With digital transformation and IT modernization on the rise, cybersecurity has become more important than ever. As businesses operate more efficiently through cloud migration and connected devices, the risk of cybercrime has increased. This has created new attack surfaces for hackers, leading to explosive growth in cybercrime.
According to Statista, the damages inflicted by cybercrime totaled $8.4 trillion last year. This number is expected to nearly triple by 2027. As a result, cybersecurity companies like CrowdStrike and Okta are expected to benefit from this trend. Here’s why investors should consider buying these two growth stocks today.
CrowdStrike
CrowdStrike, a leader in endpoint security, has developed the Falcon platform that offers 23 modules spanning multiple cybersecurity verticals, protecting endpoint devices, cloud workloads, identities, and data. With this broad product offering, clients can standardize on a single integrated platform instead of stitching together products from multiple vendors, simplifying their security workflows.
CrowdStrike’s industry-leading AI engine, uniquely effective in preventing attacks, has helped the company increase its customer count by 41% last year, and the average customer spent 25% more, leading to a 54% increase in revenue to $2.2 billion. Furthermore, free cash flow increased by 64% to $941 million. The International Data Corp. recognized CrowdStrike as the market leader in endpoint security for the third consecutive year, with more market share than other vendors, allowing its AI models to improve more quickly.
CrowdStrike, which is currently trading at a discount to its three-year average of 35.3 times sales, is a growth stock worth considering. The company estimates its addressable market to be worth $76 billion in 2023, and it anticipates it to increase to nearly $100 billion by 2025.
Okta
Okta is an identity and access management (IAM) provider that has developed a policy enforcement engine to secure sensitive data and systems.
Using artificial intelligence, the platform relies on contextual factors such as identity, device, and behavior to verify users. It also reduces friction by enabling users to access all of their applications with a single entry of their credentials.
While facing tough competition from companies such as Microsoft and Ping Identity, Okta has set itself apart in two significant ways.
First, it offers the broadest and deepest set of pre-built integrations in the IAM industry, meaning organizations can quickly configure and deploy its software. Second, Okta offers the most comprehensive identity suite on the market, addressing both workforce IAM and customer IAM use cases. The company has been acknowledged by industry analysts as a leader in both sectors.
Last year, Okta faced integration challenges from its Auth0 acquisition, a problem that exacerbated headwinds related to the difficult economic climate. However, cost-cutting measures and a revamped go-to-market strategy allowed the company to bounce back with a solid financial performance in the fourth quarter. Its customer count increased by 17%, and the average customer spent 20% more. In turn, fourth-quarter revenue climbed 33% to $234.7 million, exceeding the company’s own guidance.
Future Outlook
Okta is well-positioned for continued growth in the identity and access management market. According to a recent report from Grand View Research, the market is expected to grow at a compound annual growth rate of 13.2% from 2020 to 2027, driven by increasing demand for secure identity solutions. With its expanding product offerings and strategic acquisitions, Okta is well-equipped to capture a larger share of this growing market.
In addition to its financial success, Okta has also been recognized for its corporate social responsibility efforts. The company was named one of Fortune’s “World’s Most Admired Companies” for 2021 and was recognized as a “Leader” in the Gartner Magic Quadrant for Access Management.
