CrowdStrike Holdings reversed up on Thursday after the company reported second-quarter earnings that topped estimates while revenue edged by views. The cybersecurity firm's sales guidance for CrowdStrike stock came in below expectations, with many Wall Street analysts still focused on the lingering impact of 2024's global IT outage on customer contract renewals.
The Sunnyvale, Calif.-based cybersecurity firm reported July-ended quarterly earnings after the market close on Wednesday. Further, CrowdStrike earnings fell 10% to 93 cents per share on an adjusted basis. Revenue, including acquisitions, rose 21% to $1.17 billion.
Analysts polled by FactSet had predicted earnings of 83 cents a share on revenue of $1.15 billion.
"The stock is trading lower likely reflecting the lower-than-anticipated fiscal third-quarter revenue guidance," said William Blair analyst Jonathan Ho in a report. "To be fair, much of the revenue outperformance this quarter was driven by services rather than software revenue. However, we were encouraged by the expectation of 40% growth in second-half net new ARR, suggesting the company will continue to see reacceleration in the back half of the year."
CrowdStrike Stock: ARR Key Metric
With CrowdStrike, Wall Street analysts focus on annual recurring revenue, or ARR. It's a key financial metric tied to subscription services growth.
Analysts are monitoring trends in "net new" ARR amid expectations that many customers will seek price discounts when renewing contracts to help cover the cost of business disruptions. A software upgrade in July 2024 caused the IT outage.
In Q2, total ARR increased 20% to $4.66 billion. Analysts had predicted total ARR of $4.642 billion. Net new ARR came in at $221 million, up 2% year-over-year, versus estimates of $202 million.
For the current quarter ending in October, CrowdStrike predicted revenue in a range of $1.208 billion to $1.218 billion vs. estimates for $1.228 billion.
At Jefferies, analyst Joseph Gallo said in a report: "It remains a bit unclear to us exactly why revenue wouldn't benefit more from the uptick in ARR expectations unless CrowdStrike is continuing to discount/incentivize partners which may be anear term revenue headwind. Note that management expects these headwinds to abate in fiscal Q1 2027."
CrowdStrike To Acquire Onum Security
On the stock market today, CrowdStrike stock initially fell, then reversed up. Shares gained 3.9% to near 439 in afternoon trading. Heading into the CrowdStrike earnings report, shares were up 20% in 2025.
"Broadly, we think CrowdStrike's revenue beat was of lesser quality compared to historical quarters, and we have concerns on the relationship between revenue and ARR growth, which has been disrupted by CCPs and partner programs," said Keith Bachman, analyst at BMO Capital Markets in a report.
"We note that reported revenue missed consensus last quarter, and the beat in the just-reported quarter was driven largely by services growth, which is unusual for CrowdStrike."
Meanwhile, CrowdStrike on Wednesday announced plans to acquire Onum Security, a provider of real-time telemetry management. Terms were not disclosed.
Further, CrowdStrike still faces litigation from Delta Air Lines in connection with the IT outage.
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.
The company is building a broad, threat-detection cybersecurity platform. It monitors endpoints as well as web/email gateways, web application firewalls and cloud business workloads.
Follow Reinhardt Krause on Twitter @reinhardtk_tech for updates on artificial intelligence, cybersecurity and cloud computing.
