Shares of CrowdStrike Holdings Inc. fell over 8% in after-market trading after the company issued a weaker-than-expected earnings outlook, raising concerns about its recovery from last year’s global software outage.
🔹 Earnings Miss Shocks Investors
The cybersecurity firm expects adjusted earnings of 64 to 66 cents per share for the quarter ending April 30—far below analysts’ expectations of 96 cents. Before the announcement, CrowdStrike’s stock had been up 14% this year, closing at $390.16.
🔹 Still Recovering from 2023 Crash
This marks the third earnings report since a July 19 software update crashed Windows systems worldwide, disrupting industries from aviation to banking. Investors had been hoping for a stronger recovery.
🔹 Customer Retention Efforts End
CEO George Kurtz announced that the company is ending its customer commitment package, a program launched to retain clients impacted by the outage. However, he expects subscription revenue growth to improve in the second half of 2024 as “one-time discounts drop off.”
🔹 Strong Subscription Growth, But Cash Flow Slips
Despite the disappointing forecast, annual recurring revenue reached $4.24 billion, surpassing analyst projections of $4.12 billion. However, free cash flow totaled $239.8 million, below last year’s levels but still exceeding expectations of $215.7 million.
Meanwhile, U.S. prosecutors and regulators are investigating a $32 million deal between CrowdStrike and tech distributor Carahsoft Technology Corp., adding further uncertainty for investors.