CrowdStrike (CRWD -2.76%) just released results for its fiscal third quarter of 2025 (ended Oct. 31). This report marks a significant milestone since it covers the first full quarter since a July 19 outage caused by a CrowdStrike software update.
A relatively quick recovery in the cybersecurity stock's price indicates the company had mitigated the long-term damage. Although the stock was down 5% in the trading session following the quarterly report, the release did not seem to permanently derail CrowdStrike's stock price recovery.
Nonetheless, what remains uncertain about CrowdStrike stock is how it's likely to perform over the next year. Thus, investors need to take a closer look at the business and its financial metrics to see if it can earn market-beating returns over that time frame.
The state of CrowdStrike
The burning question with CrowdStrike is how the July 19 outage will affect the company, and it appears the long-term damage will be minimal. Indeed, the outage created short-term headwinds for the company as it made selling to new customers more difficult. It also became more challenging to upsell to its current customers.
CrowdStrike was quick to admit fault and issue a fix for the outage, showing it cared more about protecting its long-term reputation than boosting its short-term financial performance. Also, the outage involved Microsoft products only, so customers on other operating systems did not experience a service interruption.
Additionally, at the time of this writing, CrowdStrike stock is now off only 12% from its all-time high in early July. So it appears investors have moved on from the outage.
In the meantime, CrowdStrike has continued to bolster its Falcon security products, turning the company into a cybersecurity ecosystem for its customers. It has benefited from success in drawing customers more into its ecosystem.
Despite the slower upselling, CrowdStrike said on its fiscal Q3 2025 earnings call that 66% of its customers subscribe to five or more of its modules, and that number rises to eight or more modules for 20% of its customers. Its clientele therefore seem to have largely stayed with the company.
Although numerous companies compete with CrowdStrike, Fortune Business Insights projects a 14% compound annual growth rate for its industry through 2032. This bodes well for the company and for shareholders hoping the stock will stay on a long-term growth trajectory.
CrowdStrike by the numbers
Unfortunately for prospective investors, CrowdStrike's financials and stock metrics could pose a greater near-term danger to the stock than the fallout from the outage. For the first three quarters of fiscal 2025 (ended Oct. 31), revenue of $2.9 billion rose 31% versus the same period last year.
Still, that is down from the 38% growth rate in the first nine months of fiscal 2024. Also, analysts forecast 22% revenue growth in fiscal 2026, meaning the slowing is probably not a one-time event.
Net income in the first nine months of fiscal 2025 was $73 million. That's 105% higher than the same time frame last year and accounts for a $17 million loss in fiscal Q3, as the outage led to $34 million in added expenses.
However, this has occurred as the aforementioned recovery in the stock price led to a price-to-sales (P/S) ratio of 23. That's higher than its primary competitors.
CRWD PS Ratio data by YCharts
Additionally, having a forward P/E ratio of 93 shows CrowdStrike has become an expensive stock. Since this comes at a time when revenue growth is slowing, this situation could cause even CrowdStrike bulls to think twice about buying the stock at current levels.
CrowdStrike stock in one year
Although CrowdStrike stock has mostly recovered from the outage, a high valuation and slowing revenue increases make the stock's trajectory uncertain over the next year. Since revenue is rising more slowly, investors may question whether they want to pay 23 times sales for this company, which could slow buying in the stock.
Nonetheless, even if growth slows, CrowdStrike's increasing popularity and resilience should make it a winning stock longer term. Thus, current shareholders should probably hold their shares, and anyone interested in buying the stock now should consider a dollar-cost averaging strategy to mitigate the danger of a near-term sell-off.
