CrowdStrike Holdings ($CRWD), the NASDAQ-listed cybersecurity company, reported earnings for the third fiscal quarter on Tuesday (Nov, 28).

The company surpassed Wall Street estimates but this wasn’t enough to impress investors as the stock price slipped.

Crowdstrike Q3 earnings results at a glance

  • In the third fiscal quarter, the company reported a net income of $26.7 million, or 11 cents per share, in contrast to a net loss of $55.0 million, or 24 cents per share, during the same period the previous year.
  • On an adjusted basis, CrowdStrike demonstrated earnings per share of 82 cents, marking an increase from 40 cents the previous year and surpassing analysts’ expectations of 74 cents.
  • CrowdStrike’s revenue experienced a substantial surge, reaching $786 million, compared to $581 million a year earlier. This performance exceeded the analysts’ consensus of $777 million.
  • The company reported $3.15 billion in ending annual recurring revenue (ARR), up 35% on a year-over-year basis. Analysts had been looking for $3.14 billion in ARR.
  • Net new annual recurring revenue was $223.1 million.

In a statement CEO George Kurtz said: “Our single-platform architecture and unique data advantage unites security and IT teams in solving cybersecurity’s mission-critical challenges, driving increased win rates and record pipeline.”

Crowdstrike’s full Q3 financial results can be found here.

When is CrowdStrike’s earning call for Q3?

CrowdStrike held an earnings call when the US markets closed on Tuesday, Nov 28 at 5pm EST. The call took place via a webcast which can be accessed through the company’s event page here.

What was expected?

Analysts expected CrowdStrike’s revenue to grow by 34% year on year to $777.4 million, a slight slowdown from the 53% increase in revenue the company had recorded in the same quarter last year, reports Yahoo Finance.

Much of the analysis from Wall Street this week has suggested Crowdstrike – which is still a relatively small company with a $50 billion market cap – will announce another solid set of results. As reflected in the rise of CrowdStrike’s stock price growth in recent years, the company has a history of surpassing expectations. It did again today, but not enough to excite investors.

CrowdStrike is a popular stock with institutional and retail investors thanks to its strong position in the burgeoning online security sector, its cloud-based security modules that utilize machine learning, and its market-beating returns over the last five years. In five years the Austin, Texas-based organization has seen the stock price increase by 227%, comfortably beating the S&P 500 which grew by 64% over the same period.

In its previous quarter (the three months ending on July 31), CrowdStrike generated $2.6 billion in revenue over the last 12 months. The company’s quarterly revenue grew by 37% and it remains a market-leading endpoint protection platform (EPP)

As a result of the increasing sophistication of online threats and their frequency, the demand for cloud-native cybersecurity is skyrocketing. CrowdStrike benefits from this tailwind, and it has garnered a lot of attention due to its dominant position in the sector. However, the big increase in the stock price creates valid questions about the firm’s valuation. CrowdStrike’s forward price-to-earnings ratio of 73 makes it a pricey stock and one likely to make value investors balk.

Readwrite does not provide investment advice.

Feature image: CrowdStrike logo via WikiCommons

Sam Shedden

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