CrowdStrike: Module adoption, customer retention drive earnings beat and outlook hike

CrowdStrike: Module adoption, customer retention drive earnings beat and outlook hike

Execs say demand for module-based cybersecurity platform remains ‘very high’

CrowdStrike Holdings Inc. shares were relatively timid in the extended session Tuesday after the cybersecurity company topped Wall Street estimates for the quarter and raised its forecast for the year.

After hours, CrowdStrike CRWD, +0.65% shares slipped 0.4%, following a 0.7% rise in the regular session to close at $193.30. That’s not usually the story: CrowdStrike shares have swung between being down 13% to being up 18% following earnings beats over the past 12 quarters, according to FactSet data.

On a conference call, George Kurtz, CrowdStrike’s co-founder and chief executive, told analysts that customers seeking to build up their security under one cloud-based platform by adopting more modules of the company’s Falcon security platform was what was driving growth.

“This differentiates us from others in the market, and we believe this positions us as well the continued success even in the current macro environment,” Kurtz said. The CEO said customers with five or more, six or more, and seven or more modules rose 59%, 6%, and 26%, respectively.

“This represents a 70%, 84%, and 105% year-over-year increase,” Kurtz said.

And Burt Podbere, CrowdStrike’s chief financial officer, told analysts that demand for Falcon remained “very strong.”

“On the bottom line, we also raising our guidance for fiscal-year 2023 and as our guidance reflects we remain committed to deliver non-GAAP operating margin leverage for the year while continuing to invest in the business,” Burt Podbere, CrowdStrike’s chief financial officer, said on the call.

“We also remain committed to achieving 30% or more free-cash-flow margin for the year,” Podbere said.

The company expects adjusted fiscal third-quarter earnings of 30 cents to 32 cents a share on revenue of $569.1 million to $575.9 million, while analysts surveyed by FactSet forecast earnings of 29 cents a share on revenue of $569.2 million, according to analysts.

For the year, the company hiked its forecast to an earnings range of $1.31 to $1.33 a share on revenue of $2.22 billion to $2.23 billion, compared with a previous forecast of $1.18 to $1.22 a share on revenue of $2.19 billion to $2.21 billion. Wall Street expects $1.22 a share on revenue of $2.21 billion.

The company reported a fiscal second-quarter loss of $49.3 million, or 21 cents a share, compared with a loss of $57.3 million, or 25 cents a share, in the year-ago period. Adjusted net income, which excludes stock-based compensation and other items, was 36 cents a share, compared with 11 cents a share in the year-ago period.

Revenue rose to $535.2 million from $337.7 million in the year-ago quarter. Annual recurring revenue, or ARR, a software-as-a-service metric that shows how much revenue the company can expect based on subscriptions, grew 59% to $2.14 billion from the year-ago quarter.

Analysts expected CrowdStrike to report earnings of 28 cents a share on revenue of $516 million, based on the company’s outlook of 27 cents to 28 cents a share on revenue of $512.7 million to $516.8 million.

As of Tuesday’s close, the stock is down 5% year to date, versus a 16% loss by the S&P 500 index SPX, -1.10%, a 24% drop for the tech-heavy Nasdaq Composite Index COMP, -1.12% and a 22% loss by the ETFMG Prime Cyber Security ETF HACK, -0.43%.

Share:
error: Content is protected !!