CrowdStrike shares dropped 3.3% due to a weak revenue forecast, stemming from a botched software update last year that caused a global outage. The company predicts third-quarter sales to align with analysts’ estimates, affected by incentive programs and discounts related to the outage. Revenue surged 21% in the second quarter, reflecting strong cybersecurity demand amid rising digital threats.

Analysts anticipate a $50 million rebate-related drag to fade in fiscal 2027, leading to a tighter correlation between annual recurring revenue and subscription revenue. Despite the setback, CrowdStrike aims to expand beyond core protection services by offering additional security tools for cloud systems and user logins. At least 10 brokerages have slashed their target price on the stock post-earnings report.

Morningstar analysts attribute the share price decline to “inflated near-term expectations” prior to the earnings release. CrowdStrike’s shares have risen 23.5% this year, but premarket losses could result in a $3.5 billion market valuation drop. The company remains focused on enhancing its cybersecurity offerings to meet evolving digital threats.

Read more at Yahoo Finance: CrowdStrike shares slip as forecast reflects lingering effects of tech outage