CrowdStrike Swings to a Loss With Costs Tied to Massive Outage, Despite Revenue Gains

CrowdStrike (CRWD) swung to an unexpected loss in the third quarter as expenses rose, despite revenue gains that topped analysts’ estimates.

The cybersecurity giant posted third-quarter revenue of $1.01 billion, up 29% year-over-year and above the analyst consensus compiled from Visible Alpha. However, the company posted a loss of $16.82 million or 7 cents per share, compared to a profit of $26.67 million or 11 cents per share a year earlier, falling short of expectations as costs surged.

CrowdStrike Still Dealing With Effects of Massive July Outage 

The results come as CrowdStrike continues to deal with costs tied to the fallout from a faulty software update in July that affected Microsoft (MSFT) Windows-based systems across the world and led to the grounding of thousands of flights.

Delta Air Lines (DAL) sued the company last month, estimating the incident cost it $500 million, along with loss of future revenue and damaged reputation. The complaint alleges breach of contract, gross negligence, and intentional misrepresentation or fraud by omission on CrowdStrike’s part.

CrowdStrike has said it is not responsible for Delta’s handling of the incident and that the airline largely ignored its offers for assistance.

CrowdStrike CFO Burt Podbere said the company’s third-quarter results showed “a strong finish and quarter-over-quarter increase in pipeline, despite expected headwinds from the July 19 incident.”

The company raised its full-year revenue guidance to $3.92 billion to $3.93 billion, up from $3.89 billion to $3.9 billion and above Street expectations.

Shares of CrowdStrike fell 2% in extended trading Tuesday following the release. The stock was up over 42% from the start of the year through Tuesday’s close.