Various Q3-24 Earnings
Alarum, Zoom & CrowdStrike.
Some quarters from companies I follow out of interest or for their potential but won't really dive into - for now. I know these can interest many here, so I still give my opinion on their earnings.
Rapid introduction, I am not planning to do any weekly review sunday, we didn’t have any interesting news despites CrowdStrike’s earnings which are covered below. Will be back next week with some more write up & am working on the energy investment case for later on, probably before year end!
Alarum.
I covered Alarum's last quarter mostly because its impressive growth was worth at least studying the company. I ended up starting a position after the crash with a clear thesis: the holiday period should see a surge in demand for their scraper.
EPS. $0.04 | $0.20 | +400.00% beat
Revenue. $7M | $7.2M | +2.86% beat
The company slightly beat revenue, which means the 5 kings didn't resume their full activity during the quarter. Most importantly, guidance talks about $7.5M during Q4-24… Which means they do not anticipate the kings to do so.
This was my entire thesis.
“But this will be it. No DCA, no re-entry, just today’s reinforcement. And if activity isn’t back by the end of 2024, I will take my loss and leave Alarum.”
So, you guessed it: I took my loss and move on.
I do not think Alarum is a bad company nor that it cannot do wonders in the future. But for now, they are proposing a tool only used by a handful of clients, without any proof that theirs is better than the competition, and data clearly points that they either lost one, or aren't attracting more clients.
The thesis here is hope that someone new comes or that an actual user boosts its consumption, without any idea on why & when this would happen… I simply do not want to hold this.
Zoom.
I really don't like Zoom, and it might even be the last time I cover it. It has been a great pump during Covid but the truth is, the company isn't growing, isn't doing much including not taking market shares. The only thing they are doing efficiently is diluting shareholders…
They are losing users although their load of customers above $100k ARR is growing properly, it isn't enough to move the needle much & bring back significant growth. Once again, the company had a bigger stock-based compensation than its profitabilit. Although they did buy back more shares than they emitted this time.
We're still with a company which is losing users, competing with Microsoft Teams - integrated tools in most computers for companies, globally diluting shareholders & not growing.
I might be a bit harsh, but those are the reasons why I won't cover it anymore.
CrowdStrike.
Now, let's talk about excellence. If you can recall, CrowdStrike was the company responsible for the internet outage which happened in July and closed airports & hospitals. We talked about it here.
Here was my rapid take on the subject, but you can read it fully on the above write-up.
“Very hard to imagine the consequences already but Crowdstrike still proposes some of the most advanced cyber softwares and even if the headlines and the market are certainly not done hurting the stock, everything will certainly be forgotten in a few months or a year and the company will continue to grow as if nothing happened. To be monitored over the next months, might be buying in if the market punishees the stock too much.”
EPS. $0.81 | $0.93 | +14.81%
Revenue. $983.03M | $1.01B | +2.74%
The single most important data in my opinion is the ARR growing 27% YoY & surpassing $4B - added to a growth in module adoption rates. The only potentially worrying data is a lower net new ARR this quarter YoY, with "only" $153M compared to $223M.
My interpretation remains the same as in July, the incident didn't hurt CrowdStrike for its actual clients, but did hurt for potential new clients or those who wanted to deepen their relationship. Guidance seems to show this, coming a bit weak, under 30% of YoY growth. I still believe this is a short-term issue and those companies will forget about the incident in a few months.
Finances are great except for the net income which has been impacted by R&D & sales, both due to the July event which will continue to hurt them some time, but isn't a business flaw.
The stock mostly recovered by now but still is very, very expensive - even more now with a weaker growth. The crash was a great opportunity, holding seems reasonable but buying is complicated for me… Good job for those who took advantage.
No need to worry about being harsh, telling data supported facts is way more important!