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CrowdStrike (CRWD) delivered impressive fourth-quarter results for its fiscal 2025, surpassing Wall Street expectations. However, despite revenue and earnings growth, the stock took a hit and fell 9% in March 5 trading due to its lower-than-anticipated outlook.
CrowdStrike’s revenue for the quarter came in at $1.06 billion, reflecting a 25% year-over-year increase and exceeding analysts’ forecast of $1.03 billion. The company’s subscription revenue was particularly strong, reaching $1.01 billion, up 27% from the previous year. Additionally, its annual recurring revenue (ARR) grew by 23% to $4.24 billion, with net new ARR of $224.3 million added in the quarter.
On the profitability front, earnings per share (EPS) stood at $1.03, beating the Street’s estimate of $0.86 and marking an 8.4% increase year-over-year. These figures underscore the company’s execution in a competitive cybersecurity market.
Market Concerns Over Weaker Guidance
Despite the solid Q4 performance, CrowdStrike’s forward guidance was weaker than expected. Management projected first-quarter adjusted EPS between $0.64 and $0.66, significantly below the consensus estimate of $0.96. For fiscal year 2026, the company expects adjusted EPS to range between $3.33 and $3.45, missing the anticipated $3.85. The company said it expects $73 million in cash impacts in Q1 due to outrage-related costs.
Another point of concern is the slowing growth in ARR. While still expanding, ARR growth has gradually decelerated, falling from 42% in Q1 FY24 to 23% in Q4 FY25. This slowdown suggests a potential moderation in CrowdStrike’s growth trajectory, contributing to the stock’s pullback.
Notably, for the first quarter of FY26, CrowdStrike expects total revenue between $1.1 billion and $1.106 billion, reflecting 20% year-over-year growth. While still healthy, this marks a slowdown compared to previous quarters. The full-year revenue forecast is set between $4.74 billion and $4.81 billion, reflecting 20% to 22% growth, which is lower than the 29% increase seen in FY25.
Reasons for Optimism
While the near-term outlook might seem underwhelming, CrowdStrike’s long-term growth story remains intact. The company expects net new ARR to reaccelerate in the second half of FY26, alongside expanding operating and free cash flow margins.
One of the key drivers of CrowdStrike’s future growth is its Falcon Flex program, which has been instrumental in boosting platform adoption. In Q4 alone, customers with six, seven, and eight or more Falcon modules grew to 48%, 32%, and 21% of subscription customers, respectively. Notably, customers with five or more modules reached an all-time high of 67%. On average, new customers land with at least five modules.
CrowdStrike’s total contract value surged to approximately $6 billion in FY25, reflecting a 40% year-over-year growth rate. This trend suggests strong demand and positions the company for continued expansion.
The company also set new records across deal sizes in Q4, closing over 20 deals worth more than $10 million, 350 deals exceeding $1 million, and 2,300 deals surpassing $100,000. These numbers highlight CrowdStrike’s ability to win high-value contracts and deepen customer relationships.
Another catalyst is the success of CrowdStrike Financial Services (CFS), which has already closed over $140 million in deals since its launch in Q3 FY25. CFS enhances customers’ ability to engage in larger, long-term contracts, reinforcing CrowdStrike’s leadership in the cybersecurity space.
Customer loyalty remains a strength, with a 97% gross retention rate and a 112% dollar-based net retention rate, signaling that organizations continue to see value in CrowdStrike’s offerings and are willing to expand their investments.
Additionally, the company is leveraging artificial intelligence (AI) to enhance sales processes, automate reporting, and streamline workflows. The AI-driven efficiencies will allow CrowdStrike to scale operations more efficiently while staying focused on its growth objectives.
The Bottom Line
Despite the short-term concerns, Wall Street remains bullish on CrowdStrike. Analysts have given CRWD stock a “Strong Buy” consensus rating, highlighting confidence in its long-term growth potential.
CrowdStrike’s post-earnings dip may seem like a red flag at first glance, but it could be a buying opportunity for long-term investors. While the company’s near-term ARR growth might face some pressure, there are compelling reasons to stay optimistic about its future trajectory.
The cybersecurity giant continues to strengthen its position in a rapidly expanding market. CrowdStrike’s Falcon platform is gaining momentum, with more businesses adopting its security solutions. At the same time, the company is seeing an increase in contract values as customers deepen their investment in its services. These factors point to strong long-term upside potential, even if short-term headwinds persist.
