CrowdStrike Holdings Inc. said it successfully navigated a worldwide global IT outage to retain most of its customers and avoid a hemorrhage of business.
During a fiscal third-quarter earnings conference call with analysts last week, CrowdStrike CEO George Kurtz said Falcon customers are “staying with CrowdStrike as their trusted cybersecurity platform of choice.” Retention of customers was more than 97%, he said, down less than 0.5% from the previous quarter.
“I’m encouraged by the conversation that I’m having with our largest customers, and a reflection on the fact that they realize that we have the best tech in the industry, and the ability to stop breaches and drive down overall operational costs from a platform perspective,” Kurtz told analysts.
Indeed, CrowdStrike’s stock is off only 12% from its all-time high in early July, exhibiting a speedy recovery.
The disclosure was all the more remarkable given the circumstances of July 19, when a botched Falcon Sensor security software update set into motion a worldwide IT outage that shut down airlines, banks, hospitals, ports, media operations and other businesses, leading to billions of dollars in losses, threats of lawsuits against CrowdStrike, and a public relations black eye. Microsoft Corp. said 8.5 million Windows machines were affected.
A precipitous 24% plunge in CrowdStrike shares in the days following the outage portended dark days ahead for the respected vendor.
To be sure, the glitch created short-term headwinds for CrowdStrike in its efforts to sell to new customers — let alone retain and upsell to current customers.
And yet, CrowdStrike’s crisis management allowed it to quickly rebound. The company instantly admitted fault and issued a fix for the outage. Its executives testified about the issue on Capitol Hill. And CrowdStrike promised to make internal changes to prevent a repeat of the July incident.
Discounts to some customers through the second half of this year also generated longer-term deals and increased adoption of CrowdStrike services, the company said.
“They did an outstanding job” of crisis management, Punit Minocha, Zscaler Inc.’s executive vice president of business development and corporate strategy, said in an interview. “These outages can happen to any of us. No one is impervious. All the industry players reached out to CrowdStrike after the outage happened.”
Still, CrowdStrike isn’t entirely out of the woods, based on at least two metrics from its most recent quarterly results. For the first three quarters of fiscal 2025, revenue rose 31% to $2.9 billion versus the same period last year. That is down from a 38% growth rate in the first nine months of fiscal 2024.
Meanwhile, the company’s annual recurring revenue improved 27% year over year, down from 35% a year earlier.
“Although true that we are a little further from the sun, we’re still kind of fighting through the incident,” CrowdStrike Chief Financial Officer Burt Podbere acknowledged during last week’s earnings call.
