Cybersecurity firm CrowdStrike Holdings may underwhelm investors on a key growth metric when it reports earnings in June, cautioned an analyst who downgraded the cybersecurity stock on Thursday. CrowdStrike stock fell on a downgrade from Mizuho Securities.
Analyst Gregg Moskowitz lowered his rating from outperform to neutral. CrowdStrike earnings for the first quarter are due June. 3.
With CrowdStrike, Wall Street analysts focus on annual recurring revenue, or ARR. It's a key financial metric tied to subscription services growth. Analysts have lowered estimates for "net new" ARR amid expectations that many customers have been seeking price discounts when renewing contracts to help cover the cost of business disruptions tied to a global IT outage in July 2024. A CrowdStrike software upgrade caused the IT outage.
"Discounting has continued to wane but, following the termination of the Customer Commitment Packages in February, we had hoped for a little more improvement," said Moskowitz. "More positively, CrowdStrike's Falcon Flex program continues to gain strong ongoing traction, and certain modules are experiencing rising adoption. But altogether, we believe CrowdStrike will likely show less Q1 ARR upside than usual. Over the medium-term, we continue to believe CrowdStrike can reaccelerate ARR growth in the second half of fiscal 2026 as renewals occur alongside easier comps, although we're now somewhat less optimistic about the magnitude of potential reacceleration."
On the stock market today, CrowdStrike fell more than 1% to 430.90 in morning action. In 2025, CrowdStrike has gained 25%.
CrowdStrike recently said it plans to reduce its workforce by 5%, or about 500 employees.
In a regulatory filing, CrowdStrike estimated the job cuts will lead to charges of $36 million to $53 million, with $7 million to be recognized in the first quarter of its fiscal 2026 year, and the rest in its second quarter.
CrowdStrike Stock: Technical Rating
Also, CrowdStrike reaffirmed fiscal 2026 guidance and indicated Q1 results in line with or above guidance issued in March.
CrowdStrike competes with Palo Alto Networks, SentinelOne, Microsoft and others in the "endpoint" market. Endpoint security tools detect malware on laptops, mobile phones and other devices that access corporate networks.
Also, CrowdStrike is building an XDR (extended detection and response) broad, threat-detection cybersecurity platform. This type of platform monitors endpoints as well as web/email gateways, web application firewalls and cloud business workloads.
Meanwhile, CRWD stock holds an IBD Composite Rating of 98, according to IBD Stock Checkup.
Follow Reinhardt Krause on X, formerly Twitter, @reinhardtk_tech for updates on artificial intelligence, cybersecurity and cloud computing.
