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CrowdStrike (CRWD) Beats on Q1 Earnings and Revenue Estimates

CrowdStrike Holdings CRWD reported strong first-quarter fiscal 2024 results, wherein revenues and earnings surpassed the respective Zacks Consensus Estimate and marked significant year-over-year improvements.

Despite the upbeat first-quarter performance, the shares of the cybersecurity solutions provider plunged 11.8% in Wednesday’s extended trading session after the company updated the annual revenue forecast, which was mostly in line with the consensus mark. Also, a statement by the company’s CFO, Burt Podbere, on macroeconomic conditions made investors cautious about CRWD’s near-term prospects.

During the post-earnings call, Burt stated that the current challenging macroeconomic conditions are not likely to improve for the rest of the year. He said, “when we think about that all in perspective, we know that there's going to be deals that are going to be more difficult to close within a particular quarter.”

Before discussing about the updated fiscal 2024 guidance, let’s delve deeper into the first-quarter performance first.

CrowdStrike Price, Consensus and EPS Surprise

CrowdStrike price-consensus-eps-surprise-chart | CrowdStrike Quote

Q1 Performance

CrowdStrike reported first-quarter fiscal 2024 non-GAAP earnings of 57 cents per share, beating the Zacks Consensus Estimate by 14% and jumping 83.9% year over year.

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The company’s fiscal first-quarter revenues of $692.6 million rose 42% year over year and surpassed the consensus mark by 2.3%.

Subscription revenues (94% of the total revenues) jumped 42% year over year to $651.2 million. Professional services revenues (6% of the total revenues) rose 47.8% year over year to $41.4 million.

Annual recurring revenues (ARR) increased 42% year over year to $2.73 billion. The net new ARR added in the reported quarter was $174.2 million. CrowdStrike’s subscription customers, who adopted five or more cloud modules, represented 62% of the total subscription customers, those with six or more cloud modules accounted for 40% and those with seven or more cloud modules represented 23% as of Apr 30, 2023.

Operating Details

CrowdStrike’s non-GAAP gross margin improved 100 basis points (bps) on a year-over-year basis to 78%.

The non-GAAP subscription gross margin expanded 100 bps to 80% on a year-over-year basis. The non-GAAP professional gross margin improved 300 bps to 46%.

Non-GAAP sales and marketing expenses jumped 47.3% year over year to $244.8 million. Non-GAAP research and development expenses surged 50.3% year over year to $134.3 million.

The non-GAAP operating income was $115.9 million, up 39.6% year over year. The non-GAAP operating margin for the quarter was 17%, flat on a year-over-year basis.

Balance Sheet & Cash Flow

As of Apr 30, 2023, cash and cash equivalents were $2.93 billion compared with $2.46 billion as of Jan 31, 2023. CrowdStrike had long-term debt of $741.4 million.

In the fiscal first quarter, CRWD generated operating and free cash flows of $300.9 million and $227.4 million, respectively.

Updated Fiscal 2024 Guidance

For fiscal 2024, CRWD now expects revenues between $3,000.5 million and $3,036.7 million, up from the previous guidance range of $2,955.1-$3,014.8 million. Non-GAAP earnings are now anticipated in the band of $2.32-$2.43 per share, raised from the earlier forecast in the range of $2.21-$2.39 per share. The non-GAAP operating income for fiscal 2024 is now projected in the band of $498.9-$526.2 million instead of the earlier guidance range of $474-$518.7 million.

For the fiscal second quarter, CrowdStrike anticipates revenues between $717.2 million and $727.4 million. The non-GAAP operating income is expected in the band of $116.4-$123.8 million. For the bottom line, the company expects non-GAAP earnings between 54 cents and 57 cents per share.

Zacks Rank & Stocks to Consider

CrowdStrike currently carries a Zacks Rank #3 (Hold). Shares of CRWD have rallied 52.1% year to date (YTD).

Some better-ranked stocks from the broader technology sector are Meta Platforms META, Manhattan Associates MANH and Blackbaud BLKB. While Meta and Manhattan Associates each sport a Zacks Rank #1 (Strong Buy), Blackbaud carries a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Meta's second-quarter 2023 earnings has been revised 8 cents northward to $2.87 per share in the past 30 days. For 2023, earnings estimates have been revised 2.4% upward to $12.04 per share in the past 30 days.

Meta’s earnings beat the Zacks Consensus Estimate twice in the preceding four quarters while missing the same on two occasions, the average surprise being 15.5%. Shares of META have surged 120% YTD.

The Zacks Consensus Estimate for Manhattan Associates' second-quarter 2023 earnings has been revised upward by a couple of cents to 72 cents per share for the past 60 days. For 2023, earnings estimates have moved upward by 17 cents to $2.87 per share in the past 60 days.

Manhattan Associates' earnings beat the Zacks Consensus Estimate in the preceding four quarters, the average surprise being 33.6%. Shares of MANH have soared 49.5% YTD.

The Zacks Consensus Estimate for Blackbaud’s second-quarter 2023 earnings has been revised 10 cents northward to 93 cents per share in the past 30 days. For 2023, earnings estimates have increased to $3.75 per share from $3.43 30 days ago.

Blackbaud's earnings beat the Zacks Consensus Estimate in the preceding four quarters, the average surprise being 10.4%. Shares of BLKB have rallied 24.7% YTD.

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