CrowdStrike $CRWD reported earnings Tuesday after the market closed.
While the results were objectively strong, the stock was met with a negative reaction in Wednesday’s session.
This marked the 3rd straight quarter where a double beat was followed by selling pressure.
On paper, the company is doing what investors should want.
Recurring revenue continues to climb, margins are expanding, and customer adoption remains healthy across multiple segments.
Management once again delivered better-than-expected numbers, reinforcing their status as one of the most reliable compounders in enterprise software.
Yet the market wasn’t in the mood to reward them.
Some of that may come down to high expectations.
Because the stock has performed so well in recent years, anything less than perfection can spark a short-term pullback.
There may also be concerns about moderating growth rates or cautious guidance.
But zooming out, the fundamental story hasn’t changed.
This company continues to dominate endpoint protection, build out a broader cybersecurity platform, and win market share from legacy providers.
In many ways, this is a classic example of a great business working through short-term noise.
While this short-term negative reaction isn't bullish, the long-term fundamentals remain solid.
So what else did we learn from yesterday's earnings reactions? Let’s dive into the details.
Here are the latest earnings stats from the S&P 500 👇
*Click the image to enlarge it
Hewlett Packard Enterprise $HPE had the best reaction score after reporting a double beat.
The company reported revenues of $7.63B, versus the expected $7.49B, and earnings per share of $0.38, versus the expected $0.35.
Dollar Tree $DLTR had the worst reaction score after reporting a double beat.
The company reported revenues of $4.64B, versus the expected $4.54B, and earnings per share of $1.26, versus the expected $1.21.
Now let's dive into the data and talk about what happened with these reports 👇
CRWD has been punished for 3 consecutive earnings reports:
Crowdstrike fell 0.58% after this earnings report, and here's why:
The company acknowledged receiving requests for information from the DOJ and SEC about revenue recognition and ARR reporting. The market hates the uncertainty this brings to the table.
There were $39.7 million of expenses related to a prior outage and associated matters. This is expected to continue negatively affecting free cash flow in future quarters.
Guidance for revenue growth in upcoming quarters and the full year was solid (19–22% Y/Y), but not materially higher than recent quarters.
This company is a powerhouse in cybersecurity, but that doesn't mean they don't have problems.
The negative earnings reactions over the past 3 quarters suggest that the market does not love the current fundamentals.
The stock is hitting new all-time highs, but it isn't showing the relative strength it used to.
With the price still above a key Fibonacci extension level, we want to give the bull the benefit of the doubt.
This uptrend is still alive and well despite the poor earnings reactions over the last three quarters.
If CRWD is above 426, the path of least resistance will likely remain higher for the foreseeable future.
DLTR has been punished for 8 of its last 12 earnings reports:
Dollar Tree fell 8.4% after this earnings report, and here's why:
Despite a strong Q1 performance and beating guidance, management guided for meaningfully lower profits in Q2, potentially down 45% to 50% year-over-year.
Inventory was up 10% Y/Y, partly because of higher costs tied to tariffs.
Capital expenditures remain elevated for 2025 ($1.2B to $1.3B), which is compressing near-term free cash flow.
This company and its closest competitor, Dollar General $DG, have been some of the biggest disasters in retail over the last few years.
However, they seem to be in the process of bottoming.
DG had its best earnings reaction ever yesterday. This move also decisively resolved a textbook bearish-to-bullish reversal pattern.
We think DLTR will follow it higher.
The 38.2% retracement of the prior drawdown is our line in the sand. If the price is above there, it's game on.
If DLTR is above 95, the path of least resistance will shift from sideways to higher for the foreseeable future.
Thank you for reading.
- The Beat Report Team
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