Two tech companies I would buy while in a recession are CrowdStrike Holdings and Autodesk. Both provide crucial software, something that can’t be cut regardless of how slow business gets. During the last recession, which was caused by the Covid-19 pandemic, each of these companies shrugged off the challenge and kept growing.
An area no business can cut back on is its cybersecurity. An attack that compromises the security when a company is already having a hard time during a recession might be the end of the company. The company’s endpoint security software helps protect network access points, like a phone or computer. Its zero-trust approach will help identify when its users aren’t doing what they normally do. The response to prevent any stolen information or damage is instant.
Unlike Autodesk, CrowdStrike is new enough to have never gone through a prolonged recession. Founded in 2011, the business has only known good times.
Although the business is not yet profitable, with the rising revenues coupled with how crucial the software is to its customers, the company might reach profitability sooner than later. Though profitability is great, having great leadership is the key for any team during a challenging period, and Kurtz provides CrowdStrike with an edge.
The stock is also an excellent investment right now; during its Q3 2022, yearly recurring revenue (ARR) increased 67% to $1.5 billion and customer count also increased 75% when compared to the year-ago quarter. Quick adoption showcases how important CrowdStrike’s products have become, making it unlikely they will be cut when a recession hits.
Manufacturing and construction slow down when recessions hit. With Autodesk’s old business model, engineering and architecture companies could choose to not upgrade to the newest software model and wait until its business picks up.
Now, the subscription model produces revenue every year, unless a customer were to drop the software completely. Autodesk’s software lineup includes AutoCAD, Revit, and Inventor — all must-haves for their users. These programs modify, create, and maintain products and designs and could never be dropped; they have to be replaced instead — an expensive alternative unlikely to happen during a recession.
With how crucial the United States is to the global economy when a recession hits the nation, it will likely have an affect around the globe. However, every region will experience a recession differently. The revenue stream of Autodesk is diversified across all corners of the globe and is growing.
By being diversified, Autodesk is able to maintain growth through a domestic recession by relying on other regions.
It likely will never enjoy growth that is as fast as CrowdStrike but it is still solidly profitable. It converted 23% of its revenue into free cash flow during Q3 and had a 13% profit. Recurring revenue has made up 97% of the total. Autodesk will not light the world on fire, but it could provide it with solid results.