Hello and welcome back to our regular morning look at private companies, public markets and the gray space in between.
This week will see two richly valued SaaS businesses share their Q1 earnings reports: CrowdStrike and Zoom. Both are 2019 IPOs, but these relatively young public companies have enjoyed a strong run in the public markets this year.
Zoom started off 2020 worth around $69 per share; today it is worth $179.48 ahead of the start of today’s trading. CrowdStrike started the year at a little over $49 per share; today it’s worth $87.81 per share. The business-focused, but consumer-friendly video chat service Zoom and the cybersecurity-focused CrowdStrike are perfect examples of the updraft that SaaS businesses have ridden this year.
With both firms reporting earnings at the same time, we’ll get notes on the work-from-home trend, and how it is impacting services that help make remote-work possible. CrowdStrike’s earnings will inform us on how the cybersecurity space is performing — are businesses shelling out more than expected to keep their networks and employees safe when so many are out of the office?
If Zoom and CrowdStrike report results that disappoint investors, they could do more than just deflate their own shares. Missed earnings reports from either could puncture SaaS valuations more broadly, perhaps impacting private valuations for companies that are in the market for new capital. Why?
Prominence and timing.