CrowdStrike Q3 Earnings Preview: Analysts Anticipate Recovery, 'Customers Remain Confident'

Analysts expect CrowdStrike Holdings CRWD to report third-quarter revenue of $982.36 million after market close Tuesday. That’s up from $786.01 million in last year's third quarter, according to data from Benzinga Pro.

Observers will be closely watching the stock for signs of a recovery following a July IT outage — one of the largest in history.

Earnings Estimates: CrowdStrike has beaten analyst revenue estimates in more than 10 straight quarters.

Analysts expect the company to report third-quarter earnings per share of 81 cents, versus 82 cents in last year's third quarter. The company has beaten analyst earnings per share estimates in more than 10 straight quarters.

Guidance from the company calls for third-quarter revenue to be in a range of $979.2 million to $984.7 million. The company also is guiding for third-quarter earnings per share to be in a range of 80 cents to 81 cents per share.

Read Also: CrowdStrike Expands Cybersecurity Reach In Europe And Launches AI Red Team Services

What Analysts Are Saying: Investor attention will be on CrowdStrike's recovery from its July 19 outage, Rosenblatt analyst Catherine Trebnick said in a new investor note.

The analyst reiterated a Buy rating and raised the price target from $325 to $385.

"Our channel checks suggest that customers remain confident in the company and are not stepping away," Trebnick said.

Trebnick said CrowdStrike could show "modest upside" from quarterly estimates and raise guidance.

"Some renewals may be delayed, but overall customer retention appears strong."

Guidance and the litigation overhang are key items being watched by WestPark Capital’s Paul Rodriguez. The analyst has a Hold rating and no price target. Future revenue can be impacted by customer discounts being used to help offset customer complaints about the July outage.

"Our checks suggest CRWD has not suffered much customer churn but CrowdStrike has had to make concessions to its clients base," Rodriguez said.

The analyst said there are concerns about heavy discounting being done in the field.

A litigation overhang mainly revolves around Delta Air Lines, is also a concern for the analyst after Delta decided to move forward with legal action.

"If other companies move further with litigation against CrowdStrike post the Delta news remains to be seen but this scenario does pose a risk to CrowdStrike shares."

Key Items to Watch: CrowdStrike said second-quarter annual recurring revenue was up 32% year-over-year. This remains a key item for investors to watch on Tuesday.

The company said the July outage inspired a renewed focus on becoming a "more customer-obsessed CrowdStrike."

Cybersecurity remains a key theme going forward with companies increasing focus and spending on this category. Aside from the July outage recovery, new products and commentary on customer spending will be big items to watch for investors.

Price Action: CrowdStrike stock is down 2% to $363.80 on Monday versus a 52-week trading range of $200.81 to $398.30. CrowdStrike stock is up 47% year-to-date.

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