CrowdStrike (CRWD) shares spiked early Thursday after the company raised its full-year net new annual recurring revenue, or ARR, outlook amid increasing demand for cybersecurity solutions to address artificial intelligence risks, while the firm reported better-than-expected fiscal second-quarter results.
ARR, which measures the annualized value of all the company's active customer subscription contracts, is now anticipated to come in between $6.6 billion and $6.61 billion for fiscal 2027, it said late Wednesday. The firm previously projected the metric to be in a range of $6.53 billion to $6.56 billion, while FactSet's current consensus is $6.58 billion.
At the midpoint of the guidance, CrowdStrike now expects about $1.36 billion of net new ARR for the ongoing fiscal year, representing growth of about 34% versus its initial forecast for an increase of roughly 23%, Chief Financial Officer Burt Podbere said during an earnings call, according to a FactSet transcript. The stock grew 8.4% in the most recent premarket activity.
"Our outlook reflects the strength we see in the business while maintaining a prudent approach," according to Podbere. "As AI expands the attack surface and increases the urgency around cybersecurity, we believe it is driving a broader security modernization cycle that creates durable demand across the Falcon platform."
In the quarter ended July, ARR jumped 25% year over year to $5.84 billion, topping the Street's view for $5.79 billion. Net new ARR surged 51% annually to $332.8 million, an "all-time record," Podbere said on the call.
The global market has accepted that AI adoption needs cybersecurity, with new models creating a new risk environment, Chief Executive George Kurtz told analysts. "Every enterprise will run on AI, and securing it is the largest market opportunity in our history," Kurtz added.
"A second consecutive increase to (fiscal 2027) expectations, improving retention metrics and record (third-quarter) pipeline suggest the current demand environment remains durable," Truist Securities said in a Wednesday client note. "We continue to view CrowdStrike as one of the primary beneficiaries of the increasing convergence of AI, platform consolidation and cybersecurity modernization."
CrowdStrike posted adjusted earnings of $0.31 per share for the second quarter, up from $0.23 the year before, ahead of the average analyst estimate of $0.29. Revenue rose 26% to $1.47 billion, surpassing the market's forecast of $1.44 billion, while subscription revenue recorded a 27% yearly gain to $1.4 billion.
"Both our dollar-based net and gross retention rates improved sequentially," according to Podbere.
For fiscal 2027, the company now sees adjusted EPS coming in at $1.25 to $1.26. In June, CrowdStrike projected adjusted EPS of $4.88 to $4.96 for the year and announced a four-for-one stock split. Revenue is now projected at $5.99 billion to $6.01 billion, up from the prior outlook of $5.91 billion to $5.96 billion. The Street is looking for non-GAAP EPS of $1.24 and sales of $5.98 billion.
CrowdStrike expects ARR of $6.18 billion to $6.19 billion for the current three-month period, reflecting net new ARR of $343 million to $347 million, Podbere said. Analysts surveyed by FactSet are estimating $6.16 billion.
It also anticipates adjusted EPS of $0.31 on a revenue range of $1.52 billion to $1.53 billion. The market expects $0.31 in non-GAAP EPS and $1.52 billion in sales.
Rival SentinelOne (S) is scheduled to release its latest financial results after the markets close Thursday. Palo Alto Networks (PANW) and Zscaler (ZS) post their earnings next week.
