On Wednesday, BTIG maintained a Neutral rating on CrowdStrike Holdings (NASDAQ:CRWD), following the company's mixed financial results for the third fiscal quarter of 2025. CrowdStrike reported an annual recurring revenue (ARR) of $4.018 billion, a 27.4% increase year-over-year, which was slightly above BTIG's estimate of $4.005 billion and the consensus estimate of $4.011 billion.
The cybersecurity firm's net ARR additions for the quarter stood at $153 million, marginally surpassing the street's expectation of $147 million. However, this figure included a one-time headwind from the non-recurrence of a $26 million federal deal from the previous year, which was not counted in this quarter's ARR. Adjusting for this, the normalized net new ARR for CrowdStrike was about $179 million.
Despite these seemingly positive trends, BTIG noted that the results did not exceed investor expectations, which had not been firmly set but were anticipated to be around $200 million in net adds. The company's guidance for the fourth fiscal quarter suggested that analysts should anticipate net new ARR additions more in line with historical seasonality, rather than the higher levels projected by prior estimates, which forecasted $228 million in net new ARR.
CrowdStrike's management did not provide a clear answer when questioned about whether to expect the stronger seasonality seen in the fourth fiscal quarter of 2024 or the more muted trends of the fourth fiscal quarter of 2023. They referred to ongoing uncertainty from an outage in July and customer commitment packages.
BTIG remarked that the impact of the July outage might have been greater than most anticipated and it could take more than a couple of quarters to fully resolve. Nonetheless, BTIG believes there were not enough negative data points to significantly alter the outlook for a potential rebound in the second half of fiscal year 2026.
After accounting for the $26 million federal deal and the Adaptive Shield acquisition, BTIG's updated fiscal year 2026 estimate for CrowdStrike's ARR is $5.080 billion, reflecting a growth of 21% year-over-year, with the Neutral rating on the stock unchanged.
In other recent news, CrowdStrike Holdings reported third-quarter earnings and revenue that surpassed consensus estimates, with a 29% increase in revenue from the previous year, surpassing the $1 billion mark. Despite a 27% decrease in new annual recurring revenue (ARR) reported by Guggenheim, the company's dollar-based gross retention remained stable at historical levels of 97.5%.
Analyst firms including Evercore ISI, Cantor Fitzgerald, BMO Capital Markets, DA Davidson, and Mizuho (NYSE:MFG) Securities have maintained positive ratings on CrowdStrike, with price targets ranging from $370 to $410.
The company's Falcon Flex (NASDAQ:FLEX) offering is expected to contribute to the company's sustained success. CrowdStrike's management aims to accelerate net new ARR in the second half of fiscal year 2026 and has set a goal to reach $10 billion in ARR by fiscal year 2031. Guggenheim analysts expect that CrowdStrike will meet its fourth-quarter guidance without difficulty, although they note that ARR could present some risk.
Despite facing challenges such as a service disruption in July and customer churn concerns, CrowdStrike's broader platform adoption, driven by the Falcon Flex offering, is expected to contribute to the company's sustained success.
InvestingPro Insights
CrowdStrike's financial performance, as discussed in the article, can be further contextualized with recent data from InvestingPro. The company's market capitalization stands at $89.3 billion, reflecting its significant presence in the cybersecurity sector. CrowdStrike's revenue for the last twelve months as of Q2 2025 reached $3.52 billion, with a robust revenue growth of 33.07% over the same period. This aligns with the article's mention of the company's increasing annual recurring revenue (ARR).
InvestingPro Tips highlight that CrowdStrike's net income is expected to grow this year, which could be a positive sign for investors considering the company's mixed Q3 results. Additionally, the company operates with a moderate level of debt, potentially providing financial flexibility as it navigates market uncertainties and invests in growth initiatives.
It's worth noting that CrowdStrike is trading at high valuation multiples across various metrics, including earnings, EBIT, EBITDA, and revenue. This suggests that investors have high expectations for the company's future performance, which may explain why the recent results, although positive, did not exceed market expectations as mentioned in the article.
For readers interested in a more comprehensive analysis, InvestingPro offers 15 additional tips for CrowdStrike, providing a deeper dive into the company's financial health and market position.
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