The business of protecting corporate computing networks from cyberattacks on endpoints such as laptops and smartphones is large, slowly growing, and crowded with competitors.
according to Fortune Business InsightThe endpoint security industry is expected to grow at a compound annual growth rate of 8.3%, from $ 14 billion in 2021 to about $ 25 billion in 2028. The August 21st report featured 33 competitors.
Two such competitors, SentinelOne, based in Mountain View, Calif. And CrowdStrike, based in Sunnyvale, Calif., Have made it publicly available for years. As I wrote in June 2019, SentinelOne commented critically on Crowdstrike’s products and did so this month. In July, Crowdstrike accused SentinelOne of failing to make a profit by setting prices low, according to CRN.
Since both are listed (SentinelOne completed its IPO in June), SentinelOne is growing twice as fast, but CrowdStrike is clearly five times larger.
I think the SentinelOne stock has more potential for the upside. Why? Both companies have received very positive feedback from their customers and are investing in future growth, but SentinelOne has an advantage for two reasons.
- It’s growing faster
- The product dodges more cyberattacks before it breaks into the corporate network
(I have no financial interest in the securities mentioned).
Financial Performance and Outlook: Advantage SentinelOne
Investors like companies that exceed growth expectations and raise guidance are ideally for profit and profit. Investors often focus on revenue growth over loss, unless the company risks running out of cash.
By that standard, both SentinelOne and Cr0wdStrike are working. However, SentinelOne is growing much faster, albeit from a much smaller foundation.
In the latest financial report, SentinelOne exceeded earnings expectations, but lost more money than expected. We also expect revenue to grow very rapidly this quarter.
Why? In the three months to July 31, SentinelOne’s revenue increased by about 121% to $ 45.8 million, about $ 6 million higher than analysts expected.
SentinelOne also raised its earnings forecast for the end of October quarter. According to CRN, revenue growth of 101% is projected to be $ 49.5 million. That’s about $ 9 million more than analysts expected.
Meanwhile, a net loss of $ 46 million was about 116% worse than the previous year, with a net loss of 62 cents per share, 42 cents below analysts’ consensus.
Nevertheless, the company is in a solid financial position. SentinelOne’s business ran out of $ 42 million in cash, but SentinelOne closed the quarter with $ 1.7 billion on its balance sheet.
CrowdStrike, about 7.3 times more than SentinelOne, reported higher-than-expected earnings and earnings per share growth, but guidance for the quarter at the end of October suggests a significant slowdown in growth.
According to ZDNet, Crowdstrike’s total revenue increased 70% in the second quarter to $ 337.7 million, more than $ 24 million higher than analysts expected, but non-GAAP earnings per share was 11. It was cents.
Crowdstrike expects total third-quarter revenue to range from $ 358 million to $ 365.3 million. The midpoint is 56% higher than the results for the third quarter of 2020.
Crowdstrike was pleased with the result. CEO George Kurtz said: The success of the platform strategy and the growth of brand leadership has led to a surge in customers using CrowdStrike as a trusted security platform. “
Customer Value Proposition: Both are very strong
Customers give high marks to both companies.
According to Gartner Peer Insights, CrowdStrike’s Falcon endpoint security service received 4.9 / 5 stars from 757 customers. A five-star review praised the company for demonstrating its responsive service and its thorough concept. According to critics’ reviews, CrowdStrike’s “The support team feels that their product is so good that they want the software to learn and fix the problem.”
SentinelOne’s Singularity Platform received 4.8 / 5 stars from 342 reviews. The favorable review praised the SentinelOne team and said, “It was amazing in terms of sales, customer service, product quality, and technical support.” A less favorable review complained about the need for updates that “require significant changes to the enterprise.”
SentinelOne argued that CrowdStrike’s products weren’t enough to preemptively thwart cyberattacks. In June 2019, Weingarten said SentinelOne’s technology “wins the competition with CrowdStrike and others because it’s more effective and efficient.” Others see something happening to you and send you to the analyst. There are benefits without human intervention. “
Earlier this month, Weingarten reiterated that customers prefer a preventative first approach. As he told CRN, “[We recently won over a multi-million dollar customer that was] I am increasingly dissatisfied with the need to constantly extinguish the fire. And if you take a more preventive approach, you can prevent these fires from actually happening. ”
SentinelOne states that the solution will reduce customer distress. As Weingarten told me in an interview on September 17, “We provide a shift from detection and response, which includes repair from costly human intervention. We Artificial intelligence diverts more attacks [than do rival products].. “
In July, CrowdStrike offered SentinelOne at a low price. As CRN pointed out, Kurtz said SentinelOne is “buying growth.” [to impress investors].. At some point, you need to undo your losses and start making cash. “
Weingarten pointed out that SentinelOne’s “technology costs as much or more than its competitors. [Unlike CrowdStrike,] We are not trying to hijack a customer’s security budget by forcing them to buy a large amount of service time to support non-automated products, “he told CRN.
New Product Initiatives: Both Very Powerful
SentinelOne and CrowdStrike are investing in future growth opportunities.
As Weingarten told me on September 17, “We are constantly innovating. We release two new modules every quarter. We listen to our customers: What do your customers need? What can you solve? ”
Analyzing corporate data is an important opportunity for SentinelOne. As he said, “We have acquired a data analytics company, which allows companies to gain insights from data through many use cases, such as logs that need to be maintained for regulatory purposes. This is a Ranger product that maps everything on the corporate network and automatically provisions and deploys software to the most common sources of compromise, including unknown and remaining devices that have access to the network. There are many companies that do it, but unlike Microsoft’s tedious products, our products are easy to use and enabled. “
In its latest earnings announcement, CrowdStrike highlighted new products, including “Falcon X Recon +, a new managed solution that simplifies the process of finding and mitigating external threats to brands, employees and sensitive data.”
CrowdStrike sees Falcon as the wave of the future. Kurtz said: “The extensible Falcon platform, built to harness the power of the cloud to collect data once and reuse it over and over again …