Can Identity Security Fuel CrowdStrike’s Next Growth Phase?

Key Points

• CrowdStrike stock nears correction territory ahead of Q2 earnings as investors take profits in the high-flying cybersecurity name.
• The company is expanding its Falcon platform with Next-Gen Identity Security, targeting a $10 billion addressable market.
• Key metrics to watch include ARR growth, multi-module adoption, and management commentary on identity protection traction.

[content-module:CompanyOverview|NASDAQ:CRWD

CrowdStrike Holding Inc. NASDAQ: CRWD stock continues to fall ahead of earnings. Since hitting an all-time high in early June, the stock is down approximately 19%, which puts it nearly in correction territory. That adds a little drama to the company’s upcoming earnings on August 27. 

However, the selling has been orderly, hinting at the fact that the selling is motivated by profit taking with a stock that many investors view as overvalued, even for a red-hot sector like cybersecurity. 

It's also important to note that the stock is also part of a general sell-off in technology stocks that is not company-specific. That means that investors may have to look for other ways to decide when or if to buy the dip in CRWD stock. One way may be to look at the company’s expansion of its Falcon platform to include identity protection. 

Stopping Breaches at the Source

CrowdStrike’s expansion into identity protection is a strategic move that positions the company for growth beyond its core endpoint security business. This includes its Falcon Next-Gen Identity Security. The company launched this service in June 2024 to target one of the fastest-growing areas of cybersecurity: protecting user credentials and access. Analysts say this is the cause of the majority of breaches today.

In its most recent earnings presentation, CrowdStrike forecasted a $10 billion total addressable market for identity protection. However, like other cybersecurity companies, it does not provide a detailed revenue breakout for this segment. 

Instead, CrowdStrike focuses on metrics like total annual recurring revenue (ARR) growth and platform adoption, signaling how well the broader Falcon platform is resonating with customers. Early adoption of identity features is reflected indirectly through customers using multiple Falcon modules rather than via a specific headcount for identity adoption.

For investors, the key takeaway is that identity security is still in the early adoption stage and is an incremental growth lever. The product strengthens the company’s overall platform, enhances stickiness, and creates opportunities for cross-selling to existing customers.

Even if revenue from identity protection is modest in the near term, successful adoption could fuel long-term ARR expansion and help maintain CrowdStrike’s trajectory as a cybersecurity leader.

What Investors Should Watch 

With Q2 earnings approaching, investors will be looking for signals that CrowdStrike’s growth remains intact despite recent stock weakness. Several key indicators can provide insight into customer adoption and broader platform strength.

ARR Growth: CrowdStrike’s annual recurring revenue is the primary metric for gauging subscription expansion, including uptake of new modules like identity protection. In its most recent earnings report, the company posted strong 22% year-over-year (YOY) growth in ending ARR. However, it also showed an 8% YOY decline in net new ARR. 

Sustained or accelerating ARR growth would suggest the platform continues to resonate with customers and that cross-selling efforts are paying off.

Module Adoption Trends: While identity-specific numbers are not disclosed, a rising number of multi-module customers is a strong proxy for adoption and platform stickiness.

In the company’s last earnings report, it reported that:

• 48% of customers use six or more modules

• 32% of customers use seven or more modules

• 22% of customers use eight or more modules

Management Commentary on Customer Traction: Any anecdotal evidence or case studies regarding Falcon Identity Security adoption can provide color on its growth trajectory, even if numbers are not yet material.

How Low Could CRWD Stock Go?

CrowdStrike stock has pulled back meaningfully from its summer highs near $520 and now trades around $415, below its 50-day moving average of $467. Momentum indicators confirm the weakness: the MACD is negative, and the RSI near 33 shows the stock is approaching oversold territory.

That combination suggests the stock could be due for a short-term bounce if buyers step in, but the near-term trend remains bearish. Investors should watch $410 as an important support level and the 50-day moving average as a key resistance point.

With earnings coming up, a positive surprise on ARR growth or platform adoption could be the catalyst for a reversal. However, a miss or even cautious guidance could see the stock test deeper support in the $380–$390 range.