CrowdStrike slumps 9% on weak earnings outlook, outage costs

CrowdStrike shares dropped 9% after issuing weak earnings guidance as the company signaled ongoing pressure from its global IT outage that rattled businesses in July.

The cybersecurity software provider said it expects first-quarter earnings to range between 64 cents and 66 cents per share, versus the average Factset estimate of 95 cents. CrowdStrike is projecting earnings for the year to range between $3.33 and $3.45 per share, excluding items. That fell short $4.42 expected by analysts polled by LSEG.

For the period, CrowdStrike posted a net loss of $92.3 billion, or 37 cents per share, versus net income of $53.7 million, or 22 cents per share, in the year-ago period. The company also reported $21 million in costs from incident-related expenses and $49.9 million of tax expenses connected to acquisitions.

The company also said it anticipates another $73 million in expenses for the first quarter resulting from its July update that spurred a global IT outage, grounded flights and disrupted businesses. CrowdStrike projects an additional $43 million in costs due to some deal packages offered in its wake.

The outage has also weighed on free cash flow margins, which CrowdStrike said on the call it expects to return to 30% or more in the fiscal 2027 year.

Many on Wall Street expect headwinds from the July issue to start abating in the new fiscal year, with Bernstein’s Peter Weed expecting a pick up in CrowdStrike net retention rate in the new fiscal year.

“Although FY26 guidance marked a conservative start to the year, in our view, we expect management is setting the stage for a return to a beat-and-raise cadence we saw before the outage,” wrote JPMorgan’s Brian Essex.

CrowdStrike’s disappointing guidance offset better-than-expected fourth-quarter results. The company posted earnings of $1.03 per share on $1.06 billion in revenue and said that revenue grew 25% from a year ago.

CEO and Founder George Kurtz called the company a “comeback story” on a conference call with analysts Tuesday.

“I’m extremely proud of the engagement we’ve had with customers, partners, prospects in the market navigating a year that tested CrowdStrike,” he said. “Q4 showcases the fruits of our labors, giving me strong conviction in our AI-native, single platform, excellent execution, and accelerating market opportunity.”