CrowdStrike Shares fell 4% in extended trading on Wednesday after the cybersecurity software maker reported strong second-quarter financial results but cut full-year guidance following a global shutdown.
Here’s how the company did compared to the LSEG consensus:
- Earnings per share: $1.04 adjusted vs. 97 cents expected
- Annuity: $963.9 million vs. $959 million expected
CrowdStrike’s revenue rose 32% year over year in the quarter ended July 31, according to statement. The company posted net income of $47 million, or 19 cents per share, compared with $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 an incorrect content configuration update for the Falcon sensor to computers running Microsoft Windows operating systems, in order to collect data for new attacks. The bug crashed millions of computers, leading to flight cancellations, delayed package deliveries and postponed medical appointments. Administrators had to manually restart affected computers.
CEO George Kurtz he apologized to customers and partners and said the company had developed a fix. Meanwhile, investors were putting pressure on CrowdStrike’s stock price. The shareholders have filed suit against the company and Delta Air Lineswhich reported $380 million in lost revenue and $170 million in costs due to the incident, said it would seek damages. Travelers have filed class action lawsuits against CrowdStrike as well.
CrowdStrike’s customer agreements have provisions limiting its liability, and it has insurance policies intended to reduce the impact from legal claims, along with cash on the balance sheet, Burt Podbere, the company’s chief financial officer, said on a conference call with analysts.
“All customers are looking for some kind of discount,” BTIG’s Gray Powell and Trevor Rambo wrote in an Aug. 23 note, with a hold-equivalent rating on CrowdStrike shares.
Professional services revenue of $45.6 million was down from $48.9 million in the prior quarter, mainly because CrowdStrike provided free recovery services to customers after the July 19 outage, Podbere said.
As for guidance, CrowdStrike called for adjusted net earnings of 80 cents to 81 cents per share on revenue of $979.2 million to $984.7 million.
For fiscal 2025, CrowdStrike now sees $3.61 to $3.65 in adjusted earnings per share and $3.89 billion to $3.90 billion in revenue. That’s down from management’s June forecast of adjusted earnings per share of $3.93 to $4.03 and revenue of between $3.98 billion and $4.01 billion.
Full-year revenue guidance includes a negative impact on subscription revenue of $30 million in each quarter and professional services revenue in the high single digits for the second half of the fiscal year due to incentives for a customer engagement package, according to the statement. Custom guidance excludes costs associated with downtime, CrowdStrike said.
“Because the July 19 incident was in the last two weeks of the quarter, when a significant portion of our sales typically close, it delayed deals for the next few quarters,” Kurtz said on the conference call. “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, Podbere said.
Before CrowdStrike issued its earnings report, its stock was up about 4% this year, while the S&P 500 gained 17% during that period.
