CrowdStrike Stock Tanked 20% In Extended Trading: What Happened?

CrowdStrike Holdings Inc (Nasdaq: CRWD) tanked 20% in extended trading on Tuesday even though the cybersecurity company reported market-beating results for its fiscal third quarter.

Why is CrowdStrike stock down then?

Investors are punishing its current quarter guidance for revenue that came in shy of Street expectations. CrowdStrike did also fall slightly short of estimates for annual recurring revenue in Q3. In the earnings press release, CEO George Kurtz said:

ARR was below our expectations as increased macro headwinds elongated sales cycles with smaller customers and caused some larger customers to pursue multi-phase subscription start dates, which delays ARR recognition until future quarters.

Annual recurring revenue in the third fiscal quarter was $2.34 billion (up 54% YoY) versus the consensus of $2.35 billion. Versus its year-to-date high, CrowdStrike stock is now down more than 50%.  

CrowdStrike’s Q3 financial highlights

  • Lost $55 million versus the year-ago $50.5 million
  • Per-share loss also climbed from 22 cents to 24 cents
  • On an adjusted basis, EPS came in at 40 cents
  • Revenue jumped 53% year-on-year to $581 million
  • Consensus was 28 cents a share on $516 million revenue
  • Added 1,460 net new subscription customers

CrowdStrike generated a record free cash flow of $174 million in Q3. Earlier this year, it agreed to buy Reposify.

CrowdStrike’s guidance for the future

For the current quarter, CrowdStrike expects an adjusted profit of 42 cents to 45 cents on $619.1 million to $628.2 million in revenue. In comparison, analysts had called for 34 cents a share of earnings but a higher $633.9 million revenue.

Its full-year guidance for revenue, however, was roughly in line with Street estimates.

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