Key Takeaways:
- Revenue of $1.39B beat estimates but ARR growth disappointed investors
- Net new ARR hit $255.8M, up 32% YoY, missing elevated expectations
- Stock slid 11% premarket as AI monetization timeline faces skepticism
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CrowdStrike slides 11% as ARR growth fails to justify AI rally
CrowdStrike reported Q1 revenue of $1.39B, beating estimates by $30M, but shares slid 11% in premarket trading Thursday.
"The worlds of cybersecurity and frontier AI collided this quarter," Chief Executive Officer George Kurtz said in a statement, citing the company's early access to Anthropic's Mythos model through Project Glasswing.
Adjusted earnings per share came in at $1.10, topping the $1.07 consensus, while net income swung to $27.8M from a $104.3M loss a year earlier. Net new annual recurring revenue reached $255.8M, up 32% year over year, landing in the middle of elevated expectations that had priced a 39% probability of clearing $275M, according to Polymarket data.
The decline wipes out roughly $15B in market value from a stock that had surged 64% year to date to $768.95 before the report. The company raised its full-year net new ARR growth forecast by 520 basis points to 27.7% at the midpoint, but the modest beat failed to justify a valuation already trading well above the $564 analyst consensus target.
Revenue rose 26% from a year ago, driven by platform consolidation through the Falcon Flex program, which reached $1.69B in ARR, up more than 120% year over year. The company's AI detection and response product, or AIDR, grew more than five times versus the prior quarter, Kurtz said on the earnings call. Next-gen SIEM surpassed $585M in ARR, up 75% year over year, while cloud ARR exceeded $800M.
The company also announced a four-for-one stock split effective in July, with a record date of June 25 and split-adjusted trading beginning July 2. CrowdStrike guided second-quarter revenue to about $1.44B, roughly in line with the $1.43B estimate from LSEG.
Stock-based compensation of $317.6M and lingering litigation costs from the July 2024 Falcon sensor incident kept GAAP operating income negative. DZ Bank earlier this month slapped a sell rating on the stock with a $500 price target, citing valuation concerns after the 68% year-to-date rally.
The premarket drop signals that investors are questioning how quickly AI investments will translate into measurable revenue acceleration. CrowdStrike's next catalyst is the Q2 earnings report in September, where the market will look for AIDR and Falcon Flex to convert pipeline into billings.
This article is for informational purposes only and does not constitute investment advice.
[1] CrowdStrike drops as revenue growth fails to impress investors despite AI push[2] CrowdStrike narrowly beats estimates on AI tailwinds, but stock falls 10%[3] CrowdStrike reports higher operating expenses as AI investments gain pace[4] Live: Can CrowdStrike Deliver Another Blowout Quarter With Q1 Earnings Tonight?
