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CrowdStrike (CRWD) Down 2.9% Since Last Earnings Report: Can It Rebound?
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A month has gone by since the last earnings report for CrowdStrike Holdings (CRWD - Free Report) . Shares have lost about 2.9% 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 Q4 Earnings and Revenues Beat Estimates
CrowdStrike reported fourth-quarter fiscal 2024 results, wherein both revenues and earnings surpassed the Zacks Consensus Estimate and marked significant year-over-year improvements.
CrowdStrike’s fourth-quarter non-GAAP earnings increased more than twofold to 95 cents per share from the year-ago quarter’s earnings of 47 cents. Quarterly earnings also surpassed the Zacks Consensus Estimate of 82 cents and came ahead of management’s previous guidance of 81-82 cents. The robust bottom-line performance was mainly driven by higher revenues and better cost management.
CrowdStrike’s fiscal fourth-quarter revenues of $845.3 million rose 33% year over year and surpassed the consensus mark of $839.1 million. The top line was also higher than the company’s earlier guidance of $836.6-$840 million. The strong adoption of the Falcon platform and better sales execution mainly aided top-line growth in the fourth quarter.
Top Line in Detail
Subscription revenues (94% of the total revenues) jumped 33% year over year to $795.9 million. Professional services revenues (6% of the total revenues) rose 26% year over year to $49.4 million. Our estimates for the Subscription and Professional Services segments were pegged at $788.9 million and $47.8 million, respectively.
As of Jan 31, 2024, annual recurring revenues (ARR) were $3.44 billion, up 34% year over year. The company added $281.9 million to its net new ARR in the reported quarter. Our fourth-quarter projections for ARR and net new ARR were $3.43 billion and $354 million, respectively.
CrowdStrike ended the quarter with record deal volumes. During the reported quarter, the company closed more than 250 deals greater than $1 million in value, more than 490 deals greater than $500,000 in deal value and more than 1,900 deals greater than $100,000 in deal value.
CrowdStrike’s subscription customers, who adopted five or more cloud modules, represented 64% of the total subscription customers, those with six or more cloud modules accounted for 43%, and those with seven or more cloud modules represented 27% as of Jan 31, 2024. Deals with eight or more modules doubled on a year-over-year basis. CRWD ended the fourth quarter with more than 29,000 subscription customers, which excludes smaller customers served through managed security service provider partners.
Operating Details
CrowdStrike’s non-GAAP gross profit increased 37.6% to $661.2 million in the fourth quarter from $480.6 million in the year-ago quarter. The non-GAAP gross margin improved 300 basis points (bps) on a year-over-year basis to 78%. The strong gross margin performance was primarily driven by the company’s ability to command stable pricing, supported by the exceptional customer value delivered by its Falcon platform, as well as its continued investments in data center and workload optimization.
The non-GAAP subscription gross profit soared 38% year over year to $638.6 million, while the gross margin expanded 300 bps to 80% on a year-over-year basis. The non-GAAP professional gross profit jumped 25% to $22.6 million, while the gross margin remained flat at 46% on a year-over-year basis.
CrowdStrike’s total non-GAAP operating expenses increased 16.4% to $448 million from $385 million in the year-ago quarter. However, as a percentage of revenues, non-GAAP operating expenses declined to 53% from 60% in the year-ago quarter.
Non-GAAP sales and marketing (S&M) expenses jumped 19.9% year over year to $243.5 million. Non-GAAP research and development (R&D) expenses increased 10.4% year over year to $151.8 million. Non-GAAP general and administrative (G&A) expenses climbed 18.6% year over year to $52.7 million. As a percentage of revenues, S&M, R&D and G&A expenses contracted by 300 bps, 400 bps and 100 bps to 29%, 18% and 6%, respectively.
The non-GAAP operating income surged more than twofold to $213.1 million from $95.6 million in the year-ago quarter, mainly driven by higher revenues. The non-GAAP operating margin for the quarter improved to 25% from 15% in the previous year’s quarter, which primarily benefited from a higher gross margin and lower operating expenses as a percentage of revenues.
Balance Sheet & Cash Flow
As of Jan 31, 2024, cash and cash equivalents were $3.47 billion. CrowdStrike had a long-term debt of $742.5 million.
In the fiscal fourth quarter, CRWD generated operating and free cash flows of $347 million and $283 million, respectively. In full fiscal 2024, it generated operating and free cash flows of $1.17 billion and $938.2 million, respectively.
Guidance
CrowdStrike initiated guidance for the first quarter and fiscal 2025. For the fiscal first quarter, CrowdStrike anticipates revenues between $902.2 and $905.8 million. The non-GAAP operating income is expected in the band of $188.1-$190.8 million. Non-GAAP net income is forecasted in the range of $220.4-$223.1 million. For the bottom line, the company expects non-GAAP earnings in the range of 89-90 cents per share.
For fiscal 2025, CRWD expects revenues between $3,924.9 million and $3,989 million. The non-GAAP operating income for fiscal 2025 is projected in the band of $863.6-$913 million, while non-GAAP net income is anticipated in the range of $940.3-$989.7 million. Non-GAAP earnings are anticipated in the band of $3.77-$3.97 per share.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended upward during the past month.
The consensus estimate has shifted 54.82% due to these changes.
VGM Scores
Currently, CrowdStrike has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with a C. However, the stock was allocated a grade of F on the value side, putting it in the lowest quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. 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.
Performance of an Industry Player
CrowdStrike belongs to the Zacks Internet - Software industry. Another stock from the same industry, Workday (WDAY - Free Report) , has gained 0.7% over the past month. More than a month has passed since the company reported results for the quarter ended January 2024.
Workday reported revenues of $1.92 billion in the last reported quarter, representing a year-over-year change of +16.8%. EPS of $1.57 for the same period compares with $0.99 a year ago.
Workday is expected to post earnings of $1.57 per share for the current quarter, representing a year-over-year change of +19.9%. Over the last 30 days, the Zacks Consensus Estimate has changed -1.6%.
Workday has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of D.
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CrowdStrike (CRWD) Down 2.9% Since Last Earnings Report: Can It Rebound?
A month has gone by since the last earnings report for CrowdStrike Holdings (CRWD - Free Report) . Shares have lost about 2.9% 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 Q4 Earnings and Revenues Beat Estimates
CrowdStrike reported fourth-quarter fiscal 2024 results, wherein both revenues and earnings surpassed the Zacks Consensus Estimate and marked significant year-over-year improvements.
CrowdStrike’s fourth-quarter non-GAAP earnings increased more than twofold to 95 cents per share from the year-ago quarter’s earnings of 47 cents. Quarterly earnings also surpassed the Zacks Consensus Estimate of 82 cents and came ahead of management’s previous guidance of 81-82 cents. The robust bottom-line performance was mainly driven by higher revenues and better cost management.
CrowdStrike’s fiscal fourth-quarter revenues of $845.3 million rose 33% year over year and surpassed the consensus mark of $839.1 million. The top line was also higher than the company’s earlier guidance of $836.6-$840 million. The strong adoption of the Falcon platform and better sales execution mainly aided top-line growth in the fourth quarter.
Top Line in Detail
Subscription revenues (94% of the total revenues) jumped 33% year over year to $795.9 million. Professional services revenues (6% of the total revenues) rose 26% year over year to $49.4 million. Our estimates for the Subscription and Professional Services segments were pegged at $788.9 million and $47.8 million, respectively.
As of Jan 31, 2024, annual recurring revenues (ARR) were $3.44 billion, up 34% year over year. The company added $281.9 million to its net new ARR in the reported quarter. Our fourth-quarter projections for ARR and net new ARR were $3.43 billion and $354 million, respectively.
CrowdStrike ended the quarter with record deal volumes. During the reported quarter, the company closed more than 250 deals greater than $1 million in value, more than 490 deals greater than $500,000 in deal value and more than 1,900 deals greater than $100,000 in deal value.
CrowdStrike’s subscription customers, who adopted five or more cloud modules, represented 64% of the total subscription customers, those with six or more cloud modules accounted for 43%, and those with seven or more cloud modules represented 27% as of Jan 31, 2024. Deals with eight or more modules doubled on a year-over-year basis. CRWD ended the fourth quarter with more than 29,000 subscription customers, which excludes smaller customers served through managed security service provider partners.
Operating Details
CrowdStrike’s non-GAAP gross profit increased 37.6% to $661.2 million in the fourth quarter from $480.6 million in the year-ago quarter. The non-GAAP gross margin improved 300 basis points (bps) on a year-over-year basis to 78%. The strong gross margin performance was primarily driven by the company’s ability to command stable pricing, supported by the exceptional customer value delivered by its Falcon platform, as well as its continued investments in data center and workload optimization.
The non-GAAP subscription gross profit soared 38% year over year to $638.6 million, while the gross margin expanded 300 bps to 80% on a year-over-year basis. The non-GAAP professional gross profit jumped 25% to $22.6 million, while the gross margin remained flat at 46% on a year-over-year basis.
CrowdStrike’s total non-GAAP operating expenses increased 16.4% to $448 million from $385 million in the year-ago quarter. However, as a percentage of revenues, non-GAAP operating expenses declined to 53% from 60% in the year-ago quarter.
Non-GAAP sales and marketing (S&M) expenses jumped 19.9% year over year to $243.5 million. Non-GAAP research and development (R&D) expenses increased 10.4% year over year to $151.8 million. Non-GAAP general and administrative (G&A) expenses climbed 18.6% year over year to $52.7 million. As a percentage of revenues, S&M, R&D and G&A expenses contracted by 300 bps, 400 bps and 100 bps to 29%, 18% and 6%, respectively.
The non-GAAP operating income surged more than twofold to $213.1 million from $95.6 million in the year-ago quarter, mainly driven by higher revenues. The non-GAAP operating margin for the quarter improved to 25% from 15% in the previous year’s quarter, which primarily benefited from a higher gross margin and lower operating expenses as a percentage of revenues.
Balance Sheet & Cash Flow
As of Jan 31, 2024, cash and cash equivalents were $3.47 billion. CrowdStrike had a long-term debt of $742.5 million.
In the fiscal fourth quarter, CRWD generated operating and free cash flows of $347 million and $283 million, respectively. In full fiscal 2024, it generated operating and free cash flows of $1.17 billion and $938.2 million, respectively.
Guidance
CrowdStrike initiated guidance for the first quarter and fiscal 2025. For the fiscal first quarter, CrowdStrike anticipates revenues between $902.2 and $905.8 million. The non-GAAP operating income is expected in the band of $188.1-$190.8 million. Non-GAAP net income is forecasted in the range of $220.4-$223.1 million. For the bottom line, the company expects non-GAAP earnings in the range of 89-90 cents per share.
For fiscal 2025, CRWD expects revenues between $3,924.9 million and $3,989 million. The non-GAAP operating income for fiscal 2025 is projected in the band of $863.6-$913 million, while non-GAAP net income is anticipated in the range of $940.3-$989.7 million. Non-GAAP earnings are anticipated in the band of $3.77-$3.97 per share.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended upward during the past month.
The consensus estimate has shifted 54.82% due to these changes.
VGM Scores
Currently, CrowdStrike has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with a C. However, the stock was allocated a grade of F on the value side, putting it in the lowest quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. 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.
Performance of an Industry Player
CrowdStrike belongs to the Zacks Internet - Software industry. Another stock from the same industry, Workday (WDAY - Free Report) , has gained 0.7% over the past month. More than a month has passed since the company reported results for the quarter ended January 2024.
Workday reported revenues of $1.92 billion in the last reported quarter, representing a year-over-year change of +16.8%. EPS of $1.57 for the same period compares with $0.99 a year ago.
Workday is expected to post earnings of $1.57 per share for the current quarter, representing a year-over-year change of +19.9%. Over the last 30 days, the Zacks Consensus Estimate has changed -1.6%.
Workday has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of D.