CrowdStrike

On July 18, 2024, IT systems around the world were affected by a software update released by CrowdStrike. This update caused a problem where Windows terminals would display a blue screen and repeatedly reboot. This problem occurred because CrowdStrike's security software "CrowdStrike Falcon" was running on the Windows kernel. (I also vividly remember the problem when I was at work and couldn't open Excel, etc.)


<What I think about CRWD's financial results after the above incident>


- Impact of the system failure


I didn't care about the sales or margins of this quarter's CRWD financial results.


The focus this time was on how much Annual Recurring Revenue (ARR: annually renewed revenue) and Remaining Performance Obligation (RPO: backlog) were affected, that is, how many accounts that had already signed up canceled their services.


And the revised guidance for this fiscal year after the system failure.


Surprisingly, neither ARR nor RPO had decreased.


I have about 10% to 20% of my customers canceled their services. I was surprised by this figure because I thought that the remaining customers would have negotiated for a maximum 40% price reduction.


Unless I'm misreading the numbers, these figures tell us that most customers did not cancel their services or negotiate for price reductions after the incident.


It's hard to believe. It's only been a little over a month, so they may not have negotiated yet.


And the guidance. Sales guidance for fiscal year 2025 in the April quarter was $4,011 million. It has been revised downward to $3,902 million.


That's only a 2.7% downward revision.


EPS guidance for fiscal year 2025 has been revised downward from $4.03 to $3.65, so that's a 9.4% drop, but still, not a big deal.


The impact of the accident on business performance was much less than I expected.

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