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CrowdStrike Holdings CRWD reported second-quarter fiscal 2022 non-GAAP earnings of 11 cents per share, beating the Zacks Consensus Estimate by 22.2%. The bottom line improved from the year-ago quarter’s figure of 3 cents.

The company added $150.6 million to its net new annual recurring revenue (ARR), which amounted to $1.34 billion, up 70% from the year-ago quarter’s levels.

Top-Line Details

CrowdStrike’s fiscal second-quarter revenues of $337.7 million surged 70% year over year and beat the consensus mark of $324 million. Subscription revenues jumped 71% year over year to $315.8 million.

The company added 1,660 net new subscription customers during the reported quarter. It had a total of 13,080 subscription customers as of Jul 31, 2021, reflecting year-over-year growth of 81%.

CrowdStrike’s subscription customers who adopted four or more cloud modules increased to 66%, and those with five or more cloud modules rose to 53%, and for those with six or more cloud modules, the metric jumped to 29% as of Jul 31, 2021.

Revenues from professional services climbed 48.5% year over year to $21.9 million.

Geographically, 72% of total revenues stemmed from the United States, 14% came in from Europe, Middle East and Africa, 10% from Asia Pacific and 4% from others.

Operating Details

CrowdStrike’s non-GAAP gross margin expanded more than 150 basis points (bps) on a year-over-year basis to 76%. Non-GAAP subscription gross margin was 78%, up 90 bps from the previous year’s reported figure.

Total non-GAAP operating expenses, as a percentage of revenues, were 66% compared with the prior-year quarter’s 71%.

Non-GAAP operating income was $35.3 million compared with $7.8 million in the year-ago quarter. Non-GAAP operating margin for the quarter was 10%, up 600 bps year over year.

Balance Sheet & Cash Flow

As of Jul 31, 2021, cash and cash equivalents were $1.79 billion compared with $1.68 billion as of Apr 30, 2021. CrowdStrike has a long-term debt of $738.8 million.

During the fiscal second quarter, the company generated operating and free cash flows of $108.5 million and $73.6 million, respectively. In the first half of fiscal 2022, free cash flow accounts for 30% of revenues. The company generated operating cash flow of $256 million in the first-half of fiscal 2022.

Outlook

Buoyed by the stellar second-quarter performance, CrowdStrike anticipates revenues between $358 million and $365.3 million for third-quarter fiscal 2022. As far as the bottom line is concerned, the company expects to report earnings per share (EPS) between 8 cents and 10 cents.

Non-GAAP operating income is expected to be $29.4-$34.7 million.

Management expects subscription revenue to be the primary growth driver in the third quarter.

For fiscal 2022, management raised its revenue guidance in the band of $1,391.2-$1,409.4 million from the previous range of $1,347-$1,365.7 million. The company now anticipates non-GAAP EPS of 43-49 cents instead of 35-41 cents.

Zacks Rank & Stocks to Consider

CrowdStrike currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader technology sector include Apple AAPL, Advanced Micro Devices AMD and Avnet AVT, all sporting a Zacks Rank #1 (Strong Buy), at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

The long-term earnings growth rate for Apple, Advanced Micro Devices and Avnet is currently pegged at 12.7%, 44.6% and 25.4%, respectively.