Business Context and Reporting Period
Company: CrowdStrike Holdings, Inc.
Filing Type: Form 10-Q (Quarterly Report)
Period Ended: July 31, 2026 (Second Quarter of Fiscal 2027)
Business Overview: CrowdStrike is a global cybersecurity leader providing an AI-native, cloud-delivered platform (Falcon) for endpoint, cloud workload, identity, and data protection. The company operates as a single reporting segment.
Key Financial Metrics
| Metric | Three Months Ended July 31, 2026 | Six Months Ended July 31, 2026 |
|---|---|---|
| Total Revenue | $1,470.9 million | $2,856.5 million |
| Gross Profit | $1,096.9 million | $2,140.2 million |
| Gross Margin | 75% | 75% |
| Net Income (Loss) Attributable to CrowdStrike | $5.3 million | $33.1 million |
| Diluted EPS | $0.01 | $0.03 |
| Operating Cash Flow (6 Months) | $1,121.2 million | |
| Cash and Cash Equivalents (Balance Sheet) | $5,013.8 million | |
| Long-Term Debt | $746.2 million | |
| Annual Recurring Revenue (ARR) | $5,841.4 million (as of July 31, 2026) |
Material Changes vs. Prior Period
- Revenue Growth: Total revenue increased 26% year-over-year (YoY) for both the three and six-month periods, driven by new customer acquisitions and expansion of sensors/modules with existing customers.
- Profitability: The company returned to profitability, reporting net income of $5.3 million for the quarter compared to a net loss of $70.2 million in the prior year quarter. This improvement was aided by a tax benefit of $1.4 million and reduced operating losses.
- Operating Expenses:
- Sales & Marketing: Increased 14% YoY ($509.9M) due to higher headcount and stock-based compensation, partially offset by a reduction in Strategic Plan charges.
- R&D: Increased 30% YoY ($444.2M) driven by headcount growth and stock-based compensation.
- G&A: Remained flat YoY ($176.0M) as lower costs related to the "July 19 Incident" offset higher stock-based compensation.
- Acquisitions: Significant investing activity ($1.1 billion cash used) was driven by the acquisitions of SGNL.AI, Inc. and Seraphic Algorithms Ltd., totaling approximately $881.4 million in cash consideration.
- Stock Split: A 4-for-1 stock split was executed in June 2026; all share and per-share data in the filing have been retroactively adjusted.
Guidance, Outlook, Risks, and Unusual Items
- July 19 Incident: The filing continues to highlight the adverse effects of the July 19, 2024, sensor update incident. While the company has won key legal dismissals (including a Fifth Circuit affirmation in May 2026), it faces ongoing litigation (e.g., Delta Airlines) and expects continued legal expenses. The incident has led to elongated sales cycles and customer commitment packages that may increase contraction.
- Strategic Plan: A workforce reduction plan announced in May 2025 (approx. 500 roles) was completed as of July 31, 2026. No charges related to this plan were recorded in the current period.
- Future Acquisitions: In July 2026, the company signed a definitive agreement to acquire XM Cyber Ltd. for approximately $145.0 million, expected to close in the second half of fiscal 2027.
- Share Repurchases: The board authorized an additional $500 million in repurchases in April 2026, bringing the total program to $1.5 billion. The company repurchased $175.6 million of stock in the six months ended July 31, 2026. Approximately $1.3 billion remains available.
- Accounting Changes: The company revised prior period financial statements to correct an immaterial error regarding stock-based compensation timing. Additionally, the estimated period of benefit for sales commissions was increased from four to five years, reducing commission expense by $53.4 million for the six-month period.
Investor Verification Checklist
- Legal Exposure: Verify the status of the Delta Airlines lawsuit and any new governmental inquiries related to the July 19 Incident, as these could result in material liabilities.
- Retention Metrics: Monitor Dollar-Based Net Retention Rate trends to assess the long-term impact of the July 19 Incident on customer churn and upsell capability.
- Acquisition Integration: Review the integration progress and financial contribution of recent acquisitions (SGNL.AI, Seraphic, Pangea, Onum) to ensure they meet growth objectives.
- Capital Allocation: Track the pace of share repurchases against the $1.5 billion authorization and the timing of the pending XM Cyber acquisition.
- Stock-Based Compensation: Analyze the impact of the revised commission amortization period (5 years) on future operating margins and the trajectory of total stock-based compensation expense.