CrowdStrike slumps 9% on weak earnings outlook, overhang from outage costs

CrowdStrike shares dropped 9% after issuing weak earnings guidance as the company signaled ongoing pressure from its global IT outage that rattled businesses in July.

The cybersecurity software provider said it expects fiscal first-quarter earnings to range between 64 cents and 66 cents per share, versus the average Factset estimate of 95 cents. CrowdStrike is projecting earnings for the year to range between $3.33 and $3.45 per share, excluding items. That fell short $4.42 expected by analysts polled by LSEG.

For the fiscal fourth quarter, CrowdStrike posted a net loss of $92.3 billion, or 37 cents per share, versus net income of $53.7 million, or 22 cents per share, in the year-ago period. The company also reported $21 million in costs from incident-related expenses and $49.9 million of tax expenses connected to acquisitions.

The company also said it anticipates another $73 million in expenses for the first quarter resulting from its July update that spurred a global information technology outage, grounded flights and disrupted businesses. CrowdStrike projects an additional $43 million in costs due to some deal packages offered in its wake.

The outage has also weighed on free cash flow margins, which CrowdStrike said on a conference call with analysts Tuesday it expects to return to 30% or more in fiscal 2027.

Many on Wall Street expect headwinds from the July issue to start abating in the new fiscal year, with Bernstein’s Peter Weed expecting a pick up in CrowdStrike net retention rate in the new fiscal year.

“Although FY26 guidance marked a conservative start to the year, in our view, we expect management is setting the stage for a return to a beat-and-raise cadence we saw before the outage,” wrote JPMorgan’s Brian Essex.

CrowdStrike’s disappointing guidance offset better-than-expected fiscal fourth-quarter results. The company posted adjusted earnings of $1.03 per share on $1.06 billion in revenue and said that revenue grew 25% from a year ago.

Founder and CEO George Kurtz called the company a “comeback story” on the conference call.

“I’m extremely proud of the engagement we’ve had with customers, partners, prospects in the market navigating a year that tested CrowdStrike,” he said. “Q4 showcases the fruits of our labors, giving me strong conviction in our AI-native, single platform, excellent execution, and accelerating market opportunity.”