Cybersecurity giant CrowdStrike (CRWD) is scheduled to report its earnings results for fiscal Q3 of 2025 (ended in October) after the close on Tuesday, Nov. 26. In the current earnings season, 93% of S&P 500 Index ($SPX) companies have reported quarterly results so far, and 75% of those have surpassed earnings estimates. Comparatively, only 61% have beaten revenue estimates.
CrowdStrike went public in June 2019, and was trading at record highs in July 2024, when the company issued a defective software update that impacted millions of Microsoft (MSFT) customers globally. The outage hit enterprise customers across industries, including airlines, logistics, and healthcare. In fact, Delta Air Lines (DAL) was forced to ground thousands of flights, dragging CRWD stock sharply lower in the process.
While the tech stock has recovered, it still trades about 13% below all-time highs. Despite the recent turbulence, CRWD stock has returned over 400% to investors since its initial public offering (IPO) five years ago.
Ahead of next week's quarterly earnings, let’s see what analysts are expecting for CrowdStrike, and if the company can surpass estimates in Q3.
What Does Wall Street Expect From CRWD in Q3?
According to analysts' estimates, CrowdStrike is forecast to report:
- Revenue of $983 million, up from $786 million last year
- Adjusted earnings per share of $0.81, compared to $0.82 last year
So, while sales are forecast to rise 25%, earnings might fall by 1.8% year over year in the October quarter.
It's possible that CrowdStrike will have to increase customer acquisition costs and allocate funds to reimburse its customers for the outage, which could impact profit margins in the near term.
In fiscal Q2, CRWD grew sales by 32% year over year and ended the quarter with annual recurring revenue (ARR) of $3.86 billion, above estimates of $3.85 billion. In the Q2 earnings call, management forecast Q3 sales between $979.2 million and $984.7 million, with earnings projected between $0.80 and $0.81 per share.
Notably, CrowdStrike forecasts revenue between $3.89 billion and $3.90 billion in fiscal 2025, and earnings between $3.61 and $3.65 per share. This is lower than prior revenue estimates of $3.98 billion and $4 billion, while earnings guidance initially stood at $3.93 to $4.03 per share.
Is CrowdStrike Stock Still a Good Buy?
Valued at $84 billion, CrowdStrike continues to grow at an impressive pace, while reporting consistent profits. In Q2, it reported a GAAP (generally accepted accounting principles) profit for the sixth consecutive quarter, while free cash flow grew by 44% year over year to $272 million, indicating a margin of 28%.
The company’s cloud security business ended Q2 with $515 million in ARR and rose by 80% year over year. With gross margins of 78%, CrowdStrike enjoys pricing power and a competitive moat as it continues expanding its customer base and spending. In Q2, CrowdStrike achieved its second-largest quarter ever for net new customer additions, business expansion, and net new ARR contribution from cloud, identity, and LogScale combined.
Analysts tracking CRWD expect adjusted earnings to expand from $3.09 per share in fiscal 2024 to $4.31 per share in fiscal 2026. So, priced at 80 times forward earnings, CRWD stock trades at a premium.
Out of the 44 analysts covering CRWD stock, the average recommendation is a “strong buy.” The stock trades above its mean price target of $327.37, although Truist just raised its price target to $375 ahead of earnings.
