Phishing attacks by email, website hacks, extortion schemes, malware, denial of service (DOS), server attacks — the list goes on. As the world turns digital, it’s becoming an inevitability that businesses have to protect themselves with cybersecurity solutions. We’ve got the stats to back that up, and two stocks we think are worth watching.
Cybersecurity Industry Growth And Statistics
It’s estimated that a cybercrime attack occurs every 11 seconds, and the pandemic certainly hasn’t helped either — estimates predict there has been a 600% increase in cybercrime since the onset of COVID-19. The costs to businesses, not limited to any one factor — financial losses, reputation damage, legal liability, as well as squandered productivity — are expected to total $10.5 trillion in business costs by 2025, so it’s no surprise the industry is growing so rapidly. The total addressable market is expected to be worth a staggering $366 billion by 2028 as a result.
“Organizations with well-integrated functions for identifying assets and risks are nearly 40 percent stronger at threat detection and response”.
Increasingly, there’s also a need for cybersecurity in small and medium-sized businesses too. It’s estimated that 43% of attacks are aimed at small businesses and only 14% are well-equipped to manage potential threats. So, the conclusion we can draw from here is that there is a largely untapped opportunity for both companies that we’ll discuss next.
CrowdStrike (NASDAQ: CRWD) is a cloud-native platform company providing end-to-end solutions for cybersecurity threats faced by companies. Its diverse portfolio of customers includes 37 of the top 100 companies globally, 13 of the world’s major banks, five of the largest top 10 global healthcare providers, and seven of the 10 largest energy solutions businesses in the world.
In its most recent quarter, the company added 1,607 new customers bringing the total to 14,687. It grew annual recurring revenue (ARR) to more than $1.5 billion too, a 67% year-over-year increase. At the end of the last quarter, Crowdstrike also had $1.91 billion in cash and cash equivalents to support its future growth.
Crowdstrike has new developments working closely with Amazon Web Services (AWS) and continued expansion of its product offering for AWS customers. It was also announced that Crowdstrike Falcon Horizon would be the provider for Google Environments, making Crowdstike the management solution for the three largest cloud providers in the world.
Cloudflare (NYSE: NET) is the network that protects corporate structures by securing websites, access, and applications across businesses. Its network is integrated seamlessly with its customer’s businesses to provide global protection from unwanted attacks on content delivery networks and site domains.
In its Q4 2021 results, the company reported that it has 125% net-dollar retention, a testament to its services driven by large enterprise customers. Total revenue came to $194 million, a 54% increase from the year prior, and gross profit margins expanded slightly to 78% from 76.9% the year before. Cloudflare exited the quarter with more than $1.8 billion in cash and cash equivalents on hand.
A solid financial performance, and the company is seemingly making all the right moves strategically, as well. It strengthened its portfolio of cybersecurity services too, through strategic acquisitions of phishing experts such as Area 1 Security, and app security manager Vectrix just last month, following on from its Zaraz acquisition last year that will support third-party performance solutions.
Cybersecurity has an ever-growing presence everywhere we do business. Businesses are being forced to adapt and scale protective solutions quickly, so make sure to keep an eye on these two as they grow, because they have quickly become industry leaders.
Financial Writer at MyWallSt
David's favorite stock is Google. He's a daily user of its YouTube platform, where you can learn or find something brand new at the touch of a button. He believes the company will continue to grow for many years to come.