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Amid a stubbornly choppy IT spending environment, and in the wake of last July's massive outage that crashed about 8.5 mln Windows devices, cybersecurity company CrowdStrike (CRWD) displayed its resiliency once again by beating Q3 EPS and revenue expectations. Following that outage, which sent shares plummeting lower by 36% from July 18 - August 2, concerns mounted that the company would have trouble closing deals while some existing customers also migrate to competitors' platforms. However, with CRWD adding $153.0 mln in net new Annual Recurring Revenue (ARR) in the quarter for a total of $4.02 bln (+27% yr/yr), edging past analysts' estimates, it's evident that the company's efforts to mitigate the damage from the outage were effective.

• Those efforts included a new "customer commitment package" that was designed to keep its customers on board by offering incentives and discounts. While the deal has an estimated $30 mln hit to revenue for this quarter and the next, that seems to be a reasonable price to pay in the long run. That's because once customers sign on with CRWD, many become entrenched in the platform and increase their adoption. On that note, CRWD's model adoption rates grew by 31% for seven or more modules, and by 20% for eight or more modules.
• Still, the macro environment remains challenging, and visibility remains limited as enterprises continue to scrutinize spending, lengthening sales cycles. As a result, CRWD offered a cautious outlook for Q4, guiding EPS and revenue merely in line with expectations. The tepid forecast came as a disappointment, especially since competitor Qualys (QLYS) issued upside Q4 EPS and revenue guidance in early November.
• On the topic of competitors, shares of SentinelOne (S) received an initial boost in the wake of CRWD's earnings report, perhaps reflecting the idea that it managed to claw some business away from CRWD, based on CRWD's lackluster outlook. When SentinelOne reports Q3 earnings on December 4, it will become clearer whether the endpoint protection provider did pick up some market share due to the CRWD outage.

Overall, CRWD delivered another solid quarterly performance given the tough climate, while putting the tech outage in the rearview mirror. With shares surging by over 60% since the beginning of August, CRWD faced a high bar to hurdle, and its conservative guidance for Q4 is providing the impetus for a sell-the-news reaction. From a longer-term perspective, though, the company's technological competitive advantages and the ever-increasing number of threats that are only rising in complexity position it to drive healthy growth for the foreseeable future.