The cybersecurity software company CrowdStrike reported second-quarter earnings for fiscal year 2025 that surpassed analysts' estimates but revised its full-year revenue guidance downwards due to a global outage in July.
CEO George Kurtz explained: “As the incident on 19 July occurred in the final two weeks of the quarter - when a significant portion of our sales typically close - it delayed deals into subsequent quarters. However, the vast majority of these deals remain in our pipeline.”
Shares of the company fell more than 2% in after-hours trading but are up 5% year-to-date as of the close on 28 August.
Prior to the incident, CrowdStrike’s shares had more than doubled over the past 12 months and had exceeded market expectations in the first quarter.
Revenue impacted by a faulty update
The company has downgraded its fiscal year 2025 full-year revenue expectations to between $3.89 billion (€3.50 billion) and $3.9 billion (€3.51 billion), down from the previous projection of between $3.98 billion and $4.01 billion.
This new guidance is also lower than the estimated $3.96 billion (€3.56 billion).
In its reporting statement, CrowdStrike indicated that the revenue guidance "includes an estimated $30 million (€27 million) subscription revenue impact in each of the remaining fiscal quarters as a result of incentives related to our customer commitment package"
On 19 July, CrowdStrike, a cybersecurity software provider for Microsoft Windows, distributed a faulty update to its Falcon Sensor security system, causing a worldwide IT outage affecting Windows.
This disruption impacted various industries, including airlines, airports, banks, hotels, hospitals, and manufacturing.
Customers sought compensation, which significantly affected the company's revenue outlook. Following the IT outage, CrowdStrike shares dropped 25% over three days.
As CrowdStrike generates revenue through fixed-term subscriptions, recurring revenue is a key performance metric for the company.
The delays in contract signings and the need for customer compensation are expected to impact the company's earnings for the second half of fiscal year 2025.
Strong quarterly performance otherwise
Despite the disruption, CrowdStrike significantly exceeded market expectations in the second quarter, reporting earnings per share of $1.04 (€0.93) on revenue of $963.9 million (€866.58 million).
This was above the forecasted $0.97 and $959 million, reflecting a year-on-year growth of 40% in earnings and 32% in revenue.
Additionally, net income surged to $48 million (€43.15 million), compared to $8.5 million in the same quarter last year.
Kurtz commented: "In working with customers to recover from the 19 July incident, we emerge as an even more resilient and customer-focused CrowdStrike, continuing to invest aggressively in innovation.
"Our second quarter demonstrates the resilience of our business and platform—LogScale Next-Gen SIEM, Identity Protection, and Cloud Security have surpassed $1 billion in combined ending ARR."
CFO Burt Podbere added: "In the second quarter, we achieved strong growth in revenue, operating profit, and net income, showcasing our focused execution.
"Our market opportunity remains unchanged, and we believe our ongoing commitment to customers and innovation will drive even greater adoption of the Falcon platform, protecting our customers from rapidly evolving cyber threats and enabling us to meet our long-term targets."
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