CrowdStrike (CRWD) Jumps 7% as Q1 Earnings Beat Estimates
CrowdStrike Holdings, Inc.’s CRWD shares jumped 7% during Tuesday’s extended trading session after the cloud-based cybersecurity solution provider reported better-than-expected first-quarter fiscal 2025 results. Both revenues and earnings witnessed a significant improvement on a year-over-year basis as well.
CrowdStrike’s fiscal first-quarter non-GAAP earnings increased to 93 cents per share from the year-ago quarter’s 57 cents. Quarterly earnings also surpassed the Zacks Consensus Estimate of 89 cents and came ahead of management’s guidance of 89-90 cents. The robust bottom-line performance was mainly driven by higher revenues and better cost management.
CrowdStrike’s fiscal first-quarter revenues of $921 million rose 33% year over year and surpassed the consensus mark of $904.8 million. The top line was also higher than the company’s guidance of $902.2-$905.8 million. The strong adoption of the Falcon platform and better sales execution mainly aided top-line growth in the first quarter.
Strong adoption of the Falcon platform can be attributable to its ability to consolidate cybersecurity functions at scale, meeting the market's demand for a unified AI-powered solution. The expansion of available modules has enhanced the platform's value, leading to increased adoption, particularly in cloud, Identity and Falcon Next-Gen SIEM modules.
CrowdStrike Price, Consensus and EPS Surprise
CrowdStrike price-consensus-eps-surprise-chart | CrowdStrike Quote
Top Line in Detail
Subscription revenues (94.7% of the total revenues) jumped 34% year over year to $872.2 million. Professional services revenues (5.3% of the total revenues) rose 18% year over year to $49 million. Our estimates for the Subscription and Professional Services segments were pegged at $844.8 million and $59.2 million, respectively.
As of Apr 30, 2024, annual recurring revenues (ARR) were $3.65 billion, up 33% year over year. The company added $211.7 million to its net new ARR in the reported quarter. Our projections for ARR and net new ARR were $3.62 billion and $367 million, respectively.
CrowdStrike’s subscription customers, who adopted five or more cloud modules, represented 65% of the total subscription customers, those with six or more cloud modules accounted for 44% and those with seven or more cloud modules represented 28% as of Apr 30, 2024.
Operating Details
CrowdStrike’s non-GAAP gross profit increased 33.4% to $721.3 million in the fiscal first quarter from $540.5 million in the year-ago quarter. The non-GAAP gross margin remained flat at 78%. The strong gross margin performance was primarily driven by the company’s ability to command stable pricing, supported by the exceptional customer value delivered by its Falcon platform, as well as its continued investments in data center and workload optimization.
The non-GAAP subscription gross profit soared 34.5% year over year to $701.5 million, while the gross margin remained flat at 80% on a year-over-year basis. The non-GAAP professional gross profit rose 4.7% to $19.8 million, while the gross margin fell 500 bps to 41% on a year-over-year basis.
CrowdStrike’s total non-GAAP operating expenses increased 23% to $522.5 million from $424.6 million in the year-ago quarter. However, as a percentage of revenues, non-GAAP operating expenses declined to 57% from 61% in the year-ago quarter.
Non-GAAP sales and marketing (S&M) expenses jumped 21.4% year over year to $297.2 million. Non-GAAP research and development (R&D) expenses climbed 25% year over year to $168 million. Non-GAAP general and administrative (G&A) expenses increased 26% year over year to $57.3 million. As a percentage of revenues, S&M, R&D and G&A expenses contracted by 300 bps, 100 bps and 100 bps to 32%, 18% and 6%, respectively.
The non-GAAP operating income surged 72% to $198.7 million from the year-ago quarter’s $115.9 million, mainly driven by higher revenues. The non-GAAP operating margin for the quarter improved to 22% from 17% in the previous year’s quarter, which primarily benefited from a higher gross margin and lower operating expenses as a percentage of revenues.
Balance Sheet & Cash Flow
As of Apr 30, 2024, cash and cash equivalents were $3.7 billion. CrowdStrike had a long-term debt of $743 million.
In the fiscal first quarter, CRWD generated operating and free cash flows of $383 million and $322 million, respectively.
Guidance
CrowdStrike initiated guidance for the fiscal second quarter and revised the projections for fiscal 2025. For the fiscal second quarter, CrowdStrike anticipates revenues between $958.3 million and $961.2 million. The non-GAAP operating income is expected in the band of $208.3-$210.5 million. Non-GAAP net income is forecasted in the range of $245.7-$247.8 million. The company expects non-GAAP earnings to be in the 98-99 cents per share range. The Zacks Consensus Estimate for second-quarter revenues and non-GAAP earnings are pegged at $956.2 million and 90 cents per share, respectively.
For fiscal 2025, CRWD now expects revenues between $3,976.3 million and $4,010.7 million compared with the previously projected revenues of $3,924.9-$3,989 million. The updated non-GAAP operating income for fiscal 2025 is now projected in the band of $890.1-$916.5 million compared with the previously announced range of $863.6-$913 million.
The company now expects the non-GAAP net income in the range of $985.6-$1,012 million compared with the previous guidance of $940.3-$989.7 million. Non-GAAP earnings are now anticipated in the band of $3.93-$4.03 per share. The consensus mark for fiscal 2025 revenues and non-GAAP earnings are pegged at $3.97 billion and $3.90 cents per share, respectively.
Zacks Rank and Other Stocks to Consider
Currently, CrowdStrike carries a Zacks Rank #2 (Buy). Shares of CRWD have gained 19.7% in the year-to-date period.
Some other top-ranked stocks from the broader technology sector are AppFolio APPF, Arista Networks ANET and Alphabet GOOGL, each sporting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for AppFolio’s 2024 EPS has been revised upward by 3 cents to $4 in the past 30 days. Shares of APPF have jumped 31% in the year-to-date period.
The Zacks Consensus Estimate for ANET’s 2024 EPS has been revised upward by 43 cents to $7.92 in the past 30 days. Shares of ANET have climbed 24.5% in the year-to-date period.
The Zacks Consensus Estimate for Alphabet’s 2024 EPS has been revised upward by 9 cents to $7.61 in the past 30 days. Shares of GOOGL have gained 23.5% in the year-to-date period.
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