By By Jaspreet Singh
(Reuters) – Cybersecurity firm CrowdStrike (NASDAQ:CRWD) cut its revenue and profit forecasts on Wednesday in the aftermath of a July global outage due to its faulty software update, and said the environment would remain challenging for about a year.
The outage disrupted internet services, affecting 8.5 million Microsoft (NASDAQ:MSFT) Windows devices and causing mass flight cancellations.
CEO George Kurtz said the incident delayed some of the company’s deals into subsequent quarters, but the majority remain “in the pipeline”.
Analysts expected the reputational hit could hurt CrowdStrike’s dominant position, but the cost of switching providers could stave off a larger effect. Its shares fell more than 3% in extended trading.
CFO Burt Podbere said the company’s challenges would remain for about a year, with reacceleration in growth expected in the back half of next year.
He said annual revenue forecast would be impacted by the customer commitment package that will cost $60 million in the second half.
“The customer support package and Falcon Flex (NASDAQ:FLEX) (has been around even before outage) are CrowdStrike’s moves to solidify trust and ramp up platform adoption after the July 19 outage,” said Shrenik Kothari, lead sector analyst at Baird.
Big businesses are spending heavily on cybersecurity products amid a surge in digital scams and high-profile hacks, which have hit companies such as UnitedHealth Group (NYSE:UNH), Microsoft and U.S. oilfield services firm Halliburton (NYSE:HAL).
CrowdStrike expects annual revenue to be between $3.89 billion and $3.90 billion, compared with its prior expectations of $3.98 billion to $4.01 billion. Analysts on average were expecting $3.95 billion.
Rivals SentinelOne (NYSE:S) and Palo Alto Networks (NASDAQ:PANW) raised their annual revenue forecasts this month, a sign that they were gaining market share.
CrowdStrike expects annual adjusted profit per share to be between $3.61 and $3.65, compared with prior estimates of $3.93 to $4.03.
“The overall view is skies are not falling in light of the 7/19 outage,” said TD Cowen analyst Shaul Eyal, adding that the second-quarter results and guidance was “better than feared”.
Its second-quarter revenue rose about 32% to $963.9 million, beating estimates of $958.6 million, and it reported adjusted profit per share of $1.04, above expectations of 97 cents.