CrowdStrike (CRWD) Stock: Earnings Report Set for Tuesday With 20% Revenue Growth Expected

TLDR

• CrowdStrike reports third-quarter earnings Tuesday with analysts expecting 20% revenue growth to $1.2 billion
• Annual recurring revenue projected to rise 22% to $4.9 billion as company continues recovery from July 2024 outage
• Stock has surged over 130% since August 2024 low following the software update incident that affected 8.5 million devices
• Company now trades at 77 times projected free-cash-flow-per-share, nearly double the 40x multiple of its industry peers
• Wall Street analysts have maintained their estimates over the past 30 days with adjusted earnings expected at $0.94 per share

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CrowdStrike reports third-quarter earnings Tuesday afternoon. The cybersecurity company faces high expectations from Wall Street.

Analysts project revenue of $1.2 billion for the quarter. That represents 20% growth compared to last year.

CrowdStrike Holdings, Inc., CRWD

Adjusted earnings are expected to hit $0.94 per share. This figure matches roughly what the company reported in the same quarter of fiscal 2025.

The year-over-year comparisons don’t tell the full story this time. CrowdStrike changed how it calculates adjusted earnings per share earlier this fiscal year. The new method significantly lowered the measurement.

The company also shifted its customer payment structure. Clients can now commit to longer-term contracts. This change boosts long-term sales but delays revenue recognition in the near term.

Annual recurring revenue provides a clearer picture for subscription software companies. Analysts expect this metric to climb 22% to $4.9 billion.

Recovery From July Outage Continues

The earnings come as CrowdStrike moves past the July 2024 incident. A faulty software update crashed 8.5 million Windows devices worldwide. Microsoft confirmed the scope of the outage.

The technical nature of the bug meant each PC and server required manual fixes. That created a massive workload for IT teams.

CrowdStrike shares dropped 11% on the day of the outage. The decline continued through August. The stock lost 36% of its value during that period.

The company handled the crisis with aggressive customer support. Management distributed free products and services to retain clients. New procedures were implemented to prevent similar incidents.

Sales growth has been trending down since 2019 when it exceeded 100%. The rate has now stabilized around 20%. That’s still considered strong growth for a company of this size.

Delta Air Lines has filed a lawsuit over damages from the outage. This remains the main legal liability facing the company.

Valuation Concerns Mount

The stock has roared back since hitting bottom in August 2024. Shares have climbed more than 130% from that low point.

This rally pushed the valuation into expensive territory. CrowdStrike trades at 77 times projected free-cash-flow-per-share for the next 12 months.

The S&P 500 Software and Services Industry Group trades at 40 times the same metric. CrowdStrike commands nearly double the multiple of its peers.

The company has beaten revenue estimates consistently. Over the past two years, it missed Wall Street’s projections just once. On average, it exceeded expectations by 1.4%.

Last quarter delivered a 1.7% revenue beat with sales of $1.17 billion. That represented 21.3% year-over-year growth.

Analysts covering the stock have held steady on their estimates over the past 30 days. This suggests they expect business conditions to remain stable heading into the report.

Peers in the cybersecurity space showed mixed results in their recent quarters. Varonis Systems reported 9.1% revenue growth but missed estimates by 2.7%. Qualys beat expectations by 2.2% with 10.4% revenue growth.

CrowdStrike shares are down 8.3% over the past month. The broader cybersecurity group has fallen 5.2% in the same period. Analysts maintain an average price target of $533.26 compared to the current price around $506.51.

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