CrowdStrike (CRWD) ARR and New Customer Acquisition To Watch For Third Quarter

This will be CRWD’s first full quarter since a faulty July software update caused a global Microsoft Windows outage with wide-ranging impacts.

Analysts are expecting CRWD revenue and adjusted profit to rise as the outage should have less of a negative impact on its bookings than consensus estimates.

Wall Street expects CRWD to post EPS of $0.81, while revenue is expected to rise 25% at $983.03 million.

We have seen CRWD rebound from the 19 July system outage and it seems like customer confidence in CrowdStrike remains unshaken, and there is no significant customer loss.

Because of CRWD’s swift actions, including the roll-out of Customer Commitment Packages (CCP) and flexible price options have been able to effectively retain its customers.

But something we need to watch out is the projected Annual Recurring Revenue (ARR) and revenue impact for the second half of 2025, estimated at a $60 million headwind.

Analyst noted that discussions with 20 Chief Information Security Officers (CISOs) across various industries and four resellers suggest that the credits provided are being used strategically to purchase additional modules and prolong contracts. While some renewals might be postponed, the overall customer retention is perceived to be solid.

If we looked at the returns CRWD have given to investors year-to-date, we are seeing that there have been pretty consistent upside since August and able to return more than 40% to investors.

This might cause investors to have high expectations for CrowdStrike, evidenced by the stock's 20% rise in the last 30 days and a 42% increase year-to-date.

If we have watched CRWD stock price movement, investors have enjoyed 42% returns to date and this could cause investors to be confident of this quarter, but I think we need to look at other factor that could cause CRWD third-quarter earnings to be lacklustre.

On the positive side, we have JPMorgan expressed that CRWD’s platform strength and anticipated over $1 billion in Annual Recurring Revenue (ARR) growth would be something to look forward to. Cantor Fitzgerald also expect broader adoption of CRWD's platform and potential ARR acceleration, expect a better third-quarter. Stifel and Truist Securities both raised their price targets ahead of the Q3 earnings report, signaling faith in the company's medium-term market opportunities.

Though CrowdStrike continues to make strategic moves, such as forming a partnership with Plurilock Security Inc., to strengthen its market position. These recent developments have placed CrowdStrike in the spotlight, shaping its current market standing.

So CRWD strong growth in its Annual Recurring Revenue (ARR) over the past year, with ARR increasing 34% year-over-year to $3.44 billion as of 31 January 2024. In the second quarter of fiscal year 2025, ARR grew 32% year-over-year to $3.86 billion.

So this might be something we should be watching.

If we looked at the recent fiscal quarter earnings, we can see that there have been significant improvement of the EPS vs Forecast as CRWD ARR and revenue came in stronger.

So it is important to see how the revenue would be like followed the July incident, because three month after that incident, though customer is retained, but are they spending more or reduce the spending?

And how about new customers? Any major customers acquired in the third quarter?

From the technical, we are seeing CRWD trading on the upside movement since the last quarterly earnings, which seem to ignore the July outage incident, so investors are still optimistic about CRWD’s business mainly due to the demand as AI development continue in a fast pace.

But we need to be aware of some incumbents who have entered the market in the third quarter as well, so consumers have more choices, so CRWD strength is in its large enterprise customer and tech companies.

MACD is giving confidence on more upside unless we saw a weaker third quarter and outlook or updates of some customer cancellation, if not, we should be seeing upside continuing as seen in the MTF with strong upward trend.

I will be watching CRWD price action today (26 Nov) before its earnings as I expect a small pullback so that can take advantage to buy in.

Crowdstrike might have moved positively upside since the July outage incident, but for long term growth, I think we need to look at how much ARR have grown in the third quarter and also new customers acquisition, both small and large ones.

That might give us an idea on whether CrowdStrike stands in the cybersecurity market.

Appreciate if you could share your thoughts in the comment section whether you think CrowdStrike ARR growth would be strong and there would be large new customers acquisition in third quarter?

Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.