Key Takeaways:
CrowdStrike Holdings reports fiscal second-quarter results Wednesday after the close, with options pricing implying a swing of up to 7 percent in either direction.
"The cybersecurity leader delivered record net-new ARR growth last quarter and raised its full-year outlook, setting a high bar heading into this report," Jay Woods, chief market strategist at Freedom Capital Markets, said. "Good numbers may not be good enough."
Analysts expect revenue of $1.44 billion, up 23 percent from a year earlier, with adjusted earnings of 29 cents a share, according to Visible Alpha estimates. Jefferies forecasts about $310 million in net new annual recurring revenue, above management's guidance midpoint of roughly $285 million. Bank of America models the figure at $286 million, near the top of the company's range.
Shares have climbed about 90 percent this year and touched an all-time high of $226.90 on Aug. 10, leaving little room for a merely in-line quarter. Bank of America analysts said investors may need a beat of at least 3 percent against consensus to read the results as a win, after CrowdStrike beat first-quarter revenue estimates yet saw shares slide about 10 percent the next day.
Net new ARR has become the metric Wall Street watches most closely, since it shows whether Falcon Flex, the company's consumption-based bundling program, keeps expanding rather than simply renewing existing accounts. CrowdStrike's AI Detection and Response product saw ARR grow about 250 percent sequentially in the first quarter, off a small base, with a sales pipeline above $50 million heading into the second quarter, according to Bank of America's research note.
Wall Street is largely bullish, with 15 of 19 analysts tracked by Visible Alpha rating the stock a buy and an average price target of $218. Jefferies, KeyBanc and JPMorgan have each raised targets in recent weeks, with KeyBanc's $240 the highest among major banks, while Benchmark and Cantor Fitzgerald have pushed targets as high as $250. Bank of America raised its own target to $230 from $187.50 but held a Neutral rating, citing elevated expectations.
The company has beaten revenue estimates in four straight quarters and adjusted earnings estimates in each of the past 10 quarters, according to Benzinga Pro data. CrowdStrike raised its full-year revenue and earnings guidance after first-quarter results, and investors are counting on another raise with strong quarterly numbers. Bank of America's repricing of the cybersecurity group also lifted targets for Palo Alto Networks and SentinelOne, showing the sector-wide AI security trade.
The report will test whether a well-run, fast-growing company can satisfy investors whose expectations have been pulled higher by the AI security narrative. Management's outlook at the Fal.Con conference the following week, and its ability to convert AI-driven demand into Falcon platform sales, will likely determine the stock's reaction.
This article is for informational purposes only and does not constitute investment advice.
