With Wall Street focused on the impact of July's global IT outage on customer contract renewals, CrowdStrike Holdings delivered fourth-quarter earnings and revenue that beat estimates. The cybersecurity firm's fiscal 2026 sales and profitability outlook for CrowdStrike stock underwhelmed.
The Sunnyvale, Calif.-based cybersecurity firm reported January-ended quarterly earnings after the market close on Tuesday.
CrowdStrike earnings climbed 8% to $1.03 per share on an adjusted basis. Revenue, including acquisitions, rose 25% to $1.06 billion.
Analysts polled by FactSet had predicted earnings of 86 cents a share on revenue of $1.035 billion.
CrowdStrike Stock: ARR Key Metric
With CrowdStrike, Wall Street analysts focus on annual recurring revenue, or ARR. It's a key financial metric tied to subscription services growth. Analysts have lowered estimates for "net new" ARR amid expectations that many customers will seek price discounts when renewing contracts to help cover the cost of business disruptions. A software upgrade caused the IT outage.
In Q4, total ARR increased 23% to $4.24 billion. Analysts had predicted total ARR of $4.21 billion. But net new ARR fell 20% to $224.3 million.
"CrowdStrike put up strong Q4 results with $224 million in net new ARR coming in ahead of expectations, but offering little in the way of clarity into the timing or magnitude of a second half (fiscal 2026) reacceleration," said UBS analyst Roger Boyd in a report. "In addition, while the revenue guidance for 21% year-over-year growth was ahead of consensus, the outlook for margins was below expectations, with CrowdStrike guiding to 20% operating margin."
For fiscal 2026, which starts with the current quarter ending in April, CrowdStrike predicted revenue in a range of $4.744 billion to $4.805 billion vs. estimates for $4.768 billion.
Adjusted EPS Guidance Below Views
CrowdStrike said it expects adjusted EPS of $3.39 at the midpoint of guidance, well below estimates of $4.40. CrowdStrike plans higher investments in marketing and artificial intelligence infrastructure. Higher taxes also will impact profitability
Also, CrowdStrike did not provide an outlook for total ARR versus estimates of $5.058 billion.
At William Blair, analyst Jonathan Ho noted that CrowdStrike management said it no longer is offering customers perks related to the IT outage.
"Guidance for revenue was offered only slightly above the consensus for 2026 with pro forma EPS guidance well below, due primarily to tax rate and incremental investments," Ho said in a report. "Fiscal 2026 is expected to be back-end loaded from an ARR perspective as customer commitment package — related revenue is expected to be renewed, but it is unclear at what levels."
He added: "CrowdStrike has been clear that it expects the business to accelerate in the back half of the year as it converts CCP-free products to be paid."
At Jefferies, analyst Joseph Gallo said in a report: "While risk remains on whether customers actually pay for free modules eventually, we have confidence in CrowdStrike's market position driving a fiscal second half 2026 net new ARR re-acceleration."
CrowdStrike Competitors
On the stock market today, CrowdStrike stock fell 7.5% to near 361 in early trading. Heading into the CrowdStrike earnings report, shares were up 15% in 2025.
"The company changed the accounting of employee payroll related to stock based compensation, hiding another 500 to 600 basis points of operating mrgin pressure, but management noted it now uses the same accounting practices as peers," said Bank of America analyst Tal Liani in a report. "Similar to other software vendors and to Zscaler, management raised the assumed tax rate from about 5% to 22.5% to account for full taxes post historical loss credits."
Further, CrowdStrike recently said its sales through Amazon Web Services, the cloud computing arm of Amazon.com, had surpassed $1 billion in 2024.
CrowdStrike competes with Palo Alto Networks, SentinelOne, Microsoft and others in the "endpoint" market. Endpoint security tools detect malware on laptops, mobile phones and other devices that access corporate networks.
Also, CrowdStrike is building a broad, threat-detection cybersecurity platform called XDR, which stands for extended detection and response. It monitors endpoints as well as web/email gateways, web application firewalls and cloud business workloads.
Follow Reinhardt Krause on Twitter @reinhardtk_tech for updates on artificial intelligence, cybersecurity and cloud computing.
