CRWD Q4 Earnings Beat: Will Weak Guidance Drag the Stock Down?

CrowdStrike Holdings, Inc. (CRWD Quick QuoteCRWD – Free Report) reported non-GAAP earnings of $1.03 per share for the fourth quarter of fiscal 2025, which surpassed the Zacks Consensus Estimate by 21.2% and came ahead of management’s guidance of 84-86 cents.

CRWD reported non-GAAP earnings of 95 cents in the year-ago quarter. The robust bottom-line performance was mainly driven by higher revenues.

CRWD’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 11.65%.

Find the latest EPS estimates and surprises on Zacks Earnings Calendar.

CrowdStrike’s fiscal fourth-quarter revenues of $1.06 billion rose 25.2% year over year and surpassed the consensus mark of $1.03 billion. The top line was also higher than the company’s guidance of $1.0287-$1.0354 billion. The strong adoption of the Falcon platform and better sales execution mainly aided top-line growth in the fiscal fourth quarter.

Despite its better-than-expected fourth-quarter results, CRWD has released a weak fiscal 2025 guidance. CRWD shares lost 7.60% in the pre-market hours on Wednesday. In the past year, CRWD shares have gained 10.5%, underperforming the Zacks Security industry’s growth of 21.4%. The weak earnings guidance for the upcoming quarter and fiscal year is unlikely to push CRWD stocks higher.

Top-Line Details of CRWD

Subscription revenues (95.3% of the total revenues) jumped 26.7% year over year to $1.01 billion. Professional services revenues (4.7% of the total revenues) increased 1.7% year over year to $50.22 million.

As of Jan. 31, 2025, annual recurring revenues (ARR) were $4.24 billion, up 23% year over year. The company added $224.3 million to its net new ARR in the reported quarter.

CrowdStrike’s subscription customers, who adopted five or more cloud modules, represented 67% of the total subscription customers, those with six or more cloud modules accounted for 48% and those with seven or more cloud modules represented 32% as of Jan. 31, 2025.

CRWD’s Operating Details

CrowdStrike’s non-GAAP gross profit increased 24.8% to $825 million in the fiscal fourth quarter from $661.2 million in the year-ago quarter. The non-GAAP gross margin remained flat at 78%.

The non-GAAP subscription gross profit soared 26.7% year over year to $809.2 million, while the gross margin remained flat at 80% year over year. The non-GAAP professional gross profit declined 29.7% to $15.88 million, while the gross margin fell 1,400 basis points (bps) to 32% on a year-over-year basis.

CrowdStrike’s total non-GAAP operating expenses increased 35.6% to $607.8 million from $448.1 million reported in the year-ago quarter. As a percentage of revenues, non-GAAP operating expenses increased to 53% from 57% in the year-ago quarter.

Non-GAAP sales and marketing (S&M) expenses jumped 37.8% year over year to $335.7 million. Non-GAAP research and development (R&D) expenses climbed 31.6% year over year to $199.7 million. Non-GAAP general and administrative (G&A) expenses increased 37.2% year over year to $72.4 million. As a percentage of revenues, S&M expenses expanded 300 bps, while R&D and G&A expenses expanded 100 bps each.

The non-GAAP operating income jumped 1.9% to $217.3 million, mainly driven by higher revenues. The non-GAAP operating margin for the quarter contracted 400 bps year over year to 21%.

CRWD’s Balance Sheet & Cash Flow

As of Jan. 31, 2025, cash and cash equivalents were $4.32 billion. CrowdStrike had a long-term debt of $744 million.

In the fiscal fourth quarter, CRWD generated operating and free cash flows of $345.7 million and $239.8 million, respectively.

CrowdStrike’s Q1 and FY26 Guidance

CrowdStrike initiated guidance for the fiscal first quarter and 2026. For the fiscal first quarter, CRWD anticipates revenues between $1.1006 billion and $1.1064 billion. The non-GAAP operating income is expected in the band of $173.1-$180.0 million. Non-GAAP net income is forecasted in the range of $162.1-$167.5 million. The company expects non-GAAP earnings per share in the band of 64-66 cents. The consensus mark for fiscal first-quarter revenues and non-GAAP earnings is pegged at $1.10 billion and 94 cents per share, respectively.

For fiscal 2026, CRWD expects revenues between $4.7435 billion and $4.8055 billion. The non-GAAP operating income for fiscal 2025 is projected in the band of $944.2-$985.1 million. The company expects non-GAAP net income in the range of $851.2-$883 million. Non-GAAP earnings are anticipated in the band of $3.33-$3.45. The consensus mark for fiscal 2026 revenues and non-GAAP earnings is pegged at $4.72 billion and $4.36 per share, respectively.

Other Stocks to Consider

Currently, CRWD carries a Zacks Rank #2 (Buy).

Dropbox (DBX Quick QuoteDBX – Free Report) , Garmin (GRMN Quick QuoteGRMN – Free Report) and Pitney Bowes (PBI Quick QuotePBI – Free Report) are some other top-ranked stocks that investors can consider in the broader Zacks Computer & Technology sector. DBX, GRMN and PBI presently sport a Zacks Rank #1 (Strong Buy) each. You can see the complete list of today’s Zacks #1 Rank stocks here.

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The consensus mark for GRMN’s 2025 earnings has been revised upward by 32 cent to $7.98 per share over the past 30 days, indicating a 8% year-over-year increase. GRMN shares have gained 57% in the past year.

The consensus mark for PBI’s 2025 earnings has been revised nine cents downward to $1.21 per share over the past seven days, indicating a 47.6% year-over-year decline. PBI shares have gained 143.4% in the past year.