Why has CrowdStrike (CRWD) stock price shot up over $17 in after-hours trading?

on Jun 5, 2024
  • Cybersecurity stock CrowdStrike surprised the markets when it surged more than $17 in after-hours trading yest
  • But what caused the sudden spike in price?
  • A far better-than-expected earnings report for Q1 helped, as well as a bullish 2025 outlook.

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Cybersecurity company CrowdStrike Holdings Inc (CRWD) known for its cyberattack response services among other things, suddenly saw a boost to its after-hours trading after the New York trading session last night.

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The shares of the company popped $17.52 to a price of $326.21, roughly 6.5% up from the stock’s closing price for the day.

But why?

Why are CrowdStrike Holdings stock prices up?

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Last night, CrowdStrike reported Q1 earnings after US markets closed.

Thanks to the embattled business landscape most companies are facing, filled with myriad layoffs and cost pressures so far in 2024, its safe to say that the markets didn’t have high hopes.

But they were pleasantly surprised. The Q1 results posted by the company showed better-than-expected revenues at $921 million – up more than $200 million year-on-year.

GAAP income from operations was $6.9 million, compared to a loss of $19.5 million in the first quarter of fiscal 2024. Non-GAAP income from operations was $198.7 million, compared to $115.9 million in the first quarter of fiscal 2024.

Exceeding expectations

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Analysts, ahead of the earnings, were broadly expecting lower revenues than this, around $900 million.

In terms of subscriptions – the company’s main source of profits – these were up more than 30% year-on-year to total $872.17 million. CrowdStrike’s subscription gross profit were also up to $701.48 million.

These numbers too were significantly above expectations. Analysts, before the earnings, had broadly expected around $854 million to be announced in subscription revenues, and around $686.5 million estimated for subscription gross profits.

Earnings per share also brought welcome surprise, rising by more than 60% to an EPS of $0.93 per share, roughly 4 cents higher than expected by analysts.

This was also up significantly from the previous year’s $0.57 earnings per share.

What CrowdStrike says

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“CrowdStrike started the fiscal year from a position of momentum and exceptional strength, with net new ARR of $212 million growing 22% year-over-year and ending ARR (annual recurring revenue) growing 33% year-over-year to reach $3.65 billion,” said George Kurtz, CrowdStrike’s president, CEO and co-founder, on the results.

Is CrowdStrike a $10 billion company?

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Investors will also be pleased to know that the company is targeting a far higher annual recurring revenue by the end of the financial year – $10 billion.

Commenting on the company’s financial results, Burt Podbere, CrowdStrike’s chief financial officer, said of the results that:

The CrowdStrike team delivered another exceptional quarter driven by strong execution and platform adoption as customers increasingly consolidate on the Falcon platform. In addition to our strong top-line performance, financial highlights included record gross margin, significant year-over-year operating leverage, record free cash flow of $322 million or 35% of revenue and a rule of 68 on a free cash flow basis, showcasing our focus on profitably scaling the business to $10 billion ending ARR and beyond.”

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