title.We Raise CrowdStrike Price Target After Beating Estimates and Raising Guidance

CrowdStrike reported fiscal 2026 third‑quarter results that topped expectations and lifted its forward guidance. Revenue jumped 22% year‑over‑year to $1.23 billion, edging past the LSEG consensus of $1.22 billion, while adjusted earnings per share rose to $0.96, beating the $0.94 estimate.

Why the stock matters
In an era where digital transformation is a prerequisite for growth, cybersecurity has moved from a cost center to a strategic imperative. Under the leadership of co‑founder and CEO George Kurtz, CrowdStrike has built an AI‑native platform—Falcon—that powers endpoint protection, threat intelligence, and managed hunting across a single, cloud‑native stack. Its primary rivals include Palo Alto Networks, Fortinet, SentinelOne and Microsoft, but CrowdStrike’s rapid adoption of subscription‑based pricing and its deep integration of artificial‑intelligence analytics give it a distinct competitive edge.

Quarterly performance highlights

• Operating cash flow: record high, reflecting the cash‑generating power of the Falcon platform.
• Adjusted operating income & free cash flow: both posted all‑time highs, underscoring the scalability of the subscription model.
• Net new annual recurring revenue (ARR): $265 million, pushing year‑end ARR to $4.92 billion—a 23% YoY increase and 5.7% sequential growth.
• Falcon Flex impact: Nearly 30% of ending ARR ($1.35 billion) originated from the Flex pricing tier, which allows customers to spin up protection on demand without lengthy procurement cycles.

Management highlighted that “reflex” customers—those that renew once their credits are exhausted—more than doubled sequentially to over 200 accounts, with ten customers renewing more than twice their original Flex subscription. The firm expects Flex to become the standard licensing model, a shift that could accelerate ARR growth and improve margin leverage.

AI as a double‑edged sword
Kurtz warned that AI is dramatically expanding both the attack surface and the tools available to defenders. “Every day businesses see AI‑powered adversarial tradecraft in the wild,” he said on the earnings call. The same technology that enables automated code generation also empowers threat actors to craft sophisticated exploits at scale. CrowdStrike’s AI‑driven analytics not only detect these new vectors faster but also provide a pricing moat: customers are willing to pay a premium for solutions that can keep pace with AI‑enhanced threats.

Strategic outlook
For the full fiscal year 2026, CrowdStrike lifted its revenue guidance to a range of $4.796 billion–$4.866 billion, up from the prior $4.749 billion–$4.805 billion and comfortably above the LSEG consensus of $4.784 billion. Adjusted EPS guidance now sits between $3.70 and $3.72, a step up from the previous $3.60–$3.72 and ahead of the $3.67 consensus.

Looking ahead to the fourth quarter, the company projects revenue of $1.29 billion–$1.30 billion and adjusted EPS of $1.09–$1.11, both modestly topping Street expectations. The guidance reflects confidence that the “agentic AI” era—where autonomous software agents can execute complex tasks with minimal human oversight—will drive sustained demand for a unified, platform‑based security approach.

Valuation and investment thesis
CrowdStrike trades at a premium relative to peers, reflecting its high growth rate, AI‑centric technology stack, and the stickiness of its subscription base. At a 2025 year‑to‑date performance of +51%, the stock ranks among the top performers in the sector. Our analysis suggests the following catalysts could unlock further upside:

1. Scalable subscription pricing: Falcon Flex’s success signals a shift toward higher‑margin, usage‑based revenue, which should boost operating leverage.
2. AI‑driven threat landscape: As AI lowers the barrier to entry for sophisticated attacks, enterprises will increasingly prioritize platforms that combine detection, response, and automation.
3. Cross‑sell opportunities: The Falcon platform’s modular architecture allows seamless upsell of Managed Threat Hunting, Identity Protection, and Cloud Security services.
4. Competitive moat: Deep integration of AI analytics, a vast telemetry dataset, and a single‑pane‑of‑glass architecture make it difficult for rivals to replicate CrowdStrike’s value proposition quickly.

Given the strong quarterly results, an elevated full‑year outlook, and the broader secular tailwinds in cybersecurity, we reaffirm a “Buy” rating and raise the price target to $550 per share from $520.