CrowdStrike shares fall 5% after fourth-quarter outlook misses expectations

Shares in CrowdStrike Holdings Inc. fell nearly 5% in late trading today after the cybersecurity company reported solid fiscal 2025 third-quarter results but fell short of expectations with its fourth-quarter outlook.

For the quarter that ended on Oct. 31, CrowdStrike reported adjusted earnings per share of 93 cents, up from 82 cents in the same of quarter of the previous year, on revenue of $1.02 billion, up 29% year-over-year. Both were beats, as analysts had expected adjusted earnings per share of 81 cents on revenue of $982.81 million.

Subscription revenue in the quarter came in at $962.7 million, up 31% year-over-year. Annual recurring revenue was up 27%, to $4.02 billion, as of the end of October, with CrowdStrike adding $153 million in new annual recurring revenue added in the quarter.

The company saw net cash generated from operations of $326.1 million in the quarter, up from $273.5 million in the third quarter of fiscal 2024, and free cash flow of $230.6 million. It ended the quarter with $4.26 billion in cash and equivalents on hand as of Oct. 31.

Business highlights in the quarter included CrowdStrike’s module adoption rates growing to 66%, 47%, 31% and 20% for five or more, six or more, seven or more and eight or more modules, respectively, as of Oct. 31.

Through the quarter, CrowdStrike established new strategic partnerships with CardinalOps Inc., Nagomi Inc. and Veriti Inc. to deliver intelligence-led threat defense across the enterprise. In addition, CrowdStrike also announced a strategic partnership with Fortinet Inc. to unify best-in-class endpoint and firewall protection.

On the product front, CrowdStrike unveiled a series of new and enhanced offerings during the eighth annual Fal.Con cybersecurity conference in September. Announcements covered endpoint security, cloud security, identity protection, next-gen security information and event management, and exposure management, along with Charlotte AI and Falcon for information technology innovations, as well as Project Kestrel, a new user experience, and CrowdStrike Financial Services.

“Our third-quarter results reflect our focused execution and financial discipline, which drove a strong finish and quarter-over-quarter increase in pipeline, despite expected headwinds from the July 19th incident,” Chief Financial Officer Burt Podbere said in the company’s earnings release. “We saw incredible success with our customer commitment packages as customers embraced the program and chose to deepen their relationship with CrowdStrike.”

The July 19 incident refers to a faulty software update that disrupted the operations of CrowdStrike customers worldwide.

For its fiscal fourth quarter, CrowdStrike expects adjusted earnings per share of 84 to 86 cents on revenue of $1.029 billion to $1.035 billion. For the full year, the company expects adjusted earnings of $3.74 per share on revenue of $3.924 billion to $3.93 billion.

Investors were on alert for any downward impact the outage from July may have had on CrowdStrike’s outlook. The fourth quarter outlook came in below an expected 87 cents per share, hence the decline in CrowdStrike’s after-hours share price.

Chief Executive George Kurtz spoke with theCUBE, SiliconANGLE Media’s livestreaming studio, during Fal.con 2024, where he discussed the future of cybersecurity and how artificial intelligence is reshaping the industry.

Photo: CrowdStrike

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