CrowdStrike customers delay, scrutinize deals after global IT outage
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July's global IT outage sparked by a faulty CrowdStrike software update has caused some customers to hit pause on engaging with the cybersecurity company's services.
Why it matters: The scale of last month's issue exposed the risk of widespread reliance on only a handful of key tech platforms.
Driving the news: New and current CrowdStrike customers are scrutinizing deals more closely — with higher levels of approvals at the CEO and in some cases at the board levels now required, CFO Burt Podbere said on an earnings call Wednesday afternoon.
- The company also slowed its own outbound sales activities following the outage for a few weeks.
The impact: CrowdStrike now expects deals to take longer to close, to take a $60 million revenue hit for the second half of the year by offering discounts, flexible payment terms and extended subscription periods to customers, as well as other additional expenses.
- When asked by an analyst if the company has seen customers moving to other platforms to diversify their cybersecurity coverage, CEO George Kurtz said the opposite case has been true.
- "They want to buy more from us. ... They don't want a bunch of disparate products."
The big picture: Since the incident, CrowdStrike has been embroiled in a public spat with one of its impacted customers, Delta Air Lines, which has threatened to seek hundreds of millions of dollars in lost revenue from the cybersecurity firm.
- "The outcome of litigation is inherently difficult to predict, particularly in the early stages, and it is still too early for us to estimate any potential legal exposure we may have at this time," Podbere said.
- "Our customer agreements contain provisions limiting our liability, and we maintain insurance policies intended to mitigate the potential impact of certain claims and have a strong cash position," he added.
What we're watching: CrowdStrike also faces other legal challenges, including class action lawsuits from travelers impacted by the travel delays and investors.
Go deeper: CrowdStrike strikes out on communications following global outage
