Crowdstrike cuts revenue forecast after global IT outage

Crowdstrike has cut its annual sales and profit forecasts after demand for its cybersecurity products was hit by the global Windows outage caused by a faulty update from the company.
The systems failure last month affected 8.5 million Microsoft Windows devices, interrupting internet services and leaving thousands of people stranded at airports after mass flight cancellations.
The outage halted a steady rise in the fortunes of Crowdstrike, which has become one of the leading sellers of a cybersecurity tool that seeks to identify and mitigate threats on computers and other devices.
The episode led to the company saying that it expected to bring in annual revenue of between $3.89 billion and $3.90 billion, down from a previous forecast of $3.98 billion to $4.01 billion and from a consensus prediction by analysts of $3.95 billion. Similarly, its annual adjusted profit per share was forecast to be between $3.61 and $3.65, down from a range of $3.93 to $4.03 previously.
SentinelOne and Palo Alto Networks, the rival cybersecurity providers, have raised their annual revenue forecasts this month, suggesting that they are gaining market share at the expense of Crowdstrike.
However, revenue for the second quarter rose by about a third to $963.9 million, beating estimates of $958.6 million. Moreover, Shaul Eyal, an analyst at TD Cowen, said the second-quarter results and guidance were “better than feared”, argued that “skies are not falling” in light of the outage incident and noted that “one of the main discussion points will be the potential rising liabilities associated with the outage”.
“Working with customers to recover from the July 19 incident, we emerge as an even more resilient and even more customer-obsessed Crowdstrike, continuing to aggressively invest in innovation,” George Kurtz, 59, Crowdstrike’s co-founder and chief executive, said.
Burt Podbere, its chief financial officer, said: “For the second quarter, we delivered strong growth in revenue, operating profit and net income, demonstrating our focused execution.
“Our market opportunity remains unchanged and we believe our continued commitment to customers and innovation will drive even more Falcon platform adoption, protecting our customers from rapidly evolving cyber threats and enabling us to achieve our long-term targets.”
Crowdstrike’s shares, which lost about a third of their value after the outage last month, rose $7.47, or 2.8 per cent, to close at $271.67 in New York on Thursday. The stock had more than doubled in the 12 months before the outage.
Some of the companies affected by the incident are facing huge bills. Delta Air Lines has estimated that it may owe its customers $380 million after the Crowdstrike-induced outage fouled up its computer systems so horribly that it had to cancel about 7,000 flights. Delta has threatened to sue Crowdstrike, which has insisted that the airline is using the technology outage as an excuse for its own bungling.
Crowdstrike did not provide an estimate of legal expenses that it may face from the outage, but indicated that the bills were unlikely to be too burdensome. “Our customer agreements contain provisions limiting our liability and we maintain insurance policies intended to mitigate the potential impact of certain claims,” Podbere said.