CrowdStrike faces $60 Million hit after software update debacle, hopes to regain lost sales pipeline

Cybersecurity specialist CrowdStrike Holdings on Wednesday estimated it took a roughly $60 million hit to its sales pipeline last month after its mishandling of a software update caused a technology meltdown that left thousands of people stranded at airports along with other frustrating disruptions.

Although the massive outage rattled customers that had been expected to finalise deals totalling $60 million during the last few weeks of CrowdStrike's fiscal second quarter, executives at the Austin, Texas-based company predicted they will still be able to secure those contracts before their fiscal year ends in January 2025. This confidence stems from the belief that customers still trust its cybersecurity products despite the July 19 blunder that froze machines running on Windows software.

"Our mission is alive and well, and I know that CrowdStrike's very best days are ahead of us," CrowdStrike CEO George Kurtz assured analysts during a conference call discussing the company's April-July period. He also apologised for the company's role in the outage, stating, "will never be lost on me, and my commitment is to make sure this never happens again. The days following the incident were among the most challenging in my career because I deeply felt what our customers experienced."

Kurtz's reassuring remarks, combined with quarterly earnings that beat analysts' expectations, seemed to calm investors who have been buying up CrowdStrike's stock in recent weeks after initially selling off shares following the chaos that the company attributed to a computer bug. The shares rose slightly in Wednesday's extended trading, leaving the stock price 13 per cent below its level before the tech meltdown — a loss of about $10 billion in market value. Earlier this month, CrowdStrike's shares fell nearly 25 per cent, wiping out more than $20 billion in market value.

Even if the $60 million in deals that CrowdStrike expected to close before the tech meltdown never materialise, it will be a small price to pay compared to the massive costs those affected by the outage are facing.

Delta Air Lines, for example, has estimated that it may owe its customers $380 million after the CrowdStrike-induced outage disrupted its computer systems so badly that it had to cancel approximately 7,000 flights. Delta has threatened to sue CrowdStrike, which has insisted that the airline is using the tech meltdown as an excuse for its own mismanagement.

CrowdStrike didn't provide an estimate of the legal expenses it may incur from the outage but suggested the costs likely won't be too heavy.

"Our customer agreements contain provisions limiting our liability, and we maintain insurance policies intended to mitigate the potential impact of certain claims," Burt Podbere, CrowdStrike's chief financial officer, said during Wednesday's conference call.