CrowdStrike Braces for Impact: Can Q4 Results Reignite the Rally?

CrowdStrike Holdings (NASDAQ: CRWD) is set to report its fourth-quarter earnings after the market closes today. Analysts are expecting non-GAAP earnings per share (EPS) of $0.86 on revenue of $1.0349 billion. Management’s prior guidance set revenue expectations between $1.0287 billion and $1.0354 billion, implying roughly 22% year-over-year growth. Historically, CrowdStrike has outperformed the high end of its guidance by approximately 1.3%, or $12.2 million, on a trailing twelve-month basis.

Key Metrics to Watch

Investors will closely monitor several key financial and operational metrics:

- Annual Recurring Revenue (ARR): The consensus estimate is for ARR to reach $4.2099 billion, which implies net new ARR of $192.4 million for the quarter. This would be a key figure, as net new ARR in the prior quarter declined by 31% year-over-year and 30% sequentially due to lingering impacts from the July outage.

- Renewal Trends: The fourth quarter coincides with year-end renewal seasonality, which is historically strong for CrowdStrike. Investors will look for indications that renewals and upsell activity have rebounded following last quarter’s slowdown.

- Gross Margin and Operating Expenses: Given the increased focus on profitability within the broader cybersecurity sector, gross margin trends will be closely watched, as well as any commentary on operating efficiency initiatives.

- Federal and Large Customer Deal: CrowdStrike’s growth has been fueled by strong adoption of new security modules, particularly within cloud security, identity threat detection, and log management. Large customer spending trends will be key to assessing whether growth remains durable in the face of macro uncertainty.

Prior Guidance and Potential Drivers

Management has acknowledged a negative impact of approximately $30 million to net new ARR and subscription revenue from customer commitment packages (CCP), which will be an overhang in the near term. However, sell-side analysts remain positive on CrowdStrike’s ability to outperform, citing:

- Steady win rates despite concerns following the July outage.

- Product expansion momentum, including increased adoption of its Falcon security modules.

- Strong demand for cybersecurity solutions, particularly in cloud security and endpoint protection.

RBLT analysts expect CRWD to meet or slightly exceed its Q4 estimates, with net new ARR potentially landing at $187 million, down 34% year-over-year but improving sequentially. Conversations with cybersecurity professionals and resellers suggest the impact of the outage has been limited, with customers expanding usage rather than switching providers.

Valuation and Stock Performance

Heading into earnings, CRWD stock has experienced notable weakness, declining from a high of $455 to the $385 range. The stock is now testing its 50-day moving average, which is emerging as a key support level. If the report disappoints or guidance is weak, a break below this level could lead to a retest of lower technical supports.

Despite recent weakness, Wall Street remains optimistic about CrowdStrike’s long-term prospects. Several analysts have raised their price targets ahead of the report:

- Canaccord Genuity: Increased price target from $370 to $420, citing strong customer engagement and the company’s ability to drive long-term growth through expanded contracts and product adoption.

- Rosenblatt Securities: Raised price target to $450, anticipating solid Q4 results and continued traction with new security modules.

- UBS: Raised price target from $396 to $450 but noted a mixed near-term outlook, citing some investor concerns over potential downside risk to FY26 revenue estimates.

- Stifel: Increased price target to $475, citing improving customer sentiment and an expectation that CrowdStrike will emerge stronger from its prior outage-related challenges.

Outlook and Investor Sentiment

Looking beyond Q4, the key question is whether CrowdStrike can sustain strong growth in FY26. Management has expressed confidence in accelerating growth in the second half of the fiscal year, driven by:

- Increased adoption of emerging security modules.

- Expansion of long-term contracts.

- Growing demand for consolidated security platforms.

However, investors will be closely watching for any hints of pricing pressure, as some analysts have flagged concerns over potential pricing concessions on large customer renewals. CrowdStrike’s ability to maintain strong renewal rates and upsell additional modules will be critical in offsetting any potential slowdown in net new ARR.

Conclusion

CrowdStrike’s Q4 report will be a pivotal moment for the stock, particularly given its recent pullback. The focus will be on net new ARR trends, renewal activity, and management’s outlook for FY26. While expectations are tempered following last quarter’s ARR miss, analysts remain optimistic that strong product adoption and customer retention trends will support the company’s long-term growth trajectory. If the company can demonstrate improving momentum and reaffirm its longer-term targets, the recent dip in share price may present a buying opportunity for investors.