CrowdStrike Holdings Inc (CRWD), a leading cybersecurity firm, has revised its annual revenue and profit forecasts downwards in the wake of a major global outage in July. The announcement led to a 2.31% drop in the company’s pre-market value on Thursday, according to Benzinga Pro.
The July outage, triggered by a faulty software update, disrupted internet services and affected 8.5 million Microsoft Windows devices. This widespread disruption led to flight cancellations and significant business disruptions globally. CEO George Kurtz acknowledged that the incident delayed several deals, but reassured investors that most of these deals remain in the pipeline, as reported by Reuters on Thursday.
Despite the negative impact on the company’s reputation, analysts believe that the cost of switching cybersecurity providers may deter a significant loss of customers. However, CrowdStrike’s shares fell more than 3% in extended trading. CFO Burt Podbere expects the company’s challenges to persist for approximately a year, with a return to growth anticipated in the latter half of next year.
The revised annual revenue forecast reflects a $60 million customer commitment package in the second half of the year. CrowdStrike now anticipates its annual revenue to be between $3.89 billion and $3.90 billion, down from its previous forecast of $3.98 billion to $4.01 billion.
Amid an increase in digital scams and high-profile hacks, businesses continue to invest heavily in cybersecurity products. The July outage, described as the “largest IT outage in history”, highlighted our heavy reliance on a few key companies. It impacted businesses worldwide, including airlines, banks, media, and even 911 services.
Despite the outage, CrowdStrike reported strong second-quarter results. Revenue reached $963.9 million, surpassing the consensus estimate of $958.582 million. Adjusted earnings also came in above expectations at $1.04 per share, exceeding analyst estimates of 97 cents per share. This continued a trend established since the company’s public debut in 2019, where CrowdStrike has consistently surpassed analyst estimates on both revenue and earnings.
