CrowdStrike shares drop as Windows-outage fallout hits forecast
CrowdStrike shares slumped 7 per cent in premarket trading after the cybersecurity company forecast its second-quarter revenue below analysts' estimates, weighed down by its customer retention efforts following a Windows-related outage last year.
Following the outage caused by faulty update to its "Falcon Sensor" software in July 2024, the company introduced incentive packages that included discounts and flexible payment terms to reassure and retain customers.
CEO George Kurtz said in March that CrowdStrike wrapped up the Customer Commitment Packages (CCP) program at the end of fourth quarter.
The program reduced revenue growth because subscriptions lasted longer due to extensions offered by the company. It also impacted new opportunities, as these incentives provided additional features at no extra cost.
Finance chief Burt Podbere said CCP-related initiatives reduced revenue by about $11 million in the first quarter, with an expected continued impact of $10 million to $15 million per quarter for the remainder of the fiscal year.
The Austin, Texas-based company reported loss per share of 44 cents in the quarter ended April 30, compared with a profit per share of 17 cents a year earlier.
If premarket losses hold, CrowdStrike could lose more than $8 billion from its market value of $121.74 billion, despite its stock having surged around 43 per cent this year.
"We believe CRWD is taking share from other vendors across their product offerings," Truist Securities said.
At least 18 brokerages raised their price target after the company's first quarter revenue came in-line with estimates, while adjusted profit per share exceeded the target.
The results follow the company's announcement last month that it would layoff about 500 employees in a bid to streamline operations and work toward its goal of $10 billion in annual recurring revenue.
CrowdStrike trades at 123.69 times the estimates of its earnings for the next 12 months, compared with 54.01 times for rival Palo Alto Networks and 81.56 times for Zscaler.
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