A month has gone by since the last earnings report for CrowdStrike Holdings (CRWD Quick QuoteCRWD - Free Report) . Shares have lost about 8.6% 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 the most recent earnings report in order to get a better handle on the important drivers.

CrowdStrike Beats on Q1 Earnings and Revenue Estimates

CrowdStrike reported strong first-quarter fiscal 2024 results, wherein revenues and earnings surpassed the respective Zacks Consensus Estimate and marked significant year-over-year improvements.

CrowdStrike reported first-quarter fiscal 2024 non-GAAP earnings of 57 cents per share, beating the Zacks Consensus Estimate by 14% and jumping 83.9% year over year.

The company’s fiscal first-quarter revenues of $692.6 million rose 42% year over year and surpassed the consensus mark by 2.3%.

Subscription revenues (94% of the total revenues) jumped 42% year over year to $651.2 million. Professional services revenues (6% of the total revenues) rose 47.8% year over year to $41.4 million.

Annual recurring revenues (ARR) increased 42% year over year to $2.73 billion. The net new ARR added in the reported quarter was $174.2 million. CrowdStrike’s subscription customers, who adopted five or more cloud modules, represented 62% of the total subscription customers, those with six or more cloud modules accounted for 40% and those with seven or more cloud modules represented 23% as of Apr 30, 2023.

Operating Details

CrowdStrike’s non-GAAP gross margin improved 100 basis points (bps) on a year-over-year basis to 78%.

The non-GAAP subscription gross margin expanded 100 bps to 80% on a year-over-year basis. The non-GAAP professional gross margin improved 300 bps to 46%.

Non-GAAP sales and marketing expenses jumped 47.3% year over year to $244.8 million. Non-GAAP research and development expenses surged 50.3% year over year to $134.3 million.

The non-GAAP operating income was $115.9 million, up 39.6% year over year. The non-GAAP operating margin for the quarter was 17%, flat on a year-over-year basis.

Balance Sheet & Cash Flow

As of Apr 30, 2023, cash and cash equivalents were $2.93 billion compared with $2.46 billion as of Jan 31, 2023. CrowdStrike had long-term debt of $741.4 million.

In the fiscal first quarter, CRWD generated operating and free cash flows of $300.9 million and $227.4 million, respectively.

Updated Fiscal 2024 Guidance

For fiscal 2024, CRWD now expects revenues between $3,000.5 million and $3,036.7 million, up from the previous guidance range of $2,955.1-$3,014.8 million. Non-GAAP earnings are now anticipated in the band of $2.32-$2.43 per share, raised from the earlier forecast in the range of $2.21-$2.39 per share. The non-GAAP operating income for fiscal 2024 is now projected in the band of $498.9-$526.2 million instead of the earlier guidance range of $474-$518.7 million.

For the fiscal second quarter, CrowdStrike anticipates revenues between $717.2 million and $727.4 million. The non-GAAP operating income is expected in the band of $116.4-$123.8 million. For the bottom line, the company expects non-GAAP earnings between 54 cents and 57 cents per share.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in estimates review.

The consensus estimate has shifted 64.74% 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 F on the value side, putting it in the bottom 20% quintile 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 broadly 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.

Performance of an Industry Player

CrowdStrike is part of the Zacks Internet - Software industry. Over the past month, Splunk , a stock from the same industry, has gained 2.2%. The company reported its results for the quarter ended April 2023 more than a month ago.

Splunk reported revenues of $751.51 million in the last reported quarter, representing a year-over-year change of +11.5%. EPS of $0.18 for the same period compares with -$0.32 a year ago.

For the current quarter, Splunk is expected to post earnings of $0.40 per share, indicating a change of +344.4% from the year-ago quarter. The Zacks Consensus Estimate remained unchanged over the last 30 days.

Splunk has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of B.