CrowdStrike Stock Drops on Cautious Outlook -- Is This a Buying Opportunity?

Core Viewpoint - CrowdStrike's share prices declined following a report of decelerating revenue growth and maintained full-year revenue guidance, despite a year-to-date increase of nearly 37% in stock value [1] Revenue and Growth Metrics - CrowdStrike reported a 20% increase in revenue to $1.1 billion, matching analyst expectations, with subscription revenue also rising by 20% to $1.05 billion [4] - Annual recurring revenue (ARR) grew by 22% to $4.44 billion, adding $193.8 million in new ARR during the quarter [4] - Revenue growth has been decelerating over several quarters, with Q1 FY26 showing a 20% growth compared to 35% in Q3 FY24 [6][5] Future Expectations - The company anticipates improving sequential net new ARR growth in the next quarter and accelerating ARR growth in the second half of the fiscal year, driven by strong adoption of Falcon Flex [6][8] - Falcon Flex has closed over 820 deals worth $3.2 billion in less than two years, enhancing customer adoption of CrowdStrike's modules [6][7] Financial Performance - Adjusted earnings per share (EPS) fell 8% to $0.73, exceeding the adjusted consensus of $0.63, attributed to increased spending in sales, marketing, and R&D [10] - Operating cash flow was $384.1 million, with free cash flow at $279.4 million, and the company ended the quarter with $4.61 billion in net cash and short-term investments [11] Guidance and Valuation - CrowdStrike maintained its fiscal 2026 revenue guidance of $4.74 billion to $4.81 billion, indicating a growth of 20% to 22%, while raising adjusted EPS guidance to $3.44 to $3.56 [12] - The stock trades at a forward price-to-sales multiple of just under 24 times fiscal 2026 estimates, which is considered expensive given the current growth outlook [13][14]