Why CrowdStrike Stock Is Plummeting Today

CrowdStrike (NASDAQ: CRWD) stock is getting hit with a wave of sell-offs following the company's recent fourth-quarter report. The company's share price was down 8.2% as of 12:30 p.m. ET and had fallen as much as 12.1% earlier in the day.

CrowdStrike published its Q4 results after the market closed yesterday, actually reporting sales and earnings that beat Wall Street's expectations. But despite posting better-than-expected quarterly results, investors are selling out of the stock due to forward guidance that came in lower than anticipated.

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Q4 beats weren't enough to lift CrowdStrike stock

CrowdStrike reported non-GAAP (adjusted) earnings per share of $1.03 on sales of $1.06 billion in the fourth quarter, topping the average analyst estimate's call for per-share earnings of $0.86 on sales of $1.04 billion. The company's revenue was up 25.4% year over year in the period, and adjusted earnings per share were up 8.4%.

The business closed out the period with annual recurring revenue of $4.24 billion, representing an increase of 23%. Meanwhile, the company's Q4 performance pushed free cash flow for the year up to $1.07 billion -- good for a 14% increase. All in all, it was a good quarter and year for the business despite some significant headwinds -- but investors aren't happy with management's forward guidance.

Investors are worried about CrowdStrike's profit forecast

For this year, CrowdStrike is guiding for sales to come in between $4.744 billion and $4.805 billion, with the midpoint of that guidance range falling slightly short of the average analyst estimate's call for sales of $4.78 billion. Meanwhile, the company guided for adjusted earnings per share to come in between $3.33 and $3.45, well below the consensus Wall Street estimate's target for per-share earnings of $3.76. Management's earnings guidance suggests the business could face some significant margin pressures this year, and investors aren't happy with that outlook.

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Keith Noonan has positions in CrowdStrike. The Motley Fool has positions in and recommends CrowdStrike. The Motley Fool has a disclosure policy.