Why CrowdStrike Stock Dropped Today Even After Beating Expectations and Raising Guidance

Shares of cloud-based cybersecurity company CrowdStrike Holdings (NASDAQ: CRWD) dropped on Wednesday after the company reported financial results for its fiscal third quarter of 2025. Results beat expectations and management raised its full-year guidance. But it didn't raise guidance as much as investors had hoped, which is why CrowdStrike stock was down about 5% as of 10:30 a.m. ET.

CrowdStrike's business remains resilient

Back on July 19, a glitch in an update to CrowdStrike's software caused massive IT outages worldwide. I had serious questions as to whether this would cause its customers to lose confidence and alter spending, but the company's growth doesn't seem to be impaired at all, based on the Q3 numbers.

CrowdStrike's Q3 revenue was up 29% year over year to over $1 billion. As a subscription software business, recurring revenue is an important metric to watch. And Q3 annualized recurring revenue was up 27% to over $4 billion. Moreover, CrowdStrike offers various cybersecurity software modules to its customers and those adoption rates continue to tick higher.

With ongoing gains in the business, CrowdStrike's management modestly raised full-year expectations. Previously management guided for full-year revenue of $3,890.0 million to $3,902.2 million but now it expects revenue of $3,923.8 million to $3,930.5 million. Moreover, its guidance for full-year adjusted earnings per share was $3.61 to $3.65 but now it's $3.74 to $3.76.

CrowdStrike investors should think long term

As mentioned, CrowdStrike raised guidance but investors are still moderately disappointed because they were hoping for a bigger raise. That thinking might be a little short term. The big picture is that CrowdStrike's business doesn't seem to have suffered permanent damage from the IT outage, customers continue to increase their spending, and it still has a huge runway for growth due to the size of the cybersecurity space. That continues to bode well for the company (and the stock) long term, even if many investors are merely looking at next quarter's numbers.

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Jon Quast has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends CrowdStrike. The Motley Fool has a disclosure policy.