Why Is CrowdStrike (CRWD) Up 5.2% Since Last Earnings Report?

A month has gone by since the last earnings report for CrowdStrike Holdings (CRWD). Shares have added about 5.2% in that time frame, outperforming the S&P 500.Will the recent positive trend continue leading up to its next earnings release, or is CrowdStrike due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers. CrowdStrike Q3 Earnings and Revenues Beat EstimatesCrowdStrike Holdings reported non-GAAP earnings of 93 cents per share in the third quarter of fiscal 2025, which surpassed the Zacks Consensus Estimate by 14.8% and came ahead of management’s guidance of 80-81 cents.CRWD reported non-GAAP earnings of 82 cents in the year-ago quarter. The robust bottom-line performance was mainly driven by higher revenues.CrowdStrike’s fiscal third-quarter revenues of $1.01 billion rose 29% year over year and surpassed the consensus mark of $982.3 million. The top line was also higher than the company’s guidance of $979.2-$984.7 million. The strong adoption of the Falcon platform and better sales execution mainly aided top-line growth in the fiscal third quarter.Top-Line Details of CRWDSubscription revenues (95.3% of the total revenues) jumped 31.3% year over year to $962.74 million. Professional services revenues (4.7% of the total revenues) declined 9.7% year over year to $47.4 million.As of Oct. 31, 2024, annual recurring revenues (ARR) were $4.02 billion, up 27% year over year. The company added $153 million to its net new ARR in the reported quarter.CrowdStrike’s subscription customers, who adopted five or more cloud modules, represented 66% of the total subscription customers, those with six or more cloud modules accounted for 47% and those with seven or more cloud modules represented 31% as of Oct. 31, 2024.CRWD’s Operating DetailsCrowdStrike’s non-GAAP gross profit increased 28.5% to $786.5 million in the fiscal third quarter from $612 million in the year-ago quarter. The non-GAAP gross margin remained flat at 78%.The non-GAAP subscription gross profit soared 30.9% year over year to $770.44 million, while the gross margin remained flat at 80% year over year. The non-GAAP professional gross profit declined 29.8% to $16.2 million, while the gross margin fell 1,000 basis points (bps) to 34% on a year-over-year basis.CrowdStrike’s total non-GAAP operating expenses increased 35.7% to $591.7 million from $436.1 million reported in the year-ago quarter. As a percentage of revenues, non-GAAP operating expenses increased to 59% from 55% in the year-ago quarter.Non-GAAP sales and marketing (S&M) expenses jumped 38.3% year over year to $336.3 million. Non-GAAP research and development (R&D) expenses climbed 33.1% year over year to $190 million. Non-GAAP general and administrative (G&A) expenses increased 30.6% year over year to $65.3 million. As a percentage of revenues, S&M and R&D expenses expanded 200 bps and 100 bps, while G&A expenses remained flat at 6%.The non-GAAP operating income jumped 11% to $194.9 million, mainly driven by higher revenues. The non-GAAP operating margin for the quarter contracted 300 bps year over year to 19%.CRWD’s Balance Sheet & Cash FlowAs of Oct. 31, 2024, cash and cash equivalents were $4.26 billion. CrowdStrike had a long-term debt of $743.6 million.In the fiscal third quarter, CRWD generated operating and free cash flows of $326 million and $231 million, respectively.CrowdStrike’s Q4 and FY25 GuidanceCrowdStrike initiated guidance for the fiscal fourth quarter and revised the projections for fiscal 2025. For the fiscal fourth quarter, CrowdStrike anticipates revenues between $1.0287 billion and $1.0354 billion. The non-GAAP operating income is expected in the band of $184-$189 million. Non-GAAP net income is forecasted in the range of $210.9-$215.8 million. The company expects non-GAAP earnings per share in the band of 84-86 cents.For fiscal 2025, CRWD now expects revenues between $3,923.8 million and $3,930.5 million, up from the previously projected range of $3,890-$3,902.2 million. The updated non-GAAP operating income for fiscal 2025 is now projected in the band of $804.4-$809.4 million compared with the previously guided range of $774.7-$783.9 millionThe company now expects non-GAAP net income in the range of $937.5-$942.6 million compared with the previous guidance of $908.8-$918.0 million. Non-GAAP earnings are now anticipated in the band of $3.74-$3.76, up from the previous guidance of $3.61-$3.65.How Have Estimates Been Moving Since Then?It turns out, estimates revision have trended downward during the past month.The consensus estimate has shifted -78.46% due to these changes.VGM ScoresCurrently, CrowdStrike has an average Growth Score of C, however its Momentum Score is doing a lot better with an A. However, the stock was allocated a grade of F on the value side, putting it in the lowest quintile for this investment strategy.Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.OutlookEstimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, CrowdStrike has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.Performance of an Industry PlayerCrowdStrike is part of the Zacks Internet - Software industry. Over the past month, Zoom Communications (ZM), a stock from the same industry, has gained 0.4%. The company reported its results for the quarter ended October 2024 more than a month ago.Zoom reported revenues of $1.18 billion in the last reported quarter, representing a year-over-year change of +3.6%. EPS of $1.38 for the same period compares with $1.29 a year ago.For the current quarter, Zoom is expected to post earnings of $1.31 per share, indicating a change of -7.8% from the year-ago quarter. The Zacks Consensus Estimate has changed +4.6% over the last 30 days.The overall direction and magnitude of estimate revisions translate into a Zacks Rank #1 (Strong Buy) for Zoom. Also, the stock has a VGM Score of C.Free: 5 Stocks to Buy As Infrastructure Spending SoarsTrillions of dollars in Federal funds have been earmarked to repair and upgrade America’s infrastructure. In addition to roads and bridges, this flood of cash will pour into AI data centers, renewable energy sources and more.In, you’ll discover 5 surprising stocks positioned to profit the most from the spending spree that’s just getting started in this space.Download How to Profit from the Trillion-Dollar Infrastructure Boom absolutely free today.Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report CrowdStrike (CRWD): Free Stock Analysis Report Zoom Communications, Inc. 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