CrowdStrike Holdings Inc. shares fell in late trading after the cybersecurity software firm issued a fourth-quarter earnings forecast that fell short of investors’ expectations.
The company said it expects adjusted earnings of 84 US cents (US$1.13) to 86 US cents per share, below analysts’ estimates for 87 US cents.
The report is the company’s second since a flawed CrowdStrike update crashed millions of devices operating on Microsoft’s Windows systems.
The outage, which unfolded on July 19, disrupted a wide range of industries, including air travel, banks and healthcare.
Third-quarter revenue represented a bright spot in Tuesday’s report. Sales for the period came to US$1.01 billion, exceeding Wall Street’s expectations. Profit, excluding some items, was 93 US cents a share, compared with the average estimate of 81 US cents.
CrowdStrike also raised its guidance for revenue for the full fiscal year, to US$3.92 billion to US$3.93 billion. Analysts were expecting US$3.9 billion.
See also: Global IT collapse puts cyber firm CrowdStrike in spotlight
The company surpassed US$4 billion in annual recurring revenue as of Oct 31, making CrowdStrike “the fastest and only pure play cybersecurity software company to reach this reported milestone”, CEO George Kurtz said in the statement.
The company excluded roughly US$26 million from its annual recurring revenue in the quarter, CrowdStrike CFO Burt Podbere said during the earnings call. That came after a distributor in the federal space provided notice of its intention “to exercise transferability rights with respect to a transaction”, and CrowdStrike concluded the transaction wouldn’t recur. That transaction remains in revenue in compliance with US revenue recognition rules, Podbere said.
CrowdStrike previously agreed to a US$32 million deal with Carahsoft Technology, a distributor which serves as a middleman between technology companies and government agencies, for identity protection software intended for the US Internal Revenue Service. But the IRS never purchased the software, Bloomberg reported in October.
See also: CrowdStrike reports 2QFY2025 sales that beat estimates
The deal caused concern within CrowdStrike and, according to some legal and accounting experts, raised red flags.
Jeremy Fielding, a spokesperson for CrowdStrike, declined to say whether the company’s comments were related to the Carahsoft deal involving the IRS. “Our comments during the 3QFY2025 earnings call speak for themselves,” he said in an email. Carahsoft didn’t respond to a request for comment.
Delta Airlines’ operations were stunted for days as a result of the outage, costing the airline at least US$500 million in out-of-pocket losses, according to a lawsuit it filed against CrowdStrike in October.
CrowdStrike said Delta was shifting blame “from its failure to update its antiquated IT infrastructure”, in a statement at the time.
“Following this summer’s incident as a company we were tested,” Kurtz said, in a call with investors on Tuesday. “We responded with speed, care and resolve and we focused on becoming even better.”
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CrowdStrike has been a top pick of The Edge Singapore's in-house analyst Thiveyen Kathirrasan since 2021. Read more about this Nasdaq-listed company:
- From 2021: CrowdStrike Holdings: Growing niche
- From 2022: CrowdStrike Holdings: This is one winner we are keeping
- From 2023: CrowdStrike Holdings: Keeping the faith
- From 2023: CrowdStrike Holdings: Best-performing counter with consistently improving numbers
- From 2024: CrowdStrike Holdings: Keeping faith with this winner
