CrowdStrike’s Resilient Comeback After Setback (NASDAQ:CRWD)

Investment Thesis

Since the July 19 incident and our latest coverage, CrowdStrike (NASDAQ:CRWD) has demonstrated its operational resilience and strong market position. The company quickly addressed the system issue, minimizing long-term damage. CrowdStrike’s Q2 2025 results reflected this, with revenues of $963.9 million, surpassing expectations despite the disruption.

Although full-year earnings guidance was slightly revised to $3.61-$3.65 per share, its year-over-year growth rate remains strong at 23%, outperforming competitors in the cybersecurity space. The company’s strong Q2 results, with $964M in revenue and a 32% ARR growth, indicate continued market demand.

Hence, despite minor adjustments to full-year earnings guidance, the company’s financial outlook remains strong, with continued growth in AI-driven cybersecurity services and significant customer retention and expansion.

CRWD’s Neutral RSI and Fibonacci Levels Suggest a Potential Breakout

CRWD is currently trading at $246, below the average price target of $307 for 2024. The target aligns with the 3-point Fibonacci level (1.618), representing potential mid-level resistance. The optimistic price target of $363 corresponds with a higher Fibonacci level (0.5), which indicates a more bullish scenario if the stock breaks out of its current pattern. Conversely, the pessimistic target of $265 matches the 2.618 Fibonacci level, a critical support level where the stock might retrace in a bearish scenario.

Moreover, the RSI value of 45.48 suggests that CRWD is currently in a neutral zone, neither overbought nor oversold. The upward trend in the RSI line indicates potential momentum buildup, although the absence of bullish or bearish divergence limits the strength of this signal. The RSI’s long setup at 30 suggests a recovery after a deeper pullback that could offer a more attractive entry point, possibly signaling a bottoming out.

Finally, the Volume Price Trend (VPT) line is also trending upwards but is currently below its moving average of 58.18 million, which indicates that while volume momentum is bearish, it is recovering towards a strong uptrend. Crossing the VPT line above the moving average would strengthen a bullish outlook.

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In no particular year has CRWD had a mixed performance in the fall period, with September and October at 40% probability of positive return, respectively, placing them as relatively the weakest of the other months represented. Therefore, this situation looks moderately dim for early fall since, through these two months, conditions have not been ripe for posting any significant gains in the market.

However, November paints a more friendly picture, as the month holds a 60% chance of positive returns, hence a better upside toward the end of fall. In other words, investors might want to be cautious in September and October but could find better conditions in November.

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CrowdStrike’s Falcon Platform Soars: Market Domination Through Advancements and Strategic Growth

CrowdStrike has continued to see growth in its market share and portfolio, placing it in a great position in the cybersecurity market. Falcon is a platform comprising 28 modules across cloud security, identity protection, device security, data protection, IT automation, and next-generation (SIEM).

CrowdStrike strategically focuses on high-value and substantial growth segments like cloud security, identity protection, and next-gen SIEM. For instance, LogScale’s next-gen SIEM derives growth for CrowdStrike and has an Annual Recurring Revenue (ARR) exceeding $220 million with over 140% annual growth in Q2. As a moat, LogScale can displace legacy SIEMs and seize market demand for AI-powered Security Operations Center (SOC) operations. CrowdStrike’s identity protection business has surpassed $350 million in ARR and has grown over 70% year-over-year, reflecting the increasing growth potential for CrowdStrike in the identity protection market.

Cloud security is another primary growth driver for CrowdStrike. The cloud security business has an ARR exceeding $515 million and over 80% annual growth. Falcon Cloud Security integrates various cloud security capabilities into a single solution. Hence, this can replace other next-gen cloud security vendors and standardize security across large, distributed environments, which is a significant moat.

CrowdStrike’s lead in securing large customer wins post-incident points to its market leadership and customer trust. One notable win includes a nine-figure Falcon Cloud Security purchase across a million hosts in a large enterprise. This deal highlights Falcon Cloud Security’s protection and visibility capabilities. Securing such a large-scale deal after an incident demonstrates market confidence in CrowdStrike’s products and their ability to deliver value at scale.

Another significant win involved LogScale’s next-gen SIEM replacing two legacy SIEMs. This client was already a large CrowdStrike client. The ability to store, visualize, and act on large amounts of first-party CrowdStrike data natively in the platform was the reason for expanding the relationship. The cost savings of over 60% and increased functionality point to the value of CrowdStrike’s integrated platform. Overall, closing these deals after a significant incident also speaks to the strength of its client relationships and go-to-market strategy in the $225 billion addressable market.

CrowdStrike Triumphs Over July 19 Incident: Rapid Recovery and Resilience Drive Q2 Success

CrowdStrike faced a significant challenge on July 19, and this incident (a system issue, not a cyberattack!) tested its crisis management skills and operational strength. On the positive side, CrowdStrike responded immediately by activating its crisis response plan. This quick action demonstrated its tech preparedness and capability to manage sudden and unforeseen challenges, including advanced automated recovery techniques.

CrowdStrike focused on transparency, which is crucial for a cybersecurity entity during the crisis. The company communicated openly with its clients and used multiple channels, including their website, social media, and email. Fundamentally, this open communication helped maintain customer trust during a difficult time, and CrowdStrike’s transparent approach preserved its reputation and customer relationships. The company’s technical teams quickly developed new automated recovery techniques that allowed for the rapid recovery of affected devices. Many clients experienced recovery within hours, minimizing downtime is critical in cybersecurity business, and CrowdStrike excelled in this area.

Technically, against the incident, CrowdStrike took several steps to improve the resilience of its Falcon platform. The company released new content control configurations, giving clients greater control over Falcon content deployment. Theoretically, this tailored approach enhances security and reduces future risks.

CrowdStrike’s focus on customer control reflects its deep understanding of user needs. The company has also improved its content validator and interpreter. These components malfunctioned during the July 19 incident, and CrowdStrike refactored them to prevent future errors. Beyond internal efforts, CrowdStrike sought external validation to enhance its platform’s security. The company engaged two independent third-party software security vendors who reviewed the Falcon sensor code and quality control processes.

Despite the July 19 challenges, CrowdStrike’s Q2 2025 financial performance was strong. For instance, Ending Annual Recurring Revenue (ARR) reached $3.86 billion with a 32% annual growth that indicates strong demand for CrowdStrike’s services during Q2. However, CrowdStrike’s Q2 net new ARR was $218 million, up 11% annually. Despite the incident, this growth shows the company’s ability to generate new business. Based on CrowdStrike’s strong market position and sales effectiveness, Q2 revenue was $964 million, which exceeded guidance (beat by $5.55M).

CrowdStrike attained a record non-GAAP operating income of $227 million, representing a 46% annual growth. The company also achieved GAAP profitability for the sixth consecutive quarter. This is significant in the tech sector, where many prioritize growth over profit. Similarly, the company’s free cash flow was $272 million, 28% of revenue. Hence, strong free cash flow indicates CrowdStrike’s ability to fund growth.

Looking forward, analysts expect strong performance for CrowdStrike in the coming years. For the fiscal ending January 2025, the consensus EPS estimate holds a 17.91% annual growth rate; for January 2026, it is 18.91%. The January 2027 EPS estimate holds a superior 23.93% annual growth rate, indicating a robust bottom-line jump for CrowdStrike.

Similarly, top-line estimates also show a positive outlook. The top-line estimate for the fiscal ending January 2025 holds a 27.66% annual growth with a forward price-to-sales (P/S) ratio of 17.30. For fiscal 2026, the revenue estimate represents a 23.28% growth (P/S ratio of 14.03). Finally, the January 2027 estimate marks a 21.44% yearly growth with a PS ratio of 11.55. These trends point to long-term solid revenue and stock price growth for CrowdStrike.

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The Dark Side: July 19 Crisis, Unmasking the Flaws and Financial Fallout for CrowdStrike

The July 19 incident is a pivotal moment in CrowdStrike’s operational history, as the event exposed both technical and operational vulnerabilities within the Falcon platform. The incident led to a temporary disruption of services, affecting customers’ devices. CrowdStrike had to mobilize technical teams for crisis response, working around the clock. Despite these efforts, the incident caused delays in closing deals, especially during the crucial final weeks of the quarter.

This delay had a direct impact on CrowdStrike’s quarterly financial performance. The company’s ending Annual ARR had a 32% annual growth against net new ARR’s 11% increase, which points to an inflection point. This shortfall is critical as ARR growth is the core for sustaining long-term growth, and the incident also postponed over $60 million worth of deals to later quarters. This delay adds uncertainty to top-line projections that potentially hinder aggressive growth targets.

The incident also exposed operational weaknesses (as it was not a cyberattack) with long-term implications for customer trust. Although most customers were retained, vulnerabilities in the Falcon platform’s content control and quality assurance processes became apparent. This could lead to longer sales cycles, as potential customers may require additional assurances. During a critical sales period, the incident’s timing amplified its impact on financial performance. The company had to delay outbound pipeline generation activities and experienced extended sales cycles that indicated a lingering effect on operational efficiency and growth potential.

Financially, the company acknowledged that the incident would lead to additional costs. These include increased General and Administrative (G&A) expenses and flexible client payment terms. Such factors could constrain reinvestment in growth initiatives, further dampening near-term growth potential. This can be observed in recent earnings revisions by the street. There were no upward revisions in EPS or revenue estimates in the last three months. Instead, EPS saw 31 downward revisions, and revenue saw 32 downward revisions for the upcoming quarter. There were 41 downward EPS revisions for the upcoming fiscal year and 38 for revenue. In short, the July 19 incident is a stark reminder of the operational risks in CrowdStrike’s business model.

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Takeaway

CrowdStrike has shown resilience post-July 19, effectively addressing the disruption and exceeding Q2 expectations. While its full-year guidance slightly decreased, the company remains a leader in AI-driven cybersecurity, with solid customer retention and expansion. Technical indicators like neutral RSI and Fibonacci levels suggest a potential breakout, though historical patterns show caution for early fall. Therefore, CrowdStrike’s continued innovation and ability to secure large deals position it well for long-term growth.