(Reuters) -CrowdStrike forecast second-quarter revenue below Wall Street estimates, signaling soft enterprise spending on cybersecurity products, sending the company’s shares down 6.7% after the bell on Tuesday.
Higher interest rates and sticky inflation have forced clients to rein in tech spending, weighing on demand for companies such as CrowdStrike, despite an increasing need for robust cybersecurity solutions due to rising threats and ransomware attacks.
The Department of Government Efficiency’s efforts to cut costs could negatively impact the cybersecurity forecast for 2025 as the U.S. federal, state and local government contract environment appears to be significantly more challenging, brokerage William Blair said in April.
Tariffs and macroeconomic uncertainty are likely to influence future client spending, the brokerage added.
CrowdStrike also faces stiff competition from other cybersecurity firms including Palo Alto Networks and Fortinet.
CrowdStrike reported total revenue of $1.10 billion in the first quarter, in line with expectations.
The company forecast second-quarter revenue to be between $1.14 billion and $1.15 billion, compared with analysts’ average estimate of $1.16 billion, according to data compiled by LSEG.
CrowdStrike’s board also approved a share repurchase program of up to $1 billion on Tuesday.
(Reporting by Harshita Mary Varghese in Bengaluru; Editing by Shounak Dasgupta)
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