CrowdStrike shares fell 4% in full trade on Wednesday after the cybersecurity software maker reported strong fiscal second-quarter results but cut full-year guidance due to global disruptions.
Here’s how the company compares to the LSEG consensus:
- Earnings per share: $1.04 adjusted vs. 97 cents expected
- result: $963.9 million vs $959 million expected
CrowdStrike’s revenue rose 32% year over year in the quarter, which ended July 31, according to a statement. The company reported net income of $47 million, or 19 cents per share, compared to $8.47 million, or 3 cents per share, in the same quarter last year.
Annual recurring revenue was $3.86 billion, just above the StreetAccount consensus of $3.85 billion.
On July 19, CrowdStrike distributed a flawed content configuration update for the Falcon sensor to computers running it. Microsoft Windows operating system, with the aim of collecting data on new attacks. The error caused millions of computers to crash, causing flight cancellations, delaying package deliveries and postponing medical appointments. Administrators must manually restart the affected computer.
CEO George Kurtz apologized to clients and partners and said the company has rolled out a fix. Meanwhile, investors are driving down CrowdStrike’s stock price. Shareholders have filed suit against the company, and Delta Air Lineswhich cited $ 380 million in lost revenue and $ 170 million in costs due to the incident, said it will seek damages. Travelers also filed a lawsuit against CrowdStrike.
CrowdStrike’s customer agreements have provisions that limit their liability, and they have insurance policies intended to mitigate the impact of lawsuits, along with cash on the balance sheet, said Burt Podbere, the company’s chief financial officer, in a conference call with analysts.
“All customers are looking for some discount,” BTIG’s Gray Powell and Trevor Rambo, with the same hold rating on CrowdStrike stock, wrote in an Aug. 23 note.
Professional services revenue of $45.6 million was down from $48.9 million in the prior quarter mainly because CrowdStrike offered free remediation services to clients after the July 19 outage, Podbere said.
Regarding guidance, CrowdStrike asked for adjusted net earnings of 80 cents to 81 cents per share on $979.2 million to $984.7 million in revenue.
For fiscal year 2025, CrowdStrike now sees $3.61 to $3.65 in earnings per share and $3.89 billion to $3.90 billion. That’s down from management’s June forecast for adjusted earnings per share of $3.93 to $4.03 and revenue between $3.98 billion to $4.01 billion.
Full-year revenue guidance includes a negative subscription revenue impact of $30 million in each quarter and professional services revenue in the high single-digit million dollars for the second half of the fiscal year due to incentives for customer commitment packages, according to a statement. The adjusted guidance does not include costs associated with outages, CrowdStrike said.
“As the July 19 event was in the last two weeks of the quarter, when a significant portion of our sales would normally be closed, it postponed the offer into the next quarter,” Kurtz said in a conference call. “Most of these deals remain in our pipeline.”
CrowdStrike expects a longer-than-usual sales cycle, sometimes requiring approval approval from CEOs and directors, Podbere said.
Before CrowdStrike released its earnings report, its stock was up about 4% this year, while the S&P 500 index had gained 17% during the period.
