SentinelOne Stock vs. Crowdstrike: Which Is Best?

SentinelOne Stock vs. Crowdstrike: If you aren’t already losing sleep over cybersecurity, you may be soon. Individuals and businesses of every size are falling victim to cybercrime, and the damage is devastating.

Lost or compromised data, downtime, and recovering from an attack are costly and time-consuming, and the problem is getting worse month over month and year over year.

Some of the most alarming statistics include:

  • Small and medium-sized businesses aren’t safe – they are just as likely to be targeted as their larger peers

  • Victims of phishing attacks increased 34 percent year-over-year in 2021

  • Ransomware attacks increased 61 percent year-over-year in 2021

  • Careless or untrained employees inadvertently open the door to cybercriminals in 28 percent of cyberattacks

  • The average cost of a data breach increased 10 percent year-over-year in 2021

  • The average time to identify and contain a breach is 287 days

Fortunately, there is some good news. A collection of the world’s most innovative companies are hard at work on staying one step ahead of cybercrime. They are building new technology that monitors network activity to identify and put a stop to cyberattacks before any damage is done.

So far, they are seeing measurable success when it comes to securing sensitive data. In many cases, cybercriminals have reverted to gaining access through careless and untrained employees rather than attempting to breach network security because technology-based safeguards are too difficult to overcome.

The cybersecurity market is already big – roughly $218 billion in 2021 – and it is projected to grow at a CAGR between 9.5 percent and 12 percent through 2030. Healthcare companies are particularly interested in expanding their protections, which creates a massive opportunity for cybersecurity firms with proven solutions.

Two of the cybersecurity companies making the biggest impact on the industry are SentinelOne and Crowdstrike. For investors, that brings up an important question – when it comes to SentinelOne stock vs. Crowdstrike, which is best?

SentinelOne Revenues & Earnings

The first quarter of SentinelOne (NYSE:S) fiscal 2023 closed on April 30, 2022, and the company announced its results on June 1st. Based on the numbers, two things are abundantly clear: the company is growing, and there is strong demand for SentinelOne’s cybersecurity products. Highlights of the fiscal first-quarter 2023 report include:

  • Total Revenue – $78.3 million, marking a year-over-year increase of 109 percent

  • Annualized Recurring Revenue (ARR) – $339.0 million, which is a year-over-year increase of 110 percent

  • Total Customer Count – 7,450+ customers, a year-over-year increase of 55 percent

  • Customers with ARR Over $100K – 591 customers, a year-over-year increase of 113 percent

  • Dollar-Based Net Revenue Retention Rate – 131 percent

  • GAAP Gross Margin – 65 percent, as compared to 51 percent for the same period last year Non-GAAP Gross Margin – 68 percent, as compared to 53 percent for the same period last year

  • GAAP Operating Margin – (115) percent, as compared to (165) percent for the same period last year

  • Non-GAAP Operating Margin – (73) percent, as compared to (127) percent for the same period last year

  • Cash, Cash Equivalents, Short-Term Investments – $1.6 billion

Though the company isn’t profitable quite yet, margins are improving – a good sign for a company that is still in the early stages of growth.

Investors responded to the results with enthusiasm, and SentinelOne stock increased by approximately ten percent in the days before and after the earnings call.

SentinelOne Market Share

Compared to rivals like Crowdstrike and Palo Alto Networks (PANW), SentinelOne’s revenue is relatively low – for now – and it has yet to match the market share of its larger rivals.

However, in a relatively short amount of time, SentinelOne has captured 4.59 percent of market share, indicating that the company has what it takes to compete with current industry leaders.

So, is SentinelOne a buy?

SentinelOne’s IPO took place on June 30, 2021, when tech stocks were on their way up. Investors were excited, pushing SentinelOne stock prices up 21 percent on the first day of trading. Before long, SentinelOne traded at a price-to-sales ratio (P/S) of 100, making it one of the most expensive stocks on Wall Street.

That figure came down along with the rest of the tech industry at the start of 2022. Since trading began just under a year ago, SentinelOne shares have lost approximately 43 percent of their value, bottoming out under $19 per share in mid-May.

It appears the tide has turned, and SentinelOne stock is starting to recover, which makes now the right time to buy. Shares have never been less expensive, despite the fact that all signs point to continued growth.

Crowdstrike Revenues & Earnings

Crowdstrike (NASDAQ:CRWD) released its first-quarter earnings for fiscal 2023 (the period ending April 30, 2022) on June 3rd, and share prices immediately dipped. That’s somewhat surprising, given the strength of its results.

Crowdstrike exceeded expectations on the revenue side by a substantial amount, and it increased full-year revenue guidance.

Highlights from the financial report include:

  • Total Revenue – $487.8 million, which is a 61 percent increase year-over-year

  • Subscription Revenue – $459.8 million, representing a 64 percent increase year-over-year

  • Annual Recurring Revenue (ARR) – $1.92 billion, an increase of 61 percent year-over-year

  • GAAP Subscription Gross Margin – 77 percent, which is flat compared to the prior-year period

  • Non-GAAP Subscription Gross Margin – 79 percent, which is flat compared to the prior-year period

  • GAAP Loss from Operations – ($23.9) million

  • Non-GAAP Income from Operations – $83.0 million

  • Cash Flow – Net cash from operations came in at $215 million, and free cash flow was $157.5 million

  • Cash and Cash Equivalents – $2.15 billion

The issue doesn’t appear to be the results themselves but rather a general sense that Crowdstrike stock is overvalued.

In fact, nearly everyone agrees that Crowdstrike’s current rate of growth is healthy, and it is poised to continue on its growth trajectory over the next twelve months.

Crowdstrike Market Share

The cybersecurity market leader, McAfee, has been around since 1987, long before computers were on every desktop. Mobile devices were still decades away when John McAfee started worrying about security issues.

With that sort of history, experience, and brand recognition, it’s no wonder McAfee controls more than 25 percent of the cybersecurity market. However, competitors are creeping up – especially Crowdstrike – which now holds nearly 15 percent of the market.

So, is Crowdstrike a buy?

There is no question that Crowdstrike is growing, and it will continue to do so for the foreseeable future. It has two important advantages – exceptional technology and expanding demand for advanced cybersecurity products and services.

Crowdstrike’s leaders increased their guidance for fiscal 2023, which suggests that Crowdstrike stock will go up over the course of the year.

The current dip could be a rare opportunity to buy Crowdstrike stock at a more reasonable price, though more cautious investors may prefer to hold off until the stock hits bottom and the trend begins to reverse.

Crowdstrike vs. SentinelOne Stock: Which Is Best?

Crowdstrike and SentinelOne are locked in heated competition as they both pursue best-in-class cybersecurity solutions through advanced Artificial Intelligence (AI) tools. Both companies are growing at a rapid rate, though for the moment, there is a large gap in size and market share.

Both are likely to deliver strong returns in the medium and long-term, though for the moment, conditions are too volatile to predict short-term results. All other things equal, SentinelOne may be the better buy given its current valuation.

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The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.