CrowdStrike Beats Q4 Estimates, But Weak Guidance Sends Shares Lower
3min read CrowdStrike Holdings (CRWD) delivered fourth-quarter earnings that topped analyst expectations, but a weaker-than-expected outlook overshadowed the strong results, sending shares lower in after-hours trading. The cybersecurity firm, a leader in endpoint and cloud security, posted adjusted earnings per share (EPS) of $1.03, well above the consensus estimate of $0.86. Revenue came in at $1.06 billion, marking a 25% year-over-year increase and exceeding Wall Street’s forecast of $1.04 billion. However, despite these headline beats, softer-than-expected forward guidance weighed on sentiment.
One of the most closely watched metrics in software and cybersecurity—Annual Recurring Revenue (ARR)—rose 23% year-over-year to $4.24 billion, ahead of analysts’ expectations of $4.21 billion. However, net new arr, which tracks the additional subscription revenue gained in the quarter, was $224.3 million—down 20% year-over-year. This figure was slightly above expectations of $198 million but raised concerns about growth momentum heading into fiscal 2026. ARR is critical for subscription-based software companies like CrowdStrike, as it reflects the sustainability of revenue streams and customer retention. A strong ARR figure provides visibility into future cash flows, while weakness in net new ARR can signal slowing customer expansion or renewal headwinds.
Guidance Disappoints, Raising Growth Concerns
Despite a solid Q4, CrowdStrike’s forward outlook failed to impress investors. For the fiscal first quarter, the company guided for adjusted EPS of $0.64 to $0.66, well below the consensus estimate of $0.96. Revenue guidance of $1.10 billion to $1.11 billion was roughly in line with expectations of $1.1 billion, but the weak EPS projection spooked investors.
For the full fiscal year 2026, CrowdStrike expects revenue between $4.74 billion and $4.81 billion, slightly above the $4.77 billion consensus. However, adjusted EPS guidance of $3.33 to $3.45 fell significantly short of the Street’s $4.43 estimate. The company attributed the earnings shortfall to increased investments in platform resiliency, AI-driven cybersecurity efficiencies, sales and marketing expenses, and costs associated with phasing out a prior customer discount program.
While management reiterated expectations for a second-half acceleration in net new ARR, analysts are divided on whether this recovery will materialize. Raymond James analysts noted that CrowdStrike’s Net Revenue Retention (NRR) rate currently sits at approximately 112%, well below its pre-outage levels of 120%. The firm believes that a return to previous retention levels is necessary for the company to maintain elite growth.
Stock Declines Below Key Technical Levels
Shares of CrowdStrike, which had already declined from $455 to $390 leading into earnings, fell sharply in after-hours trading, dropping another 9% to around $360. The stock is now trading below its 50-day moving average of $386, with the next key support level at the 200-day moving average near $333. If CRWD fails to regain momentum in the coming sessions, it could test that longer-term support.
Despite the selloff, several Wall Street analysts maintained their bullish outlook on CrowdStrike. Evercore raised its price target from $400 to $450, citing strong total contract value (TCV) growth of 40% year-over-year, stable module adoption, and robust gross retention of 97%. Raymond James also reiterated an Outperform rating, raising its target to $390 while acknowledging concerns about NRR trends. However, Mizuho lowered its price target from $450 to $410, citing valuation concerns and the weaker profitability outlook.
Competitive Landscape: Palo Alto Networks, Microsoft, and SentinelOne in Focus
CrowdStrike operates in a highly competitive cybersecurity market, facing off against rivals such as Palo Alto Networks (PANW), Microsoft (MSFT), and SentinelOne (S). Palo Alto Networks has been aggressive in expanding its cloud security offerings, while Microsoft remains a formidable competitor due to its deep integration across enterprise IT environments. SentinelOne, a smaller but fast-growing player, continues to push into the endpoint security space, directly challenging CrowdStrike in certain segments.
One area where CrowdStrike is looking to differentiate itself is its expansion beyond endpoint security into extended detection and response (XDR). The company’s Falcon platform is evolving into a broader cybersecurity ecosystem, integrating endpoint security with cloud workload protection, identity security, and SIEM (Security Information and Event Management). Management highlighted strong demand for Falcon Flex, a subscription model that offers customers more flexibility in bundling security modules, with bookings exceeding $1 billion in the quarter.
Can CRWD Rebound?
The sharp decline in CrowdStrike shares raises the question of whether this pullback is a buying opportunity or a sign of deeper challenges ahead. Bulls argue that the company's long-term growth story remains intact, with strong ARR trends, expanding product adoption, and leadership in cloud security. Additionally, with the discontinuation of prior discounting programs, revenue quality should improve over time.
On the other hand, bears point to the softer guidance, particularly on profitability, as a red flag. Elevated sales and marketing expenses, combined with continued investments in AI and platform enhancements, suggest that margin expansion may take longer than previously expected. Furthermore, if net new ARR growth does not re-accelerate as projected, the stock could face further downside pressure.
Final Thoughts
CrowdStrike delivered a strong Q4, with beats on both the top and bottom lines and healthy ARR growth. However, the weak EPS guidance and concerns about ARR acceleration overshadowed the solid results, sending shares lower. While analysts remain positive on CrowdStrike’s long-term prospects, near-term execution risks and elevated spending weigh on sentiment. Investors will now be watching whether the company can successfully reaccelerate growth in the second half of fiscal 2026, while also maintaining profitability improvements. For now, the stock is in a precarious position, testing key technical levels and requiring renewed confidence in its outlook to regain its footing.