Cybersecurity firm CrowdStrike Holdings hosts an investor day Tuesday, where analysts expect it to provide fresh views on competition with Microsoft, a new partnership with Dell and expected growth in subscription-based annual recurring revenue, or ARR. CRWD stock has gained 31% thus far in 2023 after a big pullback last year.
"We expect management to provide more color on the potential ARR contribution and long-term growth targets of its emerging solutions like identity security, log management, vulnerability management and its Cloud security offerings," Bank of America analyst Tal Liani said in a note to clients.
Liani added: "We expect management to address investor concerns around the competitive landscape, namely Microsoft share gains and recent launch of the Microsoft Security Copilot, as well as pricing trends with SentinelOne and others."
CrowdStrike uses artificial intelligence and a specialized database to detect malware. Further, it works on laptops, mobile phones and other devices that access corporate networks.
Shift In Market Strategy?
At UBS, CRWD stock analyst Roger Boyd says the company's sales strategy is shifting in its core business. Analysts call it endpoint detection and response, or EDR.
"With the enterprise EDR market starting to look more mature, CRWD is emphasizing their ability to push further down-market where there are 10s of millions of customers with less than 500 employees," Boyd said in his note to clients. "We expect this topic to be discussed in detail at the April 4 event."
Boyd recently queried CrowdStrike partners on competition.
"Our biggest take-away from conversations was the view that the Dell partnership helps even playing field for CRWD against MSFT," he said.
Microsoft Becoming Bigger Threat To CRWD Stock
Meanwhile, Microsoft is leveraging its cloud computing unit in the cybersecurity market. Also, it's selling multiple cybersecurity products to companies in discounted deals. And, Microsoft is adding artificial intelligence tools to cybersecurity products.
Further, CrowdStrike is building a broad, threat-detection cybersecurity platform. It's called XDR, or extended detection and response. It monitors endpoints as well as web/email gateways, web application firewalls and cloud business workloads.
"Expectations for investor day this week are low and updates to long-term targets for total annual recurring revenue and profitability are unlikely," said Morgan Stanley analyst Hamza Fodderwala in a report. "However, we think a $1 billion ARR target for the emerging products segment would be an incremental positive and achievable by fiscal 2026."
In the fourth quarter, CrowdStrike said ARR from subscription services increased 48% to $2.56 billion. Analysts had predicted ARR of $2.515 billion.
CrowdStrike shares edged up to 137.69 in morning trades on the stock market today.
CRWD stock owns an IBD Relative Strength Rating of only 32 out of a best-possible 99, according to IBD Stock Checkup. Also, IBD's cybersecurity group ranks No. 111 out of 197 industry groups tracked.
Follow Reinhardt Krause on Twitter @reinhardtk_tech for updates on 5G wireless, artificial intelligence, cybersecurity and cloud computing.
