Major news for CrowdStrike investors

By July, shares of CrowdStrike Holdings (CRWD 0.34%) were flying high, gaining more than 50% since the beginning of the year. And that’s been part of triple-digit growth over the past five years. Thus, the company has wowed existing and potential customers with its artificial intelligence (AI)-powered platform to protect their businesses from cyber attacks.

In fact, CrowdStrike has become such a powerhouse in cybersecurity that when the company released a botched software update in July, the world seemed to stop. Airlines, hospitals and other businesses across the sectors faced blue screens and were unable to continue their daily operations.

It released a fix in about an hour, but some customers took weeks to recover. And the outage could have cost Fortune 500 companies more than $5 billion, according to insurance company Parametrix.

In the wake of the outage — which experts are calling the world’s largest — investors fled CrowdStrike’s stock, worried about the impending impact. But now, some major news from CrowdStrike gives us an encouraging hint about how this could affect the cybersecurity vendor in the coming months.

Image source: Getty Images.

CrowdStrike’s Falcon Platform

First, some details on CrowdStrike’s cybersecurity platform, Falcon, which gathers data from across the enterprise and beyond to determine potential threats. Customers can choose from 28 modules based on their specific security needs. And a significant number of customers signed up for more, with adoption rates for five or more modules at 65% last quarter.

All this contributed to the increase in earnings. For example, in the most recent quarter, which ended about two weeks after the July blackout, the company reported a 32% increase in annual recurring revenue, a 78% generally accepted accounting principles (GAAP) gross subscription margin and a flow of record operating cash. and free cash flow. Additionally, CrowdStrike has more than $4 billion in cash on its balance sheet.

Of course, pre-disruption business led to these results. Investors at the time worried that existing customers would flee and potential new ones would turn to rivals.

Now comes the major news for the company’s investors about this concern. During last month’s earnings call, management said the July outage delayed closing deals, but “the vast majority of these deals remain in development.”

He even won two major trades following the blackout. One is an eight-figure deal with an enterprise software company that was already a customer to replace another vendor and expand use of Falcon. The other is a nine-figure contract with a major company.

Are CrowdStrike customers happy?

CrowdStrike says the overall trend with current customers has been positive, with most satisfied with its response to the outage, including steps to prevent future problems. In fact, a customer affected by the outage recently selected the company for a new state-of-the-art security project, management said.

All this suggests that customers are not heading for the door, while it has actually attracted new customers from the event, showing that its reputation remains intact. It’s important to remember that the outage did not involve a cyber attack, but was simply related to a faulty software update. So CrowdStrike’s ability to do its job was not in question.

Following the news of the new offerings, it seems unlikely that the cybersecurity vendor will lose significant market share due to the disruption. Instead, it appears that growth may continue as before.

So what does this mean for you as an investor? Now it’s clear that, in general, existing customers and new prospects did not jump. CrowdStrike could still face some messy costs, but what it’s most valuable to — its reputation and ability to win contracts — seems safe. And that means shareholders, like customers, might want to stick with this top cybersecurity stock for the long haul.