CrowdStrike earnings stumble as weak forecast rattles investors

CrowdStrike Holdings Inc., a leader in cybersecurity, saw its shares drop by 5% in after-hours trading following a disappointing earnings forecast for the fourth quarter of fiscal 2025. The company revealed adjusted earnings expectations of $0.84 to $0.86 per share, falling just shy of analysts’ estimates of $0.87, according to Bloomberg data.

The announcement has sparked concerns among investors who had been closely monitoring the company’s recovery from a major software update failure in July that caused widespread disruptions. CrowdStrike’s mishap, which crashed millions of devices running Microsoft Windows systems, resulted in significant operational setbacks for industries such as banking, healthcare, and air travel.

Third-quarter results offer a silver lining

Despite the underwhelming forecast, CrowdStrike’s third-quarter results were strong. Revenue surged 29% year-over-year to $1.01 billion, surpassing Wall Street expectations. Subscription revenue rose 31% to $962.7 million, while adjusted earnings reached $0.93 per share, outperforming the anticipated $0.81.

CrowdStrike also revised its full-year revenue guidance upward to a range of $3.92 billion to $3.93 billion, above prior projections of $3.9 billion. The company celebrated a milestone by surpassing $4 billion in annual recurring revenue (ARR), with Chief Executive Officer George Kurtz highlighting its position as the fastest pure-play cybersecurity firm to reach this achievement.

July’s outage casts a long shadow

The July 19th software update incident, which caused major disruptions for clients including Delta Air Lines, continues to loom over CrowdStrike’s reputation. Delta reported $500 million in losses and subsequently filed a lawsuit in October, alleging negligence on the part of the cybersecurity provider. CrowdStrike, however, countered that Delta’s outdated IT systems were partly to blame for the scale of the disruption.

Addressing the incident during the earnings call, Kurtz assured stakeholders that the company had responded with “speed and care” while taking steps to enhance its operational resilience.

Expanding opportunities through innovation and partnerships

CrowdStrike’s future prospects are bolstered by its ongoing innovation and strategic partnerships. During its annual Fal.Con conference, the company introduced new advancements such as the Charlotte AI platform and expanded capabilities for its Falcon security solution. The acquisition of Adaptive Shield, a prominent SaaS security firm, has also strengthened its position in safeguarding cloud ecosystems.

Additionally, CrowdStrike forged partnerships with Fortinet and 1Password, focusing on unified cybersecurity solutions and simplified security for small and medium-sized businesses. These collaborations, along with recognition from Gartner and Forrester as an industry leader, underscore the company’s technological capabilities.

Investor concerns persist amid cautious optimism

While third-quarter successes reflect operational strength, the weak fourth-quarter earnings outlook raises questions about whether CrowdStrike can sustain its growth trajectory. For the upcoming quarter, the company anticipates revenue between $1.03 billion and $1.04 billion, with adjusted net income per share projected at $0.84 to $0.86.

CrowdStrike’s ability to mitigate residual damage from the July outage and maintain its leadership in the competitive cybersecurity market will be critical for restoring investor confidence. Financial analysts remain cautiously optimistic, pointing to strong customer retention rates and rising demand for the company’s Falcon platform as indicators of resilience.