CrowdStrike Holdings reported October-quarter earnings and revenue that topped analyst estimates while growth in a key metric edged by views. The company's revenue outlook for CRWD stock also edged by estimates amid the cybersecurity stock's big gains in 2023.
The cybersecurity firm reported third-quarter earnings after the market close on Tuesday. Shares initially dipped on the earnings release. On the stock market today, CrowdStrike stock popped 10.4% to close at 234.44.
"CrowdStrike posted solid Q3 results driven by strength in cloud security, identity protection and log management," said Bank of America analyst Tal Liani in a report. "We see some weakness in billings and deferred revenues, but focus on the strong underlying business moment."
CrowdStrike earnings for the third quarter rose 105% to 82 cents a share on an adjusted basis. Revenue, including acquisitions, climbed 35% to $786 million. Analysts polled by FactSet had projected earnings of 74 cents a share on revenue of $777 million.
A year earlier, the Sunnyvale, Calif.-based firm earned 40 cents a share on revenue of $581 million.
CRWD Stock: Focus On Recurring Revenue
With CrowdStrike, Wall Street focuses on annual recurring revenue, or ARR, a key financial metric tied to subscription services growth.
During the third quarter, ARR increased 35% to $3.15 billion. Analysts had predicted ARR of $3.14 billion.
For the current quarter ending in January, CrowdStrike predicted revenue of $838.3 million at the mid-point of guidance, just above estimates of $837 million.
For fiscal 2024, CrowdStrike management has guided growth from net ARR from new customers to be flat to modestly higher. In Q3, net ARR from new customers rose 13% to $223 million.
"CrowdStrike indicated that the macro environment remained unchanged, with deal scrutiny, sales cycle elongation and tight budgets persisting," said William Blair analyst Jonathan Ho in a report. "The company also does not expect a fourth-quarter budget flush. As a result, management raised revenue and EPS guidance but continues to expect flat to slightly positive net new ARR for the full fiscal year."
CrowdStrike Stock Jumps In 2023
Heading into the CrowdStrike earnings report, the cybersecurity stock had jumped 101% in 2023.
"Q3 momentum was broad-based and around large deals as customers increasingly look to consolidate security," said RBC Capital analyst Matthew Hedberg in a report.
Meanwhile, CrowdStrike didn't give initial EPS guidance for fiscal 2024 on its earnings call as some analysts expected.
CrowdStrike competes versus Microsoft and others in "endpoint" market. Endpoint security tools detect malware on laptops, mobile phones and other devices that access corporate networks.
Further, CrowdStrike is building a broad, threat-detection cybersecurity platform. It's called XDR, or extended detection and response. It monitors endpoints as well as web/email gateways, web application firewalls and cloud business workloads. XDR rivals include Palo Alto Networks.
Follow Reinhardt Krause on X, formerly called Twitter, @reinhardtk_tech for updates on artificial intelligence, cybersecurity and cloud computing.
