CrowdStrike Holdings Inc. (CRWD) shares fell as much as 12% in trading on Wednesday after the cybersecurity giant issued a disappointing earnings outlook, signaling ongoing challenges as the company continues to recover from last year's disruptive software outage.
2025 (FY2026) Financial Outlook:
The company issued revenue guidance of $4.74-4.81 billion, which aligns with analyst expectations of $4.77 billion. However, CrowdStrike's adjusted operating income forecast of $944.2-985.1 million fell short of the expected $1.03 billion. Most concerning to investors was the adjusted EPS outlook of $3.33-3.45, significantly below the $4.43 consensus estimate.
Q1 2025 (FY2026) Forecast:
For the upcoming quarter, CrowdStrike projects revenue between $1.10-1.11 billion, in line with analysts' $1.11 billion expectation. The company's adjusted operating income guidance of $173.1-180.0 million and adjusted EPS forecast of $0.64-0.66 fell well below analyst projections of $219.7 million and $0.96, respectively.
Factors Impacting Outlook:
The company expects $73 million in outage-related costs in Q1 2025, plus $43 million associated with customer commitment programs initiated after the July 19th incident. The implementation of an adjusted tax rate of 22.5% will result in a $0.19 EPS reduction in Q1 and a $0.98 EPS impact for the full year. CEO George Kurtz announced the company is ending the "customer commitment package program" launched after the outage, which offered discounts to help retain affected customers.
CEO Commentary:
CEO George Kurtz characterized Q4 as the beginning of a "comeback story" and expressed confidence that growth will accelerate in the second half of 2025 as "one-time discounts drop off." He explained that lower profitability guidance reflects sales and marketing costs for customer commitment packages being "amortized over the entire year" and planned investments in key areas to support the company's scale and AI capabilities.
CrowdStrike (D1 Interval)
The shares are currently trading below the 38.2% Fibonacci retracement level. Bears will aim for a retest of the 200-day SMA and the 50% Fibonacci retracement level. Bulls, on the other hand, will attempt to regain the 50-day SMA at $385.98 and the 23.6% Fibonacci retracement level, which has historically acted as both support and resistance.
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