Although CrowdStrike beat analysts’ expectations in the second quarter, investors focused on a weaker forecast for the coming months. The reason? The company is still suffering the financial consequences of a global failure more than a year ago.
As a result, the company’s shares fell by almost 3% in after-hours trading following the results announcement.
Financial results for the second quarter looked solid. Revenue grew 21% year-on-year to $1.17 billion, beating market estimates. Adjusted earnings per share were 93 cents, 10 cents higher than forecast.
However, a deeper analysis reveals a net loss of $77.7 million due to, among other things, contingency and share-based compensation costs.
An issue that casts a shadow over performance is the customer incentive programme introduced to retain customers after a failed software upgrade. Although this initiative ended in fiscal 2025, the impact is still weighing on the company’s finances.
The programme allowed customers to expand their use of services or select additional products, which delays the recognition of subscription revenue. Management estimates that this will take a $10 million to $15 million charge to revenue in each of the remaining quarters of the year.
In addition, the company expects to pay out approximately $51 million in cash in the third quarter as part of its contingency costs.
Weaker forecasts for the third quarter reflect these challenges. CrowdStrike expects revenue in the range of $1.21 billion to $1.22 billion, slightly below analysts’ average estimate of $1.23 billion.
Although forecast adjusted earnings per share (93-95 cents) are above expectations, revenue pressures proved to be key for the market. The CrowdStrike story becomes a case study, showing how the long-term financial impact of a single technical error can be.
