## CrowdStrike Earnings Impress, But Stock Price Tells a Different Story

The cybersecurity vendor CrowdStrike (NASDAQ: CRWD) just dropped solid fiscal third-quarter numbers that had investors nodding along. Revenue climbed 22% year-over-year to $1.23 billion, and the company's annual recurring revenue (ARR) hit $4.92 billion, up 23% from the same period last year. Even better? Net new ARR reached a record $265 million in the quarter — that's a 73% year-over-year surge.

Here's the thing: the business itself is firing on all cylinders. The Falcon platform continues to be their bread-and-butter, protecting endpoints and cloud workloads while customers consolidate their security tools. Add in momentum around AI security capabilities, and management is definitely seeing tailwinds. Free cash flow came in healthy at $295.9 million, with non-GAAP operating income climbing to $264.6 million.

## The Growth Story Looks Good. The Valuation? Not So Much.

But here's where it gets tricky. CrowdStrike is trading at more than 135 times forward non-GAAP earnings — and shares fetch roughly 29 times sales. For context, that's astronomically expensive even by software stock standards where high multiples are the norm.

Management's guidance doesn't ease the concern. They're targeting at least 50% year-over-year growth in net new ARR through the second half of fiscal 2026, with 20% growth expected in fiscal 2027. That's an aggressive target for a company already sitting on a massive ARR base. It means the stock has already priced in years of stellar execution with almost zero room for error.

## The Real Risk

Think about it this way: if CrowdStrike stumbles even slightly — say, growth dips to 18% instead of the guided 20% — the stock could get hammered. The current valuation leaves virtually no margin for disappointment. Competitor pressure isn't helping the case either. The cybersecurity landscape is heating up, and while CrowdStrike remains one of the best-in-class franchises, the stock price seems to assume perfection.

Yes, the company's fundamentals remain strong. Yes, customers are expanding their usage and sticking around post-outage. Yes, the cash conversion is solid. But when you're paying this much per dollar of earnings and sales, you're essentially betting that every forecast management makes will be exceeded — which rarely happens in the real world.

The takeaway? The business is genuinely excellent. The stock? That's a different conversation. Look for better entry points if you're hunting for good shares to buy now.