With its second-quarter figures, Crowdstrike exceeded investors’ expectations.
Bangalore. Until recently, Crowdstrike was one of the investors’ favorites. The cybersecurity company based in Austin, Texas, offers endpoint protection, threat consulting, and cyberattack response. Crowdstrike is considered an up-and-coming technology stock; from January 1, 2023 to July 18, 2024, the stock almost quadrupled. Customers include Google, Amazon, Intel, and Microsoft.
But on July 19, Crowdstrike wanted to update the Falcon Sensor software product, a security program that runs on laptops and computers and is designed to protect them from threats. The update was faulty and caused outages for 8.5 million Microsoft Windows customers. Hospitals, banks and airports were also affected. Although Crowdstrike was able to resolve most of the outages the same day, the damage to its reputation was done and it is still unclear what compensation claims Crowdstrike may face. The stock fell by 20 percent at one point. Competitors such as SentinelOne aggressively courted Crowdstrike customers.
Customers have largely remained loyal to Crowdstrike to date, but new customer business is likely to suffer somewhat, as the latest outlook shows. On Wednesday evening, the cybersecurity specialist lowered its full-year targets. Crowdstrike now expects revenues of $3.89 billion to $3.90 billion instead of $3.98 billion to $4.01 billion. Earnings are expected to be between $3.61 billion and $3.65 billion per share instead of $3.93 billion to $4.03.
In the past quarter, however, sales grew surprisingly sharply by 32 percent to $963.9 million. The stock then rose by three percent in after-hours trading, only to turn negative a few hours later. According to analyst Shaul Eyal from asset manager Cowen, investors are relieved that Crowdstrike “is not going to have the sky fall.”
In recent weeks, rivals Fortinet and Palo Alto have been surprisingly optimistic about their prospects following strong quarterly results. According to analysts, the companies are increasingly offering discounts to attract Crowdstrike customers who are willing to switch. However, the impact of the update glitch was limited for some of them, said analysts at Berenberg Bank. They are therefore likely to remain loyal to the software company despite the glitch. “A move away from Crowdstrike could represent an even greater risk and seems unlikely.” Since the beginning of the year, Crowdstrike shares are still up seven percent. (Reuters/bl)
