CrowdStrike lowers revenue forecast after July IT outage
Digital boards are seen due to the global communications outage caused by CrowdStrike, which provides cyber security services to US technology company Microsoft, it was observed that some digital billboards in Times Square in New York City, United States, displayed a blue screen and some screens went completely black on July on 19, 2024.
( Selçuk Acar - Anadolu Agency )
CrowdStrike, a prominent cybersecurity firm, has revised its full-year revenue forecast downward after a significant global IT outage in July, caused by a faulty software update. Despite this setback, the company reported strong second-quarter results for fiscal year 2025, exceeding analysts’ expectations.
What happened in July IT outage?
- Global outage: On July 19, a faulty update to CrowdStrike’s Falcon Sensor security system caused a worldwide IT outage, affecting various industries, including airlines, banks, and hospitals. The disruption led to significant interruptions in devices using the Windows operating system.
- Customer response: The incident occurred during a critical sales period, delaying contract signings into subsequent quarters. This disruption led to delays in contract signings and customer compensation, significantly impacting the company’s revenue outlook.
How IT outage impact CrowdStrike’s revenue and forecast?
- Lowered forecast: CrowdStrike now projects annual revenue to be between $3.89 billion and $3.9 billion for fiscal year 2025, down from the previous estimate of $3.98 billion to $4.01 billion.
- Subscription: The company noted a $30 million impact on subscription revenue for each remaining quarter due to customer compensation related to the outage.
Yet, CrowdStrike shows resilience
CrowdStrike CEO George Kurtz emphasized the company’s resilience, stating, “In working with customers to recover from the July 19 incident, we emerge as an even more resilient and customer-obsessed CrowdStrike, continuing to aggressively invest in innovation.”
- Strong second-quarter results: Despite the outage, CrowdStrike reported a 32% year-over-year increase in revenue, reaching $963.9 million for the second quarter of the fiscal year 2025. Net income surged to $47 million, up from $8.5 million in the same period last year.
- Market response: While the company’s shares dropped 25% following the outage, they rebounded, with a 3.99% increase in after-hours trading following the earnings report. CrowdStrike’s stock is up 5% year-to-date.
What will happen to CrowdStrike?
- Ongoing challenges: The delayed subscriptions and the need for customer compensation are expected to impact CrowdStrike’s earnings in the second half of fiscal year 2025.
- Positive outlook: Despite the challenges, the company remains confident in its long-term growth prospects, driven by continued innovation and customer commitment.
- Market position: CFO Burt Podbere highlighted that CrowdStrike’s market opportunity remains strong, driven by the growing need for cybersecurity solutions amid rapidly evolving threats. The company continues to see significant adoption of its LogScale Next-Gen SIEM, Identity Protection, and Cloud Security offerings.
