CrowdStrike will report its latest financial results next week. Here’s the number investors should be watching

CrowdStrike (NASDAQ: CRWD) is a leader in cybersecurity, especially when it comes to endpoint protection. It is scheduled to release its latest financial results for the second fiscal quarter of 2025 (ended July 31) on August 28, and could be the most important report in the company’s history.

On July 18, CrowdStrike released a routine update to its flagship Falcon cybersecurity platform. A software bug crashed around 8.5 million Microsoft Windows-based computers and sent them into a reboot loop that required a manual fix in many cases.

Most customers restored their systems within days, but the outage caused an estimated $5.4 billion in damage to Fortune 500 companies alone. Delta Air Linesfor example, it canceled 7,000 flights over a five-day period at a cost of $500 million. Delta is now pursuing legal action against CrowdStrike in an attempt to recoup its losses, and the cyber security giant’s potential financial liability is still unknown.

The lawsuits may take time to resolve, but in the shorter term, CrowdStrike will likely lose some of its existing customers and struggle to attract new ones. This could affect annual recurring revenue (ARR), which is one of the company’s most important financial metrics.

CrowdStrike’s ARR hit a record high of $3.6 billion in the first quarter of fiscal 2025 (ended April 30), which represented a 33% year-over-year increase. Last year, management outlined a goal to reach $10 billion in ARR within seven years.

Because the outage occurred near the end of the second quarter, cancellations from existing customers likely won’t impact ARR immediately. However, ARR will be affected by existing customers neglecting to spend more by adopting additional products. The lack of new customers will also be evident.

Additionally, if management revises its $10 billion ARR target, it will be a sure sign that weak ARR growth is on the horizon.

In decline ARR, on the other hand, could cause CrowdStrike to cut costs to remain profitable. That means taking money away from growth initiatives like marketing, and that could put a bigger dent in future ARR.

Should you invest $1,000 in CrowdStrike right now?

Before buying shares in CrowdStrike, consider the following:

The Motley Fool Stock Advisor the analyst team has just identified what they think they are 10 best stocks for investors to buy now…and CrowdStrike wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Nvidia made this list on April 15, 2005… if you invested $1,000 at the time of our recommendation, you would have $779,735!*

Stock advisor provides investors with an easy-to-follow blueprint for success, including portfolio construction guidance, regular updates from analysts, and two new stock picks every month. The Stock advisor the service has more than four times return of the S&P 500 since 2002*.

The story continues

See the 10 stocks »

*The stock advisor returns starting August 12, 2024

Anthony Di Pizio has no position in any of the shares mentioned. The Motley Fool has positions in and recommends CrowdStrike and Microsoft. The Motley Fool recommends Delta Air Lines and recommends the following options: long $395 January 2026 calls on Microsoft and short $405 January 2026 calls on Microsoft. The Motley Fool has a disclosure policy.

CrowdStrike will report its latest financial results next week. Here’s the number investors should be watching was originally published by The Motley Fool