CrowdStrike share price dips on quarterly loss
Updated
CrowdStrike’s share price plummeted in after-hours trading on Tuesday, 30 August after the cybersecurity company’s loss increased 36.71% – in spite of huge revenue growth – in its latest fiscal quarter.
At one point, Sunnyvale, Calif.-based CrowdStrike’s share price was down 4.64%, or $12.80 to $268.20 after rebounding from a decline of more than $13. Following regular trading hours, the share price closed down 1.88%, or $5.37, at $281.00.
CrowdStrike’s quarterly loss increased to $47.4m year-on-year from $30m a year earlier, the company said in its latest earnings report. The loss contrasted sharply with a 70% year-on-year revenue increase to $377m from $199m. The strong growth was driven by a 71% rise in subscription revenue to $315.8m from $184.3m in the year-earlier period.
“Our continued strong performance was driven by the groundswell of customers turning to CrowdStrike as their trusted security platform of record,” said CEO George Kurtz on a conference call to discuss the company’s earnings report. “We saw strong demand across the market, which represents large-enterprise, mid-market, and small-and-medium-sized-enterprise customers.”
For accounting purposes, the latest quarter was CrowdStrike’s second of the 2022 fiscal year.
Customer count rises
Kurtz said the company gained 1,660 new corporate customers in the quarter, bringing it total customer count to 13,080. He said new customers included a household name in the consumer-security sector, one of the large non-profit healthcare insurance organisations in the US, a Fortune 50 global insurance provider, and the company’s cybersecurity partner Proofpoint.
Also speaking on the conference call, CFO Burt Podbere said customer demand was “broadbased and well-balanced” during the quarter.
The share price’s sharp drop Tuesday contradicted recent strong investor appetite for the stock. CrowdStrike’s share price has increased more than 140% over the past year – and reached its 52-week high of $288.45 only a day earlier, on 30 August, before closing at $286.37.
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Revenue growth beats estimates
The revenue growth easily beat the company’s and analysts’ expectations. CrowdStrike had forecasted second-quarter fiscal 2022 revenues in the range of $318.3m to $324.4m. The Zacks Equity Research’s estimate was pegged at $324 million, indicating an improvement of 62.8% from the year-ago quarter.
CrowdStrike’s share price has increased more than 140% over the past year – and reached its 52-week high of $288.45 on Monday 30 August.
Writing in Real Money on Tuesday 31 August, Stephen Guilfoyle, a former chief economist with Stuart Frankel & Co. and a former vice-president with Credit Suisse, estimated that CrowdStrike will achieve growth of $0.09 per share on second-quarter 2022 revenue of $323.5m. That translates into year-on-year growth of 62.6%, he added. Guilfoyle based his estimates on a consensus among 23 sell-side analysts covering CrowdStrike.
“Though these numbers seem gaudy, they represent a deceleration of that growth since CrowdStrike showed up back in 2019,” wrote Guilfoyle. “Of those 23 analysts, 20 have revised higher their expectations for both earnings and revenue at some point over the past three months, while exactly zero revised anything lower. The range of expectations for adjusted earnings runs from $0.07 to $0.13 (per share) while that range for revenue generation spans from $319 million to $335 million.”
Zacks Equity Research reported on Tuesday, 31 August that 24 of 26 analysts rate CrowdStrike’s shares as a buy or strong buy. By trading around $286.50, the company’s shares have outrun their median trading price of $280 per share, added Zacks.
In a recent research note, Wedbush Securities analyst Daniel Ives listed CrowdStrike among companies that will benefit from an increase in US government cybersecurity investment.
CrowdStrike issued guidance Tuesday that exceeds analyst predicts. The company anticipates revenue of $358m to $365 in its next quarter and expects to generate $1.39bn to $1.41bn on a full-year basis in fiscal-year 2022.