Isn’t cybersecurity supposed to be more macro resilient than we just witnessed for CRWD’s Q3?
PANW delivered a beat and raise. CRWD failed to do so and did the exact opposite, a miss and drop in outlook.
Why are we moving goalposts and making macro excuses for CRWD’s disappointments?
Look at PANW:
Their NGS ARR grew 67% YoY at 2.11B and with higher NGS ARR guidance range for the year.
Full year revenue guidance was raised.
Net new ARR continued to increase
Look at CRWD:
Their ending ARR grew 54% year-over-year to reach $2.34 billion.
Full year revenue guidance was NOT raised.
Q3 net new ARR came in below management’s expectations. They grew it by a pathetic 17%, while the last 4Q average was 44%!!!
Q4 net new ARR will be below Q3 by up to -10%.
CRWD also expects a low 30s ending ARR growth rate and a subscription revenue growth rate in the low to mid-30s for FY '24.
And keep an eye on the SBC. CRWD had to grow SBC expense by 62% YoY, higher than its 53% revenue growth YoY.
Also, in the calls, PANW was upbeat about hiring in the face of macro:
“ …we are seeing customers spend more time trying to understand what they’re spending money on. There’s more questions, the CFOs are getting involved…what we have done is, because of that behavior, we have increased scrutiny internally, we’ve increased efforts with our sales teams to get ahead of this, and we’re just increasing the activity of execution. We front-loaded our hires. We hired 550 direct sales rep as quickly as we could in the quarter because we think this environment is going to continue. And the only way to fight this is to get more coverage out of the field. Get work coverage, get more focus on getting deals done, get them across the line.”
Meanwhile CRWD was “significantly slowing the pace of new hires needed to execute our plans.”
Interestingly, on the Blind website, ‘rumors’ were already abound earlier this month of hiring freezes at CRWD.
A stark contrast to the rumor last month of a frantic hiring pace at PANW.