CRWD Stock: Key Growth Metric Could Be Critical In CrowdStrike Earnings

When CrowdStrike Holdings (CRWD) reports July-quarter earnings on Tuesday, many analysts will focus on the cybersecurity software maker’s annual recurring revenue, or ARR. The size of an ARR beat could move CRWD stock, just like it did in the April quarter.

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When CrowdStrike reports after the market close, analysts project earnings of 28 cents a share, jumping 154% from a year earlier. Revenue is expected to rise nearly 53% to $516 million.

Those are heady numbers. But analysts also track ARR, which is a financial metric tied to subscription customer growth. For the July quarter, analysts project ARR of $2.114 billion, up 57% year over year. ARR rose 61% to $1.92 billion in the April quarter, merely edging by estimates. That prompted CRWD stock to fall.

“Over the last four quarters, ARR has exceeded the consensus estimate by an average of 2.6%,” Wells Fargo analyst Andrew Nowinski said in a recent note to clients. He expects a smaller beat, around 1%.

No ARR Guidance From Company

Trouble is, the Sunnyvale, Calif.-based company does not provide ARR guidance. Some analysts aim to break out ARR from new customers.

“We remain focused on ARR, with consensus at $2,114 million, which implies $192 million of net-new ARR, up 27% year over year vs. $151 million in Q2 fiscal 2022 and vs $190 million in the April quarter,” RBC Capital analyst Matthew Hedberg said in his note to clients.

Heading into the CrowdStrike earnings report, CRWD stock had retreated 7% in 2022. CRWD stock owned a Relative Strength Rating of 82 out of a best-possible 99, according to IBD Stock Checkup.

CRWD Stock: A Cybersecurity Stock To Watch

The company uses machine learning, one form of artificial intelligence, in its products. It also uses a specialized database to detect malware on laptops, mobile phones and other devices that access corporate networks.

UBS analyst Roger Boyd is cautious on Q2.

“We are cautious on competition, where multiple (survey) anecdotes highlighted a more aggressive pricing environment between CrowdStrike, SentinelOne (S) and Microsoft (MSFT) with both SentinelOne and CrowdStrike allegedly getting more aggressive on discounting,” he said.

Also, CrowdStrike is building a broad, threat-detection cybersecurity platform. Called XDR, or extended detection and response, it monitors endpoints as well as web/email gateways, web application firewalls and cloud business workloads.

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Follow Reinhardt Krause on Twitter @reinhardtk_tech for updates on 5G wireless, artificial intelligence, cybersecurity and cloud computing.

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