On Wednesday, CrowdStrike Holdings (NASDAQ:CRWD) maintained its Overweight rating and $395.00 price target according to a report from KeyBanc. The cybersecurity firm reported strong third-quarter results, surpassing expectations in annual recurring revenue (ARR) by $22 million. The company also saw beats in revenue, billings, remaining performance obligations (RPO), and margins. These positive results come after the first full quarter following an outage that occurred in July.
Despite the upbeat third-quarter performance, CrowdStrike's stock experienced a decline in after-hours trading. The fall is attributed to the one-time removal of $26 million in ARR due to a non-recurring transaction with a distributor in the Federal vertical. Additionally, there was a shift in the expected timing of net new ARR acceleration to the second half of fiscal year 2026, differing from previous forecasts made at the Fal.Con conference.
KeyBanc highlighted that CrowdStrike's total trailing twelve months (TTM) gross retention only slightly decreased by less than 0.5%, with an estimated 1.5 percentage points of churn occurring within the period. The net retention rate remained strong at 115%. Furthermore, CrowdStrike reported over $600 million in Falcon Flex (NASDAQ:FLEX) bookings during the quarter and saw robust growth in its security information and event management (SIEM) offerings, with ARR growth estimated to be over 150% year-over-year.
The report also suggested that CrowdStrike's performance could be a positive indicator for SentinelOne (NYSE:S), which is set to report earnings on December 4. The increase in gross churn for CrowdStrike could imply around $47 million in ARR, with the possibility of half of that benefiting SentinelOne. Following CrowdStrike's earnings beat, KeyBanc has increased its fiscal year 2025 to 2027 estimates, which were previously below consensus.
In conclusion, KeyBanc reaffirmed its Overweight rating and $395 price target for CrowdStrike, citing the company's position as a leading consolidator of security spend. The firm's research indicates a strong customer commitment to CrowdStrike's Falcon platform.
In other recent news, CrowdStrike Holdings has seen notable attention from analysts following robust third-quarter results and a strong forecast for the fourth quarter. KeyBanc maintained its Overweight rating on the company, setting a price target of $395. TD Cowen also reaffirmed a Buy rating with a $380 target, highlighting a 27% growth in Annual Recurring Revenue (ARR) and a 29% increase in revenue. Needham raised its price target to $420 from $360, while Citi raised the price target to $400 from $300. Baird also increased its price target to $390 from $375.
CrowdStrike's revenue exceeded $1 billion, marking a 29% increase from the previous year. The ARR also saw a significant rise, reaching $4.02 billion, a 27% growth from the previous year. Despite some concerns over a decrease in new ARR and a contraction in Free Cash Flow margins, CrowdStrike's Falcon Flex offering and broader platform adoption are expected to contribute to sustained success.
Analysts from firms such as Scotiabank (TSX:BNS) and BTIG have maintained neutral ratings, noting potential challenges such as the lingering effects of a July outage incident. However, CrowdStrike's management aims to accelerate net new ARR in the second half of fiscal year 2026 and has set a goal to reach $10 billion in ARR by fiscal year 2031.
InvestingPro Insights
CrowdStrike's strong financial performance, as highlighted in the article, is further supported by real-time data from InvestingPro. The company's market capitalization stands at an impressive $84.7 billion, reflecting investor confidence in its growth potential. CrowdStrike's revenue for the last twelve months reached $3.74 billion, with a robust revenue growth of 31.35% over the same period. This aligns with the article's mention of the company surpassing expectations in annual recurring revenue.
InvestingPro Tips also provide additional context to CrowdStrike's financial health. One tip indicates that the company's net income is expected to grow this year, which corroborates KeyBanc's decision to increase its fiscal year 2025 to 2027 estimates. Another tip highlights that CrowdStrike has been profitable over the last twelve months, with a strong return over the last year, month, and three months. This positive momentum is reflected in the article's discussion of the company's beat on revenue, billings, and margins.
It's worth noting that InvestingPro offers 13 additional tips for CrowdStrike, providing investors with a more comprehensive analysis of the company's financial position and market performance. These insights can be particularly valuable for those looking to delve deeper into CrowdStrike's investment potential beyond the quarterly results discussed in the article.
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