TLDR
- CrowdStrike posted Q2 EPS of $0.93 vs $0.83 estimate with revenue of $1.17B beating $1.15B consensus
- Shares fell 3% premarket despite strong results due to Q3 revenue guidance of $1.208-1.218B missing $1.23B target
- Record net new ARR of $221M pushed total ARR to $4.66B with 20% year-over-year growth
- Goldman Sachs lowered price target from $530 to $492 while keeping Buy rating
- Company announced Onum acquisition to expand cybersecurity capabilities
CrowdStrike delivered another quarter of solid financial performance but Wall Street focused on what lies ahead rather than past achievements.
The cybersecurity giant reported second-quarter earnings of $0.93 per share, easily beating the $0.83 consensus estimate. Revenue reached $1.17 billion, topping forecasts of $1.15 billion and representing 21% year-over-year growth.
Despite these wins, CRWD stock dropped 3% in premarket trading. The culprit was third-quarter revenue guidance that fell short of expectations.
Q3 Guidance Weighs on Sentiment
CrowdStrike projected Q3 revenue between $1.208 billion and $1.218 billion. This range came in below the Street’s $1.23 billion estimate, disappointing investors who expected stronger forward momentum.
The company attributed the conservative outlook to its CCP partner rebate program. These rebates get amortized as contra revenue, reducing reported top-line figures.
Subscription revenue grew 20% to $1.10 billion during the quarter. This recurring revenue stream remains the backbone of CrowdStrike’s business model.
Net new annual recurring revenue hit a record $221 million for the second quarter. This metric returned to positive growth as the company moves past last year’s outage impacts.
Financial Strength Remains Intact
CrowdStrike’s cash generation stayed robust with operating cash flow of $333 million. Free cash flow reached $284 million, showing the company converts revenue growth into actual cash effectively.
Total ARR climbed to $4.66 billion, up 20% from the prior year period. The company added over 1,000 Flex customers during the quarter while completing more than 100 re-flexes.
Full-year revenue guidance of $4.749-4.815 billion matched the $4.78 billion consensus. EPS projections of $3.60-3.72 exceeded analyst expectations of $3.51.
Goldman Sachs adjusted its CRWD price target from $530 to $492 while maintaining a Buy rating. The firm cited lower peer multiples as justification for the reduced valuation.
CrowdStrike also announced the acquisition of Onum, which specializes in real-time telemetry pipeline management. The deal expands the company’s cybersecurity platform capabilities.
Piper Sandler noted that while NNARR growth returned ahead of schedule, last year’s incident continues dampening near-term revenue performance. Analysts expect more consistent results once abnormal revenue recognition from concessions ends.
