CrowdStrike offers $60M in credits; Delta reports $500M loss

CrowdStrike has announced that it will offer about $60 million in credits to customers affected by a massive software outage earlier this year, a figure that might significantly underestimate the actual damages incurred. Delta Air Lines alone, one of the most impacted clients, claims it lost around $500 million due to the incident, including revenue losses from canceled flights.

Despite these challenges, CrowdStrike’s financial report showed strong earnings, with record adjusted earnings of $260.8 million for the quarter ending July 31, marking a 47% increase from the previous year. The company’s stock, while still down over 20% since the outage, saw a rise in after-hours trading following the earnings report.

Download the SAN app today to stay up-to-date with Unbiased. Straight Facts™.

Point phone camera here

The company’s guidance for full-year earnings was also revised downward by $86 million to $109 million, primarily due to the anticipated costs of customer compensation. However, CrowdStrike still expects to generate approximately $3.9 billion in revenue for the year.

CrowdStrike’s troubles began when a flawed software update caused a significant system failure, leading to widespread disruptions across various industries, including airlines, retailers, and hospitals. Delta, the hardest-hit client, is preparing to sue CrowdStrike and Microsoft to recover its losses, although CrowdStrike has stated that its liability is contractually capped at less than $10 million.

Moody’s, which had upgraded CrowdStrike to an investment-grade credit rating in May, has since downgraded its outlook from positive to neutral, reflecting concerns about the company’s ability to maintain customer trust and manage its relationships in the wake of the outage.

While the company’s financials remain strong, the long-term impact of the incident on customer retention and future growth remains uncertain.