Crowdstrike contract with Carahsoft ‘raises red flags,’ Bloomberg reports

Carahsoft Technology is paying Crowdstrike (CRWD) for a $32M contract even though the Internal Revenue Service never bought the identity threat protection software as intended, Jake Bleiberg of Bloomberg reports, citing records reviewed by Bloomberg News and people with knowledge of the situation. Carahsoft has been making on-time payments on the $32M to CrowdStrike, and when asked for comment by Bloomberg, both companies explained that they had a “non-cancellable order” between them. “Some legal and accounting experts, who reviewed the arrangement at Bloomberg’s request, said it raises red flags that merit scrutiny from regulators,” notes Bleiberg. The deal also raised concerns within CrowdStrike, people familiar with the matter said, and many specifics of the transaction remain unclear, adds Bleiberg. CrowdStrike “closed and recognized” the deal once Carahsoft placed the order, and its booking of the revenue is consistent with standard accounting principles, according to Thomas Clare and Elizabeth Locke, lawyers representing the company told Bloomberg. Shares of Crowdstrike dropped 1% to $300.87 following the report.