CrowdStrike (CRWD) reported strong fiscal first-quarter results amid accelerating demand for artificial intelligence, but questions around the company's performance sustainability remain, BofA Securities said in a Thursday client note.
The cybersecurity firm late Wednesday reported adjusted earnings of $1.10 per share for the quarter ended April, up from $0.73 the year before, while revenue climbed 26% to $1.39 billion. Both metrics topped Wall Street's estimates.
The company lifted its net new annual recurring revenue outlook for fiscal 2027 by 520 basis points at the midpoint versus the previous guidance. That reflects stronger demand and improved pipeline visibility, BofA said.
However, CrowdStrike's shares were down 6.9% in Thursday trade. The stock has gained nearly 49% so far this year.
"The key question remains whether this represents a durable reacceleration cycle or a more front loaded demand step up," BofA analysts Tal Liani and Trevor Dodds wrote in the note.
The company added more than 300 Falcon Flex accounts in the quarter, Chief Executive George Kurtz said on a conference call, according to a FactSet transcript.
"Flex dynamics have accelerated meaningfully, with faster re-Flex timing at roughly 7 months and higher expansion uplift, raising questions on demand durability into the back half versus more linear expansion last year," Liani and Dodds wrote.
While net new ARR grew 32%, total ARR growth of 24% suggests "lagged translation into sustained growth," the duo said.
AI detection and response and AI-driven products are "early cycle contributors versus more mature drivers," adding uncertainty around normalization as adoption scales, according to the brokerage.
BofA reiterated its neutral rating on CrowdStrike's stock and lifted its price objective to $750 from $535.
Price: $696.16, Change: $-51.46, Percent Change: -6.88%
