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Should You Buy CrowdStrike Following Q2 Earnings?

The ‘curse’ of COVID recovery has struck once more, this time giving investors in cybersecurity leader CrowdStrike something to ponder.

If you haven’t noticed, cybersecurity has been a growing threat to the public and private sector alike in recent years, accelerating thanks to COVID-19 and working from home. 

This has led to the rapid growth of cybersecurity firms such as CrowdStrike (NASDAQ: CRWD), though investors seem less than impressed by yet another earnings beat last night. 

How did CrowdStrike do in Q2? 

It was green across the board for CrowdStrike:

  • Revenue: $337.7 million — up 70% year-over-year (YoY), and beating estimates of $323.2 million.
  • Earnings per share (EPS): $0.11 — up from $0.03 a year ago, and beating estimates of $0.07.
  • Total subscribed customers: 13,080 — up 81% YoY.
  • Annual Recurring Revenue (ARR): $1.34 billion — up 70% YoY.

So why is its stock price down today? 

Well, it’s another case of ‘enough is never enough’ from us investors. Concerns have been flagged over the size of the beat and its Q3 guidance — revenue of between $358 and $365.3 million.

The problem is that CrowdStrike has now beaten on its earnings for the past five consecutive quarters while its stock price has jumped a whopping 610% since the pandemic took hold in March 2020. The move to remote work created an accelerated growth space for cybersecurity firms as companies scrambled to beef up their own protocols. 

And now, when all metrics aren’t growing in triple digits, investors are disappointed. This is happening across all the work-from-home industries this earnings season, and it’s something investors might just need to get used to. 

CrowdStrike had a great quarter and is operating in a global market that’s expected to be worth close to $400 billion annually by the middle of the decade; there’s nothing to fear here just yet.

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