Shares of CrowdStrike Holdings turned losses into major gains Thursday on July-quarter results that topped Wall Street estimates. Meanwhile, cybersecurity peer Okta soared as it delivered a bigger beat. CRWD stock surged more than 9% while OKTA stock managed a double-digit hike.
Both cybersecurity firms reported earnings after the market close on Wednesday. CrowdStrike earnings for its fiscal second quarter jumped 105% to 74 cents a share on an adjusted basis. Revenue, including acquisitions, climbed 37% to $731.6 million.
Analysts polled by FactSet had projected earnings of 56 cents a share on revenue of $724 million for the period ended July 31.
A year earlier, the Sunnyvale, Calif.-based firm earned 36 cents a share on revenue of $535 million.
CRWD Stock: Key Financial Metric
CrowdStrike stock initially rose, then reversed down in extended trading late Wednesday. By Thursday morning CRWD stock made a strong move back up, and finished the session up 9.3% to 163.03 on the stock market today.
With CrowdStrike, Wall Street focuses on annual recurring revenue, or ARR, a key financial metric tied to subscription services growth. During the July quarter, ARR increased 37% to $2.93 billion. Analysts had predicted ARR of $2.92 billion.
"Outside of key metrics, the AI-powered Falcon platform's native capabilities across cloud, identity and next-gen security monitoring businesses in aggregate are contributing well over half a billion dollars in ending ARR," RBC Capital analyst Matthew Hedberg said in a note to clients.
For the current quarter ending in October, CrowdStrike predicted revenue of just under $777 million at the midpoint of its outlook. That edged by estimates of $774 million.
At BMO Capital Markets, analyst Keith Bachman said in a note: "Net new ARR was modestly above consensus and management reiterated its fiscal 2024 net new ARR guide, which implies double-digit growth in the second half of the fiscal year."
He added: "While we continue to have concerns on CRWD's ability to accelerate net new ARR, we are encouraged by increasing cloud security module traction and multi-module adoption, which suggests CRWD continues to benefit from consolidation."
OKTA Stock: Outlook Raised
Meanwhile, Okta reported profit of 34 cents, up from a 10-cent loss in the year earlier period. Revenue rose 23% to $556 million. Analysts that follow OKTA stock had predicted 22-cent profit on revenue of $535 million.
Okta raised its full-year revenue outlook, RBC Capital analyst Matthew Hedberg said in a note to clients.
"Fiscal 2024 guidance moved higher for all metrics with midpoint revenue guided to $2.21 billion vs. prior guidance of $2.18 billion, which points to 19% growth," he said.
At TD Cowen, analyst Shaul Eyal said in a note: "Although the macro environment remains challenging, OKTA sees signs of stabilization. As organizations recognize the central role Identity plays in enterprise security, OKTA's expanding solutions portfolio should drive higher deal sizes and profitability."
San Francisco-based Okta specializes in identity verification. Its software monitors and manages privileged accounts. Also, hackers often target employees or management with administrative access to company computer systems.
Goldman Sachs analyst Gabriela Borges said in a note: "After several quarters of worsening macro, Okta is now seeing stability. While new customer adds are still weak particularly at small- and medium-sized businesses, commentary on enterprise traction was positive."
Further, OKTA stock popped 13.5% to close at 83.60.
CrowdStrike's Specialized Database
CrowdStrike uses machine learning, a form of artificial intelligence, in its products. In addition, it uses a specialized database to detect malware on laptops, mobile phones and other devices that access corporate networks.
CrowdStrike expects to launch pricing for its AI security operations center product at its September customer conference.
Heading into the CrowdStrike earnings report, CRWD stock had climbed 40% thus far in 2023. But CrowdStrike stock owned an IBD Relative Strength Rating of only 38 out of a best-possible 99, according to IBD Stock Checkup.
Follow Reinhardt Krause on Twitter @reinhardtk_tech for updates on 5G wireless, artificial intelligence, cybersecurity and cloud computing.
