CrowdStrike and Datadog: Promising Long-Term Investments in Cloud Services and Cybersecurity
Fast-Growing Shares to Invest in 2022 and Beyond Legacy
CrowdStrike Holdings and Datadog are two companies that stand out as promising long-term investments due to their strong growth trajectories, leadership positions, and innovation within the cloud services and cybersecurity industries.
CrowdStrike's Impressive Growth
CrowdStrike, a leader in cybersecurity, has been growing rapidly since its inception in 2011. The company's revenue has quadrupled over the last five years, and its annual recurring revenue (ARR) reached $1.9 billion over the last four quarters. The year-over-year growth rate of CrowdStrike's net new subscription customers stands at a robust 57%. This growth is reflective of the more robust demand environment for CrowdStrike's services today compared to this time last year.
CrowdStrike's success is largely attributed to its Falcon security platform, which uses artificial intelligence to gather and analyze trillions of incidents in real time. This enables the platform to detect vulnerabilities and prevent threats for clients. Moreover, 71% of CrowdStrike's subscription customers have adopted at least four additional services, or modules, demonstrating the platform's versatility and effectiveness.
CrowdStrike's Recent Achievements
In the most recent quarter, CrowdStrike added 1,620 net new subscription customers, bringing the total to 17,945 at the end of April. One of CrowdStrike's services, Falcon Complete, which provides a team of digital forensic experts to assist companies against potential threats, completed its best quarter yet with annual recurring revenue reaching an all-time high.
Datadog's Growth and Innovation
Datadog, on the other hand, benefits from a combination of factors. Its recent inclusion in the S&P 500, robust financial growth with a 25% year-over-year revenue increase to $762 million, a rapidly expanding customer base, and a strong cash position of $4.4 billion that supports acquisitions and innovation, make it an attractive investment.
Datadog is leveraging AI innovation through products like Bits AI and Watchdog, reflecting strong adoption of AI-driven observability tools in cloud infrastructure. AI-native customers now contribute 8.5% of its Annual Recurring Revenue (ARR), up from 3.5% a year ago.
Risk-Adjusted Returns
In risk-adjusted terms, CrowdStrike carries a lower volatility and higher Sharpe Ratio (0.57 vs. Datadog’s 0.06), suggesting it has delivered steadier risk-adjusted returns historically. However, both companies exhibit moderate correlation, allowing diversification benefits in a portfolio.
Conclusion
In sum, Datadog’s positioning at the intersection of cloud monitoring and AI innovation and CrowdStrike’s strong market leadership and growth in cloud-based cybersecurity underpin their attractiveness as long-term investments in their sectors. If cybersecurity is a top priority for corporations, buying shares of CrowdStrike should also be a top priority for investors.
Investing in CrowdStrike and Datadog presents potential opportunities for long-term gains in the cloud services and cybersecurity sectors. CrowdStrike's impressive growth is fueled by its innovative Falcon security platform, which uses technology to detect and prevent threats for clients, leading to a high demand for its services. Datadog, with its inclusion in the S&P 500, strong financial growth, expanded customer base, and a significant cash position, benefits from AI innovation in cloud infrastructure. In terms of risk-adjusted returns, CrowdStrike demonstrates lower volatility and higher returns compared to Datadog, offering a more steady investment option. Investing in these companies can be seen as a strategic move for businesses prioritizing cybersecurity and for investors seeking to diversify their portfolio.
