Proactive Investors - CrowdStrike (NASDAQ:CRWD) is expected to deliver its second-quarter financial results on Wednesday, 28 August 28, with no prizes for guessing what issue will take centre stage.
The cybersecurity giant’s valuation remains substantially deflated following its role in a Microsoft (NASDAQ:MSFT) IT outage that caused widespread chaos in July.
CrowdStrike president George Kurtz blamed “a single content update for Windows hosts” for a fault causing severe disruption for airlines, emergency services and broadcasters around the world.
Businesses affected by the outage have since launched compensation claims against CrowdStrike and Microsoft, including Atlanta-based airline Delta, which had to cancel more than 6,000 flights and suffered an estimated $350 million to $500 million in losses due to the outage.
Stakeholders will be wanting to hear from management how these legal proceedings will affect CrowdStrike’s bottom line.
However, Wedbush analysts have suggested that the potential liabilities facing CrowdStrike are “a lot less than feared”.
Citing ‘legal experts’, Wedbush recently said CrowdStrike’s potential liability and damages risk arising from Delta’s legal action would be in the "single-digit" millions range.
"CrowdStrike's user contracts are very favourable to CrowdStrike and include prohibition on collection for revenue losses and liability limitations,” Wedbush stated.
But that does not take into account the prospect of new business losses if CrowdStrike fails to resuscitate its reputation.