CrowdStrike: A Sticky Wicket?

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Now, CrowdStrike, a name that sounds suspiciously like a villain from a penny dreadful, has been having a bit of a wobble. Shares have dipped, you see, a rather unappetizing 17% down since the start of the year. And yet, the company itself is cheerfully announcing splendid results – a curious contradiction, wouldn’t you agree? They’re practically bursting with growth and cash, like a greedy badger hoarding nuts.

The question, then, is this: is this a chance to scoop up some shares, a little bargain for the discerning investor? Or is it a trap, a sticky wicket laid by the market goblins?

They’re due to reveal their latest earnings on March 3rd, which is all very well, but numbers are fickle things. They can bounce up, they can plummet down – a bit like a particularly bouncy rubber ball. One can’t be certain, of course. But let’s not bother with short-term jiggles. We’re building fortunes here, not chasing butterflies.

Another Quarter of Jolly Good Growth

Their last quarter (ended October 31st, 2025) showed a healthy appetite for subscription revenue. Customers are piling onto their security modules, which is rather like adding extra locks to your sweet shop. A sensible precaution, one might think.

Revenue rose a respectable 22% to $1.23 billion. Subscription revenue, the truly juicy bit, grew 21% to $1.17 billion. Nearly half their customers – 49% – are using six or more modules. That’s a lot of locks, even for a very determined sweet thief. They even have some customers – 34% and 24% – who’ve gone whole hog with seven and eight modules respectively. They must be expecting a serious raid!

Their Annual Recurring Revenue (ARR) climbed 23% to $4.92 billion. They conjured up $265 million in new ARR during the quarter. ARR, you see, is a fancy way of saying how much money they expect to roll in each year from their subscriptions. A predictable income is a very comforting thing, especially when you’re building a wealth mountain.

Cash flow was remarkably robust – $398 million from operations, and $296 million free cash flow. That’s a whopping 24% free cash flow margin. They ended the period with $4.8 billion in cash and cash equivalents. Enough to build a very large, very secure sweet shop, indeed.

“Q3 was one of our best quarters in company history,” declared CEO George Kurtz. He talks about a “platform approach” – a clever way of getting customers to buy more and more of their security goodies. It’s a bit like selling them a whole set of locks, keys, and alarm systems. Very thorough, if a little bit…controlling.

Does This Shiny Apple Have a Worm?

Now, here’s the rub. Despite all this cheerfulness, CrowdStrike isn’t actually making a proper profit. They’re still losing money, a rather alarming $69 million in the last quarter. For a company worth nearly $98 billion, that’s a bit like a giant, gilded goose laying lead eggs.

The valuation is asking for perfection, you see. Investors are expecting this company to grow and grow, without a single stumble. It’s a very high bar, and a very risky bet. Even after the recent dip, the price-to-sales ratio is a rather extravagant 21. Investors aren’t just paying for growth; they’re paying for a dream.

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To be fair, there are some good things about their economic model. Their subscription gross margin is a healthy 78%, and their free cash flow is impressive. If they can keep those numbers up while finally turning a profit, then maybe, just maybe, the valuation will be justified.

But cybersecurity is a crowded market, and increasingly, these tools are being bundled together by the tech giants. It’s a bit like a gang of bullies muscling in on the sweet shop business. Pure-play cybersecurity companies may find themselves pressured on price.

And then there’s the execution risk. They had some trouble with a recent software update, which caused some unexpected costs. These things happen, of course, but they can create friction and damage trust.

So, is this a buying opportunity? Honestly? I’d steer clear for now. The fundamentals are solid enough, but the valuation is simply too rich. There’s no room for error, and no margin for disappointment.

If the stock keeps falling, or if CrowdStrike can deliver sustained profitability, then I might reconsider. But until then, I’d rather invest my money in something a little less…precarious. Perhaps a very large, very secure sweet shop.

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2026-02-22 22:33