Shares of CrowdStrike (CRWD) are trading higher on Tuesday after the company posted its fourth quarter earnings, revealing $845 million in revenue versus an expected $839 million. In addition, the company issued a better-than-expected full-year guidance for 2024.
Rob Owens, Piper Sandler Senior Research Analyst, joins Yahoo Finance to discuss CrowdStrike's planned acquisition of Flow Security and broader cyber momentum as large corporations are navigating security challenges.
The upcoming election could also be a catalyst for CrowdStrike, Owens explains: "Obviously there's speculation from a partisan perspective as to one side being more tech-friendly than the other, but at the end of the day, we're seeing a lot of nation state activity. Even the head of the FBI came out recently and predicted some type of Pearl Harbor-like activity that may happen to our critical infrastructure within the next six to nine months. I think cyber is going to be top of mind, whether that is attacks on digital infrastructures or whether that's attacks on physical infrastructures as they become integrated with IT. So, at the end of the day, I think that election season is going to continue to point to a lot of deep fakes, a lot of phishing attempts as well, and the potential for increased attacks. "
For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.
JULIE HYMAN: Well, shares of cybersecurity firm CrowdStrike are soaring after earnings with more on the numbers. Let's bring in Rob Owens, Piper Sandler co-head of technology research. Rob, but from where we sit, the numbers look like they beat across the board, both looking at last quarter and looking at the forecasts here. It was interesting to see the shares fall in today's regular trading ahead of this. Was there some caution going into these numbers and then they came out and beat here?
ROB OWENS: Look, I think we've had a pretty robust start to the year for tech and especially for cyber. And as we look at some of the other results, I think it's caused speculation just around what the health of the environment currently looks like. And so the sell off into earnings was not surprising, but this is a very strong result. As you pointed out, we've got about a 40 million beat relative to R.N. A beat on revenue and free cash flow. And it looks to be a strong guide as well.
JOSH LIPTON: And Rob, we got some acquisition news too. There was a headline here, CrowdStrike is going to acquire flow security. It looks like to expand their footprint in Cloud security, it doesn't look like we have terms here but just strategically Rob, this move makes sense to you.
ROB OWENS: Yeah, to us. CrowdStrike has been pursuing a lot of adjacent angles Josh. And I think that as we look at data security posture management or the larger play around data. Given Crowd's footprint and given the opportunity to really drive a platform like scale, we think this is the type of acquisition that makes sense given their presence in the market and the adjacencies that they're moving into.
And it's something they've actually foreshadowed before to start to talk about their data protection capabilities.
JULIE HYMAN: Rob, now that we've had CrowdStrike, we heard from Palo Alto, what do we know about enterprise spending here, and in particular their willingness to spend on this area?
ROB OWENS: Look, we see indefatigable cyber momentum right now. And I think that there was speculation to the contrary a couple of weeks ago on that Palo Alto call. But I think the reality is that large corporations are dealing with a lot of things right now, whether it is increases in attacks, ransomware, increases in regulation and disclosure requirements, bringing AI into the mix as well. And I think at the end of the day, fundamentally this space sets up as well as I've seen in the past couple of decades.
JOSH LIPTON: Well, and looking ahead, Rob, we think about the upcoming reelection. Is that a potential catalyst for a name like CrowdStrike?
ROB OWENS: I think it's a potential catalyst for the space, Josh. I think it's a good question. Obviously there's speculation from a partisan perspective as to one side being more tech friendly and the other. But at the end of the day, we're seeing a lot of nation state activity. And even the head of the FBI came out recently and predicted some type of Pearl Harbor-like activity that may happen to our critical infrastructure within the next six to nine months.
I think cyber is going to be top of mind, whether that is attacks on digital infrastructures or whether that's attacks on physical infrastructures as they become integrated with IT. So at the end of the day, I think that election season is going to continue to point to a lot of deep fakes, a lot of phishing attempts as well, and the potential for increased attacks.
JULIE HYMAN: And I'm looking at some of your ratings on cybersecurity broadly. It looks like you're overweight on most of the space. Is there a company that you think is best poised here? Is it a CrowdStrike or is it perhaps one of its competitors?
ROB OWENS: As we've looked at our top five ratings, two are a little more on the infrastructure but frankly have back door cyber plays in Datadog and GitLab. And as we look across that cyber infrastructure, it's been Zscaler, it's been CyberArk, and Crowdstrike that have rounded out the top five. So we continue to think that the fundamental landscape remains very healthy. And we continue to think that these companies can outperform expectations as we move throughout 2024.
