Shares in CrowdStrike Holdings surged on Wednesday after the cybersecurity firm reported fourth-quarter earnings that topped estimates as a key growth metric beat. The company's fiscal 2025 guidance for CrowdStrike stock came in above expectations.
CrowdStrike reported earnings after the market close on Tuesday. On the stock market today, CrowdStrike stock jumped 10.8% to close at 329.57.
The rally in CRWD stock follows sell-offs in Palo Alto Networks and Zscaler on disappointing earning reports.
"CrowdStrike management noted no signs of spending fatigue, with multiple tailwinds including rising cyberattacks, new SEC regulations and artificial intelligence driving increased demand," said Morgan Stanley analyst Hamza Fodderwala in a report.
CrowdStrike earnings for Q4 rose 102% to 95 cents a share on an adjusted basis. Revenue, including acquisitions, climbed 33% to $845.3 million.
Meanwhile, analysts polled by FactSet had projected earnings of 82 cents a share on revenue of $839 million for the period ended Jan. 31.
A year earlier, the Sunnyvale, Calif.-based firm earned 47 cents a share on revenue of $637.4 million.
CrowdStrike Stock: Focus On Recurring Revenue
With CrowdStrike, Wall Street focuses on annual recurring revenue, or ARR. It's a key financial metric tied to subscription services growth.
In Q4, ARR increased 34% to $3.44 billion. Analysts had predicted ARR of $3.39 billion.
"CrowdStrike reported January quarter ARR of $3.44 billion, or net new ARR of $282 million, which exceeded consensus of $242 million and reached the likely high end of investor expectations, in our judgement," said BMO Capital Markets analyst Keith Bachman in a report. "Management did not provide a clear ARR target for fiscal 2025, but guided April quarter net new ARR growth to the double-digit to low teens range year-over-year."
For fiscal 2025, which starts with the current quarter ending in April, CrowdStrike predicted revenue of $3.957 billion at the midpoint of its outlook vs. estimates for $3.942 billion.
At William Blair, analyst Jonathan Ho said in a report: "We view this quarter as further evidence that the company is executing well against its platform strategy and continues to benefit from its own consolidation of smaller point solution players."
Meanwhile, CrowdStrike announced the acquisition of cloud-computing security firm Flow Security. The deal is expected to close in early 2025. No terms were disclosed.
CrowdStrike Stock: Technical Ratings
At Evercore ISI, analyst Peter Levine said in a report: "The Flow Security deal was purely a tech-plus-team acquisition. Flow did not have any go-to-market and will not contribute to ARR."
Heading into the CrowdStrike earnings report, CRWD stock had climbed 22% thus far in 2024. The stock had an IBD Relative Strength Rating of 97 out of a best-possible 99, according to IBD Stock Checkup.
The company uses machine learning, a form of artificial intelligence, in its products. It also uses a specialized database to detect malware on laptops, mobile phones and other devices that access corporate networks.
Follow Reinhardt Krause on Twitter @reinhardtk_tech for updates on artificial intelligence, cybersecurity and cloud computing.
