Shares of CrowdStrike Holdings (NASDAQ:CRWD) stock are tumbling, down 12% as of 12:50 p.m. EDT despite the cloud-based security software maker reporting estimate-beating results in its Q2 earnings report last night -- and better-than-expected guidance as well.
For Q2, analysts had predicted CrowdStrike would lose $0.23 per share (pro forma) on sales of $103.8 million. Instead, management reported a loss of "only" $0.18 per share -- and sales of $108.1 million.
Sales nearly doubled year over year and were up 94%. Some 90% of those sales came from recurring revenue subscriptions, a segment that grew even faster than overall sales: up 98% year over year. CEO George Kurtz hailed the securing of "a record number of net new subscription customers in the quarter" as a key accomplishment.
Gross margins on all these new revenues also improved, rising 4 full percentage points to 74%. Nevertheless, this fast-growing company still lost money: $0.18 per share pro forma and $0.40 per share as calculated according to generally accepted accounting principles (GAAP).
The good news is that these losses were a whole lot better than the $0.75 per share lost in the year-ago quarter, and CrowdStrike predicts continued improvement as time goes by. New guidance is for Q3 sales to range from $117.1 million to $119.5 million (both numbers better than the $111.2 million Wall Street consensus) with a pro forma loss of $0.11 or $0.12 (Wall Street had worried $0.13 was more likely).
Full-year sales could come in between $445.1 million and $451.8 million (only $434.9 million is expected), with a pro forma loss of between $0.62 and $0.65 per share, versus the $0.73-per-share loss Wall Street is looking for.
In short, the company crushed expectations and is promising to do so again and again as the year rolls along -- yet despite all that, investors are selling the stock.