On Thursday, Guggenheim maintained a Neutral stance on CrowdStrike Holdings (NASDAQ:CRWD), following the cybersecurity firm's second-quarter fiscal year 2025 results which surpassed consensus estimates. The analyst pointed out that despite CrowdStrike's effective handling of the July 19 IT outage, the incident is expected to have prolonged repercussions over the coming year.
The company has introduced a Customer Commitment Package to mitigate the impact, but the effects are anticipated to persist through the first half of fiscal year 2026.
CrowdStrike's recent IT outage has raised concerns about its near-term prospects. The analyst acknowledged that while investors showed interest in buying the stock when it dipped to around 10 times enterprise value to next twelve months (EV/NTM) recurring revenue post-outage, the uncertainty surrounding the incident has led to a cautious approach.
Since then, the stock has experienced a rally, but with the NTM revenue now lower than before, the resulting multiple is estimated to reach approximately 16 times, which could be the highest among the stocks covered by the analyst.
The report further elaborates that while high-multiple stocks can present value, as previously defended by the analyst with a Buy rating on CrowdStrike, the current situation is fraught with uncertainty.
Investors who are looking for a solid asset and are willing to wait for the fallout from the IT outage to subside might consider purchasing shares in the future. However, there is a possibility of downside risk before any potential recovery.
The analyst concluded by expressing a preference to stay on the sidelines with a Neutral rating on CrowdStrike. This position reflects a cautious outlook due to the significant uncertainty that remains after the IT outage and its expected long-term impact on the company's performance.
In other recent news, cybersecurity firm CrowdStrike Holdings, Inc. reported impressive fiscal second quarter 2025 financial results, demonstrating resilience amid the recent Channel File 291 Incident. The company's ending annual recurring revenue (ARR) reached $3.86 billion, a robust 32% year-over-year increase. Revenue for the quarter stood at $964 million, surpassing CrowdStrike's own guidance. Additionally, the firm reported a record non-GAAP operating income of $227 million, marking a significant 46% growth from the previous year.
Looking ahead, CrowdStrike anticipates Q3 revenues to be between $979.2 million and $984.7 million, reflecting a year-over-year growth rate of 25%. For the full fiscal year 2025, revenue is projected to be between $3,890.0 million and $3,902.2 million, indicating a growth rate of 27% to 28%. Despite challenges, including extended sales cycles and the impact of the Channel File 291 Incident on sales, the company maintains a positive outlook.
In other developments, CrowdStrike's Falcon platform continues to receive positive feedback, with strong customer loyalty and retention. The firm's Falcon Flex (NASDAQ:FLEX) procurement vehicle has created $700 million in deal value in one year and is expected to be the primary go-to-market approach.
InvestingPro Insights
In light of the recent IT outage at CrowdStrike Holdings and the subsequent market reaction, InvestingPro data offers a deeper dive into the company's financial health and market performance. With a market capitalization of $65.67 billion, CrowdStrike is trading at a high earnings multiple, with a P/E ratio of 483.56, reflecting the market's high expectations for future earnings growth. This aligns with one of the InvestingPro Tips, which suggests that net income is expected to grow this year.
Despite the challenges faced, CrowdStrike's financials show robust revenue growth over the last twelve months as of Q1 2023, with an increase of 34.26%. The company's gross profit margin stands at an impressive 75.29%, indicating strong profitability in its core operations. However, the operating income margin is relatively thin at 0.74%, highlighting the competitive nature of the cybersecurity industry and the need for ongoing investment in innovation and customer acquisition.
For investors considering CrowdStrike's stock, another relevant InvestingPro Tip is that the company holds more cash than debt on its balance sheet, which could provide a cushion against near-term uncertainties. Furthermore, with a 1-year price total return of 80.1%, the stock has shown the capacity for high returns over the past year. For those interested in further insights, there are 15 additional InvestingPro Tips available for CrowdStrike, which can be found at https://www.investing.com/pro/CRWD.
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