CrowdStrike CEO George Kurtz speaks at the Wall Street Journal Tech Live conference in Laguna Beach, California, on Oct. 21, 2019.
Martina Albertazzi | Bloomberg | Getty Images
CrowdStrike shares slipped 4% in extended trading on Wednesday after the cybersecurity software maker reported strong fiscal second-quarter results but reduced full-year guidance in the wake of a global outage.
Here is how the company did compared to LSEG consensus:
- Earnings per share: $1.04 adjusted vs. 97 cents expected
- Revenue: $963.9 million vs. $959 million expected
CrowdStrike’s revenue grew 32% year over year in the quarter, which ended July 31, according to a statement. The company recorded net income of $47 million, or 19 cents per share, compared to $8.47 million, or 3 cents per share, in the same quarter a year ago.
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 its Falcon sensor to computers running Microsoft Windows operating systems, with the intent to gather data on new attacks. The error caused millions of computers to crash, leading to flight cancellations, delayed packaged deliveries and postponed medical appointments. Administrators had to manually reboot affected computers.
CEO George Kurtz apologized to clients and partners and said the company had rolled out a fix. Meanwhile, investors were pushing down CrowdStrike’s share price. Shareholders have filed suit against the company, and Delta Air Lines, which cited $380 million in lost revenue and $170 million in costs because of the incident, said it will seek damages. Travelers have filed class action lawsuits against CrowdStrike as well.
“All customers are looking for some kind of discount,” Gray Powell and Trevor Rambo of BTIG, with the equivalent of a hold rating on CrowdStrike shares, wrote in an Aug. 23 note.
With respect to guidance, CrowdStrike called for adjusted net earnings of 80 cents to 81 cents per share on $979.2 million to $984.7 million in revenue.
For the 2025 fiscal year, CrowdStrike now sees $3.61 to $3.65 in adjusted earnings per share and $3.89 billion to $3.90 billion in revenue. That is 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.
The 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 millions of dollars for the second half of the fiscal year because of incentives for a customer commitment package, according to the statement. The adjusted guidance excludes costs related to the outage, CrowdStrike said.
“As the July 19th incident was in the final two weeks of the quarter, when a meaningful portion of our sales typically close, it delayed deals into subsequent quarters,” Kurtz said on a conference call with analysts. “The vast majority of these deals remain in our pipeline.”
CrowdStrike expects longer sales cycles than usual, sometimes requiring deal approval from CEOs and directors, said Burt Podbere, the company’s finance chief.
Before CrowdStrike issued the earnings report, its stock was up about 4% this year, while the S&P 500 index has gained 17% during that period.
