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CrowdStrike (CRWD) Up 3.6% Since Last Earnings Report: Can It Continue?
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A month has gone by since the last earnings report for CrowdStrike Holdings (CRWD - Free Report) . Shares have added about 3.6% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is CrowdStrike due for a pullback? 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 Q2 Earnings and Revenues Beat Estimates
CrowdStrike reported non-GAAP earnings of $1.04 per share in the second quarter of fiscal 2025, which surpassed the Zacks Consensus Estimate of 98 cents and came ahead of management’s guidance of 98-99 cents. CRWD reported non-GAAP earnings of 74 cents in the year-ago quarter. The robust bottom-line performance was mainly driven by higher revenues and better cost management.
CrowdStrike’s fiscal second-quarter revenues of $963.9 million rose 32% year over year and surpassed the consensus mark of $958.58 million. The top line was also higher than the company’s guidance of $958.3-$961.2 million. The strong adoption of the Falcon platform and better sales execution mainly aided top-line growth in the fiscal second quarter.
Strong adoption of the Falcon platform can be attributable to its ability to consolidate cybersecurity functions at scale, meeting the market's demand for a unified AI-powered solution. The expansion of available modules has enhanced the platform's value, leading to increased adoption, particularly in cloud, Identity and Falcon Next-Gen SIEM modules.
Despite the strong second-quarter performance, CrowdStrike lowered guidance for fiscal 2025 due to several factors, including an extended sales cycle and planned delay in the vast majority of outbound pipeline generation activities for a few weeks following the July 19 incident.
Top-Line Details of CRWD
Subscription revenues (95.3% of the total revenues) jumped 33% year over year to $918.3 million. Professional services revenues (4.7% of the total revenues) rose 9.5% year over year to $45.6 million.
As of July 31, 2024, annual recurring revenues (ARR) were $3.86 billion, up 32% year over year. The company added $217.6 million to its net new ARR in the reported quarter.
CrowdStrike’s subscription customers, who adopted five or more cloud modules, represented 65% of the total subscription customers, those with six or more cloud modules accounted for 45% and those with seven or more cloud modules represented 29% as of July 31, 2024.
CRWD’s Operating Details
CrowdStrike’s non-GAAP gross profit increased 33% to $756 million in the fiscal second quarter from $568.2 million in the year-ago quarter. The non-GAAP gross margin remained flat at 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 34.5% year over year to $740.5 million, while the gross margin increased 100 bps to 81% on a year-over-year basis. The non-GAAP professional gross profit declined 13% to $15.5 million, while the gross margin fell 900 bps to 34% on a year-over-year basis.
CrowdStrike’s total non-GAAP operating expenses increased 23% to $529.2 million from $412.5 million reported in the year-ago quarter. However, as a percentage of revenues, non-GAAP operating expenses declined to 55% from 56% in the year-ago quarter.
Non-GAAP sales and marketing (S&M) expenses jumped 27.4% year over year to $294.3 million. Non-GAAP research and development (R&D) expenses climbed 31.4% year over year to $174 million. Non-GAAP general and administrative (G&A) expenses increased 24% year over year to $61 million. As a percentage of revenues, S&M and G&A expenses contracted by 100 bps each while R&D expenses remained flat at 18%.
The non-GAAP operating income jumped 46% to $226.8 million, driven by higher revenues. The non-GAAP operating margin for the quarter improved 300 bps year over year to 24%, which benefited from a higher gross margin and lower operating expenses as a percentage of revenues.
CRWD’s Balance Sheet & Cash Flow
As of July 31, 2024, cash and cash equivalents were $4.04 billion. CrowdStrike had a long-term debt of $743.2 million.
In the fiscal second quarter, CRWD generated operating and free cash flows of $327 million and $272 million, respectively.
CrowdStrike’s Q3 and FY25 Guidance
CrowdStrike initiated guidance for the fiscal third quarter and revised the projections for fiscal 2025. For the fiscal third quarter, CrowdStrike anticipates revenues between $979.2 million and $984.7 million. The non-GAAP operating income is expected in the band of $166.7-$170.8 million. Non-GAAP net income is forecasted in the range of $201.2-$205.2 million. The company expects non-GAAP earnings per share in the band of 80-81 cents.
For fiscal 2025, CRWD now expects revenues between $3,890 million and $3,902.2 million, down from the previously projected range of $3,976.3-$4,010.7 million. The updated non-GAAP operating income for fiscal 2025 is now projected in the band of $774.7-$783.9 million compared with the previously guided range of $890.1-$916.5 million.
The company now expects non-GAAP net income in the range of $908.8-$918.0 million compared with the previous guidance of $985.6-$1,012 million. Non-GAAP earnings are now anticipated in the band of $3.61-$3.65, down from the previous guidance range of $3.93-$4.03.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended downward during the past month.
The consensus estimate has shifted -81.89% due to these changes.
VGM Scores
Currently, CrowdStrike has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with an F. Following the exact same course, the stock was allocated a grade of F on the value side, putting it in the fifth quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise CrowdStrike has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.
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CrowdStrike (CRWD) Up 3.6% Since Last Earnings Report: Can It Continue?
A month has gone by since the last earnings report for CrowdStrike Holdings (CRWD - Free Report) . Shares have added about 3.6% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is CrowdStrike due for a pullback? 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 Q2 Earnings and Revenues Beat Estimates
CrowdStrike reported non-GAAP earnings of $1.04 per share in the second quarter of fiscal 2025, which surpassed the Zacks Consensus Estimate of 98 cents and came ahead of management’s guidance of 98-99 cents. CRWD reported non-GAAP earnings of 74 cents in the year-ago quarter. The robust bottom-line performance was mainly driven by higher revenues and better cost management.
CrowdStrike’s fiscal second-quarter revenues of $963.9 million rose 32% year over year and surpassed the consensus mark of $958.58 million. The top line was also higher than the company’s guidance of $958.3-$961.2 million. The strong adoption of the Falcon platform and better sales execution mainly aided top-line growth in the fiscal second quarter.
Strong adoption of the Falcon platform can be attributable to its ability to consolidate cybersecurity functions at scale, meeting the market's demand for a unified AI-powered solution. The expansion of available modules has enhanced the platform's value, leading to increased adoption, particularly in cloud, Identity and Falcon Next-Gen SIEM modules.
Despite the strong second-quarter performance, CrowdStrike lowered guidance for fiscal 2025 due to several factors, including an extended sales cycle and planned delay in the vast majority of outbound pipeline generation activities for a few weeks following the July 19 incident.
Top-Line Details of CRWD
Subscription revenues (95.3% of the total revenues) jumped 33% year over year to $918.3 million. Professional services revenues (4.7% of the total revenues) rose 9.5% year over year to $45.6 million.
As of July 31, 2024, annual recurring revenues (ARR) were $3.86 billion, up 32% year over year. The company added $217.6 million to its net new ARR in the reported quarter.
CrowdStrike’s subscription customers, who adopted five or more cloud modules, represented 65% of the total subscription customers, those with six or more cloud modules accounted for 45% and those with seven or more cloud modules represented 29% as of July 31, 2024.
CRWD’s Operating Details
CrowdStrike’s non-GAAP gross profit increased 33% to $756 million in the fiscal second quarter from $568.2 million in the year-ago quarter. The non-GAAP gross margin remained flat at 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 34.5% year over year to $740.5 million, while the gross margin increased 100 bps to 81% on a year-over-year basis. The non-GAAP professional gross profit declined 13% to $15.5 million, while the gross margin fell 900 bps to 34% on a year-over-year basis.
CrowdStrike’s total non-GAAP operating expenses increased 23% to $529.2 million from $412.5 million reported in the year-ago quarter. However, as a percentage of revenues, non-GAAP operating expenses declined to 55% from 56% in the year-ago quarter.
Non-GAAP sales and marketing (S&M) expenses jumped 27.4% year over year to $294.3 million. Non-GAAP research and development (R&D) expenses climbed 31.4% year over year to $174 million. Non-GAAP general and administrative (G&A) expenses increased 24% year over year to $61 million. As a percentage of revenues, S&M and G&A expenses contracted by 100 bps each while R&D expenses remained flat at 18%.
The non-GAAP operating income jumped 46% to $226.8 million, driven by higher revenues. The non-GAAP operating margin for the quarter improved 300 bps year over year to 24%, which benefited from a higher gross margin and lower operating expenses as a percentage of revenues.
CRWD’s Balance Sheet & Cash Flow
As of July 31, 2024, cash and cash equivalents were $4.04 billion. CrowdStrike had a long-term debt of $743.2 million.
In the fiscal second quarter, CRWD generated operating and free cash flows of $327 million and $272 million, respectively.
CrowdStrike’s Q3 and FY25 Guidance
CrowdStrike initiated guidance for the fiscal third quarter and revised the projections for fiscal 2025. For the fiscal third quarter, CrowdStrike anticipates revenues between $979.2 million and $984.7 million. The non-GAAP operating income is expected in the band of $166.7-$170.8 million. Non-GAAP net income is forecasted in the range of $201.2-$205.2 million. The company expects non-GAAP earnings per share in the band of 80-81 cents.
For fiscal 2025, CRWD now expects revenues between $3,890 million and $3,902.2 million, down from the previously projected range of $3,976.3-$4,010.7 million. The updated non-GAAP operating income for fiscal 2025 is now projected in the band of $774.7-$783.9 million compared with the previously guided range of $890.1-$916.5 million.
The company now expects non-GAAP net income in the range of $908.8-$918.0 million compared with the previous guidance of $985.6-$1,012 million. Non-GAAP earnings are now anticipated in the band of $3.61-$3.65, down from the previous guidance range of $3.93-$4.03.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended downward during the past month.
The consensus estimate has shifted -81.89% due to these changes.
VGM Scores
Currently, CrowdStrike has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with an F. Following the exact same course, the stock was allocated a grade of F on the value side, putting it in the fifth quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise CrowdStrike has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.