CRWD Stock: Will Q1 Earnings Lift the CrowdStrike Share Price?

CrowdStrike reported strong Q4 2024 earnings back in March, which lifted its share price to an all-time high. The cybersecurity firm is expected to deliver again when Q1 2025 results are released on Tuesday, though an uncertain macro backdrop could weigh on annual recurring revenue in the near-term.

Cybersecurity firm CrowdStrike [CRWD] announced two major partnerships last week.

One is to help eSentire migrate customers from Broadcom’s [AVGO] Carbon Black platform to CrowdStrike’s Falcon platform.

The other is with Cloudflare [NET] to improve how networks are secured and to stop cyber breaches at scale.

“The rich dataset from our Falcon platform paired with Cloudflare’s robust zero trust capabilities provides unprecedented value for global customers. Together, we are converging two of the most critical pieces of the risk management puzzle,” Daniel Bernard, CrowdStrike’s Chief Business Officer, said in a press release.

Despite the eyecatching announcements, the CrowdStrike share price fell 10.75% last week to its lowest level in nearly a month. This could have been partly triggered by selloffs in Salesforce [CRM], which reported weak cloud demand, and Dell [DELL], which said that the cost of AI servers is eating into its margins.

According to data from Stockcircle, two ‘super investors’ bought $216.7m worth of CrowdStrike shares in the first three months of the year, while nine super investors sold $228.5m worth.

Ken Griffin, Founder, CEO and Co-Chief Investment Officer (CIO) of Citadel, snapped up approximately 706,000 shares, boosting his holding by 335.9%. Among the sellers were Ray Dalio, Founder of Bridgewater Associates, and Cathie Wood, Founder, CEO and CIO of ARK Invest, who reduced her position by 19%, offloading 27,000 shares.

Impressive Q4 Numbers

Investors will be hoping that CrowdStrike’s fiscal Q1 2025 earnings are a bit brighter when results are reported after the bell on Tuesday.

CrowdStrike’s share price jumped as much as 22.7% the day after the company reported its Q4 2024 results on 5 March. Revenue rose 33% year-over-year to $845.3m, while adjusted earnings came in at $0.95 per share, up from $0.47 per share in the year-ago quarter.

More impressively, more than 250 deals closed in the quarter were worth more than $1m. The overall number of deals was up 30% year-over-year, while the customer retention rate was 98%. Net new annual recurring revenue (ARR) was up 27%, hitting a record $282m.

According to a note from NAND Research Founder and Chief Analyst Steve McDowell, “CrowdStrike’s strategic focus on innovation and expanding its platform capabilities drives this growth”.

Challenging Macro Environment Could Slow Q1 ARR Growth

In its Q4 report, CrowdStrike guided towards revenue in the range of $902.2–905.8m for Q1, up 30%–31% from $692.6m in the year-ago quarter. Adjusted earnings per share are expected to rise from $0.57 in Q1 2024 to as much as $0.90. For the full year, EPS are forecast to be $3.77–3.97 on revenue of $3.92–3.99bn.

Net new ARR is forecast to accelerate by at least double digits to the low teens from the $174m net new ARR recorded in Q1 2024, but this would be a significant decline from the $282m of net new ARR acquired in Q4.

CrowdStrike Chief Financial Officer Burt Podbere said on the Q4 earnings call that “we continue to maintain a consistent and prudent approach to our outlook amid a macro environment that remains challenging”.

Nevertheless, CrowdStrike has “strong momentum in the market” and intends to increase the pace of its hiring in fiscal 2025 as it continues to invest in its “innovation engine”, Podbere added. The company is targeting ARR of $10bn annually over the next five to seven years.

CrowdStrike Share Price Pulls Back from All-Time High

Investors may be nervous heading into CrowdStrike’s earnings, especially after shares in fellow cybersecurity name Palo Alto Networks [PANW] tumbled following its earnings report last month. The CrowdStrike share price has already pulled back 14.1% from its all-time high of $365, recorded on 6 March, to close at $313.67 on 31 May. Still, the stock has rallied 103.6% in the past year and is up 22.9% year-to-date.

Given the uncertain macro backdrop in the near term, another way to gain exposure to CrowdStrike is through thematic ETFs.

The First Trust Nasdaq Cybersecurity ETF [CIBR] has CrowdStrike as its second-biggest holding, with a weighting of 6.3% as of 31 May. The fund is up 21.8% in the past year but down 0.8% year-to-date.

The Amplify Cybersecurity ETF [HACK] currently has CrowdStrike as its fifth-biggest holding, with a weighting of 6.1% as of 3 June. The fund is up 21.7% in the past year but down 1% year-to-date.

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