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During the fiscal first quarter, the company generated operating and free cash flows of $215 million and $157.5 million, respectively. Free cash flow accounted for 32% of revenues in the same period.

Bright Outlook

Buoyed by the stellar first-quarter performance, CrowdStrike anticipates revenues between $512.7 million and $516.8 million for the second quarter of fiscal 2023. As far as the bottom line is concerned, the company expects to report non-GAAP earnings per share between 27 cents and 28 cents.

Non-GAAP operating income is expected to be $70.4-$73.3 million.

For fiscal 2023, CrowdStrike raised its guidance. The company's management currently estimates its revenues in the band of $2,190.5-$2,205.8 million, compared with the previously projected band of $2,133.1-$2,163.2 million. The company now anticipates non-GAAP earnings to be $1.18-$1.22 per share, up from the prior range of $1.03-$1.13 per share.

Non-GAAP operating income for the full fiscal 2023 is now projected to be $306.5-$317.8 million, higher than the previous band of $289.2-$311.8 million.

Based on this guidance, analysts have pushed this year's EPS consensus to $1.24, representing a blistering 85% growth rate!

And next year only slows down to 42.4% growth to $1.76.

While profits are great, the real story of demand for CRWD solutions is in the topline growth numbers.

This year is projected to cross $2.2 billion, for a 52% advance.

And next year is pegged at crossing $3 billion for a 37% jump.

Analyst Reactions

Here was the report I delivered to my TAZR Trader members on June 6 when we bought CRWD...

TAZR Traders

I told you last Thursday we wanted to buy CrowdStrike, the premier cybersecurity defender, under $170 and you got your chances Friday and this morning.

This morning sees this upgrade...

CrowdStrike upgraded to Overweight from Equal Weight at Morgan Stanley: Analyst Hamza Fodderwala upgraded CrowdStrike to Overweight from Equal Weight with a price target of $215, up from $195. The company offers "defensive positioning" in an uncertain macro environment and the recent pullback in the shares provides an attractive entry point. Security demand remains durable as companies invest to bolster their defenses in a rising threat environment, says the analyst. As a next-generation software-as-a-security platform, CrowdStrike is the leading beneficiary of growing secular trends within security.

And here's a round-up of analyst reactions from last week after the company report, which keep the stock at a Zacks #2 Rank Buy...

CrowdStrike price target raised to $215 from $200 at Jefferies: Analyst Joseph Gallo raised the firm's price target on CrowdStrike to $215 from $200 and keeps a Buy rating on the shares after the company's "impressive" ARR growth of 61% year-over-year beat consensus and its FY23 guidance for 51-52% year-over-year revenue growth was also above the consensus forecast. He continually hears of dislocation of other legacy endpoint vendors, with two of the biggest beneficiaries being CrowdStrike and SentinelOne (S), noted Gallo, who believes CrowdStrike should continue to take share from Carbon Black as well as Kaspersky, Symantec and McAfee.

CrowdStrike price target lowered to $235 from $280 at DA Davidson: Analyst Rudy Kessinger lowered the firm's price target on CrowdStrike to $235 from $280 to reflect lower peer multiples but keeps a Buy rating on the shares. The company posted another typical "beat and raise quarter", and its module attach rates are continuing to climb nicely, while its gross retention was at an all-time high. Kessinger adds that the macro backdrop and increased competition from SentinelOne (S) do not appear to be having any material impact on the trajectory of the business.

CrowdStrike's First-Quarter Earnings Beat Driven by Strengths in Emerging Modules, Customer Adds, Oppenheimer Says
Jun 3, 2022, 14:43MT Newswires

CrowdStrike Holdings' fiscal first-quarter results topped Wall Street views as the company saw continued momentum for its emerging modules, as well as robust subscription revenue and customer growth, Oppenheimer said.

For the quarter through April, the cybersecurity company late Thursday reported non-GAAP earnings of $0.31 per share on revenue of $487.8 million. Analysts surveyed by Capital IQ projected normalized EPS of $0.23 and revenue of $464.4 million. Its emerging modules' annual recurring revenue grew by 100%, while its managed detection and response solution, Falcon Complete, saw a record net new ARR.

Oppenheimer analysts led by Ittai Kidron said in a note emailed Friday that Falcon Complete has "significant runway for growth," especially in a challenging macroeconomic environment. "We are bullish on Falcon Complete's value proposition and believe it offers CrowdStrike a frictionless cross-sell motion and opportunity to capture incremental revenue as the company adds new modules," they added.

For fiscal 2023, the company lifted its non-GAAP EPS estimate to a range of $1.18 to $1.22 from $1.03 to $1.13 and its revenue projection to $2.19 billion to $2.21 billion from its prior range of $2.13 billion to $2.16 billion.

Oppenheimer said the outlook is "somewhat conservative" as it reflects the potential for macro headwinds. The analysts said CrowdStrike's fiscal second-quarter net new ARR is likely to be impacted by seasonality and its operational expenditure is expected to increase in the second half of the year as its pursues aggressive investment to capture growth.

The firm cut its price target on the company's stock to $250 from $300 while maintaining its outperform rating.

Separately, RBC Capital Markets said CrowdStrike remains one of its "favorite" ideas and one of the "most impressive models we've seen at scale, continuing to deliver on both growth and profitability."

RBC increased its price target to $232 from $225 while keeping its Outperform rating intact.

Bottom line on CRWD: Buy it now before it's $220 and the risk-reward is still good, but not as great as it is now.

Bear of the Day:

Applied Materials, a major WFE (wafer fabrication equipment) provider to semiconductor manufacturers like Intel, NVIDIA and Samsung reported Q2 non-GAAP earnings in late May of $1.85 per share, which improved 13% year over year.

However, the figure missed the Zacks Consensus Estimate by 2.1%.

Net sales of $6.25 billion climbed 12% from the year-ago period's level. But the figure lagged the Zacks Consensus Estimate of $6.35 billion.

These slight disappointments, plus subdued forward guidance, prompted analysts to lower revenue and profit estimates for the full year, thus pushing AMAT into the cellar of the Zacks Rank.

Since the company's May 19 report (for a fiscal year that ends in October), EPS projections have dropped 7.2% from $8.06 to $7.48.

And next year's EPS was dunked over 9% from $9.60 to $8.70. Much of this has to do with the global pressure from supply chain issues that may actually be resolving soon.

I profiled the dilemma for Semiconductor investors in this week's video where I broke down the 4 major industry players and why the Electronic Design Automation (EDA) duopoly of Synopsys and Cadence Design Systems were signaling that the Semi bear market may be over soon.

AMAT Quarter Details

Top-line growth was driven by the strong performance delivered by the Semiconductor Systems and Applied Global Services segments.

The company witnessed solid growth in geographies, namely the United States, Europe, Taiwan, Southeast Asia and China, which was another positive.

Although the company witnessed strengthening demand for semiconductors, global supply-chain constraints remained its major headwind.

Nevertheless, management remains optimistic about the growing demand for semiconductor and wafer fab equipment. Further, the growing momentum in foundry/logic, and equipment markets remains a positive.

AMAT Segments in Detail

Semiconductor Systems generated $4.46 billion of sales (which contributed 71.4% to its net sales), reflecting a year-over-year increase of 12%. A solid demand environment and strong orders contributed well.

However, the pandemic-led supply-chain disruptions were negatives.

Applied Global Services reported sales of $1.38 billion (22.1% of net sales), which rose 15% from the prior-year quarter's level. Growth of 11% in systems under subscription agreement contributed well amid the supply-chain issues.

Sales from Display and Adjacent Markets were $381 million (6.1% of net sales), up 2% from the year-ago level.

AMAT Revenues by Geography

The United States, Europe, Japan, Korea, Taiwan, Southeast Asia and China generated sales of $702 million, $489 million, $407 million, $968 million, $1.41 billion, $138 million and $2.13 billion, each contributing 11%, 8%, 6%, 16%, 23%, 2% and 34% to net sales, respectively.

On a year-over-year basis, sales in the United States, Europe, Taiwan, Southeast Asia and China increased 43.6%, 113.5%, 35.3%, 26.6% and 15.7%, respectively. Sales in Japan and Korea fell 7.9% and 32.2% from the year-ago quarter.

AMAT Operating Results

The non-GAAP gross margin was 47%, contracting 70 basis points (bps) from the year-ago quarter's level.

Operating expenses were $1.03 billion, down 3.8% from the year-ago quarter's level. As a percentage of sales, the figure contracted 270 bps year over year to 16.5%.

The non-GAAP operating margin of 30.6% for the reported quarter contracted 110 bps from the prior-year period's level.

AMAT Balance Sheet & Cash Flow

As of May 1, 2022, cash and cash equivalent balance, and short-term investments were $3.9 billion compared with $5.7 billion as of Jan 30, 2022.

Inventories were $5.01 billion in second-quarter fiscal 2022 compared with $4.5 billion in first-quarter fiscal 2022. Accounts receivables increased to $4.9 billion in the reported quarter from $4.4 billion in the previous quarter.

Long-term debt was $5.455 billion at the end of the reported quarter compared with $5.454 billion at the end of the previous quarter.

Applied Materials generated a cash flow of $415 million, significantly down from $2.7 billion in the prior quarter.

AMAT returned $2.01 billion to its shareholders, of which share repurchases were worth $1.8 billion and dividend payments were worth $211 million.

AMAT Guidance

For third-quarter fiscal 2022, Applied Materials expects net sales of $6.25 billion (+/-$400 million). The Zacks Consensus Estimate for the same is pegged at $6.68 billion.

The company anticipates Semiconductor Systems, AGS and Display revenues of $4.48 billion, $1.43 billion and $310 million, respectively.

Management expects non-GAAP earnings per share of $1.59-$1.95. The Zacks Consensus Estimate for the same is pegged at $2.04.

Applied Materials expects a non-GAAP gross margin of 46% and non-GAAP operating expenses of $1.06 billion. It projects a non-GAAP tax rate of 12%.

Bottom-line on AMAT: The WFE companies are seeing a slight slow-down in equipment orders. But given the Tech Super Cycle will persist through this decade of AI, buying AMAT soon will become a smart investment. The Zacks Rank will confirm when it's time to buy.

Additional content:

Will 2nd Half 2022 Be Any Better for Automakers?

U.S. new vehicle sales remained stuck in low gear in the second quarter of 2022. The persistent microchip shortage has been crippling the auto industry for over a year. The last month marked the 12th straight month of year-over-year decline in U.S. new vehicle sales. After a difficult first quarter, auto sales continued to slump during the April-June 2022 timeframe as parts shortage choked supplies and low stockpiles put the automakers on edge.

Per Cox Automotive, the overall sales decline was even greater than anticipated. June sales volumes came in at 1.125 million, lower than the forecast levels of 1.2 million units. The seasonally adjusted annual rate (SAAR) for June declined to around 13 million units from 15.43 million in the year-ago period. Prior to COVID, SAAR had topped 17 million vehicles for five straight years from 2015 to 2019.

You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

U.S. legacy automaker General Motors’ sales declined 15% year over year to 582,401 vehicles. Deliveries of Chevrolet, GMC, Buick and Cadillac brands skid 11%,14%, 56% and 6.7%, respectively.  Nonetheless, the company managed to reclaim its U.S. sales crown in the second quarter after losing it to Toyota in 2021 and the first quarter of 2022.

Toyota had dethroned GM as the top-selling automaker of the nation in 2021 amid the chip crisis. That was the first time that a foreign automaker outsold a Detroit counterpart in U.S. auto sales for an entire calendar year in the industry's 120-year history.

Meanwhile, GM's close peer Ford was a clear outlier, bucking the trend of declining sales in the second quarter. Ford sold 483,688 vehicles in the United States, edging up 1.8% year over year. The company exited the second quarter with 297,000 units of gross stock, which was up from about 236,000 in gross stock inventory at the end of May, although many of the new units are in transit.

Italian-American carmaker Stellantis saw its sales tumble 16% year over year, from 485,312 to 408,521 vehicles, marking the fourth consecutive quarter of decline.The sales numbers were down across the bulk of their lineups, except for a handful of models. Jeep was down 11%, Ram 27%, Dodge 30% and Alfa Romeo 39%. Fiat sold a meager 249 vehicles in the quarter, declining from 891 in the year-ago period.

Tight Inventory Levels Remain Key Pain Point

The mounting shortage of semiconductors has left the industry in disarray since mid-2021. Just when industry watchdogs and auto giants were predicting the chip deficit to gradually start easing out from mid-2022, the geopolitical conflict between Russia and Ukraine triggered the second round of global microchip shortage. That, coupled with recent COVID-induced lockdowns in China, has aggravated the chip crisis and supply chains, with automakers again being forced to slash production plans, profit targets and halt operations.

Low inventory levels will continue to be a drag on the auto industry. June marked the eighth-consecutive month recording retail inventories below 900,000 cars and light trucks, per J.D. Power and LMC Automotive. And the inventory shortage issues are only going to persist in the near term.

General Motors' reported vehicle inventory was about 248,000 units at the end of the second quarter, down 9.5% from the end of March, when it had about 274,000 vehicles in its U.S. inventory. Hyundai exited June with 17,922 cars and light trucks in U.S. inventory, down from 18,641 in May and 67,992 at the end of June 2021.

Testing Times to Prevail

Supply-chain disruptions are likely to linger through the year and even into 2023. Automakers will battle additional supply chain snafus in the wake of the Russia-Ukraine war. The only bright spot for automakers currently is the rising average prices of vehicles amid the supply-demand mismatch. Per automotive researcher Edmunds.com, the average selling price (ASP) of a new vehicle in the United States rose around 13% year over year in May to roughly $47,000.

But rising sticker prices may soon prompt consumers to put these discretionary expenses on hold owing to recessionary fears. Demand might take a hit amid inflationary concerns. With inflation at levels not seen in decades, the Fed has been forced to become more aggressive, cranking borrowing rates. This monetary policy tightening, paired with geopolitical issues and supply chain bottlenecks, has created a challenging macroeconomic backdrop.

Higher interest rates are increasing the cost of financing a new vehicle. The average monthly payment on a new car loan was almost $700 in June, up 13% from a year ago. Affordability concerns, inflation and weak consumer sentiment, are also starting to pose threats to the auto market outlook in addition to chip dearth. In the face of economic slowdown concerns and the absence of a quick solution to the chip problem, automakers have to brace for tougher times ahead.

In view of such headwinds, Cox Automotive has lowered its US new-vehicle sales forecast for 2022. It now projects new car sales of 14.4 million units this year, down from the prior projection of 15.3 million units. At current sales rates, sales volumes this year will likely finish below the pandemic year of 2020.

Zacks Names "Single Best Pick to Double"

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