CrowdStrike Holdings Inc CRWD shares traded down by 6.2% on Friday after the company reported a first-quarter earnings beat and raised its full-year guidance.
On Thursday, CrowdStrike reported adjusted first-quarter EPS of 31 cents on revenue of $487.8 million. Both numbers exceeded consensus analyst estimates of 23 cents and $463.2 million, respectively. Revenue was up 61% from a year ago.
Annual recurring revenue was up 61% to $1.92 billion and free cash flow was up 34% to $157.5 million.
For the full fiscal 2023, CrowdStrike guided for revenue of about $2.2 billion, up from a previous guidance range of between $2.13 billion and $2.16 billion. CrowdStrike also raised its full-year EPS guidance from a prior range of between $1.03 and $1.13 to a new range of between $1.18 and $1.22.
Differentiated Platform: RBC Capital Markets analyst Matthew Hedberg said CrowdStrike's quarter was impressive across the board.
"CRWD remains a favorite idea and one of the most impressive models we've seen at scale, continuing to deliver on both growth and profitability with a Rule of 40 score of 93," Hedberg wrote.
Wells Fargo analyst Andrew Nowinski said the negative market reaction may be stemming from concerns over the fact that CrowdStrike reported a $19 million operating profit beat in the first quarter but raised its full-year operating profit guidance by only $12 million.
"Management expects to ramp up investments in the second half of year, though this should set the company up for stronger growth next year," Nowinski wrote.
Mizuho analyst Gregg Moskowitz said CrowdStike shares have significant long-term upside.
"More broadly, we believe CRWD’s cloud platform remains highly differentiated, and we remain confident the company can very successfully extend beyond traditional endpoint security markets," Moskowitz wrote.
Margin Leverage: Needham analyst Alex Henderson said CrowdStrike is demonstrating impressive margin leverage.
"The growth is becoming an increasing competitive advantage that is increasingly unassailable, we believe," Henderson wrote.
Bank of America analyst Tal Liani said CrowdStrike is experiencing secular tailwinds and booming underlying demand.
"We favor CrowdStrike’s wide technological moat within endpoint security, which is supported by robust secular tailwinds from legacy displacements, Cloud proliferation, and zero trust adoption," Liani wrote.
Ratings And Price Targets:
- RBC Capital Markets has an Outperform rating and a $232 target.
- Wells Fargo has an Overweight rating and a $250 target.
- Mizuho has a Buy rating and a $220 target.
- Needham has a Buy rating and a $210 target.
- Bank of America has a Buy rating and a $210 target.
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