By Wallace Witkowski, MarketWatch
CrowdStrike Holdings Inc. shares surged in the extended session Tuesday as the cybersecurity company continues to seize opportunities created by the COVID-19 pandemic, hiking its outlook for the year as quarterly results topped Wall Street expectations with a surprise adjusted profit.
CrowdStrike /zigman2/quotes/212513426/composite CRWD +1.49% raised its outlook for the year, forecasting an adjusted loss of 8 cents to 5 cents a share on revenue of $761.2 million to $772.6 million, up from a previous forecast of a loss of 14 cents to 10 cents a share on revenue of $723.3 million to $733.5 million. Analysts surveyed by FactSet expect a loss of 12 cents a share on revenue of $726.9 million.
The company expects an adjusted loss of 2 cents a share to break-even on revenue of $185.8 million to $190.3 million for the fiscal second quarter, while analysts forecast a loss of 6 cents a share on revenue of $173.1 million.
Late Tuesday, CrowdStrike reported a fiscal first-quarter loss of $19.2 million, or 9 cents a share, compared with a loss of $26 million, or 55 cents a share, in the year-ago period. Adjusted earnings were 2 cents a share, the company’s first-ever quarterly profit on an adjusted basis, compared with an adjusted loss of 47 cents a share in the year-ago period. Revenue rose to $178.1 million from $96.1 million in the year-ago quarter.
Analysts had forecast an adjusted loss of 6 cents a share on revenue of $165.4 million, based on CrowdStrike’s forecast adjusted loss of 7 cents to 6 cents a share on revenue of $164.3 million to $167.6 million for the first quarter.
On the conference call, George Kurtz, CrowdStrike’s co-founder and chief executive, said that the COVID-19 pandemic has inspired “one of the most heightened threat environments we have ever seen” as millions of people have moved to work-from-home environments and hackers have sought to take advantage of that disruption. Kurtz said he expects working-from-home to become a long-term trend regardless as companies are prompted to speed up their digital transformations.
Back in late March, it was apparent that CrowdStrike was an early beneficiary of the work-from-home rush after COVID-19 was declared a pandemic as evidenced in the company’s previous earnings report. CrowdStrike provides “cloud first” cybersecurity for clients, meaning it is provided independent of a client’s on-premise corporate servers and is better suited for remote access and updates.
Shares rallied as much as 8% after hours and was up 9% premarket Wednesday. On Tuesday, the stock closed 7.4% off its all-time closing high of $99.65, set on August 13.
Annual recurring revenue, a Software-as-a-Service metric that shows how much revenue the company can expect based on subscriptions, surged 88% to $686.1 million for the quarter, while the Street expected $643.1 million.
A big part of that ARR increase has come through CrowdStrike’s partnership with Amazon.com Inc.’s /zigman2/quotes/210331248/composite AMZN -0.07% Amazon Web Services as companies have rushed to build up new remote workspaces in the cloud, Kurtz told analysts.
“Over the past year, CrowdStrike has seen an increase in the volume of transactions through AWS which includes customer securing their cloud workloads as well as endpoints that reside on the customer’s corporate network,” Kurtz said. “We saw a 75% increase in ending ARR from business transacted via the AWS partnership compared to the prior quarter Q4.”
Of the 21 analysts who cover CrowdStrike, 15 have overweight or buy ratings, four have hold ratings, and two have a sell rating, with an average price target of $82.90, according to FactSet data.
The ETFMG Prime Cyber Security ETF /zigman2/quotes/207892345/composite HACK -0.93% closed down 0.6% Tuesday, the S&P 500 /zigman2/quotes/210599714/realtime SPX -1.31% rose 0.8%, and the tech-heavy Nasdaq Composite Index /zigman2/quotes/210598365/realtime COMP -0.92% advanced 0.6% for the session.
For the year, CrowdStrike shares are up 85%, compared with a 9.6% gain in the HACK index, a 4.6% decline in the S&P 500, and a 7.1% gain in the Nasdaq. CrowdStrike has been publicly traded for a little less than a year, following its June 12, 2019 IPO that priced at $34 a share.