CrowdStrike earnings: Vendor consolidation drives upside as outage impact dissipates
We maintain our fair value estimate, shares overvalued.
Mentioned: CrowdStrike Holdings Inc Class A (CRWD)
Key Morningstar metrics for CrowdStrike
- Fair Value Estimate: $330
- Morningstar Rating: ★★
- Morningstar Economic Moat Rating: Narrow
- Morningstar Uncertainty Rating: High
What we thought of CrowdStrike’s earnings
CrowdStrike CRWD kicked off fiscal 2026 with a set of solid financial results that underscore the robust demand landscape the firm enjoys for its solutions. Sales grew 20% to $1.1 billion and adjusted margins contracted 490 basis points to 18%, mostly due to the continued impact of the July 19 outage.
Why it matters: With the infamous July 19 outage almost a year old, we believe the firm’s ability to continue to increase its top line at a healthy clip while continuing its expansion beyond endpoint security is a testament to how important CrowdStrike is to its clients.
- Especially in a cybersecurity landscape that is marked by security toolkit fatigue, buyers are increasingly turning to vendor consolidation as a method of not only rationalizing security budgets but also improving security outcomes, benefiting large vendors such as CrowdStrike.
- To that end, CrowdStrike’s bundling discounts—that were initiated after the outage, and which incorporate better pricing for higher spending on the firm’s solutions as well as its foray into cloud security, identity security, and security operations—are well-timed and are meeting tangible customer demand.
The bottom line: We maintain our $330 per share fair value estimate for narrow-moat CrowdStrike, with the firm’s quarterly results largely in line with our prior estimates. Despite shares dropping after hours, we continue to view them as overvalued.
- Much like the last few quarters, CrowdStrike saw a substantial increase in operating costs due to the fallout from the July 19 outage, the primary driver behind the firm’s contracting margins for the quarter.
- With the third quarter being the first full postoutage quarter, we are expecting the firm to reenter margin expansion territory in the second half of fiscal 2026. Beyond 2026, we expect plenty of scale-driven margin expansion, with 2030 adjusted margins closing in on 30%.
