A federal judge in Boston dismissed a shareholder lawsuit against CrowdStrike on January 14, 2026, ruling that the plaintiffs failed to prove the company engaged in fraudulent conduct related to a July 2024 outage that disrupted more than 8 million Windows‑based computers worldwide. The court found no evidence that CrowdStrike concealed inadequate software testing or quality‑assurance procedures, and granted summary judgment in the company’s favor.
The July 19, 2024 outage was caused by a faulty configuration update to CrowdStrike’s Falcon sensor software for Windows. The update contained a logic flaw that triggered an out‑of‑bounds memory read, forcing affected systems into a bootloop or recovery mode. The incident impacted airlines, banks, hospitals, and government agencies, and the estimated financial damage exceeded $10 billion. CEO George Kurtz testified before Congress and confirmed that a fix was deployed shortly after the outage.
CrowdStrike’s financial performance in the most recent quarter demonstrates resilience amid the legal and operational challenges. Revenue rose 21.8% to $1.23 billion, beating consensus estimates of $1.22 billion. The growth was driven by strong demand in the enterprise and government segments, with the U.S. commercial revenue increasing 121% to $397 million and U.S. government revenue up 52% to $486 million. The company’s earnings per share of $0.96 surpassed the $0.94 estimate by $0.02, a beat of 2.1 percentage points, largely due to disciplined cost management and the continued expansion of its AI‑native Falcon platform.
Despite the revenue growth, CrowdStrike’s net margin contracted to –6.88% from –6.50% in the prior year, reflecting higher investment in research and development and the cost of addressing the outage’s fallout. The negative return on equity of –2.12% also indicates that the company is still in a growth‑phase investment cycle. Management has signaled confidence in the long‑term trajectory, raising its FY 2026 EPS guidance to $3.70–$3.72 from $3.60–$3.62, and its Q4 2026 EPS guidance to $1.09–$1.11 from $1.05–$1.07.
The dismissal removes a significant legal liability and is expected to stabilize investor sentiment. However, CrowdStrike remains subject to other litigation, notably a $500 million claim from Delta Air Lines over the same outage, and a separate passenger lawsuit that was dismissed in June 2025. The company’s management has emphasized that the legal outcome does not alter its commitment to rigorous testing and rapid incident response. Chief Legal Officer Cathleen Anderson said, “We appreciate the court’s thoughtful consideration and decision to dismiss this case.”
The market has responded to the company’s strong quarterly results with a modest uptick in analyst coverage, but valuation concerns persist. Analysts have maintained a “Moderate Buy” stance, citing the company’s robust revenue growth and expanding total addressable market, projected to rise from $140 billion in 2026 to $300 billion by 2030. The company’s net new annual recurring revenue grew 73% year‑over‑year to $265 million, and it has raised its second‑half 2026 NNARR guidance to at least 50% growth, underscoring confidence in sustained demand for its cloud‑native security platform.
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