Why CrowdStrike Stock Skyrocketed Today
Key Points
CrowdStrike reported record financial results.
The company's annual recurring revenue, profits, and cash flow all increased at an impressive rate.
The stock has never been cheap, but the results warrant a premium.
- 10 stocks we like better than CrowdStrike ›
Shares of CrowdStrike (NASDAQ: CRWD) charged sharply higher on Thursday, gaining as much as 19.7% in early trading. As of 2:42 p.m. ET, the stock was still up 19.6%.
The catalyst that sent the cloud-based cybersecurity specialist higher was financial results that blew past expectations.
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Blockbuster results
CrowdStrike reported the results for its fiscal 2027 second quarter (ended July 31), and investors were clearly impressed. Revenue of $1.47 billion grew 26% year over year, as customers continued to expand their relationships with the platform. This forged record profits, with adjusted diluted earnings per share (EPS) of $0.31, up 34%.
For context, analysts' consensus estimates were calling for revenue of $1.44 billion and adjusted EPS of $0.29, so CrowdStrike easily surpassed both metrics.
It wasn't just the top- and bottom-line metrics that caught investors off guard. CrowdStrike added record net new annual recurring revenue (ARR) -- which measures subscription services growth -- of $333 million, up 51% year over year. This brought total ARR to $5.84 billion, up 25%. This suggests that CrowdStrike's growth spurt is far from over.
The company also revealed that subscription customers continued to adopt more modules at a higher rate, with 51%, 35%, and 26% adopting six or more, seven or more, and eight or more modules, respectively.
This also translated to record operating cash flow and free cash flow of $530 million and $377 million, respectively.
Investors had other reasons to celebrate. For the full 2027 fiscal year, management lifted its outlook, calling for revenue of $6 billion and EPS of $1.25 at the midpoint of its guidance, ahead of analysts' consensus estimates, which called for revenue of $5.94 billion and EPS of $1.23.
CrowdStrike stock isn't cheap, currently trading for 144 times next year's expected earnings and 45 times sales, but investors are rewarding the stock with a juicy premium, given its history of conservative guidance and robust results.
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Danny Vena, CPA has positions in CrowdStrike. The Motley Fool has positions in and recommends CrowdStrike. The Motley Fool has a disclosure policy.
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