CrowdStrike 2025Q2 Earnings Preview: Well-Positioned for AI Innovations

TradingKey - CrowdStrike will release its earnings for the second quarter of the fiscal 2025 on August 27th after the bell.

Overall, CRWD stock has been outperforming the broad market by being up 20% since the beginning of the year, however after July it has been in a constant decline.

Way more than just Revenue and EPS:

Investors would pay close attention not just to revenue and earnings but also to the health of the annual recurring revenue (ARR), the modules per user and the cash conversion.  Last quarter ARR rose 22% to USD 4.44 billion, thus maintaining this level of growth would be important.

What’s also important is the outlook for the coming quarters and the full-year guidance, which is $4.74-$4.81 for revenue and $3.44-$3.56 for EPS. Any revision of these numbers would directly translate to stock price volatility.

Impact of July 2024 Outage:

The July 2024 global IT outage, caused by a faulty CrowdStrike software update, continues to impact the company in financial and reputational ways. The major incident can still result in litigation against the company (causing excessive legal expenses), customer churn, and margin headwinds.

The elephant in the room – AI:

Currently, the traditional SaaS companies are facing more criticism from investors, firstly because the valuations are not low at all, and secondly there is the major disruptive factor of AI. With the increasing introduction of AI-driven solutions that can replicate the functions of the SaaS firms, we can potentially see the SaaS firms (CrowdStrike is also one) facing big pressure to innovate and integrate AI into their product, and by not doing so, they risk becoming irrelevant. On the positive note, CrowdStrike has the strongest balance sheet among cybersecurity players, allowing them to invest aggressively in AI capabilities. During the call, we expect the management to respond to these concerns and provide updates to the current company’s initiatives in that area.

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