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CrowdStrike (CRWD) Q3 Earnings & Revenues Beat Estimates

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CrowdStrike Holdings Inc. (CRWD - Free Report) reported third-quarter fiscal 2020 non-GAAP loss of 7 cents, narrower than the Zacks Consensus Estimate of a loss of 12 cents. It was also significantly narrower than the year-ago quarter’s loss of 64 cents.  

CrowdStrike’s revenues of $125.1 million beat the consensus estimate of $118 million. Moreover, the figure soared 88% year over year. Growing traction in the Security Cloud category was a key driver.

Moreover, strong customer growth was a tailwind.

CrowdStrike Holdings Inc. Price, Consensus and EPS Surprise

CrowdStrike Holdings Inc. Price, Consensus and EPS Surprise

CrowdStrike Holdings Inc. price-consensus-eps-surprise-chart | CrowdStrike Holdings Inc. Quote

Quarter Details

Subscription revenues (91.3% of total revenues) of $114.2 million grew a whopping 98% year over year. Subscription customers increased from 730 to 772. Strong sales across both enterprise and SMB customers were a positive.

Revenues from professional services (8.7%) came at $10.9 million, growing 25.3% year over year.

Annual recurring revenues grew 97% to $501.7 million as of Oct 31, 2019.
 
Strong adoption of the expanded cloud-native Falcon platform was also a positive. The company introduced a new Firewall Management module to the platform.
 
CrowdStrike also introduced Falcon for Amazon’s (AMZN - Free Report) cloud computing arm, Amazon Web Services, to simplify cloud workload protection and improve visibility.
 
During the quarter, the company also partnered with Wipro (WIT - Free Report) to provide comprehensive, real-time endpoint protection that comes with the Falcon platform to Wipro’s global customers.
 
Margins

CrowdStrike’s non-GAAP gross margin expanded 300 basis points (bps) year over year to 70%. Continued adoption of multiple cloud modules by the company’s customer base was a tailwind.

Non-GAAP operating expenses soared from $7.1 million to $106.7 million. The company reported non-GAAP operating loss of $16.5 million.

Balance Sheet

CrowdStrike exited the quarter with cash, cash equivalents of $833.7 million compared with $732.8 million in the previous quarter.

Cash from operating activities amounted to $33.8 million.

Guidance

CrowdStrike expects full-year fiscal 2020 revenues to be between $465.2 million and $468 million.

Non-GAAP loss per share of 53-52 cents is expected.

For the fiscal fourth quarter, the company expects revenues in the range of $135.9-$138.6 million. Non-GAAP loss of 9-8 cents is expected for the  fiscal fourth quarter.

Zacks Rank & A Key Pick

CrowdStrike currently carries a Zacks Rank #3 (Hold). A better-ranked stock in the broader technology sector is Fortinet, Inc. (FTNT - Free Report) , flaunting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term earnings growth rate for Fortinet is currently pegged at 14%.

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