Proactive investors – CrowdStrike (NASDAQ:) is scheduled to report its second-quarter financial results on Wednesday, August 28. And there are no prizes for guessing what topic will be the focus.
The cybersecurity giant’s valuation remains significantly low following its role in an IT outage at Microsoft (NASDAQ:) that caused major chaos in July.
CrowdStrike President George Kurtz blamed “a single content update for Windows hosts” for a bug that caused severe disruptions to airlines, emergency services and broadcasters around the world.
Companies affected by the outage have now filed lawsuits against CrowdStrike and Microsoft for damages. This includes the Atlanta-based airline Delta, which had to cancel more than 6,000 flights and suffered estimated damages of between $350 million and $500 million as a result of the outage.
Stakeholders will want to know from management how these litigation will impact CrowdStrike’s bottom line.
However, analysts at Wedbush point out that the potential liability risks for CrowdStrike are “far lower than feared.”
Citing “legal experts,” Wedbush recently said CrowdStrike’s potential liability and damage exposure from Delta’s lawsuit is in the “single-digit” millions.
“CrowdStrike’s user agreements are very favorable to CrowdStrike and include a ban on collecting fees for lost revenue and limitations on liability,” Wedbush said.
However, this does not take into account the prospect of further business losses if CrowdStrike fails to restore its reputation.
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