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It's that time again. CrowdStrike Holdings (CRWD) steps into the earnings spotlight Wednesday after the market closes, and investors are hoping the cybersecurity giant can finally push shares back to their old highs. The stock has been on a wild ride lately, and this report could be the spark that sets it off.
Let's break down what to expect, what the experts are watching, and the key numbers that could move the needle.
Analysts are looking for second-quarter revenue of $1.44 billion, a solid jump from the $1.17 billion reported in the same period last year. CrowdStrike has been on a revenue-beating streak, topping estimates in four straight quarters and in eight of the last ten overall.
On the earnings side, the consensus is for 29 cents per share, up from 23 cents a year ago. But here's the twist: the company has missed EPS estimates in eight consecutive quarters, and in eight of the last ten. So while the top line has been strong, the bottom line has been a bit of a sore spot.
Jay Woods, Chief Market Strategist at Freedom Capital Markets, says investors should zero in on two things: ARR growth and AI-security demand. "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," Woods noted in a weekly newsletter.
But he also recalls what happened last time: the stock fell even after those record figures. "As a result, good numbers may not be good enough. With expectations elevated, another beat will help, but the forward outlook may ultimately determine the stock's reaction."
Woods points out that the stock has averaged a 4% decline after the past three earnings reports, and the options market is pricing in a move of plus or minus 7.5% after Wednesday's report. His advice? "Expect volatility."
On the technical side, Woods sees the stock holding its rising 50-day moving average. "Shares look poised to rally back to old highs and earnings could be that catalyst."
Analysts have been busy adjusting their price targets ahead of the report. Here's a quick rundown:
Given the mixed results lately, investors will likely be looking at different metrics this time. The company has been beating on revenue but missing on EPS, so the focus might shift to the quality of earnings and forward guidance.
One big number to watch is net new ARR. CrowdStrike posted record net new ARR last quarter, and they'll need to show they can keep that momentum going. In Q1, annual recurring revenue was up 24% year-over-year.
CEO George Kurtz has been talking up the company's AI security infrastructure, calling it critical for successful AI adoption. That's been driving platform adoption from both existing and new customers, and it's a narrative that could resonate with investors.
Also, keep an eye on guidance. After raising its full-year revenue and EPS outlook following Q1, analysts and investors are likely expecting another bump if the quarter comes in strong.
As of Tuesday, CrowdStrike shares were down 3.11% to $184.76. The stock's 52-week range is $85.68 to $227.50, and it's up 65.4% year-to-date. But here's the kicker: it's still about 18% below the all-time highs it set earlier this month.
So, will Wednesday's report be the catalyst that sends shares back to those highs? Or will it be another case of "good numbers not being good enough"? Tune in and find out.
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