Michael Vi
CrowdStrike (NASDAQ:CRWD) noted that it received requests for information from the U.S. Department of Justice and the U.S. Securities and Exchange Commission related to the company’s recognition of revenue and reporting of annual recurring revenue for transactions with certain customers, the IT outage in July Incident and related matters.
The company said in a June 4 regulatory filing to the SEC that it is cooperating and providing information in response to these requests.
CrowdStrike CFO Burt Podbere — while responding to a question about a Bloomberg article from May — said on the company’s earnings call that “so for us, the company and how the — and how Bloomberg reported what they reported, the company received request for information from the DOJ and the SEC relating to revenue recognition and reporting of ARR for certain transaction — for certain transactions, the July 19 outage and related matters.”
In May, a Georgia superior court ruled that Delta Air Lines (DAL) can proceed with a lawsuit against CrowdStrike for damages over a July 2024 outage that resulted in 7,000 canceled flights and brought the carrier’s operations to a standstill at its major hubs. The outage had caused global disruption to Microsoft’s (MSFT) Windows operating systems.
CrowdStrike noted in the 10-Q filing with the SEC on Wednesday that on May 16, CrowdStrike’s motion to dismiss was granted in part and denied in part.
Earlier on Wednesday, CrowdStrike’s stock saw multiple downgrades due to revenue and guidance missing expectations. However, some analysts pointed out the positive as net new annual recurring revenue was stronger than anticipated.
Shares of CrowdStrike tumbled about 5% on Wednesday.