CrowdStrike Earnings: Despite Headwinds, We Believe Falcon Is Poised for Long-Term Success

Key Morningstar Metrics for CrowdStrike Holdings

• Fair Value Estimate: $300.00
• Morningstar Rating: 3 stars
• Morningstar Economic Moat Rating: Narrow
• Morningstar Uncertainty Rating: High

What We Thought of CrowdStrike Holdings’ Earnings

We are maintaining our $300 per share fair value estimate for CrowdStrike Holdings CRWD after it reported strong second-quarter results that were offset by the firm lowering its sales and profitability outlook for the second half of fiscal 2025. Despite the impactful global outage of CrowdStrike’s Falcon Platform on July 19, we believe it’s poised to move forward successfully.

Since the outage, investors have feared CrowdStrike’s growth engine would slow considerably as customers pulled their dollars from its platform in favor of competitors like SentinelOne S and Palo Alto Networks PANW. While the firm has lowered its sales and profitability guidance for the remainder of fiscal 2025 and pointed to near-term headwinds caused by the outage, we think its impact on the business will dissipate over time as the firm reasserts itself as a high-quality vendor with an impressive array of security solutions.

After trading close to $400 per share less than two months ago, CrowdStrike’s stock has cratered since the incident, dropping more than 30% from its pre-outage high. While we viewed the shares as overvalued before the chaos, we are not as pessimistic as the market about its impact on CrowdStrike’s business. We now view shares as marginally undervalued but still trading in 3-star territory.

CrowdStrike’s second-quarter sales clocked in at $964 million, up 32% year over year and ahead of the high end of management’s prior guidance. The firm’s annual recurring revenue (a better top-line measure for software companies) expanded 32% year over year to $3.86 billion. It is important to note that these numbers were driven mainly by the firm’s fundamental strength before the IT outage, as only 13 post-incident days are reflected in the quarter’s results.