CrowdStrike Holdings reported October-quarter profit and revenue that topped estimates. But the CrowdStrike earnings outlook came in well below Wall Street targets, sending down CRWD stock and shares in cybersecurity firms Zscaler and SentinelOne.
CrowdStrike reported third quarter earnings after the market close on Tuesday. CrowdStrike stock tumbled 14.8 to close at 117.65 on the stock market today. CRWD stock clawed back after the S&P 500 rallied on views the Federal Reserve will slow rate hikes.
ZS stock fell 1% to 133.45. SentinelOne stock tumbled 6% to 14.50.
"CrowdStrike reported mixed Q3 results, with revenue exceeding guidance by 1%, though net new annual recurring revenue missed expectations," said Wells Fargo analyst Andrew Nowinski in a report. "Management attributed the miss primarily to deal slippage in the small- to medium-sized business segment and an increase in the average days needed to close deals."
For the third quarter, CrowdStrike earnings were 40 cents a share, up 135% from a year earlier, on an adjusted basis. Including acquisitions, revenue jumped 53% to $581 million, edging by estimates.
Analysts polled by FactSet had projected CrowdStrike earnings of 32 cents on revenue of $575 million for the period ended Oct. 31.
A year earlier, the Sunnyvale, Calif.-based cybersecurity firm earned 17 cents a share on revenue of $380 million.
CRWD Stock: Key Financial Metric Misses
Wall Street also focuses on annual recurring revenue, or ARR. It's a financial metric tied to subscription customer growth.
During the third quarter, ARR increased 54% to $2.34 billion. That missed estimates for ARR of $2.36 billion.
For the current quarter ending in January, CrowdStrike forecast revenue of $623.5 million, missing estimates of $634 million.
"CrowdStrike delivered a mixed quarter as ARR came in slightly below expectations and a smaller revenue beat," RBC Capital analyst Matthew Hedberg said in a note to clients. "Management noted the macroeconomic impact to ARR seeing elongated sales cycles with smaller customers and some larger customers pursuing multi-phased subscription start dates, which delays ARR recognition to future quarters."
Zscaler reports earnings on Thursday. SentinelOne earnings are due Dec. 6.
Heading into the CrowdStrike earnings report, CRWD stock had retreated 30% thus far in 2022 amid the bear market in technology companies. CRWD stock owned a Relative Strength Rating of only 23 out of a best-possible 99, according to IBD Stock Checkup.
Cybersecurity Stocks To Watch
The cybersecurity company uses machine learning, one 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.
Also, CrowdStrike is building a broad, threat-detection cybersecurity platform. Called XDR, or extended detection and response, it monitors endpoints as well as web/email gateways, web application firewalls and cloud business workloads.
CrowdStrike is one of many cybersecurity stocks to watch.
Follow Reinhardt Krause on Twitter @reinhardtk_tech for updates on 5G wireless, artificial intelligence, cybersecurity and cloud computing.
