CrowdStrike Sees Strong Module Adoption, Valuation Concerns Persist: Analysts

CrowdStrike Holdings Inc CRWD stock is trading lower Wednesday after the company reported third-quarter financial results.

On Tuesday, CrowdStrike reported third-quarter revenue of $1.01 billion, up 29%, beating the consensus estimate of $982.36 million. The company reported adjusted EPS of $0.93, beating analyst estimates of $0.81. Annual recurring revenue increased 27% to $4.02 billion.

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CrowdStrike expects fourth-quarter revenue of $1.029 billion—$1.035 billion, versus estimates of $1.03 billion. The company anticipates fourth-quarter adjusted EPS of $0.84—$0.86 versus estimates of $0.86.

CrowdStrike now expects full-year revenue of $3.924 billion—$3.931 billion, compared to estimates of $3.897 billion. The company also expects full-year EPS of $3.74—$3.76, compared to estimates of $3.63.

Analysts rerated the stock after the quarterly print.

WestPark Capital analyst Paul Rodriguez reiterated CrowdStrike with a Hold.

Needham analyst Mike Cikos maintained CrowdStrike with a Buy and raised the price target from $360 to $420.

WestPark Capital: Based on the upbeat quarterly print and guidance boost, Rodriguez increased their full-year estimates to $3.93 billion in revenue and $3.76 in EPS, up from prior projections of $3.89 billion and $3.62.

The adoption rate of CrowdStrike’s cybersecurity modules continues to outpace its overall revenue growth of 28.5% in the third quarter. Customers using five or more modules are driving this momentum, suggesting that spending on additional modules could sustain growth above 28% for longer than anticipated. Integrating Next-Gen SIEM and artificial intelligence tools like Charlotte AI further supports this trend, fueling customer interest and module adoption.

While the quarter’s overall performance was robust, CrowdStrike’s net new ARR declined compared to the second quarter, dropping to $217 million. The company attributed this to the July security incident and a slowdown in new customer acquisitions. Despite this, management expressed confidence in regaining growth in net new ARR as fiscal 2026 approaches.

CrowdStrike’s valuation continues to trade at a significant premium relative to its peers. The company’s calendar year 2025 price-to-sales (P/S) multiple stands at 19.7x, compared to the peer average of 10.5x. Similarly, its enterprise value-to-sales (EV/Sales) multiple of 22.4x far exceeds the peer group’s 9.3x. Analysts at WestPark reiterated a “Hold” rating, citing these valuation disparities. Rodriguez expects fourth-quarter revenue of $1.034 billion and EPS of $0.85.

Needham: CrowdStrike exceeded all guided metrics in its third quarter of fiscal year 2025, demonstrating solid execution despite industry challenges. Gross retention, which declined less than 0.5% quarter-over-quarter, highlights the company’s resilience and supports management’s approach to leveraging opportunities amid crises. A $500 million quarter-over-quarter increase in Remaining Performance Obligations (RPO) reflects a surge in multi-year contracts. CrowdStrike consolidates customers onto its Falcon platform and strengthens retention through multi-module adoption, making replacements more difficult.

Management acknowledges reduced visibility heading into the fourth quarter of fiscal 2025, emphasizing headwinds in annual recurring revenue (ARR) and subscription growth. However, the company remains confident about ARR reacceleration in the second half of fiscal 2026.

CrowdStrike’s Falcon Flex offering has gained significant traction, with its total contract value (TCV) nearly doubling quarter-over-quarter to $1.3 billion, up from $700 million in the prior quarter. Flex customers, often strategic partners, spend millions of dollars with CrowdStrike, far exceeding the spending of the average customer.

The company’s Next-Gen SIEM product continues to grow rapidly, with ARR increasing over 150% year-over-year, nearing $300 million. Adoption by over 2,000 customers underscores its appeal, with each paying approximately $150,000 annually.

Cikos raised the price target, applying a 21.3x EV/Sales multiple to fiscal 2026 revenue estimates. The updated valuation reflects increased confidence in CrowdStrike’s ability to execute its customer commitment strategy and outperform its target operating model. The previous price target of $360 was based on an 18.3x EV/Sales multiple.

CrowdStrike is poised for further growth as it continues to capitalize on multi-module adoption and innovative offerings like Falcon Flex and Next-Gen SIEM. Management’s focus on ARR recovery and cost optimization positions the company for improved visibility and performance exiting fiscal 2025.

Cikos expects fourth-quarter revenue of $1.034 billion and EPS of $0.86. He projects fiscal 2025 revenue of $3.901 billion and EPS of $3.62.

Price Action: CRWD stock is down 6.28% at $341.42 at last check Wednesday.

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