Key points:

  • A massive Windows outage was caused by a faulty CrowdStrike software update, causing major disruptions to internet services around the world.
  • Analysts have cut the company’s full-year revenue forecasts, and its market capitalization has fallen significantly.
  • Despite short-term headwinds, the company remains strong in the market.

CrowdStrike‘s financial results released Wednesday will provide the first glimpse of the economic impact of the massive cyberattack that crippled Microsoft’s Windows operating system. Investors will be looking closely at how the event has affected the cybersecurity company’s reputation and whether it has strengthened its competitors’ market position.

Global Windows system failure

A massive outage on July 19, caused by a faulty CrowdStrike software update, caused widespread disruption to Windows services around the world. Thousands of passengers were stranded at airports due to mass flight cancellations, broadcasters were forced to suspend broadcasts, and critical sectors such as banking and healthcare also faced significant disruption. According to Microsoft, the incident affected about 8.5 million devices running the Windows operating system and led to a number of lawsuits, including one filed by Delta Air Lines.

The incident could have significantly undermined CrowdStrike’s negotiating position, making it difficult to secure new contracts on favorable terms for the company and providing competitors with an opportunity to strengthen their market position in the short term.

Predictions about CrowdStrike

The global outage incident has significantly impacted market expectations for CrowdStrike’s financial performance. More than half of the brokerages covering the company have lowered their full-year revenue forecasts. Some experts suggest that the company may adjust its current full-year revenue forecast downwards from the current range of $3.98 billion to $4.01 billion.

CrowdStrike’s market capitalization has declined by approximately $20 billion since the incident, which has been reflected in a significant decline in the company’s stock price. In parallel, competitors such as SentinelOne and Palo Alto Networks have shown positive dynamics, increasing by 25.4% and 8.3%, respectively.

Despite the recent turmoil, CrowdStrike’s stock has maintained positive dynamics over the past year, exceeding the 5% mark. This growth is primarily due to the company’s dominant position in the cybersecurity market. Customers are increasingly turning to large suppliers who offer comprehensive solutions, which helps reduce overall costs.

According to an LSEG analyst survey, the company is expected to post a 31% revenue increase for the quarter ending in July.

Some analysts expect the negative impact on CrowdStrike’s financial results to be short-term, noting the company’s strong market position and the significant costs associated with switching from one major cybersecurity provider to another.

Some analysts also note that CrowdStrike’s proactive assistance to its customers in restoring systems after a major outage has helped strengthen its reputation among existing partners. The company also plans to attend Microsoft’s Cybersecurity Summit in September.