CrowdStrike shares faced a setback in extended trading following the cybersecurity software maker’s strong fiscal second-quarter results announcement. Despite exceeding earnings expectations of $1.04 adjusted per share compared to the anticipated 97 cents, and generating revenue of $963.9 million versus the expected $959 million, the company revised its full-year guidance downwards due to a recent global outage. This alteration in forecast has had a significant impact on the company’s financial standing, leading to a 4% decline in its share price.
On July 19, CrowdStrike mistakenly distributed a defective content configuration update to its Falcon sensor on computers operating on Microsoft Windows systems. The intention was to gather information on new cyber threats, but the error resulted in the crashing of millions of computers. This caused widespread disruption, including flight cancellations, delays in packaged deliveries, and the rescheduling of medical appointments. Affected users had to manually reboot their systems, significantly inconveniencing them.
In the aftermath of the outage, CrowdStrike’s CEO George Kurtz issued an apology to clients and partners, acknowledging the error and assuring that a fix had been implemented. However, the incident led to a negative reaction from investors, prompting a decline in the company’s share price. Shareholders took legal action against CrowdStrike, while Delta Air Lines, citing substantial losses amounting to $380 million in revenue and $170 million in costs due to the outage, announced its intention to seek compensation. Additionally, travelers affected by the disruption filed class-action lawsuits against the company.
As a result of the outage, CrowdStrike provided adjusted guidance for the remaining fiscal year, reducing its projected earnings to 80-81 cents per share on revenue in the range of $979.2 million to $984.7 million. Looking ahead to the 2025 fiscal year, the company anticipates adjusted earnings of $3.61 to $3.65 per share and revenue between $3.89 billion and $3.90 billion. This marks a significant downgrade from its earlier forecasts of adjusted earnings per share between $3.93 to $4.03 and revenue in the range of $3.98 billion to $4.01 billion.
Prior to the earnings report, CrowdStrike’s stock had shown a modest gain of around 4% for the year. In contrast, the S&P 500 index had recorded a stronger growth rate of 17% during the same period. The company now faces the challenge of regaining investor confidence and recovering from the financial implications of the outage. Executives are scheduled to elaborate on the results during an upcoming conference call with analysts to address the concerns surrounding CrowdStrike’s financial performance in the wake of this incident.