The recent global outage caused by a flawed content configuration update from CrowdStrike has had a significant impact on the cybersecurity software maker’s performance. Despite reporting strong fiscal second-quarter results, the company has seen a 4% drop in its shares in extended trading. This article will delve into the repercussions of the outage on CrowdStrike’s financials and outlook.
Financial Performance
CrowdStrike exceeded expectations in its second-quarter results, with earnings per share coming in at $1.04 adjusted compared to the 97 cents expected. The company also surpassed revenue estimates, generating $963.9 million against the anticipated $959 million. Despite this positive performance, the global outage led to a revision of full-year guidance by CrowdStrike, causing shareholders to react by pushing down the share price.
The flawed content configuration update caused millions of computers to crash, resulting in flight cancelations, delayed deliveries, and postponed medical appointments. This disrupted operations not only for individuals but also for businesses like Delta Air Lines, which reported $380 million in lost revenue and $170 million in costs due to the incident. Shareholders and travelers affected by the outage have filed lawsuits against CrowdStrike seeking damages.
In light of the global outage, CrowdStrike adjusted its net earnings expectations to 80 to 81 cents per share on $979.2 million to $984.7 million in revenue for the upcoming fiscal year. The company now anticipates adjusted earnings per share of $3.61 to $3.65 and revenue of $3.89 billion to $3.90 billion for 2025, down from the previous forecast of $3.93 to $4.03 and $3.98 billion to $4.01 billion, respectively. The revised guidance accounts for a negative subscription revenue impact of $30 million per quarter and additional professional services revenue in the high-single-digit million dollars.
Investors have reacted to the global outage by driving down CrowdStrike’s share price, prompting analysts to reassess their recommendations. Gray Powell and Trevor Rambo of BTIG, who hold a hold rating on CrowdStrike shares, noted that all customers are now seeking some form of discount due to the incident. The company’s stock had previously been up about 4% year-to-date, while the S&P 500 index gained 17% over the same period.
The global outage caused by CrowdStrike’s flawed content configuration update has had a severe impact on the company’s financial performance and outlook. Shareholders are seeking damages, and customers are demanding discounts in response to the disruption caused by the incident. It remains to be seen how CrowdStrike will navigate the aftermath of the outage and regain investor confidence moving forward.