CrowdStrike faces revenue drop after July software outage

CrowdStrike reported strong fiscal second-quarter results, with revenue of $963.9 million, surpassing expectations, and a year-over-year growth of 32%. However, the company lowered its full-year guidance due to a significant software outage on July 19, which caused widespread disruptions, including flight cancellations and delayed deliveries. This incident led to a drop in share prices and prompted legal action from shareholders and Delta Air Lines, which reported substantial financial losses due to the outage. The outage resulted in millions of computers crashing, necessitating manual reboots by administrators. In response, CrowdStrike provided free remediation services to affected clients, which contributed to a decline in professional services revenue. The company’s CEO, George Kurtz, acknowledged the incident and stated that a fix had been implemented. Looking ahead, CrowdStrike adjusted its earnings per share forecast for the 2025 fiscal year, projecting $3.61 to $3.65, down from previous estimates. The company anticipates a negative impact on subscription revenue of $30 million per quarter and expects longer sales cycles as clients seek discounts and deal approvals from higher management. Despite the challenges, CrowdStrike maintains that the majority of delayed deals remain in their pipeline. The company’s finance chief noted that they have provisions to limit liability and insurance policies to mitigate the impact of legal claims, indicating a cautious but optimistic outlook for recovery in the coming quarters.