CrowdStrike higher after solid Q3 earnings, recurring revenue outlook

CrowdStrike  (CRWD) - Get Free Report shares edged higher in early Wednesday trading after the cybersecurity group posted better-than-expected third quarter earnings paired with a solid-near term sales outlook.

CrowdStrike said current quarter revenues would likely range between $836.6 million to $840 million, nudging just ahead of Street forecasts, with annual recurring revenue (ARR), a key performance metric for tech services companies, pegged at $3.15 billion.

Investors were also impressed with the group's potential to grow revenues from small and medium-sized business through new product launches on Amazon  (AMZN) - Get Free Report.

For the three months ending in October, CrowdStrike posted adjusted earnings of 82 cents per share, topping Street forecasts by around 8 cents, on revenues of $786 million, a tally the came in just ahead of estimates. Annual recurring revenue rose 13% from last year to a record $223 million.

"This was a standout quarter and places us well on the path to $10 billion in ARR that we outlined in our latest investor briefing," CrowdStrike CEO George Kurtz told investors on a conference call late Tuesday.

"Adversaries continue to evolve, moving faster and increasing their use of dark AI, turning AI into a weapon for evil. At the same time, legislative and SEC regulatory oversight pressures boards and executives to prioritize cybersecurity," he added. "Our relentless focus on innovation and commitment to a single, built-by-design platform creates cybersecurity source of truth. Built on this platform foundation, our Cloud, Identity, and LogScale next-gen SIEM products are examples of IPO-worthy hypergrowth businesses."

CrowdStrike share were marked 1.7% higher in pre-market trading to indicate an opening bell price of $215.94 each, a move that would extend the stock's six-month gain to around 36.2% and value the Austin, Texas-based company at around $51 billion.

"CrowdStrike is well-positioned in terms of the F4Q24 setup, given the solid F3Q24 performance and only modestly raised revenue guidance," said JMP Securities analyst Trevor Walsh, who carried a 'market outperform' rating with a $235 price target on the stock. 

"Management did not provide a new framework for ARR, but reiterated the prior comments for net-new ARR coming in flat to slightly up for the year, which is achievable at this point without any net-new ARR acceleration," he added. 

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