CrowdStrike Q3 Preview: Can Strong Deals Pipeline Drive Earnings Beat?

CrowdStrike CRWD, the cloud-based and AI-powered cybersecurity platform, is poised to report quarterly earnings after the market close on Tuesday, and analysts believe the numbers will be impressive.

CrowdStrike’s share price has doubled over the year so far, rising from $105.29 on January 31 to $210.70 on Tuesday morning ahead of the results, following earnings beats in its previous four quarterly reports.

The company said in its last update that it anticipated third-quarter revenues between $775-$778 million. Zacks Equity Research, which rates the stock a Buy, offered a consensus estimate at $777.2 million, which would come in near the top end of CrowdStrike’s own assessment. The company expected earnings per share of 74 cents, which would match Zacks’ estimate.

Read Also: Decoding CrowdStrike Holdings’s Options Activity: What’s the Big Picture?

What’s Happened Since Q2 Results?

Analysts at Needham, which rates the stock at Buy, raised CrowdStrike’s price target from $215 to $245, impressed by new products on display at the recent FALCON Trade Show. Having spoken to customers of CrowdStrike at the show, Needham analyst Alex Henderson said “the message was clear.”

“The platform is coming of age, drives significant value, and fits to the customer’s strategy of shifting to the best platform and away from point products. Crowd underlined the point by launching a myriad of new products and capabilities.”

Henderson added that CrownStrike had highlighted a strong customer deal pipeline, with the company’s marketing manager saying: “We didn’t just beat our prior record and beat our goal, we doubled it.”

Zacks Also Impressed By Deals Pipeline

Zacks said the greater need for security might have spurred demand for CrowdStrike’s products in the third quarter, and a strong pipeline of deals indicated this demand.

“Stellar revenue growth in subscriptions might have contributed significantly to the third-quarter top line. Further, the increasing number of net new subscription customers may have acted as a tailwind.”

However, Zacks indicated the bottom line could have been negatively affected by increased costs in sales enhancement and marketing over Amazon.com Inc‘s AMZN Web Service, while increased investment in research and development may have also weighed on earnings.

“Our model does not conclusively predict an earnings beat for CrowdStrike this season,” it said.

Now Read: Cybersecurity Company CrowdStrike Launches AI-Powered Falcon Go On Amazon

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