Earnings Results: CrowdStrike stock drops nearly 20% as new subscriptions slow

United States

CrowdStrike Holdings Inc. shares dropped in the extended session Tuesday after the cybersecurity company said new subscriptions came in below expectations amid macro headwinds.

CrowdStrike  CRWD, -1.04% shares plummeted more than 17% after hours, following a 1% decline in the regular session to close at $ 138.

The company reported a fiscal third-quarter loss of $ 55 million, or 24 cents a share, compared with a loss of $ 50.5 million, or 22 cents a share, in the year-ago period. Adjusted net income, which excludes stock-based compensation and other items, was 40 cents a share, compared with 17 cents a share in the year-ago period.

Revenue rose to $ 580.9 million from $ 380.1 million in the year-ago quarter. Annual recurring revenue, or ARR, a software-as-a-service metric that shows how much revenue the company can expect based on subscriptions, grew 54% to $ 2.34 billion from the year-ago quarter, while the Street expected $ 2.35 billion.

Analysts expected CrowdStrike to report earnings of 28 cents a share on revenue of $ 516 million, based on the company’s outlook of 30 cents to 32 cents a share on revenue of $ 569.1 million to $ 575.9 million.

“However, total net new ARR was below our expectations as increased macroeconomic headwinds elongated sales cycles with smaller customers and caused some larger customers to pursue multi-phase subscription start dates, which delays ARR recognition until future quarters,” said George Kurtz, CrowdStrike’s co-founder and chief executive, in a statement.

Read: Cloud software is suffering a cold November rain. Can Snowflake and Salesforce turn things around?

The company expects adjusted fiscal fourth-quarter earnings of 42 cents to 45 cents a share on revenue of $ 619.1 million to $ 628.2 million, while analysts surveyed by FactSet forecast earnings of 34 cents a share on revenue of $ 633.9 million, according to analysts.

CrowdStrike expects full year earnings of $ 1.49 to $ 1.52 a share on revenue of $ 2.22 billion to $ 2.23 billion. Wall Street expects $ 1.33 a share on revenue of $ 2.23 billion.

So far, in November, cloud software stocks have been getting trashed. While the S&P 500 SPX, -0.16% has gained 2%, and the tech-heavy Nasdaq Composite COMP, -0.59% is flat, the iShares Expanded Tech-Software Sector ETF IGV, -0.78% has fallen more than 2%, the Global X Cloud Computing ETF CLOU, -1.12% has declined more than 4%, the First Trust Cloud Computing ETF SKYY, -0.74% has fallen more than 6%, and the WisdomTree Cloud Computing Fund WCLD, -1.05% has dropped more than 11%.