What happened

Shares of CrowdStrike (CRWD 0.19%) tumbled in early trading on Wednesday, falling as much as 7.7%. As of 1:16 p.m. ET, shares were still down 5.9%.

The catalyst that sent the stock lower was the cybersecurity specialist's earnings report. Curiously, not only were the results far better than expected, but management also increased the company's full-year guidance.

So what

For its fiscal 2023 second quarter (ended Jul. 31), CrowdStrike reported revenue of $535.2 million, up 58% year over year. For context, that's down just slightly from its 61% growth in Q1. The strong sales growth was fueled by subscription revenue of $506.2 million, which climbed 60%.

At the same time, adjusted net income of $85.9 million surged 231%. This resulted in adjusted earnings per share (EPS) of $0.36, which also more than tripled. 

The headline numbers easily exceeded Wall Street's consensus estimates, which called for revenue of $516 million and EPS of $0.28. 

Annual recurring revenue (ARR) of $2.14 billion increased 59% year over year, driven by new ARR of $218.1 million. At the same time, free cash flow of $135.8 million surged 84%.

CrowdStrike's customer metrics were also bullish, adding 1,741 net new subscription customers, bringing the total to 19,686, an increase of 51%.

Now what

CrowdStrike expects its strong results to continue. Management increased the company's full-year revenue outlook to roughly $2.228 billion, which would represent 54% growth at the midpoint of its guidance. This was up from its previous forecast of $2.198 billion issued just three months ago.  

The company's beat and raise got a lot of love from Wall Street, with no fewer than nine analysts increasing their price targets on CrowdStrike stock, according to The Fly. RBC Capital analyst Matthew Hedberg's comments seemed to capture the prevailing sentiment, calling CrowdStrike "one of his favorite ideas" as the company continues to make "exceptional results look ordinary." 

Given the strong results, growing pipeline of recurring business, and increased guidance, CrowdStrike still looks like an unmitigated buy.