CrowdStrike CEO Defends Financial Reporting Amid DOJ Probe Into Global IT Outage, Says 'We Stand By The Accounting Of Those Transactions'

CrowdStrike Holdings Inc. CRWD CEO George Kurtz expressed confidence in the cybersecurity company’s financial practices, as the firm faces a Department of Justice inquiry related to last year’s massive global IT outage and transaction reporting.

What Happened: “Someone asks a question, we’re going to cooperate. It’s an inquiry, and we’ll give them the answers they need and we’ll go from there,” Kurtz told CNBC’s Jim Cramer on Wednesday. “We stand by the accounting of those transactions.”

The DOJ investigation stems from CrowdStrike’s July 2024 software update failure that disrupted airlines, hospitals, and financial services worldwide. The company attributed the outage to a faulty update rather than a security breach or cyberattack.

CFO Burt Podbere disclosed that CrowdStrike received information requests from both the DOJ and Securities and Exchange Commission regarding “revenue recognition and reporting of ARR for certain transactions, the July 19 outage, and related matters.”

Why It Matters: Despite regulatory scrutiny, CrowdStrike reported strong first-quarter results with $1.1 billion in total revenue, up 20% year-over-year, and $194 million in net new Annual Recurring Revenue (ARR). The company’s annual recurring revenue grew 22%.

Kurtz emphasized customer loyalty remains intact, citing a 97% retention rate following the outage. The company’s remediation efforts cost $11 million in the quarter, which Kurtz described as handling the situation “the right way.”

Price Action: CrowdStrike’s stock closed at $460.56 on Wednesday, down 5.77% for the day. In pre-market trading, the stock edged up 0.14% to $461.20. Year to date, CrowdStrike shares have gained 32.60%, rising by $113.22.

According to Benzinga Edge Stock Rankings, CRWD shows strong momentum and modest growth. While the stock has a negative valuation, it maintains a positive price trend across short to long-term periods. Click here to view the full breakdown.