The stock was immediately pummeled.

Here's what CrowdStrike reported, what Wall Street didn't like, and whether investors should ignore Wall Street's concerns and buy CrowdStrike stock anyway.

In Q3, CrowdStrike generated revenue of $581 million, surpassing guidance of $576 million at the high end of management's guidance range. Moreover, the company's revenue was up 58% year over year, which looks stellar on the surface.

However, that's the slowest quarterly revenue growth rate that CrowdStrike has reported as a public company. Consider that the stock has routinely traded at a premium valuation – its P/S, price-to-sales ratio, has been over 20 for much of 2022. But as its growth rate has come down, so too has the valuation that investors are willing to pay, which is partly why the stock is down.

For analysts, annual recurring revenue (ARR) stood out as the biggest problem from CrowdStrike's Q3 results. CrowdStrike often signs multiyear contracts with its customers to provide various cybersecurity services, giving it recurring revenue. For this reason, ARR is an important metric for investors to watch. The company ended Q3 with ARR of $2.34 billion, up 54% year over year. But that wasn't good enough for analysts.

It's a fair criticism. Since ARR is a recurring metric, looking at year-over-year growth doesn't tell the whole story. Investors should also look at trends from quarter to quarter. At the end of the second quarter, CrowdStrike had ARR of $2.14 billion. Therefore, it only added $200 million in net ARR during Q3.

Today's shareholders are assuming that the company can eventually turn the corner on profitability and that it can maintain enough growth to warrant its premium price tag. By contrast, many investors prefer companies that are already profitable and reasonably valued.

However, CrowdStrike is on much firmer ground than the net ARR metric would have you believe, which may mean the market is being overly negative about its Q3 results.

First, we're seeing a slowdown in CrowdStrike subscriptions, but we're not seeing customer attrition. As management pointed out, its gross retention is sitting near record levels above 98%. That's huge.

Second, CrowdStrike is still adding new customers at an impressive rate. In Q3, it added 1,460 net new subscription customers, translating to 7.4% quarter-over-quarter growth.

Finally, CrowdStrike ended Q3 with record remaining performance obligations (RPO) of $2.8 billion, up from $2.5 billion in Q2. Importantly, only 64% of its RPO is expected to be recognized over the next year, compared to 65% at the end of Q2. In other words, contracts appear to be getting longer, which is good.