WORK - Could DocuSign and CrowdStrike Follow Zoom's footsteps?
Expectations are big for DocuSign Inc (NASDAQ: DOKU) and CrowdStrike (NASDAQ: CRWD) after Zoom Video Communications (NASDAQ: ZM) easily exceeded estimates on Monday as it reported four times as much revenue as it did a year ago. The latest developments suggest that companies whose products and services enabled businesses to work remotely during the lockdown are still seeing explosive growth.
Positive expectations for tech and software
Shares of workplace-messaging company Slack Inc. (NYSE: WORK) is also seeing its stock rise more than 3% in Tuesday’s session. Zoom’s results also favourably impacted shares of DocuSign, Fastly (NYSE: FSLY), and Roku (NASDAQ: ROKU). On Tuesday, they jumped 20%, 6%, and 7%, respectively. This is not such a surprise considering that stay-at-home trends benefited these companies. The three stocks have been rising in recent weeks, and Tuesday’s big jumps only extended that rally.
CrowdStrike will report its second quarter results after market close on Wednesday and DocuSign is scheduled for Thursday. They both seem poised for continued growth due to their positioning in the growing realm of remote working environments.
Turbocharged for growth
CrowdStrike is the first cloud-native intelligent security solution that protects companies across their virtual environments. Moreover, it does not only connect computers and servers, but also the growing segment of Internet of Things devices. As companies shift to cloud platforms, cybersecurity spending is bound to increase.
Intense competition
Although the cybersecurity field has many players, CrowdStrike holds the title of a ‘category-defining’ platform. Just like the recent Dow addition Salesforce.com (NYSE:CRM) is the first place to go for CRM, ServiceNow (NYSE:NOW) for service management, Workday (NASDAQ:WDAY) for HR and DocuSign for managing electronic agreements. CrowdStrike’s subscription customer base already posted a 100% year-over-year growth with a huge opportunity for further growth due to companies needing to strengthen their digital protection. With remote work, cybersecurity became the central part of corporate risk management. Competition is intense so there’s no guarantee that CrowdStrike will manage to reach its targeted 20+% operating margin. But the ease of use of its cloud-native Falcon platform combined with its offerings do make it into a good long-term contender.
Outlook
Social distancing will be an integral part of our daily lives until we win the battle against COVID-19. As a consequence, consumer behavior is changing. Long-term impact of the pandemic is still unknown. Our new normal is in the making. But in any scenario, corporations will benefit from the flexibility that above providers bring to table with their offerings. DocuSign enables us to sign a document remotely which does bring a great sense of flexilibity. This trend amplifies the importance of cybersecurity. Without digital protection, this flexibility comes with great risk and at a cost no company can afford. This is why pandemic or no pandemic, DocuSign and CrowdStrike are poised for growth.
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