Crowdstrike to Power Past Security Breach

The cybersecurity firm is expected to post solid fiscal Q3 results despite a recent security breach amid increasing demand for its products as data centres expand and outages rise.

The Key Points

• Crowdstrike is expected to report earnings after disclosing that an insider leak allowed a hacker group to falsely claim it had breached the company's security.
• Analysts expect the company's earnings to remain flat despite rising revenue amid increased marketing and research costs.
• Traders are likely to focus on guidance for the next fiscal year, hoping the company can at least match this year's 20% revenue growth.

Growing Data Centre Demand Increases Sales

The first of several essential tech companies to report this week, investors are looking to CrowdStrike to provide not only solid earnings but also an optimistic forecast for the rest of the year. This is despite some recent service issues for the company, after it was revealed a week ago that , allowing a hacker to fake a security breach. The hacking group Scattered Lapsus$ claimed to have compromised the company's security by showing screenshots of employees' dashboards. But the firm confirmed that it was a "suspicious insider" who leaked the screenshots, not that hackers had gained access to the system.

Crowdstrike seems to have an ability to move past such issues, as the company reported strong revenue growth even after the July software update that caused major computer outages. In its most recent report, the company said its and that it had a record cash flow of $333 million, giving it ample reserves to pay shareholders. Its earnings beat consensus by 12%, but the share price seemed more sensitive to guidance. The company raised its full-year outlook, but apparently not by enough to satisfy investors who were also unhappy with Q3 guidance. Naturally, traders will be looking closely at the company's forecasts when it reports earnings this time around.

Traders Are Looking for Growth

Crowdstrike will report its fiscal Q3 earnings after the market closes on Tuesday, with , up from $0.93 a year ago. This is despite an expected 20% increase in sales to $1.22 billion. The company had previously guided Q3 sales of $1.21 to $1.22 billion, suggesting investors are setting a high bar for the company. Lower earnings performance expectations are due to the company ramping up R&D expenditures and increasing marketing costs. Traders are likely expecting CrowdStrike to at least confirm its fiscal year 2026 EPS guidance in the $3.60-$3.72 range, with sales expected to increase by ~21%. The company is also likely to guide next year's sales, and if it doesn't at least match this year's performance, it could leave traders disappointed.

Crowdstrike Sits at Critical Junction

CRWD stock has come off its record high of $570 per share recently after forming consecutive momentum divergence signals, bringing into focus the $500 handle. Despite a medium-term cup-and-handle formation, the measured move projection does not appear to have materialised or likely to do so, given that prices have reverted back to the neckline. If bulls fail to hold the area formed near $470, all eyes will shift to the $450 level, given its proximity to the lower trendline of a potential terminal wedge pattern. Losing that bottom will expose $400 and ultimately the $300 round support. Alternatively, holding the short-term support or bouncing off the trendline could see CRWD attempt to reclaim record highs.

Source: SpreadEx | CrowdStrike