TLDR
- Quarterly results due Tuesday afternoon with analysts expecting $1.2 billion revenue, up 20% from last year
- Annual recurring revenue projected at $4.9 billion, marking 22% growth as recovery from July outage continues
- Stock has climbed 130% since August 2024 low following software incident that crashed 8.5 million devices worldwide
- Shares trade at 77 times forward free cash flow versus 40 times for cybersecurity industry peers
- Wall Street forecasts adjusted earnings of $0.94 per share with analyst estimates unchanged over past 30 days
CrowdStrike releases third-quarter financial results Tuesday after the market closes. The cybersecurity company faces scrutiny over its valuation despite strong growth projections.
Analysts expect quarterly revenue of $1.2 billion. That represents 20% growth compared to the year-ago period. Earnings should come in at $0.94 per share on an adjusted basis.
CrowdStrike Holdings, Inc., CRWD
The company modified its accounting practices this fiscal year. These changes lowered how adjusted earnings get calculated. A shift in customer payment options also impacts revenue timing.
Annual recurring revenue provides clearer visibility into business health. This figure is forecast to reach $4.9 billion, up 22% year-over-year. The metric matters more for subscription software businesses.
Software Outage Impact Fading
The earnings arrive as the company moves beyond its July 2024 crisis. A faulty update brought down 8.5 million Windows machines across the globe. Manual fixes were required for each affected device.
The stock fell 11% the day of the incident. Losses continued through August with shares dropping 36% from peak to trough.
Company leadership worked hard to keep customers. Free services were offered extensively to prevent defections. Enhanced testing procedures were implemented to avoid repeating the mistake.
Revenue growth peaked above 100% in 2019. The rate has settled near 20% in recent quarters. Most analysts view this pace as healthy for a mature software provider.
Delta Air Lines has a pending lawsuit over damages. This remains an outstanding liability on the company’s balance sheet.
Valuation Debate Heats Up
The stock’s rebound has been remarkable. Shares have soared more than 130% from the August 2024 bottom.
This rally pushed the valuation well above normal levels. CrowdStrike trades at 77 times projected free-cash-flow-per-share. Comparable companies in the space trade at 40 times.
The track record for beating estimates is strong. The company missed revenue forecasts only once in the past two years. Beats averaged 1.4% above Wall Street targets.
The previous quarter delivered a 1.7% revenue beat. Sales reached $1.17 billion with year-over-year growth of 21.3%. Management raised full-year guidance above analyst expectations.
Peer Results Paint Mixed Picture
Recent earnings from competitors showed divergent trends. Varonis Systems reported 9.1% revenue growth but fell short of estimates by 2.7%. Qualys exceeded forecasts by 2.2% with 10.4% growth.
The broader cybersecurity group has underperformed recently. Sector shares are down 5.2% over the past month. CrowdStrike has declined 8.3% during that span.
Current share price sits near $506.51. The average analyst price target stands at $533.26. That implies roughly 5% upside from current levels.
Analyst estimates have held steady lately. No meaningful changes occurred over the past 30 days. This stability suggests expectations for consistent business performance.
The company has exceeded revenue projections in seven of eight recent quarters. EBITDA results topped forecasts last quarter as well. Customer retention efforts appear to be working based on recurring revenue growth rates.
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