FILE PHOTO: CrowdStrike logo is seen in this illustration taken July 29, 2024. REUTERS/Dado Ruvic/Illustration/File Photo
(Reuters) -CrowdStrike shares fell 3.3% before the bell on Thursday after the cybersecurity firm's weak quarterly revenue forecast signaled the lasting effects of a botched software update last year that caused a global outage.
The company projected third-quarter sales broadly in line with analysts' expectations as incentive programs and discounts tied to the outage weigh on the timing of subscription revenue, as it lets customers pick more products or extend usage.
Last year, a faulty update to CrowdStrike's Falcon sensor software triggered a Windows malfunction and caused technology systems in hospitals, banks, and airports to go dark.
BTIG analysts expect the $50 million rebate-related drag to taper off in fiscal 2027, leading to annual recurring revenue and subscription revenue being more tightly correlated.
The company's second-quarter revenue jumped 21%, indicating cybersecurity demand remains strong despite volatility, due to investments in artificial-intelligence-powered safety systems amid a rise in digital threats.
Morningstar analysts said on Thursday the share price reaction was largely "due to inflated near-term expectations baked into the stock going into the earnings report."
To win customers beyond its core business of protecting laptops and servers, CrowdStrike has added tools to run security operations, verify user logins, and safeguard cloud systems, all of which are showing strength, the analysts added.
At least 10 brokerages have cut their target price on the stock since Wednesday's results.
CrowdStrike's shares have gained 23.5% so far this year. If premarket losses hold, the company is on track to wipe off around $3.5 billion from its market valuation.
(Reporting by Zaheer Kachwala in Bengaluru; Editing by Sriraj Kalluvila)
