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CrowdStrike (CRWD) Down 15% Since Last Earnings Report: Can It Rebound?
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It has been about a month since the last earnings report for CrowdStrike Holdings (CRWD - Free Report) . Shares have lost about 15% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is CrowdStrike due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
CrowdStrike Beats Q3 Earnings & Revenue Estimates
CrowdStrike reported third-quarter fiscal 2023 non-GAAP earnings of 40 cents per share, beating the Zacks Consensus Estimate of 32 cents. The bottom line improved from the year-ago quarter’s figure of 17 cents.
The company added $198.1 million to its net new annual recurring revenues (ARR), taking the total ARR to $2.34 billion as of Oct 31, 2022, up 54% year over year.
Top-Line Details
CrowdStrike’s fiscal third-quarter revenues of $580.9 million surged 53% year over year and surpassed the consensus mark of $574.7 million. Subscription revenues jumped 53.3% year over year to $547.4 million.
The company added 1,460 net new subscription customers during the reported quarter. It had a total of 21,146 subscription customers as of Oct 31, 2022, reflecting year-over-year growth of 44%.
CRWD’s subscription customers, who adopted five or more cloud modules, soared to 60%, those with six or more cloud modules rose to 36%, and those with seven or more cloud modules jumped to 21% as of Oct 31, 2022.
Revenues from professional services climbed 45.7% year over year to $33.5 million.
Operating Details
CrowdStrike’s non-GAAP gross margin contracted 100 basis points (bps) on a year-over-year basis at 75%. The non-GAAP subscription gross margin contracted 100 bps to 78% on a year-over-year basis.
Total non-GAAP operating expenses, as a percentage of revenues, were 60% compared with the prior-year quarter’s 63%.
The non-GAAP operating income was $89.7 million compared with $50.7 million in the year-ago quarter. The non-GAAP operating margin for the quarter was 15%, up 200 bps year over year.
Balance Sheet & Cash Flow
As of Oct 31, 2022, cash and cash equivalents were $2.47 billion compared with $2.32 billion as of Jul 31, 2022. CrowdStrike had long-term debt of $740.6 million.
During the fiscal third quarter, CRWD generated operating and free cash flows of $242.9 million and $174.1 million, respectively. During the first nine months of fiscal 2023, the company generated operating and free cash flow of $667.7 million and $467.4 million.
Outlook
Buoyed by the stellar third-quarter performance, CrowdStrike raised its guidance for fiscal 2023. Although the company’s management still expects revenues in the band of $2,223-$2,232 million, it now anticipates non-GAAP earnings in the band of $1.49-$1.52 per share, up from the prior range of $1.31-$1.33 per share.
The non-GAAP operating income for full fiscal 2023 is now projected in the range of $347.2-$353.8 million, higher than the previous band of $321.8-$328.5 million.
For the fourth quarter, CrowdStrike anticipates revenues between $619.1 million and $628.2 million. For the bottom line, the company expects to report non-GAAP earnings per share between 42 cents and 45 cents.
The non-GAAP operating income is expected in the band of $87.2-$93.7 million.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended upward during the past month.
The consensus estimate has shifted 24.21% due to these changes.
VGM Scores
Currently, CrowdStrike has a strong Growth Score of A, a grade with the same score on the momentum front. However, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Notably, CrowdStrike has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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CrowdStrike (CRWD) Down 15% Since Last Earnings Report: Can It Rebound?
It has been about a month since the last earnings report for CrowdStrike Holdings (CRWD - Free Report) . Shares have lost about 15% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is CrowdStrike due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
CrowdStrike Beats Q3 Earnings & Revenue Estimates
CrowdStrike reported third-quarter fiscal 2023 non-GAAP earnings of 40 cents per share, beating the Zacks Consensus Estimate of 32 cents. The bottom line improved from the year-ago quarter’s figure of 17 cents.
The company added $198.1 million to its net new annual recurring revenues (ARR), taking the total ARR to $2.34 billion as of Oct 31, 2022, up 54% year over year.
Top-Line Details
CrowdStrike’s fiscal third-quarter revenues of $580.9 million surged 53% year over year and surpassed the consensus mark of $574.7 million. Subscription revenues jumped 53.3% year over year to $547.4 million.
The company added 1,460 net new subscription customers during the reported quarter. It had a total of 21,146 subscription customers as of Oct 31, 2022, reflecting year-over-year growth of 44%.
CRWD’s subscription customers, who adopted five or more cloud modules, soared to 60%, those with six or more cloud modules rose to 36%, and those with seven or more cloud modules jumped to 21% as of Oct 31, 2022.
Revenues from professional services climbed 45.7% year over year to $33.5 million.
Operating Details
CrowdStrike’s non-GAAP gross margin contracted 100 basis points (bps) on a year-over-year basis at 75%. The non-GAAP subscription gross margin contracted 100 bps to 78% on a year-over-year basis.
Total non-GAAP operating expenses, as a percentage of revenues, were 60% compared with the prior-year quarter’s 63%.
The non-GAAP operating income was $89.7 million compared with $50.7 million in the year-ago quarter. The non-GAAP operating margin for the quarter was 15%, up 200 bps year over year.
Balance Sheet & Cash Flow
As of Oct 31, 2022, cash and cash equivalents were $2.47 billion compared with $2.32 billion as of Jul 31, 2022. CrowdStrike had long-term debt of $740.6 million.
During the fiscal third quarter, CRWD generated operating and free cash flows of $242.9 million and $174.1 million, respectively. During the first nine months of fiscal 2023, the company generated operating and free cash flow of $667.7 million and $467.4 million.
Outlook
Buoyed by the stellar third-quarter performance, CrowdStrike raised its guidance for fiscal 2023. Although the company’s management still expects revenues in the band of $2,223-$2,232 million, it now anticipates non-GAAP earnings in the band of $1.49-$1.52 per share, up from the prior range of $1.31-$1.33 per share.
The non-GAAP operating income for full fiscal 2023 is now projected in the range of $347.2-$353.8 million, higher than the previous band of $321.8-$328.5 million.
For the fourth quarter, CrowdStrike anticipates revenues between $619.1 million and $628.2 million. For the bottom line, the company expects to report non-GAAP earnings per share between 42 cents and 45 cents.
The non-GAAP operating income is expected in the band of $87.2-$93.7 million.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended upward during the past month.
The consensus estimate has shifted 24.21% due to these changes.
VGM Scores
Currently, CrowdStrike has a strong Growth Score of A, a grade with the same score on the momentum front. However, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Notably, CrowdStrike has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.