CrowdStrike drops about 6% on lackluster guidance, ongoing impact from July IT outage

CrowdStrike's stock experienced a significant decline of nearly 6% on Wednesday following the cybersecurity firm’s disappointing revenue projections for the upcoming quarter. The company anticipates revenue between $1.14 billion and $1.15 billion, which falls short of analysts' expectations of $1.16 billion. Additionally, CrowdStrike forecasted adjusted earnings per share in the range of 82 to 84 cents, slightly above the LSEG estimate of 81 cents. The firm is still grappling with the repercussions of a major outage last July that disrupted flights and led to delayed medical procedures. In response to the incident, CrowdStrike ended its customer commitment packages aimed at attracting and retaining clients, which resulted in a revenue decrease of approximately $11 million for the quarter, according to finance chief Burt Podbere. He further projected an additional revenue impact of $10 million to $15 million through the fiscal year's conclusion. Furthermore, CrowdStrike disclosed that it has received inquiries from the U.S. Justice Department and the Securities and Exchange Commission concerning revenue recognition practices and the outage's impact on certain deals. Evercore ISI analyst Peter Levine downgraded the stock, citing persistent issues and investor dissatisfaction. Despite the weaker outlook, the company exceeded earnings forecasts and matched revenue estimates for the first fiscal quarter, reporting adjusted earnings per share of 73 cents, surpassing the anticipated 65 cents. Revenue grew by approximately 20% during the quarter, though the firm also recorded a net loss of $110.2 million, or 44 cents per share, compared to a net income of $42.8 million, or 17 cents per share, from the previous year. Alongside these results, CrowdStrike announced a substantial $1 billion share repurchase initiative.