Shares of the cybersecurity giant CrowdStrike fell approximately 4% on Thursday, despite the company delivering first-quarter results that exceeded expectations and raising its full-year guidance. CEO George Kurtz delivered a straightforward message to investors following the earnings release: the realization of AI security demand takes time, and market expectations have been overly eager.
The financial report showed that CrowdStrike's first-quarter revenue increased by 26% year-over-year to $1.39 billion, surpassing analyst estimates of $1.36 billion. Adjusted earnings per share were $1.10, also exceeding the expected $1.07. Net new annual recurring revenue reached $255.8 million, setting a new first-quarter record. The company also announced a 4-for-1 stock split of its Class A common stock and raised its full-year revenue guidance to a range between $5.91 billion and $5.96 billion.
However, the strong results were not enough to prevent a decline in the share price. Kurtz explained in an interview that the "Mythos" AI security threat scenario, which has captured significant market attention, only emerged in mid-April, while the company's fiscal quarter ended at the close of that month. He noted that the company sells enterprise software, where contract signings and deployment operations require time, suggesting investor expectations for AI security demand to dramatically boost performance in the short term are premature.
Kurtz emphasized that AI is becoming a central growth driver for cybersecurity. Customers want to use more AI, but using more AI necessitates stronger security. He pointed out that while AI enhances defensive capabilities, it also empowers attackers, which will ultimately become a powerful growth driver for security firms like CrowdStrike.
The company has raised its full-year net new ARR guidance by over $50 million. Kurtz revealed that sales pipeline for the AI detection and response platform in the second quarter has surpassed $50 million, representing a surge of approximately 250% quarter-over-quarter. These figures indicate that despite a tepid market reaction to short-term performance, the long-term growth momentum for AI security remains robust.
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