CrowdStrike Posts Strong Q3 Results, Boosts FY25 Guidance

Profit Exceeds Expectations Amid Revenue Growth

CrowdStrike Holdings, Inc. (CRWD) achieved non-GAAP earnings of 93 cents per share for the third quarter of fiscal 2025, surpassing the Zacks Consensus Estimate by 14.8% and exceeding management’s guidance of 80-81 cents.

In the same quarter last year, CRWD reported non-GAAP earnings of 82 cents. This impressive profit increase was largely due to rising revenues.

The company has now beaten the Zacks Consensus Estimate for earnings over the past four quarters, with an average surprise of 10.32%.

Find the latest EPS estimates and surprises on Zacks Earnings Calendar.

CrowdStrike’s revenues for the fiscal third quarter reached $1.01 billion, marking a 29% increase compared to last year and surpassing the consensus estimate of $982.3 million. This figure also exceeded the company’s own guidance of $979.2-$984.7 million, primarily due to the popular Falcon platform and enhanced sales efforts.

Following these results, CRWD has updated its fiscal 2025 guidance. The company’s stock has risen 38.4% year-to-date, outperforming the Zacks Internet – Software industry, which has seen a 32.6% increase. This strong performance could lead to further gains in the stock price in the near future.

CrowdStrike Price, Consensus, and EPS Surprise

CrowdStrike price-consensus-eps-surprise-chart | CrowdStrike Quote

Revenue Breakdown of CRWD

Subscription revenues, which account for 95.3% of total revenues, surged 31.3% year-over-year to $962.74 million. However, professional services revenues (4.7% of total) fell by 9.7% year-over-year to $47.4 million.

As of October 31, 2024, CrowdStrike reported annual recurring revenues (ARR) of $4.02 billion, a 27% increase year-over-year. The company added $153 million to its net new ARR during the fiscal third quarter.

Among its subscription customers, 66% utilized five or more cloud modules, while 47% used six or more, and 31% employed seven or more modules as of October 31, 2024.

Operational Insights from CRWD

CrowdStrike’s non-GAAP gross profit grew by 28.5% to $786.5 million compared to $612 million in the same quarter last year. The non-GAAP gross margin remained steady at 78%.

The non-GAAP subscription gross profit climbed 30.9% year-over-year to $770.44 million; the gross margin for subscriptions remained flat at 80%. In contrast, non-GAAP professional gross profit decreased 29.8% to $16.2 million, with the gross margin contracting 1,000 basis points to 34% year-over-year.

Total non-GAAP operating expenses rose by 35.7% to $591.7 million from $436.1 million in the previous year’s quarter. As a percentage of revenues, these operating expenses increased from 55% to 59% year-over-year.

Non-GAAP sales and marketing expenses rose 38.3% to $336.3 million, R&D costs climbed 33.1% to $190 million, and administrative expenses increased by 30.6% to $65.3 million. As a percentage of revenues, S&M and R&D expenses grew by 200 and 100 basis points, respectively, while G&A expenses held steady at 6%.

Consequently, non-GAAP operating income increased by 11% to $194.9 million, driven by revenue growth. The non-GAAP operating margin decreased by 300 basis points to 19% compared to the prior year.

Balance Sheet and Cash Flow for CRWD

As of October 31, 2024, CrowdStrike reported cash and cash equivalents totaling $4.26 billion, with long-term debt at $743.6 million.

In the fiscal third quarter, CRWD generated operating cash flow of $326 million and free cash flow of $231 million.

Forecast for Q4 and FY25

CrowdStrike has provided guidance for the fiscal fourth quarter and adjusted its fiscal 2025 outlook. The company projects Q4 revenues between $1.0287 billion and $1.0354 billion. Expected non-GAAP operating income is between $184 million and $189 million, while non-GAAP net income is anticipated between $210.9 million and $215.8 million. Non-GAAP earnings per share is estimated to be in the range of 84-86 cents. The consensus figures for fourth-quarter revenues and non-GAAP earnings stand at $1.03 billion and 86 cents per share, respectively.

For fiscal 2025, CrowdStrike now expects revenues between $3,923.8 million and $3,930.5 million, up from its earlier estimate of $3,890-$3,902.2 million. The updated non-GAAP operating income for fiscal 2025 is projected to be between $804.4 million and $809.4 million, compared to previous guidance of $774.7-$783.9 million.

Moreover, the company anticipates non-GAAP net income of $937.5 million to $942.6 million, an increase from the previous range of $908.8 million to $918.0 million. Non-GAAP earnings per share is now expected to be between $3.74 and $3.76, improved from $3.61 to $3.65. The fiscal 2025 consensus expectations are pegged at $3.90 billion in revenues and $3.62 per share in non-GAAP earnings.

Zacks Rank and Stock Recommendations

Currently, CRWD holds a Zacks Rank #3 (Hold).

NVIDIA (NVDA), Amphenol (APH), and Celestica (CLS) are some better-ranked stocks within the broader Zacks Computer & Technology sector.

All three, NVDA, APH, and CLS, currently hold a Zacks Rank #2 (Buy). For a full list of today’s Zacks #1 Rank (Strong Buy) stocks, click here.

The consensus for NVIDIA’s 2025 earnings was recently revised upward by 9 cents to $2.93 per share, though this reflects an expected 111% year-over-year decline. NVDA shares have surged 176.5% year to date.

Amphenol’s 2024 earnings consensus has also increased by 2 cents to $1.17 per share over the past week, suggesting a notable 58% year-over-year rise. The projected long-term earnings growth rate stands at 42.60%, with APH stock climbing 43% year to date.

Similarly, Celestica’s 2024 earnings consensus rose by 20 cents to $3.85 per share, reflecting an impressive 58.4% year-over-year growth, and CLS shares have exploded by 197.1% year to date.

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