Cybersecurity Sector Ideas

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>>> CrowdStrike Holdings -- The first high-octane AI growth stock that appeared to whet the whistles of billionaire money managers during the December-ended quarter is cybersecurity company CrowdStrike Holdings (NASDAQ: CRWD). Four highly successful billionaires added to their funds' respective stakes in CrowdStrike, including (total shares purchased in parenthesis):


https://finance.yahoo.com/news/forget-nvidia-billionaires-selling-buying-084100649.html


Jeff Yass of Susquehanna International (400,988 shares)

Jim Simons of Renaissance Technologies (97,900 shares)

David Siegel and John Overdeck of Two Sigma Investments (91,091 shares)

On a macro basis, the cybersecurity industry has the look of a surefire growth story through at least the remainder of the decade. As businesses continue shifting their data online and into the cloud, third-party providers are being relied on with frequency to protect this information from hackers.

Furthermore, cybersecurity solutions can thrive in any economic climate. A bad day for Wall Street or a rough patch for the U.S. economy doesn't mean a thing to hackers and robots looking to steal sensitive information. Since CrowdStrike is a subscription-driven company that protects end users, it's well-positioned to generate predictable cash flow no matter what's happening with the economy or stock market.

On a more company-specific basis, CrowdStrike brings clearly identifiable competitive advantages to the table for its customers and investors. The company's Falcon security platform is driven by AI and ML. Falcon is overseeing trillions of events each week, which are making it smarter and more effective at recognizing and responding to potential threats.

There are a couple of key performance indicators that demonstrate just how much pull CrowdStrike has with businesses. Even though its platform isn't the cheapest, gross retention rate has been pegged right around 98% for multiple years. Additionally, the company's net retention rate hasn't fallen below 119% in more than five years. This means the company's existing clients are spending at least 19% more on a year-over-year basis.

But the key to CrowdStrike's success has been its ability to upsell existing customers. Whereas a single-digit percentage of its clients seven years ago had purchased four or more cloud module subscriptions, 64% of its customers now have five or more cloud module subscriptions. These add-on sales have lifted its adjusted subscription gross margin to an impressive 80%!

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