CrowdStrike Holdings, Inc. — Q1 FY2025 10-Q
Reporting period: Three months ended April 30, 2024; comparisons are with the three months ended April 30, 2023 unless otherwise noted. The company provides cloud-delivered cybersecurity subscriptions and professional services. Financial statements are unaudited and prepared under U.S. GAAP.
Financial performance
| Metric | Q1 FY2025 | Prior period | Change |
|---|---|---|---|
| Revenue | $921.0 million | $692.6 million | +33% |
| Subscription revenue | $872.2 million | $651.2 million | +34% |
| Professional services revenue | $48.9 million | $41.4 million | +18% |
| Gross profit / margin | $696.0 million / 76% | $523.4 million / 76% | Margin broadly flat |
| Operating income (loss) | $6.9 million | $(19.5) million | Improved |
| Net income attributable to CrowdStrike | $42.8 million | $0.5 million | Improved |
| Diluted EPS | $0.17 | $0.00 | Improved |
| Operating cash flow | $383.2 million | $300.9 million | +27% |
Operating margin was approximately 1%, versus approximately negative 3% a year earlier. Subscription gross margin was 78% in both periods; professional services gross margin declined to 28% from 34%, which management attributed primarily to lower utilization. Operating expenses rose 27% to $689.1 million, including increases in sales and marketing, research and development, and general and administrative expense. Stock-based compensation was $183.1 million, up from $130.9 million.
Liquidity, debt and other metrics
- Cash and cash equivalents were $3.70 billion at April 30, 2024, up from $3.38 billion at January 31, 2024. Operating cash flow was $383.2 million; capital spending on property and equipment was $49.7 million, with another $10.5 million spent on capitalized software.
- Total liabilities were $4.27 billion. Long-term debt carrying value was $742.9 million; the company reported $750 million principal outstanding on its 3.00% senior notes, due February 2029. No borrowings were outstanding under its $750 million revolving facility, which matures in January 2026; the company was in compliance with its debt covenants.
- Deferred revenue was $3.07 billion, including $2.31 billion current. Remaining performance obligations were $4.7 billion; the company expected to recognize about 60% within 12 months and 39% in months 13–36.
- ARR was $3.65 billion at April 30, up 33% year over year; net new ARR for the quarter was $211.7 million. Dollar-based net retention was described as consistent with expectations, but no rate was provided in the filing text.
- Non-cancellable purchase commitments totaled $2.56 billion, with remaining terms exceeding 12 months. Management said available cash, operating cash flows, and the revolver should cover anticipated needs for at least 12 months.
Changes, unusual items and outlook
Revenue growth was driven by new customers and sales of additional sensors and modules to existing customers. ARR growth slowed to 33% from 42% a year earlier, while remaining performance obligations and deferred revenue indicate substantial contracted business. Net income included $6.9 million of realized gains on strategic investments; higher interest income also contributed to pretax earnings. These items, alongside substantial stock-based compensation, are relevant when assessing the quality and sustainability of reported earnings and cash generation.
Cash used for the Flow Security acquisition was $96.4 million, net of cash acquired. The acquisition added $84.0 million of preliminary goodwill and $13.5 million of developed technology; management said it did not materially affect reported results. The company also reported $1.7 billion of unrecognized compensation expense related to unvested RSUs, expected to be recognized over a weighted-average 2.8 years.
The filing provides no specific quarterly or full-year revenue or earnings guidance. Management expects gross profit to grow and gross margin to increase modestly over the long term, while continuing to invest in sales and marketing, research and development, and infrastructure. It noted that net new ARR and operating margins are typically stronger in the second half of the fiscal year, with first-half margins affected by payroll taxes and annual sales and marketing events.
Risks and contingencies
- Growth and profitability depend on customer adoption, renewals, expansion into additional modules, competition, sales-cycle timing, and customers’ technology budgets. The company has a history of annual losses and cautions that it may not sustain profitability.
- Cybersecurity threats, service outages, defects, or breaches affecting CrowdStrike, its customers, or third-party hosting providers could damage reputation, retention, and results. The company relies substantially on AWS and colocation data centers.
- Rapid growth, talent retention, infrastructure scaling, supply constraints, acquisitions, and integration create execution risks. Other material exposures include evolving privacy, cybersecurity, AI, tax, and international regulations.
- The company disclosed no pending or threatened legal proceeding it believed reasonably likely to have a material effect. A patent dispute with Webroot/Open Text was settled and dismissed in November 2023; the settlement amount was not material.
Investor verification priorities
- Track ARR growth, net new ARR, retention, renewals, and module expansion; the filing does not disclose a numeric retention rate.
- Assess whether improving GAAP profitability persists, separating operating performance from investment gains and interest income, and monitoring stock-based compensation and dilution.
- Compare operating cash flow with deferred revenue movements, capital spending, acquisition spending, and the $2.56 billion of purchase commitments.
- Monitor gross-margin trends, particularly professional services utilization, and execution of the Flow Security integration.
- Review cyber incident, platform availability, customer adoption, regulatory, and competition developments, as well as future management guidance.