(Bloomberg) -- CrowdStrike Holdings Inc. fell in early trading on Wednesday after the cybersecurity company issued a weaker-than-expected earnings forecast, disappointing investors who have been watching for signs that it has recovered from a flawed update that crashed computers around the world.
Adjusted earnings will be 84 cents to 86 cents per share in the fiscal fourth quarter, CrowdStrike said Tuesday in a statement. Analysts were expecting 87 cents, according to Bloomberg-compiled estimates.
Shares of CrowdStrike had fallen 5.9% at 1:33 p.m. in New York on Wednesday.
The report is the company’s second since a flawed CrowdStrike update crashed millions of devices operating on Microsoft Corp.’s Windows systems. The outage, which unfolded on July 19, disrupted a wide range of industries, including air travel, banks and health care. The company posted sales three months ago that beat expectations, a sign that investors took to mean the global IT outage wouldn’t significantly affect its finances.
Third-quarter revenue represented a bright spot in Tuesday’s report. Sales for the period came to $1.01 billion, exceeding Wall Street’s expectations. Profit, excluding some items, was 93 cents a share, compared with the average estimate of 81 cents.
CrowdStrike also raised its guidance for revenue for the full fiscal year, to $3.92 billion to $3.93 billion. Analysts were expecting $3.9 billion.
The company surpassed $4 billion in annual recurring revenue as of Oct. 31, making CrowdStrike “the fastest and only pure play cybersecurity software company to reach this reported milestone,” Chief Executive Officer George Kurtz said in the statement.
The company excluded roughly $26 million from its annual recurring revenue in the quarter, CrowdStrike Chief Financial Officer Burt Podbere said during the earnings call. That came after a distributor in the federal space provided notice of its intention “to exercise transferability rights with respect to a transaction,” and CrowdStrike concluded the transaction wouldn’t recur. That transaction remains in revenue in compliance with US revenue recognition rules, Podbere said.
CrowdStrike previously agreed to a $32 million deal with Carahsoft Technology Corp., a distributor which serves as a middleman between technology companies and government agencies, for identity protection software intended for the US Internal Revenue Service. But the IRS never purchased the software, Bloomberg reported in October.
The deal caused concern within CrowdStrike and, according to some legal and accounting experts, raised red flags.
Jeremy Fielding, a spokesperson for CrowdStrike, declined to say whether the company’s comments were related to the Carahsoft deal involving the IRS. “Our comments during the Q3 FY 25 earnings call speak for themselves,” he said in an email. Carahsoft didn’t respond to a request for comment.
Delta Airlines’ operations were stunted for days as a result of the outage, costing the airline at least $500 million in out-of-pocket losses, according to a lawsuit it filed against CrowdStrike in October. CrowdStrike said Delta was shifting blame “from its failure to update its antiquated IT infrastructure,” in a statement at the time.
“Following this summer’s incident as a company we were tested,” Kurtz said, in a call with investors on Tuesday. “We responded with speed, care and resolve and we focused on becoming even better.”
(Updates shares in third paragraph and with additional information in 10th and 11th paragraph. A previous version of this story corrected seventh paragraph to reflect that CrowdStrike concluded the transaction wouldn’t recur.)
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