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CrowdStrike (CRWD) likely to report wider losses in Q3

By Staff Correspondent |
earnings preview

CrowdStrike Holdings Inc. (NASDAQ: CRWD) is set to report its earnings results for the third quarter of 2020 on Thursday after the market closes. The cybersecurity firm’s bottom line will be hurt by expenses related to the direct listing as well as its investments in the cloud security market.

The company is unlikely to record a tax benefit on the domestic losses due to the uncertainty of future profitability. Also, operating expenses are likely to increase as the company continues to make significant investments for driving additional revenue, further penetration in the market, and expansion of its global customer base.

Read: VMware Q3 earnings review

However, the top line will be benefited from customer growth. The top line will be generated from the sale of subscriptions to access its cloud platform and professional services. The company’s future success depends in large part on the growth in the market for cloud-based software-as-a-service delivered endpoint security solutions. The customer base could be expanded rapidly by the go-to-market strategy and the flexibility and scalability of the Falcon platform.

As of July 31, 2019, the company had cash and cash equivalents of $732.8 million and marketable securities of $94 million. The primary objectives of investment activities are the preservation of capital, the fulfillment of liquidity needs, and the fiduciary control of cash and investments.

Analysts expect the company to report a loss of $0.11 per share on revenue of $118.79 million for the third quarter. For the quarter, the company expects total revenue in the range of $117.1-119.5 million and adjusted loss in the range of $0.12-0.11 per share. Adjusted net loss is predicted to be $24.8-23.2 million for the third quarter.

Also read: Palo Alto Networks Q1 earnings review

For the second quarter, CrowdStrike posted a wider loss due to higher costs and expenses. The top line soared by 94% backed by rapid subscription revenue growth and record net new annual recurring revenue generated in the quarter. The company added a record 730 net new subscription customers in the quarter for a total of 3,789 subscription customers as of July 31, 2019.

For the full year 2020, the company expects total revenue in the range of $445.4-451.8 million and adjusted loss in the range of $0.65-0.62 per share. Adjusted net loss is projected to be in the range of $95.3-90.8 million and adjusted loss from operations is anticipated to be $97.9-93.5 million for the full year.

Get access to timely and accurate verbatim transcripts that are published within hours of the event.

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