CRWD

Fourth quarter highlights

• Record net new ARR of $222 million
• Ending ARR grows 48% year-over-year to reach $2.56 billion
• Record cash flow from operations of $273 million and record free cash flow of $209 million

CrowdStrike Holdings, Inc. (Nasdaq: CRWD), a global cybersecurity leader that provides cloud-delivered protection of endpoints, cloud workloads, identity and data, today announced financial results for the fourth quarter and fiscal year 2023, ended January 31, 2023.

“CrowdStrike delivered a record fourth quarter that exceeded our expectations across the board,” said George Kurtz, CrowdStrike’s president, chief executive officer and co-founder. “Highlights of the quarter included record net new ARR of $222 million, record net new subscription customers of 1,873, record operating and free cash flow and a rule of 81 on a free cash flow basis. CrowdStrike’s growing market share showcases customers' recognition of the Falcon platform’s technology leadership and advanced AI that drives better security outcomes, consolidation and lower TCO.”

Commenting on the company's financial results, Burt Podbere, CrowdStrike’s chief financial officer, added, “CrowdStrike delivered an exceptional fourth quarter and strong finish to the year. We remain focused on delivering increased operating leverage while continuing our thoughtful, disciplined and strategic approach to investing in innovation and market share expansion to capture the massive opportunities we see ahead for CrowdStrike."

Fourth Quarter Fiscal 2023 Financial Highlights

• Revenue: Total revenue was $637.4 million, a 48% increase, compared to $431.0 million in the fourth quarter of fiscal 2022. Subscription revenue was $598.3 million, a 48% increase, compared to $405.4 million in the fourth quarter of fiscal 2022.

• Annual Recurring Revenue (ARR) increased 48% year-over-year and grew to $2.56 billion as of January 31, 2023, of which $221.7 million was net new ARR added in the quarter.

• Subscription Gross Margin: GAAP subscription gross margin was 75%, compared to 76% in the fourth quarter of fiscal 2022. Non-GAAP subscription gross margin was 77%, compared to 79% in the fourth quarter of fiscal 2022.

• Income/Loss from Operations: GAAP loss from operations was $61.5 million, compared to $23.5 million in the fourth quarter of fiscal 2022. Non-GAAP income from operations was $95.6 million, compared to $80.4 million in the fourth quarter of fiscal 2022.

• Net Income/Loss Attributable to CrowdStrike: GAAP net loss attributable to CrowdStrike was $47.5 million, compared to $42.0 million in the fourth quarter of fiscal 2022. GAAP net loss per share attributable to CrowdStrike, basic and diluted was $0.20, compared to $0.18 in the fourth quarter of fiscal 2022. Non-GAAP net income attributable to CrowdStrike was $111.6 million, compared to $70.4 million in the fourth quarter of fiscal 2022. Non-GAAP net income attributable to CrowdStrike per share, diluted, was $0.47, compared to $0.30 in the fourth quarter of fiscal 2022.

• Cash Flow: Net cash generated from operations was $273.3 million, compared to $159.7 million in the fourth quarter of fiscal 2022. Free cash flow was $209.5 million, compared to $127.3 million in the fourth quarter of fiscal 2022.

• Cash, Cash Equivalents and Short-term Investments was $2.71 billion as of January 31, 2023.

Full Year Fiscal 2023 Financial Highlights

• Revenue: Total revenue was $2.24 billion, a 54% increase, compared to $1.45 billion in fiscal 2022. Subscription revenue was $2.11 billion, a 55% increase, compared to $1.36 billion in fiscal 2022.

• Subscription Gross Margin: GAAP subscription gross margin was 76% in both fiscal 2023 and 2022. Non-GAAP subscription gross margin was 78%, compared to 79% in fiscal 2022.

• Income/Loss from Operations: GAAP loss from operations was $190.1 million, compared to $142.5 million in fiscal 2022. Non-GAAP income from operations was $355.6 million, compared to $196.2 million in fiscal 2022.

• Net Income/Loss Attributable to CrowdStrike: GAAP net loss attributable to CrowdStrike was $183.2 million, compared to $234.8 million in fiscal 2022. GAAP net loss per share attributable to CrowdStrike, basic and diluted, was $0.79, compared to $1.03 in fiscal 2022. Non-GAAP net income attributable to CrowdStrike was $368.4 million, compared to $160.7 million in fiscal 2022. Non-GAAP net income attributable to CrowdStrike per share, diluted, was $1.54, compared to $0.67 in fiscal 2022.

• Cash Flow: Net cash generated from operations was $941.0 million, compared to $574.8 million in fiscal 2022. Free cash flow was $676.8 million, compared to $441.8 million in fiscal 2022.

Recent Highlights

• Added 1,873 net new subscription customers in the quarter for a total of 23,019 subscription customers as of January 31, 2023, representing 41% growth year-over-year.

• CrowdStrike’s module adoption rates were 62%, 39% and 22% for five or more, six or more and seven or more modules, respectively, as of January 31, 20231.

• Announced CrowdStrike Falcon Surface, an External Attack Surface Management (EASM) module, which features capabilities from the recent acquisition of Reposify and uses a proprietary real-time 24/7 engine to identify risky exposure of known and unknown assets.

• Announced a new strategic alliance with Dell Technologies to help organizations prevent, detect and respond to cyber threats. The CrowdStrike Falcon platform is available to purchase today with volume licensing, and in the coming months, can be added to the purchase of any Dell commercial PC through Dell’s direct sales teams and any of its authorized partners.

• Ranked #1 in IDC’s Worldwide Modern Endpoint Market Shares report2 for the third consecutive year.

• Recognized as a Leader in the 2022 Gartner Magic Quadrant for Endpoint Protection Platforms (EPP) for the third consecutive time and positioned furthest to the right for Completeness of Vision3.

• Received the 2023 SE Labs Award for Best Endpoint Detection and Response (EDR) for the third consecutive year as well as the 2023 SE Labs Award for Best Product Development.

• Named Threat Intel vendor of the year and Asia-Pacific Managed Detection and Response (MDR) vendor of the year by Frost & Sullivan4 and named as a Leader in Frost & Sullivan’s 2022 Frost Radar™: Global Cyber Threat Intelligence5.

• Promoted Michael Sentonas to President. Sentonas, who has served as CrowdStrike’s chief technology officer (CTO) since 2020, will be responsible for leading the company’s product and go-to-market functions, including its sales, marketing, product and engineering, threat intelligence, corporate development and CTO teams.

• Added former SentinelOne executives Daniel Bernard and Raj Rajamani to the leadership team as chief business officer and chief product officer, DICE (Data, Identity, Cloud and Endpoint), respectively.

• Appointed Johanna Flower to the Board of Directors.

• Chosen as a winner for Glassdoor’s Best Places to Work in 2023 List. CrowdStrike ranked at #15, earning the highest ranking for a cybersecurity company.

• Through the CrowdStrike Foundation, corporate-directed giving and corporate-matching, CrowdStrike expanded its corporate giving strategy to grow the next generation of talent and leadership in cybersecurity. This year’s highlights included growing the CrowdStrike NextGen scholarship program by 33% year-over-year and continued investments in the Thurgood Marshall College Fund and the Arkwright Engineering Scholarships program. Additionally, CrowdStrike formed a landmark partnership to support veterans with Operation Motorsport Foundation, increased corporate matching gifts by 47%, year-over-year, and introduced a new volunteer program, CrowdStrike Cares, to increase our impact where we live and work.

Financial Outlook

CrowdStrike is providing the following guidance for the first quarter of fiscal 2024 (ending April 30, 2023) and guidance for fiscal year 2024 (ending January 31, 2024).

Guidance for non-GAAP financial measures excludes stock-based compensation expense, amortization expense of acquired intangible assets, including purchased patents, amortization of debt issuance costs and discount, mark-to-market adjustments on deferred compensation liabilities, legal reserve and settlement charges or benefits, gain (loss) and other income from strategic investments, acquisition-related expenses, and losses (gains) from deferred compensation assets. The company has not provided the most directly comparable GAAP measures because certain items are out of the company's control or cannot be reasonably predicted. Accordingly, a reconciliation for non-GAAP income from operations, non-GAAP net income attributable to CrowdStrike, and non-GAAP net income per share attributable to CrowdStrike common stockholders is not available without unreasonable effort.

 

Q1 FY24

Guidance

 

Full Year FY24

Guidance

Total revenue

$674.9 - $678.2 million

 

$2,955.1 - $3,014.8 million

Non-GAAP income from operations

$107.1 - $109.5 million

 

$474.0 - $518.7 million

Non-GAAP net income attributable to CrowdStrike

$121.1 - $123.5 million

 

$535.9 - $580.7 million

Non-GAAP net income per share attributable to CrowdStrike common stockholders, diluted

$0.50 - $0.51

 

$2.21 - $2.39

Weighted average shares used in computing Non-GAAP net income per share attributable to common stockholders, diluted

241 million

 

243 million

These statements are forward-looking and actual results may differ materially as a result of many factors. Refer to the Forward-Looking Statements safe harbor below for information on the factors that could cause the company's actual results to differ materially from these forward-looking statements.

Conference Call Information

CrowdStrike will host a conference call for analysts and investors to discuss its earnings results for the fourth quarter of fiscal 2023 and outlook for its fiscal first quarter and fiscal year 2024 today at 2:00 p.m. Pacific time (5:00 p.m. Eastern time). A recorded webcast of the event will also be available for one year on the CrowdStrike Investor Relations website ir.crowdstrike.com.

Date:

March 7, 2023

Time:

2:00 p.m. Pacific time / 5:00 p.m. Eastern time

Pre-registration link for dial-in access:

register.vevent.com/register/BI2cb85248d35148df80cbcd11f30cd824

Webcast:

ir.crowdstrike.com

Forward-Looking Statements

This press release contains forward-looking statements that involve risks and uncertainties, including statements regarding CrowdStrike’s future growth, and future financial and operating performance, including CrowdStrike’s financial outlook for the fiscal first quarter and fiscal year 2024. There are a significant number of factors that could cause actual results to differ materially from statements made in this press release, including: risks associated with managing CrowdStrike’s rapid growth; CrowdStrike’s ability to identify and effectively implement necessary changes to address execution challenges; CrowdStrike’s limited experience with new product and subscription and support introductions and the risks associated with new products and subscription and support offerings, including the risk of defects, errors, or vulnerabilities; length and unpredictability of sales cycles; CrowdStrike’s ability to attract new and retain existing customers; CrowdStrike’s ability to successfully integrate acquisitions; the failure to timely develop and achieve market acceptance of new products and subscriptions as well as existing products and subscriptions and support; CrowdStrike’s ability to collaborate and integrate its products with offerings from other parties to deliver benefits to customers; industry trends; rapidly evolving technological developments in the market for security products and subscription and support offerings; and general market, political, economic, and business conditions, including those related to a deterioration in macroeconomic conditions, inflation, geopolitical uncertainty and public health crises.

Additional risks and uncertainties that could affect CrowdStrike’s financial results are included in the filings CrowdStrike makes with the Securities and Exchange Commission (“SEC”) from time to time, particularly under the captions “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, including CrowdStrike’s most recently filed Annual Report on Form 10-K, most recently filed Quarterly Report on Form 10-Q and subsequent filings.

You should not rely on these forward-looking statements, as actual outcomes and results may differ materially from those contemplated by these forward-looking statements as a result of such risks and uncertainties. All forward-looking statements in this press release are based on information available to CrowdStrike as of the date hereof, and CrowdStrike does not assume any obligation to update the forward-looking statements provided to reflect events that occur or circumstances that exist after the date on which they were made.

Use of Non-GAAP Financial Information

CrowdStrike believes that the presentation of non-GAAP financial information provides important supplemental information to management and investors regarding financial and business trends relating to CrowdStrike’s financial condition and results of operations. For further information regarding these non-GAAP measures, including the reconciliation of these non-GAAP financial measures to their most directly comparable GAAP financial measures, please refer to the financial tables below, as well as the “Explanation of Non-GAAP Financial Measures” section of this press release.

Channels for Disclosure of Information

CrowdStrike intends to announce material information to the public through the CrowdStrike Investor Relations website ir.crowdstrike.com, SEC filings, press releases, public conference calls, and public webcasts. CrowdStrike uses these channels, as well as social media and its blog, to communicate with its investors, customers, and the public about the company, its offerings, and other issues. It is possible that the information CrowdStrike posts on social media and its blog could be deemed to be material information. As such, CrowdStrike encourages investors, the media, and others to follow the channels listed above, including the social media channels listed on CrowdStrike’s investor relations website, and to review the information disclosed through such channels. Any updates to the list of disclosure channels through which CrowdStrike will announce information will be posted on the investor relations page on CrowdStrike’s website.

Definition of Module Adoption Rates

1. Beginning in the fourth quarter of fiscal 2023, module adoption rates are calculated by taking the total number of customers with five or more, six or more, and seven or more modules, respectively, divided by the total number of subscription customers (excluding Falcon Go customers). Falcon Go customers are defined as customers who have subscribed with the Falcon Go bundle, a package designed for organizations with 100 endpoints or less. The below table provides the module adoption rates excluding Falcon Go customers for the second and third quarter of fiscal 2023. There is no impact to periods prior to the second quarter of fiscal 2023. Excluding Falcon Go customers, subscription customers' adoption rates were as follows:

 

 

Q2 FY23

 

Q3 FY23

Five or more modules

 

61%

 

61%

Six or more modules

 

36%

 

37%

Seven or more modules

 

20%

 

21%

Reports Referenced and Disclaimers

2. International Data Corporation, Worldwide Modern Endpoint Security Market Shares, July 2021–June 2022: Currency Exchange Rates Slightly Trimmed Accelerating Growth, Doc #US49982022, January 2023. 3. Gartner, Magic Quadrant for Endpoint Protection Platforms, Peter Firstbrook, Chris Silva, 31 December 2022. 4. Frost Threat Intel vendor of the year and Asia-Pacific Managed Detection and Response (MDR) vendor of the year. 5. Frost Radar™ Global Cyber Threat Intelligence Market, 2022.

Gartner does not endorse any vendor, product or service depicted in its research publications, and does not advise technology users to select only those vendors with the highest ratings or other designation. Gartner research publications consist of the opinions of Gartner’s research organization and should not be construed as statements of fact. Gartner disclaims all warranties, expressed or implied, with respect to this research, including any warranties of merchantability or fitness for a particular purpose.

Gartner and Magic Quadrant are registered trademarks and service marks of Gartner, Inc. and/or its affiliates in the U.S. and internationally and are used herein with permission. All rights reserved.

About CrowdStrike Holdings

CrowdStrike Holdings, Inc. is a global cybersecurity leader that provides cloud-delivered protection of endpoints, cloud workloads, identity and data.

Powered by the CrowdStrike Security Cloud and advanced artificial intelligence, the CrowdStrike Falcon® platform delivers better outcomes to customers through rapid and scalable deployment, superior protection and performance, reduced complexity and immediate time-to-value.

CrowdStrike Falcon leverages a single lightweight-agent architecture with integrated cloud modules spanning multiple security markets, including corporate workload security, managed security services, security and vulnerability management, IT operations management, threat intelligence services, identity protection and log management.

For more information, please visit: ir.crowdstrike.com

CrowdStrike, the CrowdStrike logo, and other CrowdStrike marks are trademarks and/or registered trademarks of CrowdStrike, Inc., or its affiliates or licensors. Other words, symbols, and company product names may be trademarks of the respective companies with which they are associated.

 

CROWDSTRIKE HOLDINGS, INC.

 

Condensed Consolidated Statements of Operations

(in thousands, except per share amounts)

(unaudited)

 

 

Three Months Ended January 31,

 

Year Ended January 31,

 

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

 

Revenue

 

 

 

 

 

 

 

Subscription

$

598,263

 

 

$

405,443

 

 

$

2,111,660

 

 

$

1,359,537

 

Professional services

 

39,104

 

 

 

25,567

 

 

 

129,576

 

 

 

92,057

 

Total revenue

 

637,367

 

 

 

431,010

 

 

 

2,241,236

 

 

 

1,451,594

 

Cost of revenue

 

 

 

 

 

 

 

Subscription (1)(2)(4)

 

149,426

 

 

 

95,544

 

 

 

511,684

 

 

 

321,904

 

Professional services (1)(4)

 

26,178

 

 

 

17,076

 

 

 

89,547

 

 

 

61,317

 

Total cost of revenue

 

175,604

 

 

 

112,620

 

 

 

601,231

 

 

 

383,221

 

Gross profit

 

461,763

 

 

 

318,390

 

 

 

1,640,005

 

 

 

1,068,373

 

Operating expenses

 

 

 

 

 

 

 

Sales and marketing (1)(2)(4)

 

246,439

 

 

 

162,594

 

 

 

904,409

 

 

 

616,546

 

Research and development (1)(2)(4)

 

191,845

 

 

 

105,018

 

 

 

608,364

 

 

 

371,283

 

General and administrative (1)(3)(4)(5)

 

84,979

 

 

 

74,312

 

 

 

317,344

 

 

 

223,092

 

Total operating expenses

 

523,263

 

 

 

341,924

 

 

 

1,830,117

 

 

 

1,210,921

 

Loss from operations

 

(61,500

)

 

 

(23,534

)

 

 

(190,112

)

 

 

(142,548

)

Interest expense(6)

 

(6,352

)

 

 

(6,302

)

 

 

(25,319

)

 

 

(25,231

)

Interest income

 

27,016

 

 

 

1,134

 

 

 

52,495

 

 

 

3,788

 

Other income (expense), net(7)(8)

 

(2,782

)

 

 

545

 

 

 

3,053

 

 

 

3,968

 

Loss before provision for income taxes

 

(43,618

)

 

 

(28,157

)

 

 

(159,883

)

 

 

(160,023

)

Provision for income taxes(9)

 

5,314

 

 

 

13,582

 

 

 

22,402

 

 

 

72,355

 

Net loss

 

(48,932

)

 

 

(41,739

)

 

 

(182,285

)

 

 

(232,378

)

Net income (loss) attributable to non-controlling interest

 

(1,451

)

 

 

241

 

 

 

960

 

 

 

2,424

 

Net loss attributable to CrowdStrike

$

(47,481

)

 

$

(41,980

)

 

$

(183,245

)

 

$

(234,802

)

Net loss per share attributable to CrowdStrike common stockholders, basic and diluted

$

(0.20

)

 

$

(0.18

)

 

$

(0.79

)

 

$

(1.03

)

Weighted-average shares used in computing net loss per share attributable to CrowdStrike common stockholders, basic and diluted

 

235,027

 

 

 

229,662

 

 

 

233,139

 

 

 

227,142

 

_____________________________

(1)

Includes stock-based compensation expense as follows (in thousands):

 

Three Months Ended January 31,

 

Year Ended January 31,

 

 

2023

 

 

2022

 

 

2023

 

 

2022

Subscription cost of revenue

$

10,134

 

$

6,496

 

$

32,091

 

$

22,044

Professional services cost of revenue

 

5,096

 

 

3,087

 

 

15,692

 

 

10,050

Sales and marketing

 

42,747

 

 

21,456

 

 

151,919

 

 

89,634

Research and development

 

54,364

 

 

31,085

 

 

174,711

 

 

102,027

General and administrative

 

40,006

 

 

30,513

 

 

152,091

 

 

86,197

Total stock-based compensation expense

$

152,347

 

$

92,637

 

$

526,504

 

$

309,952

(2)

Includes amortization of acquired intangible assets, including purchased patents, as follows (in thousands):

 

Three Months Ended January 31,

 

Year Ended January 31,

 

 

2023

 

 

2022

 

 

2023

 

 

2022

Subscription cost of revenue

$

3,571

 

$

3,208

 

$

13,907

 

$

10,758

Sales and marketing

 

619

 

 

608

 

 

2,557

 

 

2,117

General and administrative

 

36

 

 

14

 

 

101

 

 

27

Total amortization of acquired intangible assets

$

4,226

 

$

3,830

 

$

16,565

 

$

12,902

(3)

Includes acquisition-related expenses as follows (in thousands):

 

Three Months Ended January 31,

 

Year Ended January 31,

 

 

2023

 

 

2022

 

 

2023

 

 

2022

General and administrative

$

477

 

$

457

 

$

2,664

 

$

6,369

Total acquisition-related expenses

$

477

 

$

457

 

$

2,664

 

$

6,369

(4)

Includes mark-to-market adjustments on deferred compensation liabilities as follows (in thousands):

 

Three Months Ended January 31,

 

Year Ended January 31,

 

 

2023

 

 

2022

 

 

2023

 

 

2022

General and administrative

$

1

 

$

—

 

$

1

 

$

—

Total mark-to-market adjustments on deferred compensation liabilities

$

1

 

$

—

 

$

1

 

$

—

(5)

Includes legal reserve and settlement charges as follows (in thousands):

 

Three Months Ended January 31,

 

Year Ended January 31,

 

 

2023

 

 

2022

 

 

2023

 

 

2022

General and administrative

$

—

 

$

7,000

 

$

—

 

$

9,500

Total legal reserve and settlement charges

$

—

 

$

7,000

 

$

—

 

$

9,500

(6)

Includes amortization of debt issuance costs and discount as follows (in thousands):

 

Three Months Ended January 31,

 

Year Ended January 31,

 

 

2023

 

 

2022

 

 

2023

 

 

2022

Interest expense

$

548

 

$

548

 

$

2,187

 

$

2,187

Total amortization of debt issuance costs and discount

$

548

 

$

548

 

$

2,187

 

$

2,187

(7)

Includes losses (gains) and other income from strategic investments as follows (in thousands):

 

 

Three Months Ended January 31,

 

Year Ended January 31,

 

 

2023

 

 

 

2022

 

 

2023

 

 

2022

Other income (expense), net

$

(2,904

)

 

$

746

 

$

1,920

 

$

5,112

Total losses (gains) and other income from strategic investments

$

(2,904

)

 

$

746

 

$

1,920

 

$

5,112

(8)

Includes gains on deferred compensation assets as follows (in thousands):

 

Three Months Ended January 31,

 

Year Ended January 31,

 

 

2023

 

 

2022

 

 

2023

 

 

2022

Other income, net

$

1

 

$

—

 

$

1

 

$

—

Total gains on deferred compensation assets

$

1

 

$

—

 

$

1

 

$

— 

(9)

Includes tax costs for intellectual property integration relating to acquisitions as follows (in thousands):

 

Three Months Ended January 31,

 

Year Ended January 31,

 

 

2023

 

 

2022

 

 

2023

 

 

2022

Provision for income taxes

$

—

 

$

8,412

 

$

4,658

 

$

57,236

Total provision for income taxes

$

—

 

$

8,412

 

$

4,658

 

$

57,236

 

CROWDSTRIKE HOLDINGS, INC.

 

Condensed Consolidated Balance Sheets

(in thousands)

(unaudited)

 

 

January 31,

 

January 31,

 

 

2023

 

 

 

2022

 

Assets

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

2,455,369

 

 

$

1,996,633

 

Short-term investments

 

250,000

 

 

 

—

 

Accounts receivable, net of allowance for credit losses

 

626,181

 

 

 

368,145

 

Deferred contract acquisition costs, current

 

186,855

 

 

 

126,822

 

Prepaid expenses and other current assets

 

121,862

 

 

 

79,352

 

Total current assets

 

3,640,267

 

 

 

2,570,952

 

Strategic investments

 

47,270

 

 

 

23,632

 

Property and equipment, net

 

492,335

 

 

 

260,577

 

Operating lease right-of-use assets

 

39,936

 

 

 

31,735

 

Deferred contract acquisition costs, noncurrent

 

260,233

 

 

 

192,358

 

Goodwill

 

430,645

 

 

 

416,445

 

Intangible assets, net

 

86,889

 

 

 

97,336

 

Other long-term assets

 

28,965

 

 

 

25,346

 

Total assets

$

5,026,540

 

 

$

3,618,381

 

Liabilities and Stockholders’ Equity

 

 

 

Current liabilities:

 

 

 

Accounts payable

$

45,372

 

 

$

47,634

 

Accrued expenses

 

137,884

 

 

 

83,382

 

Accrued payroll and benefits

 

168,767

 

 

 

104,563

 

Operating lease liabilities, current

 

13,046

 

 

 

9,820

 

Deferred revenue

 

1,727,484

 

 

 

1,136,502

 

Other current liabilities

 

16,519

 

 

 

24,929

 

Total current liabilities

 

2,109,072

 

 

 

1,406,830

 

Long-term debt

 

741,005

 

 

 

739,517

 

Deferred revenue, noncurrent

 

627,629

 

 

 

392,819

 

Operating lease liabilities, noncurrent

 

29,567

 

 

 

25,379

 

Other liabilities, noncurrent

 

31,833

 

 

 

16,193

 

Total liabilities

 

3,539,106

 

 

 

2,580,738

 

Commitments and contingencies

 

 

 

Stockholders’ Equity

 

 

 

Common stock, Class A and Class B

 

118

 

 

 

115

 

Additional paid-in capital

 

2,612,705

 

 

 

1,991,807

 

Accumulated deficit

 

(1,148,163

)

 

 

(964,918

)

Accumulated other comprehensive loss

 

(1,019

)

 

 

(1,240

)

Total CrowdStrike Holdings, Inc. stockholders’ equity

 

1,463,641

 

 

 

1,025,764

 

Non-controlling interest

 

23,793

 

 

 

11,879

 

Total stockholders’ equity

 

1,487,434

 

 

 

1,037,643

 

Total liabilities and stockholders’ equity

$

5,026,540

 

 

$

3,618,381

 

 

CROWDSTRIKE HOLDINGS, INC.

 

Condensed Consolidated Statements of Cash Flows

(in thousands)

(unaudited)

 

 

Year Ended January 31,

 

 

2023

 

 

 

2022

 

Operating activities

 

 

 

Net loss

$

(182,285

)

 

$

(232,378

)

Adjustments to reconcile net loss to net cash provided by operating activities:

 

 

 

Depreciation and amortization

 

77,245

 

 

 

55,908

 

Amortization of intangible assets

 

16,565

 

 

 

12,902

 

Amortization of deferred contract acquisition costs

 

170,808

 

 

 

113,884

 

Non-cash operating lease costs

 

9,440

 

 

 

9,103

 

Stock-based compensation expense

 

526,504

 

 

 

309,952

 

Deferred income taxes

 

1,306

 

 

 

(13,956

)

Non-cash interest expense

 

2,813

 

 

 

2,469

 

Change in fair value of strategic investments

 

(1,830

)

 

 

(4,823

)

Changes in operating assets and liabilities, net of impact of acquisitions

 

 

 

Accounts receivable, net

 

(258,109

)

 

 

(125,354

)

Deferred contract acquisition costs

 

(298,716

)

 

 

(234,308

)

Prepaid expenses and other assets

 

(46,807

)

 

 

(29,535

)

Accounts payable

 

(15,463

)

 

 

33,248

 

Accrued expenses and other liabilities

 

58,923

 

 

 

38,483

 

Accrued payroll and benefits

 

65,226

 

 

 

32,681

 

Operating lease liabilities

 

(10,364

)

 

 

(9,900

)

Deferred revenue

 

825,751

 

 

 

616,408

 

Net cash provided by operating activities

 

941,007

 

 

 

574,784

 

Investing activities

 

 

 

Purchases of property and equipment

 

(235,019

)

 

 

(112,143

)

Capitalized internal-use software and website development costs

 

(29,095

)

 

 

(20,866

)

Purchases of strategic investments

 

(21,808

)

 

 

(16,309

)

Business acquisitions, net of cash acquired

 

(18,349

)

 

 

(414,518

)

Purchases of intangible assets

 

(2,323

)

 

 

(680

)

Purchases of investments

 

(250,000

)

 

 

—

 

Purchases of deferred compensation investments

 

(64

)

 

 

—

 

Net cash used in investing activities

 

(556,658

)

 

 

(564,516

)

Financing activities

 

 

 

Payments of debt issuance costs related to revolving line of credit

 

—

 

 

 

(219

)

Payment of debt issuance costs related to Senior Notes

 

—

 

 

 

(1,581

)

Repayment of loan payable

 

(1,591

)

 

 

—

 

Proceeds from issuance of common stock upon exercise of stock options

 

8,655

 

 

 

15,899

 

Proceeds from issuance of common stock under the employee stock purchase plan

 

59,419

 

 

 

50,277

 

Capital contributions from non-controlling interest holders

 

10,954

 

 

 

8,155

 

Net cash provided by financing activities

 

77,437

 

 

 

72,531

 

 

 

 

 

Effect of foreign exchange rates on cash, cash equivalents and restricted cash

 

(1,495

)

 

 

(4,774

)

 

 

 

 

Net increase (decrease) in cash, cash equivalents and restricted cash

 

460,291

 

 

 

78,025

 

 

 

 

 

Cash, cash equivalents and restricted cash, beginning of period

 

1,996,633

 

 

 

1,918,608

 

Cash, cash equivalents and restricted cash, end of period

$

2,456,924

 

 

$

1,996,633

 

 

CROWDSTRIKE HOLDINGS, INC.

 

GAAP to Non-GAAP Reconciliations

(in thousands, except percentages)

(unaudited)

 

 

Three Months Ended January 31,

 

Year Ended January 31,

 

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

 

GAAP subscription revenue

$

598,263

 

 

$

405,443

 

 

$

2,111,660

 

 

$

1,359,537

 

GAAP professional services revenue

 

39,104

 

 

 

25,567

 

 

 

129,576

 

 

 

92,057

 

GAAP total revenue

$

637,367

 

 

$

431,010

 

 

$

2,241,236

 

 

$

1,451,594

 

 

 

 

 

 

 

 

 

GAAP subscription gross profit

$

448,837

 

 

$

309,899

 

 

$

1,599,976

 

 

$

1,037,633

 

Stock based compensation expense

 

10,134

 

 

 

6,496

 

 

 

32,091

 

 

 

22,044

 

Amortization of acquired intangible assets

 

3,571

 

 

 

3,208

 

 

 

13,907

 

 

 

10,758

 

Non-GAAP subscription gross profit

$

462,542

 

 

$

319,603

 

 

$

1,645,974

 

 

$

1,070,435

 

 

 

 

 

 

 

 

 

GAAP subscription gross margin

 

75

%

 

 

76

%

 

 

76

%

 

 

76

%

Non-GAAP subscription gross margin

 

77

%

 

 

79

%

 

 

78

%

 

 

79

%

 

 

 

 

 

 

 

 

GAAP professional services gross profit

$

12,926

 

 

$

8,491

 

 

$

40,029

 

 

$

30,740

 

Stock based compensation expense

 

5,096

 

 

 

3,087

 

 

 

15,692

 

 

 

10,050

 

Non-GAAP professional services gross profit

$

18,022

 

 

$

11,578

 

 

$

55,721

 

 

$

40,790

 

 

 

 

 

 

 

 

 

GAAP professional services gross margin

 

33

%

 

 

33

%

 

 

31

%

 

 

33

%

Non-GAAP professional services gross margin

 

46

%

 

 

45

%

 

 

43

%

 

 

44

%

 

 

 

 

 

 

 

 

Total GAAP gross margin

 

72

%

 

 

74

%

 

 

73

%

 

 

74

%

Total Non-GAAP gross margin

 

75

%

 

 

77

%

 

 

76

%

 

 

77

%

 

 

 

 

 

 

 

 

GAAP sales and marketing operating expenses

$

246,439

 

 

$

162,594

 

 

$

904,409

 

 

$

616,546

 

Stock based compensation expense

 

(42,747

)

 

 

(21,456

)

 

 

(151,919

)

 

 

(89,634

)

Amortization of acquired intangible assets

 

(619

)

 

 

(608

)

 

 

(2,557

)

 

 

(2,117

)

Non-GAAP sales and marketing operating expenses

$

203,073

 

 

$

140,530

 

 

$

749,933

 

 

$

524,795

 

 

 

 

 

 

 

 

 

GAAP sales and marketing operating expenses as a percentage of revenue

 

39

%

 

 

38

%

 

 

40

%

 

 

42

%

Non-GAAP sales and marketing operating expenses as a percentage of revenue

 

32

%

 

 

33

%

 

 

33

%

 

 

36

%

 

 

 

 

 

 

 

 

GAAP research and development operating expenses

$

191,845

 

 

$

105,018

 

 

$

608,364

 

 

$

371,283

 

Stock based compensation expense

 

(54,364

)

 

 

(31,085

)

 

 

(174,711

)

 

 

(102,027

)

Non-GAAP research and development operating expenses

$

137,481

 

 

$

73,933

 

 

$

433,653

 

 

$

269,256

 

 

 

 

 

 

 

 

 

GAAP research and development operating expenses as a percentage of revenue

 

30

%

 

 

24

%

 

 

27

%

 

 

26

%

Non-GAAP research and development operating expenses as a percentage of revenue

 

22

%

 

 

17

%

 

 

19

%

 

 

19

%

 

 

 

 

 

 

 

 

GAAP general and administrative operating expenses

$

84,979

 

 

$

74,312

 

 

$

317,344

 

 

$

223,092

 

Stock based compensation expense

 

(40,006

)

 

 

(30,513

)

 

 

(152,091

)

 

 

(86,197

)

Acquisition-related expenses

 

(477

)

 

 

(457

)

 

 

(2,664

)

 

 

(6,369

)

Amortization of acquired intangible assets

 

(36

)

 

 

(14

)

 

 

(101

)

 

 

(27

)

Mark-to-market adjustments on deferred compensation liabilities

 

(1

)

 

 

—

 

 

 

(1

)

 

 

—

 

Legal reserve and settlement charges

 

—

 

 

 

(7,000

)

 

 

—

 

 

 

(9,500

)

Non-GAAP general and administrative operating expenses

$

44,459

 

 

$

36,328

 

 

$

162,487

 

 

$

120,999

 

 

 

 

 

 

 

 

 

GAAP general and administrative operating expenses as a percentage of revenue

 

13

%

 

 

17

%

 

 

14

%

 

 

15

%

Non-GAAP general and administrative operating expenses as a percentage of revenue

 

7

%

 

 

8

%

 

 

7

%

 

 

8

%

 

CROWDSTRIKE HOLDINGS, INC.

 

GAAP to Non-GAAP Reconciliations (continued)

(in thousands, except per share amounts)

(unaudited)

 

 

Three Months Ended January 31,

 

Year Ended January 31,

 

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

 

GAAP loss from operations

$

(61,500

)

 

$

(23,534

)

 

$

(190,112

)

 

$

(142,548

)

Stock based compensation expense

 

152,347

 

 

 

92,637

 

 

 

526,504

 

 

 

309,952

 

Amortization of acquired intangible assets

 

4,226

 

 

 

3,830

 

 

 

16,565

 

 

 

12,902

 

Acquisition-related expenses

 

477

 

 

 

457

 

 

 

2,664

 

 

 

6,369

 

Mark-to-market adjustments on deferred compensation liabilities

 

1

 

 

 

—

 

 

 

1

 

 

 

—

 

Legal reserve and settlement charges

 

—

 

 

 

7,000

 

 

 

—

 

 

 

9,500

 

Non-GAAP income from operations

$

95,551

 

 

$

80,390

 

 

$

355,622

 

 

$

196,175

 

 

 

 

 

 

 

 

 

GAAP operating margin

 

(10

) %

 

 

(5

) %

 

 

(8

) %

 

 

(10

) %

Non-GAAP operating margin

 

15

%

 

 

19

%

 

 

16

%

 

 

14

%

 

 

 

 

 

 

 

 

GAAP net loss attributable to CrowdStrike

$

(47,481

)

 

$

(41,980

)

 

$

(183,245

)

 

$

(234,802

)

Stock based compensation expense

 

152,347

 

 

 

92,637

 

 

 

526,504

 

 

 

309,952

 

Amortization of acquired intangible assets

 

4,226

 

 

 

3,830

 

 

 

16,565

 

 

 

12,902

 

Acquisition-related expenses

 

477

 

 

 

457

 

 

 

2,664

 

 

 

6,369

 

Amortization of debt issuance costs and discount

 

548

 

 

 

548

 

 

 

2,187

 

 

 

2,187

 

Mark-to-market adjustments on deferred compensation liabilities

 

1

 

 

 

—

 

 

 

1

 

 

 

—

 

Legal reserve and settlement charges

 

—

 

 

 

7,000

 

 

 

—

 

 

 

9,500

 

Provision for income taxes(1)

 

—

 

 

 

8,412

 

 

 

4,658

 

 

 

57,236

 

Losses (gains) and other income from strategic investments attributable to CrowdStrike

 

1,451

 

 

 

(505

)

 

 

(960

)

 

 

(2,688

)

Gains on deferred compensation assets

 

(1

)

 

 

—

 

 

 

(1

)

 

 

—

 

Non-GAAP net income attributable to CrowdStrike

$

111,568

 

 

$

70,399

 

 

$

368,373

 

 

$

160,656

 

Weighted-average shares used in computing basic net loss per share attributable to CrowdStrike common stockholders (GAAP)

 

235,027

 

 

 

229,662

 

 

 

233,139

 

 

 

227,142

 

 

 

 

 

 

 

 

 

GAAP basic net loss per share attributable to CrowdStrike common stockholders

$

(0.20

)

 

$

(0.18

)

 

$

(0.79

)

 

$

(1.03

)

 

 

 

 

 

 

 

 

GAAP diluted net loss per share attributable to CrowdStrike common stockholders

$

(0.20

)

 

$

(0.18

)

 

$

(0.79

)

 

$

(1.03

)

Stock-based compensation

 

0.64

 

 

 

0.39

 

 

 

2.20

 

 

 

1.30

 

Amortization of acquired intangible assets

 

0.02

 

 

 

0.02

 

 

 

0.07

 

 

 

0.05

 

Acquisition-related expenses

 

—

 

 

 

—

 

 

 

0.01

 

 

 

0.03

 

Amortization of debt issuance costs and discount

 

—

 

 

 

—

 

 

 

0.01

 

 

 

0.01

 

Mark-to-market adjustments on deferred compensation liabilities

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Legal reserve and settlement charges

 

—

 

 

 

0.03

 

 

 

—

 

 

 

0.04

 

Provision for income taxes (1)

 

—

 

 

 

0.04

 

 

 

0.02

 

 

 

0.24

 

Adjustment to fully diluted earnings per share (2)

 

—

 

 

 

—

 

 

 

0.02

 

 

 

0.04

 

Losses (gains) and other income from strategic investments attributable to CrowdStrike

 

0.01

 

 

 

—

 

 

 

—

 

 

 

(0.01

)

Gains on deferred compensation assets

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Non-GAAP diluted net income per share attributable to CrowdStrike common stockholders

$

0.47

 

 

$

0.30

 

 

$

1.54

 

 

$

0.67

 

Weighted-average shares used in diluted net income (loss) per share attributable to CrowdStrike common stockholders calculation:

 

 

 

 

 

 

 

GAAP

 

235,027

 

 

 

229,662

 

 

 

233,139

 

 

 

227,142

 

Non-GAAP

 

239,501

 

 

 

238,486

 

 

 

239,098

 

 

 

238,123

 

____________________________

(1)

CrowdStrike uses its GAAP provision for income taxes for the purpose of determining its non-GAAP income tax expense. The tax costs for intellectual property integration relating to acquisitions are included in the GAAP provision for income taxes. The income tax benefits related to stock-based compensation, amortization of acquired intangibles assets, including purchased patents, acquisition related expenses, amortization of debt issuance costs and discount, losses (gains) and other income from strategic investments attributable to CrowdStrike, mark-to-market adjustments on deferred compensation liabilities, gains on deferred compensation assets, and legal reserve and settlement charges or benefits included in the GAAP provision for income taxes were not material for all periods presented.

(2)

For periods in which CrowdStrike had diluted non-GAAP net income per share attributable to CrowdStrike common stockholders, the sum of the impact of individual reconciling items may not total to diluted Non-GAAP net income per share attributable to CrowdStrike common stockholders because the basic share counts used to calculate GAAP net loss per share attributable to CrowdStrike common stockholders differ from the diluted share counts used to calculate non-GAAP net income per share attributable to CrowdStrike common stockholders and because of rounding differences. The GAAP net loss per share attributable to CrowdStrike common stockholders calculation uses a lower share count as it excludes dilutive shares which are included in calculating the non-GAAP net income per share attributable to CrowdStrike common stockholders.

 

CROWDSTRIKE HOLDINGS, INC.

 

GAAP to Non-GAAP Reconciliations (continued)

(in thousands, except percentages)

(unaudited)

 

 

Three Months Ended January 31,

 

Year Ended January 31,

 

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

 

GAAP net cash provided by operating activities

$

273,293

 

 

$

159,718

 

 

$

941,007

 

 

$

574,784

 

Purchases of property and equipment

 

(55,410

)

 

 

(26,723

)

 

 

(235,019

)

 

 

(112,143

)

Capitalized internal-use software and website development costs

 

(8,356

)

 

 

(5,665

)

 

 

(29,095

)

 

 

(20,866

)

Purchases of deferred compensation investments

 

(64

)

 

 

—

 

 

 

(64

)

 

 

—

 

Free cash flow

$

209,463

 

 

$

127,330

 

 

$

676,829

 

 

$

441,775

 

 

 

 

 

 

 

 

 

GAAP net cash used in investing activities

$

(319,140

)

 

$

(93,660

)

 

$

(556,658

)

 

$

(564,516

)

GAAP net cash provided by financing activities

$

29,134

 

 

$

26,178

 

 

$

77,437

 

 

$

72,531

 

 

 

 

 

 

 

 

 

GAAP net cash provided by operating activities as a percentage of revenue

 

43

%

 

 

37

%

 

 

42

%

 

 

40

%

Purchases of property and equipment as a percentage of revenue

 

(9

) %

 

 

(6

) %

 

 

(10

) %

 

 

(8

) %

Capitalized internal-use software and website development costs as a percentage of revenue

 

(1

) %

 

 

(1

) %

 

 

(1

) %

 

 

(1

) %

Purchases of deferred compensation investments as a percentage of revenue

 

—

%

 

 

—

%

 

 

—

%

 

 

—

%

Free cash flow margin

 

33

%

 

 

30

%

 

 

30

%

 

 

30

%

Explanation of Non-GAAP Financial Measures

In addition to determining results in accordance with U.S. generally accepted accounting principles (“GAAP”), CrowdStrike believes the following non-GAAP measures are useful in evaluating its operating performance. CrowdStrike uses the following non-GAAP financial information to evaluate its ongoing operations and for internal planning and forecasting purposes. CrowdStrike believes that non-GAAP financial information, when taken collectively, may be helpful to investors because it provides consistency and comparability with past financial performance and facilitates period-to-period comparisons of operations, as these measures eliminate the effects of certain variables unrelated to CrowdStrike’s overall operating performance. However, non-GAAP financial information is presented for supplemental informational purposes only, has limitations as an analytical tool, and should not be considered in isolation or as a substitute for financial information presented in accordance with GAAP.

Other companies, including companies in CrowdStrike’s industry, may calculate similarly titled non-GAAP measures differently or may use other measures to evaluate their performance, all of which could reduce the usefulness of CrowdStrike’s non-GAAP financial measures as tools for comparison.

Investors are encouraged to review the related GAAP financial measures and the reconciliation of these non-GAAP financial measures to their most directly comparable GAAP financial measures and not rely on any single financial measure to evaluate CrowdStrike’s business.

Non-GAAP Subscription Gross Profit and Non-GAAP Subscription Gross Margin

CrowdStrike defines non-GAAP subscription gross profit and non-GAAP subscription gross margin as GAAP subscription gross profit and GAAP subscription gross margin, respectively, excluding stock-based compensation expense, and amortization of acquired intangible assets.

Non-GAAP Income from Operations

CrowdStrike defines non-GAAP income from operations as GAAP loss from operations excluding stock-based compensation expense, amortization of acquired intangible assets (including purchased patents), acquisition-related expenses, mark-to-market adjustments on deferred compensation liabilities, and legal reserve and settlement charges.

Non-GAAP Net Income Attributable to CrowdStrike

The company defines non-GAAP net income attributable to CrowdStrike as GAAP net loss attributable to CrowdStrike excluding stock-based compensation expense, amortization of acquired intangible assets (including purchased patents), acquisition-related expenses, amortization of debt issuance costs and discount, mark-to-market adjustments on deferred compensation liabilities, legal reserve and settlement charges, losses (gains) and other income from strategic investments, gains on deferred compensation assets, and the tax costs for intellectual property integration relating to acquisitions.

Non-GAAP Net Income per Share Attributable to CrowdStrike Common Stockholders, Diluted

CrowdStrike defines non-GAAP net income per share attributable to CrowdStrike common stockholders, as non-GAAP net income attributable to CrowdStrike divided by the weighted-average shares outstanding, which includes the dilutive effect of potentially dilutive common stock equivalents outstanding during the period.

Free Cash Flow

Free cash flow is a non-GAAP financial measure that CrowdStrike defines as net cash provided by operating activities less purchases of property and equipment, capitalized internal-use software and website development costs, and purchases of deferred compensation investments. CrowdStrike monitors free cash flow as one measure of its overall business performance, which enables CrowdStrike to analyze its future performance without the effects of non-cash items and allow CrowdStrike to better understand the cash needs of its business. While CrowdStrike believes that free cash flow is useful in evaluating its business, free cash flow is a non-GAAP financial measure that has limitations as an analytical tool, and free cash flow should not be considered as an alternative to, or substitute for, net cash provided by operating activities in accordance with GAAP. The utility of free cash flow as a measure of CrowdStrike’s liquidity is further limited as it does not represent the total increase or decrease in CrowdStrike’s cash balance for any given period. In addition, other companies, including companies in our industry, may calculate free cash flow differently or not at all, which reduces the usefulness of free cash flow as a tool for comparison.

Explanation of Operational Measures

Annual Recurring Revenue

ARR is calculated as the annualized value of CrowdStrike’s customer subscription contracts as of the measurement date, assuming any contract that expires during the next 12 months is renewed on its existing terms. To the extent that CrowdStrike is negotiating a renewal with a customer after the expiration of the subscription, CrowdStrike continues to include that revenue in ARR if CrowdStrike is actively in discussion with such an organization for a new subscription or renewal, or until such organization notifies CrowdStrike that it is not renewing its subscription.

Magic Number

Magic Number is calculated by performing the following calculation for the most recent four quarters and taking the average: annualizing the difference between a quarter’s Subscription Revenue and the prior quarter’s Subscription Revenue, and then dividing the resulting number by the previous quarter’s Non-GAAP Sales & Marketing Expense. Magic Number = Average of previous four quarters: ((Quarter Subscription Revenue – Prior Quarter Subscription Revenue) x 4) / Prior Quarter Non-GAAP Sales & Marketing Expense.

Free Cash Flow Rule of 40

Free cash flow rule of 40 is calculated by taking the current quarter total revenue year-over-year growth rate percentage and summing it with the current quarter free cash flow margin percentage.

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