CrowdStrike is a company that makes computer security software. It helps protect computers from bad people who try to steal or damage information. People who use computers need this kind of software to keep their stuff safe. CrowdStrike makes money by selling their security software to businesses and government organizations. They will soon tell everyone how much money they made during the past few months, and people are interested in finding out if it's a good time to buy their company's shares. Read from source...

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Should You Buy, Sell or Hold CrowdStrike Ahead of Q2 Earnings?

CrowdStrike Holdings, Inc. (CRWD) is scheduled to release second-quarter fiscal 2025 results on Jun 4.

For the second quarter, CrowdStrike projects total revenues between $958.3 million and $961.2 million. The Zacks Consensus Estimate for revenues is pegged at $958.7 million, which indicates growth of 31% from the year-ago quarter's level.

CrowdStrike anticipates non-GAAP earnings between 98 cents and 99 cents per share. The consensus mark for the bottom line has been revised a penny downward to 98 cents per share over the past 30 days and indicates 32.4% year-over-year growth.

As CrowdStrike approaches its second-quarter earnings announcement, let's see if it is the right time to invest in this stock.

Factors Shaping Upcoming Results

CrowdStrike's second-quarter results are likely to reflect the benefits of the continued solid demand for its products, given the healthy environment of the global security market.

Stellar revenue growth in subscriptions might have contributed significantly to the second-Quarter top line. Further, the increasing number of net new subscription customers may have acted as a tailwind.

Moreover, CrowdStrike's collaboration with Amazon Web Services ("AWS") is an upside, benefiting the company from its products' availability on the AWS platform.

However, elevated expenses for enhancing sales and marketing capabilities and increased investments in research and development are likely to have weighed on the company's fiscal second-Quarter bottom line.

Price Performance & Valuation

Year to date, shares of CrowdStrike have risen 4.8%, underperforming the Zacks Internet - Software industry's growth of 14.6%.

YTD Price Return Performance

Image Source: Zacks Investment Research

Investment Thesis

Although CrowdStrike has experienced impressive growth since its IPO, recent quarterly reports have shown a deceleration in its growth rate.

CrowdStrike had enjoyed more than 50% year-Over-Year top-line growth till fiscal 2023. However, the growth rate decelerated in fiscal 2024 to 36%.

This slowdown is partly due to the law of large numbers — as companies grow larger, maintaining high percentage growth rates becomes increasingly difficult.

Additionally, heightened competition from established players and new entrants in the cybersecurity space could put further pressure on CrowdStrike's growth.

Conclusion

Given the challenges CrowdStrike is facing, it might be time for investors to reconsider their position.

The company's slowing sales growth is a serious concern that cannot be ignored. The faulty Falcon update has exposed critical vulnerabilities in the company's operations, raising questions about its ability to maintain client trust and market dominance. Moreover, this Zacks Rank #5 (Strong Sell) company's high valuation multiples add another layer of risk.

In light of the reputation damage from the global IT outage and slowing sales growth concerns