CrowdStrike Holdings, Inc. (CRWD), a cloud-delivered endpoint and cloud workload protection company, delivered outstanding second-quarter results. Strong results were backed by rapid subscription revenue growth and robust net new annual recurring revenue (ARR). However, shares dipped 4.6% in the extended trading session on August 31.
The company reported adjusted earnings of $0.11 per share, an increase of 267% compared to the year-ago period, and surpassed analysts’ estimates of $0.09 per share. (See CrowdStrike stock charts on TipRanks)
To add to that, total revenue climbed 70% year-over-year to $337.69 million and significantly outpaced the Street’s estimate of $323.13 million.
Revenue growth was driven by a rise of 71% in subscription revenue and a 70% increase in ARR to $1.34 billion. Also, CRWD added 1,660 net new subscription customers during the quarter, representing 81% year-over-year growth.
Following the results, CrowdStrike CEO George Kurtz said, “We believe that our extensible Falcon platform, purpose-built to leverage the power of the cloud, collecting data once and reusing it many times, is a fundamental cornerstone to building a durable growth business over the long-term.”
Based on the strong Q2 performance, continued momentum, and robust demand, the company lifted its guidance for Fiscal 2022.
The company now forecasts revenue to be in the range of $1.391 – $1.409 billion compared to the consensus estimate of $1.36 billion. Additionally, adjusted earnings are expected to be between $0.43 and $0.49 per share compared to the consensus estimate of $0.40 per share.
For the third quarter, CRWD guided for total revenue and adjusted earnings to fall in the range of $358 – $365.3 million and $0.08 – $0.10 per share, respectively. Consensus estimates for revenue and earnings are pegged at $350.92 million and $0.09 per share, respectively.
Impressed by CrowdStrike’s upbeat performance, Robert W. Baird analyst Jonathan Ruykhaver lifted the price target on the stock to $310 (10.3% upside potential) from $300 while maintaining a Buy rating.
Ruykhaver said, “While we believe the company has significant room for growth with core modules, opportunities with Humio and in cloud workload security, among others, should help drive a continuation of strong growth over a long-time horizon. CrowdStrike remains our top long-term idea given its history of execution and significant market opportunity.”
Additionally, the analyst noted that CrowdStrike operates in a market with $7+ billion of the total addressable market (TAM), with a strong endpoint product offering relative to its legacy peers. It is well-positioned to benefit from the significant potential for growth in the endpoint detection and response (EDR) portion of the endpoint protection market, he added.
Overall, the stock commands a Strong Buy consensus rating based on 19 Buys and 1 Hold. The average CrowdStrike price target of $289.10 implies 2.9% upside potential to current levels. Shares have gained 95.6% over the past year.
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