Computers, phones, and the Internet connect almost everyone. Unfortunately, some dangerous people with bad intentions are among the users. That means the service that gives you videos, social interaction, and stock investing advice can also be dangerous. To protect themselves from dangerous cyber threats, consumers and businesses alike are turning to different forms of cybersecurity software.
These precautions are necessary, as the results of an intrusion can be catastrophic. For consumers, cybercriminals can steal credit card data or compromise personal information like date of birth or Social Security number. On the business side, IBM found that the average cost of a data breach to a business was $4.24 million in 2021, up 10% from 2020.
With the high costs associated with a cyber attack, it makes sense for everyone to have a cybersecurity platform. Typical guidelines urge companies to spend 10-15% of their IT budget on cybersecurity. It is likely that there are many companies that do not do enough (see the Cyberattack on the Colonial Pipeline or solar winds chop for recent examples). But the companies is it so waking up and taking their cybersecurity solutions more seriously.
The need for cybersecurity makes it a fantastic place to invest, as companies are unlikely to cut budget in tough times. One niche that I think is a great place to start is endpoint protection. Endpoint Protection protects devices like desktops, laptops, or phones from malware or device hijacking threats. Although it ranks second in global market share, my top pick for this space is crowdstrike ( CRWD -3.97% ).
Top Market Holder microtrend ( TMIC.Y -1.72% ) is based in Japan and is a legacy cyber security provider working to transition to the modern business environment in the cloud. Its big difference from CrowdStrike is that CrowdStrike was built from the ground up as a cloud-based offering. Additionally, Crowdstrike is growing revenue significantly faster than Trend Micro.
|Company||Revenue growth from the last full fiscal year|
Trend Micro also has a consumer-facing product, while CrowdStrike doesn’t. Because CrowdStrike’s pricing requires a minimum purchase of five seats, most consumers will never use their software. However, CrowdStrike could easily expand its solution by removing this baseline or creating a new offering aimed squarely at personal security. This transition would open up a huge opportunity for growth, but CrowdStrike doesn’t need any help in the growth department at the current rate.
Through fiscal year 2022, CrowdStrike’s customer base grew 65% to 16,325 and had 65 Fortune 100 on its platform. While it captured more than half of the top deals, CrowdStrike’s dollar-based net retention rate (a metric that measures how much more an existing customer spends from one period to the next) was 124% for the fourth quarter, which which means that customers spent $1.24 in the fourth quarter for every $1.00 spent in the fourth quarter of 2021.
CrowdStrike has over 20 endpoint protection modules ranging from malware scanning to identity threat detection, giving customers the tools they need to deliver a robust cybersecurity offering. With 69% of customers using four or more modules and only 34% using six or more, your customers have plenty of room to expand within the CrowdStrike product line.
To further underscore CrowdStrike’s offering, Gartner named CrowdStrike a Leader in its Magic Quadrant for Endpoint Protection. It scored highest in completeness of vision and was barely beaten by Microsoft in its execution capacity. However, these two vendors were significantly ahead of any other endpoint protection vendor.
CrowdStrike has a huge market to capture; growth investors should take advantage of this best cyber security business buying shares today.
This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We are motley! Questioning an investment thesis, even one of your own, helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.