CrowdStrike CEO George Kurtz repeatedly used the word “resilience” on Wednesday to describe his cybersecurity company’s financial outlook, just weeks after a faulty software update crippled businesses around the world.
His comments came after CrowdStrike reported its latest quarterly earnings and warned that its annual revenue would be lower than expected. However, the estimate was only slightly lower than analysts had anticipated, giving hope that most customers will stick around despite major tech disruptions.
“These results demonstrate the resilience of our business and our team,” Kurtz said on a call with investors.
CrowdStrike reported revenue of $969.3 million for its fiscal second quarter, up 32% from the same period last year. Net income was $46.7 million, compared with $8.5 million last year.
A CrowdStrike software update on July 19 crippled more than 8 million Windows-connected computer systems, including those at airports and hospitals. The damage is estimated to have cost Fortune 500 companies more than $5 billion.
Analyst Dan Ives called it a “sad moment” for CrowdStrike. Worried about a customer exodus and potential legal costs, investors sent CrowdStrike shares down 27% over the next few weeks.
“It was the most challenging event in our company’s history,” Kurtz said Wednesday.
As part of its earnings report, CrowdStrike slightly cut its annual revenue forecast from what it had expected before the outage. It now says its annual revenue will be between $3.89 billion and $3.9 billion, which is lower than the $3.95 billion analysts had anticipated, according to LSEG data, but a strong signal that CrowdStrike’s business hasn’t fallen off a cliff.
CrowdStrike shares fell 2% after hours.
Kurtz and CFO Burt Podbere sought to allay any concerns about the company during Wednesday’s earnings call, highlighting a focus on retaining its product customers and incentivizing them to add more products and longer subscriptions.
“The July 19 incident marked the beginning of a new chapter for CrowdStrike,” said Kurtz, who believes the cybersecurity company’s market opportunity is the same today as it was on July 18.
The knock-on effects of the shutdown, such as longer time frames to negotiate deals due to increased buyer scrutiny, are expected to continue into next year “in varying degrees,” Podbere said. He added that about $60 million in pending deals that stalled after July 19 are expected to close in the coming quarter.
“There’s a time for this kind of thing,” Kurtz told investors, anticipating improved business next year.
Since the outage, CrowdStrike has estimated that its “customer commitment bundle” incentives will have an impact of about $60 million on subscription revenue plus an “estimated multi-million dollar impact” on professional services revenue for the remainder of fiscal 2025. The bundles—which were offered after the outage—were designed to get CrowdStrike customers to use more of its products and sign longer subscriptions.
Even in the weeks since July 19, CrowdStrike has continued to close multi-million dollar deals, including an eight-figure contract with a “large enterprise software company” and a seven-figure deal with a “leading generative AI company,” Kurtz said.
Microsoft has also faced intense scrutiny over the intrusion, and last week announced plans to host CrowdStrike, other security firms and government officials at its Redmond, Wash., headquarters for a cybersecurity summit.
Delta Air Lines, one of the companies most affected by the CrowdStrike outage, has sought $500 million in damages from Microsoft and CrowdStrike. Delta struggled to resume operations, canceling flights for six days after the incident, which the airline told U.S. regulators was caused by an over-reliance on CrowdStrike and Microsoft.
Podbere said the full scope of the legal risks posed by the blackout was “difficult to predict.”
“The magnitude of this impact will never leave my mind,” Kurtz said. “The days that followed were some of the most challenging of my career, because I felt exactly what our customers were going through.”
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