As cloud computing adoption continues to increase, securing digital assets has become a top priority for businesses. Increasing demand for cloud-based solutions is driving market growth in cybersecurity, with key players such as CrowdStrike Holdings, Inc. (CRWD), and Zscaler, Inc. (ZS), and Cloudflare, Inc. (NET) are leading the way in integrating cloud technology into their offerings.
The cloud security industry is evolving rapidly as companies and organizations continue to move their data and applications to the cloud. With the advent of digital transformation, cloud security solutions have become essential to protect sensitive data and ensure secure access across different platforms.
The rate of cloud adoption has risen in recent years, driven by advances in Internet-based services. The increasing adoption of cloud-based solutions across industries has increased demand for security tools to protect business information from external threats. Cloud solutions provide access to software and resources over the Internet, overcoming the limitations of traditional hardware.
The cloud security market is estimated to be worth US$30.29 billion in 2023, and is expected to expand at a CAGR of 14.2% to reach US$100.07 billion by 2032.
Given these positive trends, let's dig deeper into software – security stocks:
Stock #3: CrowdStrike Holdings, Inc. (CRWD)
CRWD provides cybersecurity solutions through its Falcon platform, offering subscription-based services for endpoint and cloud security, identity protection, threat intelligence, vulnerability management, and AI-driven automation. It also focuses on securing generative AI workloads and enhancing security operations globally.
On December 9, CRWD and SonicWall introduced a new Managed Detection and Response (MDR) service, integrating SonicWall's managed security services with CrowdStrike Falcon's AI-based endpoint detection and response (EDR) capabilities. This collaboration aims to deliver enterprise-level cybersecurity solutions to SMEs through Managed Service Providers (MSPs), enhancing scalability and protection.
On 7 November, CRWD expanded its partnership with Ignition Technology to distribute the Falcon platform in Ireland, in partner businesses across the UK and the Nordics.
In the fiscal third quarter ending October 31, 2024, CRWD's total revenues increased 28.5% year over year to $1.01 billion. Its income from non-GAAP operations increased 11% year-over-year to $194.92 million. Additionally, non-GAAP net income attributable to CrowdStrike was $234.26 million and $0.93 per share, up 17.6% and 13.4% compared to the prior-year quarter, respectively.
Street expects CRWD's revenue and EPS for the year ending January 31, 2025 to increase 28.6% and 21.7% year over year to $3.93 million and $3.76, respectively. Additionally, it has topped consensus EPS and revenue estimates in all four trailing quarters, which is promising.
Over the past year, the stock has risen 42.7% to close the last trading session at $362.29.
CRWD's POWR ratings reflect its strong outlook. POWR ratings are calculated by considering 118 different factors, with each factor weighted to its optimal score.
CRWD received a grade of B for growth and quality. It is ranked #16 out of 20 stocks in the B-rated Software – Security industry.
In addition to what we mentioned above, we also gave CRWD scores for Value, Momentum, Stability, and Sentiment. Get all CRWD reviews here.
Stock #2: Cloudflare, Inc. (NET)
NET cloud-based security and performance solutions, including web application firewalls, DNS, content delivery, and Zero Trust security services. These offerings are designed to enhance security, performance, and scalability for businesses, developers, and consumers across different platforms such as public and private clouds, IoT devices, and SaaS applications.
On November 20, NET announced its continued growth in the Mexican market after a year of investment and expansion. The company strengthened its infrastructure by adding a new data center in Guadalajara, strengthening its integration with key customers and partners, and building a cross-functional employee base to support its operations in the region.
On October 8, NET announced the acquisition of Kivera, a cloud security, data protection, and compliance platform. This acquisition integrates Kivera's capabilities with the .NET One platform, enabling preventive security controls directly into the cloud deployment process, ultimately enhancing the security, speed, and simplicity of cloud journeys.
NET's revenue rose 28.2% year over year to $430.08 million in the fiscal third quarter ended September 30, 2024. Its non-GAAP income from operations was $63.47 million, up 49.2% year over year. In addition, the company's non-GAAP net income was $72.58 million, up 31.3% from the same quarter last year, and non-GAAP net income per share was $0.20, indicating an increase of 25%. % over the same quarter of the previous year.
Analysts expect NET's revenue for the fiscal fourth quarter (ending December 31, 2024) to increase 24.7% year over year to $452.06 billion. EPS for the same quarter is expected to increase 20.4% year over year to $0.18. Additionally, it has topped consensus revenue and EPS estimates in each of the trailing four quarters.
NET shares have risen 36.1% over the past year and 43.7% over the past six months to close the latest trading session at $112.69.
NET's POWR reflects its powerful outlook.
NET has a B in Development and Feelings. It is ranked No. 15 in the same industry.
To access NET's Value, Momentum, Stability, and Quality ratings, click here.
Stock #1: Zscaler, Inc. (ZS)
ZS is a cloud security company that offers solutions such as Zscaler Internet Access, Zscaler Private Access, and Zero Trust security for secure access and data protection across cloud environments. It serves many industries, including healthcare, finance, and communications.
On December 17, ZS announced that Nokia Oyj (NOK) will deploy its Zscaler Zero Trust Exchange platform to improve security, operational efficiency and cloud capabilities.
On November 12, ZS announced the launch of the industry's first Zero Trust segmentation solution. It is designed to provide a more secure, flexible and cost-effective way to connect users, devices and workloads across globally distributed sites.
In the fiscal first quarter ended October 31, 2024, ZS revenues increased 26.4% year over year to $627.96 million. Its income from non-GAAP operations increased 49.5% year over year to $134.15 million. Additionally, the company's non-GAAP net income and non-GAAP net income per share were $124.26 million and $0.77, up 43.8% and 40% compared to the prior-year quarter, respectively.
The Street expects ZS's revenue for its fiscal second quarter (ending January 31, 2025) to increase 21% year over year to $635.17 million. EPS for the same quarter would likely be $0.69. Additionally, it has topped consensus EPS and revenue estimates in all four trailing quarters.
ZS shares have risen 4.9% over the past six months to close the last trading session at $187.38.
ZS's POWR ratings reflect its strong outlook.
She has a B in Development and Emotion. It is ranked No. 12 in the same industry.
Click here to see ZS's ratings for value, momentum, stability and quality.
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CRWD shares rose $0.96 (+0.26%) in pre-market trading on Monday. Year to date, CRWD is up 41.90%, versus a 25.54% rise in the benchmark S&P 500 over the same period.
About the author: Kritika Sarmah
Her interest in risky instruments and passion for writing made Kritika a financial analyst and journalist. She has a bachelor's degree in commerce and is currently pursuing the CFA program. Through its fundamental approach, it aims to help investors identify untapped investment opportunities. more…
