Wednesday's Headlines: CrowdStrike Delivers Another Stellar Quarter

Wednesday's Headlines: CrowdStrike Delivers Another Stellar Quarter

Here were the biggest movers in the MyWallSt shortlist yesterday:

Moving Up ⬆️

Lemonade (LMND) +3.3% (BILL) +2.2%

Workday (WDAY) +2.1%

Block (SQ) +1.9%

PagerDuty (PD) +1.9%

Moving Down ⬇️

Peloton Interactive (PTON) -8.5% Group (TCOM) -6.7%

Huazhu Hotels Group (HTHT) -6.7%

Hain Celestial (HAIN) -4.7%

Baozun (BZUN) -4.5%

Here are the stories that you need to know ahead of market-open today, Wednesday the 31st of August.

CrowdStrike Delivers Another Stellar Quarter ⚡️

The cybersecurity pioneer CrowdStrike (CRWD) reported earnings last night, and while the stock remains flat in pre-market trading, the company continues to outperform. Revenue for the quarter was up 59% year-over-year to $535 million, topping analysts' estimates. Management also raised its full-year guidance incrementally to boot. In fact, CrowdStrike was actually the second fastest software company ever to achieve a $2 billion revenue run rate.

And it wasn’t just revenue growth that impressed, with its customer base growing 51% to 19,686 and the company’s remaining performance obligations — future revenue that has been contracted but not delivered yet — soaring to $2.5 billion. Dollar-based net retention rate — a favorite amongst software-as-a-service (SaaS) investors — once again surpassed 120% indicating that its customers are spending more year on year as they adopt more modules.

The only blemish on the report is the net loss figure of $49 million. However, this is attributable to an outsized stock-based compensation expense as the company continues on its hiring spree. Adjusted net income came in at $86 million. While the numbers are impressive, expectations for CrowdStrike are sky high due to its premium valuation, explaining the market’s muted response.

Snap Reportedly Slashing Its Workforce 😰

According to people inside the company, Snap Inc (NYSE: SNAP) is planning to lay off 20% of its workforce, equating to more than 1,200 employees.

The owner of Snapchat has reportedly been preparing for the change over the last several weeks and impacted departments will include hardware and developer products. Most affected will be Snap’s various side projects, including its team dedicated to developing mini-apps and games within its central product, and Zenly, the social mapping app Snap bought in 2017.

Like many tech companies, Snap expanded rapidly during the pandemic as usage and revenue soared. In March 2020, Snap had 3,427 full-time employees; by the end of last quarter it had 6,446, an 88% increase. In May 2021, the company said it would slow hiring and look for ways to cut costs. Just a year prior, Snap made its largest ever acquisition, WaveOptics, an AR display provider.

The news of layoffs won’t come as a shock to investors, who will know Snap has struggled over the last several quarters. In its latest earnings report, Snap missed expectations for revenue and earnings and refused to give guidance as “forward-looking visibility remains incredibly challenging.” Over the last year, Snap’s stock has lost 80% of its value.

Russ Caditz-Peck, a Snap spokesperson, declined to comment on the layoffs.

Snap’s stock is down 7.2% in pre-market trading.

Baidu Faces The Threat of Audit 🚨

Shares of Baidu are down in premarket trading this morning, despite the company reporting quarterly results that were better than most analysts had expected.

In its earnings call yesterday, the Chinese tech giant posted sales of $4.3 billion. Although this was a drop of 5% on the same period last year, it came in just ahead of analyst expectations, who predicted the quarter to be much tougher on the company. Net income came in at $521 million — again, ahead of what analysts had forecast.

The past year or so has been rough for most tech companies, but none have had it as bad as Chinese tech companies. If contending with the strict zero-COVID policies that were implemented in the region wasn’t hard enough, the wider tech industry has been subjected to a sustained crackdown from the Chinese government since the end of 2020 that has put a halt on meaningful expansion.

But despite overcoming these challenges with its better-than-expected results, Baidu stock still fell in yesterday’s trading due to the impending threat of an audit inspection by the Public Company Accounting Oversight Board. This stems from an agreement between Chinese and American authorities that was struck last week which will give U.S. market watchdogs more access to U.S.-listed Chinese stocks.

Baidu is often referred to as “the Google of China”, and for good reason — its search engine is the second-largest in the world (no prizes for guessing who has the top-spot), while it also offers advertising, mapping, and cloud storage solutions. The company was listed on the NASDAQ exchange via American Depositary Shares (ADS) in 2005 and has grown more than threefold since.

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