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    CRWD
    Earnings call· Jan 2025(Q4 FY25)

    CrowdStrike Holdings, Inc. CRWD

    Mar 4, 2025 Source

    Executive summary

    CrowdStrike Q4 FY25 — Strong Performance Driven by Falcon Flex and AI-Native Platform Adoption

    CrowdStrike delivered a strong Q4 FY25, exceeding expectations across key metrics, driven by the success of its AI-native Falcon platform and the Falcon Flex subscription model. The company is seeing accelerating adoption of its emerging products and strategic consolidation by customers, positioning it for reacceleration in net new ARR and margin expansion in the second half of FY26. Management expressed confidence in future growth, leveraging its market leadership in cloud security, identity protection, and next-gen SIEM, and its strong ecosystem partnerships.

    Highlights

    5

    • Q4 net new ARR of $224 million, exceeding expectations.

    • FY25 ending ARR reached $4.24 billion, with Cloud Security, Identity Protection, and Next-Gen SIEM growing nearly 50% YoY to over $1.3 billion.

    • Gross dollar retention remained high at 97%, demonstrating strong customer commitment.

    • FY25 free cash flow exceeded $1 billion for the first time, reaching $1.07 billion or 27% of revenue.

    • Total contract value (TCV) accelerated to $6 billion in FY25, growing 40% YoY, driven by Falcon Flex deals.

    Concerns

    3

    • Dollar-based net retention rate was 112%, reflecting the impact of customer commitment packages, which can be a noisy metric.

    • Q1 FY26 cash impacts expected to be approximately $73 million for outage-related costs and $43 million due to flexible payment terms from customer commitment packages.

    • Non-GAAP operating margin guidance for FY26 is approximately 21%, reflecting upfront investments and amortization of FY25 sales and marketing costs related to CCPs.

    Guidance & targets

    15
    CategoryTargetConfidence
    Total Revenue
    $1,100.6 million to $1,106.4 million
    high materiality
    High
    Non-GAAP Income from Operations
    $173.1 million to $180.0 million
    medium materiality
    High
    Non-GAAP Net Income Attributable to CrowdStrike
    $162.1 million to $167.5 million
    medium materiality
    High
    Non-GAAP Diluted EPS
    $0.64 to $0.66
    high materiality
    High
    Total Revenue
    $4,743.5 million to $4,805.5 million
    high materiality
    High
    Non-GAAP Income from Operations
    $944.2 million and $985.1 million
    medium materiality
    High
    Non-GAAP Net Income Attributable to CrowdStrike
    $851.2 million and $883.0 million
    medium materiality
    High
    Non-GAAP Diluted EPS
    $3.33 to $3.45
    high materiality
    High
    Non-GAAP Operating Margin
    approximately 21%
    high materiality
    High
    GAAP Profitability
    return to GAAP profitability
    medium materiality
    High
    Non-GAAP Operating Margin
    23%
    high materiality
    High
    Free Cash Flow Margin
    between 34% and 38%
    high materiality
    High
    Q4 Free Cash Flow Margin
    approximately 27%
    medium materiality
    High
    Annual Free Cash Flow Margin
    30% or more
    high materiality
    High
    Ending ARR
    $10 billion
    high materiality
    High

    Segment performance

    6
    SegmentRevenueYoYQoQMargin
    Cloud Security
    Strong Q4 performance, central to AI revolution, with focus on runtime protection and integrated platform consolidation. Secured an 8-figure Falcon Flex transaction displacing a network security vendor's multiplatform cloud offering.
    Ending ARR: >$600 million
    		—more than 45%——
    Identity Protection
    Benefiting from rapidly growing identity attack surface. Falcon Shield (Adaptive Shield) secures identities across on-premises, SaaS, and hyperscaler infrastructure. A 7-figure deal with a state university hospital system consolidated on Falcon, displacing a competitor's product due to false positives.
    Ending ARR: >$370 million
    		————
    Next-Gen SIEM
    Rapidly breaking out as a foundational cornerstone, offering unmatched speed, scalability, and cost efficiency. Coupling with native first-party data and Charlotte AI provides a unique advantage. A 7-figure win with a major U.S. airline replaced their legacy QRadar SIEM.
    Ending ARR: >$330 million
    		—more than 115%——
    Exposure Management
    Quickly becoming a market disruptor, offering native vulnerability management and integrated attack surface management. Customers are replacing legacy vulnerability management products at scale, with wins including a digital radio station, multinational shipping line, and healthcare provider.
    Line of sight to ARR: $300 million
    		————
    GSI Business
    Attracting interest from the GSI community, especially for Next-Gen SIEM. Leading GSIs like Accenture, Deloitte, EY are investing in Falcon Services practice.
    FY25 deal value: neared $1 billion
    		—north of 40%——
    MSSP Business
    Expanding at a hyper-growth pace, addressing SMB needs for fully managed cybersecurity programs. Has grown and scaled significantly over the past 2 years.
    FY25 new business contribution: nearly 15%
    		————

    Operational metrics

    38
    Net new ARR
    $224 million
    Q4 FY25

    Well ahead of expectations.

    Ending ARR
    $4.24 billion23% over last year
    FY25

    Total ending ARR for the fiscal year.

    Gross dollar retention
    97%
    Q4 FY25

    Customers remain firmly committed to the Falcon platform.

    Free cash flow margin
    27%
    FY25

    Free cash flow as a percentage of revenue.

    Total contract value (TCV)
    $6 billion40% year-on-year
    FY25

    Record and accelerating TCV, showcasing scale and commitment to consolidation on Falcon platform.

    AWS Marketplace sales
    $1 billion
    Calendar Year

    First cybersecurity ISV to cross this deal value in a single calendar year on AWS Marketplace.

    Falcon Flex total account deal value
    $1 billion
    Q4 FY25

    Added in Q4 alone.

    Falcon Flex total account deal value
    $2.5 billion80% quarter-over-quarter and more than 10x year-over-year
    Q4 FY25

    Total deal value for accounts that adopted Falcon Flex.

    Falcon Flex deployment rate
    60%
    Q4 FY25

    Percentage of Falcon Flex deal value already deployed by customers.

    Customer commitment packages (CCP) ARR value
    $56 million
    Q4 FY25

    Estimated ARR value of CCPs provided in Q4.

    Customer commitment packages (CCP) ARR value
    $80 million
    FY25

    Estimated total ARR value of CCPs for the fiscal year.

    Subscription customers with 6+ modules
    48%
    Q4 FY25

    Percentage of subscription customers with 6 or more modules.

    Subscription customers with 7+ modules
    32%
    Q4 FY25

    Percentage of subscription customers with 7 or more modules.

    Subscription customers with 8+ modules
    21%
    Q4 FY25

    Percentage of subscription customers with 8 or more modules.

    Subscription customers with 5+ modules
    67%all-time high
    Q4 FY25

    This metric will be discontinued going forward due to broad scale adoption.

    Average modules adopted by Falcon Flex customers
    9
    FY25

    Average number of modules adopted by Falcon Flex customers.

    CrowdStrike Financial Services (CFS) deals
    $140 million
    FY25

    Total deal value closed through CFS program since its launch in Q3 FY25.

    Dollar-based net retention rate
    112%
    Q4 FY25

    Reflecting the impact of customer commitment packages.

    Non-GAAP Operating Income
    $837.7 million27% year-over-year
    FY25

    Record operating income for the full fiscal year.

    Non-GAAP Operating Margin
    21%
    FY25

    Operating income as a percentage of revenue for the full fiscal year.

    Non-GAAP Net Income Attributable to CrowdStrike
    $987.6 million31% year-over-year
    FY25

    Record net income for the full fiscal year.

    Non-GAAP Diluted EPS
    $3.9327% year-over-year
    FY25

    Record diluted EPS for the full fiscal year.

    Professional services revenue
    $50.2 million
    Q4 FY25

    Professional services revenue for the quarter.

    Non-GAAP Operating Expenses
    $607.8 millionvs $448.1 million in prior year
    Q4 FY25

    Total non-GAAP operating expenses for the fourth quarter.

    Non-GAAP Operating Income
    $217.3 million
    Q4 FY25

    Non-GAAP operating income for the fourth quarter.

    Non-GAAP Operating Margin
    21%
    Q4 FY25

    Operating margin for the fourth quarter, well ahead of guidance.

    GAAP Net Loss Attributable to CrowdStrike
    $92.3 million
    Q4 FY25

    GAAP net loss for the fourth quarter.

    Non-GAAP Net Income Attributable to CrowdStrike
    $261.0 million10% over Q4 of last year
    Q4 FY25

    Non-GAAP net income for the fourth quarter.

    Non-GAAP Diluted EPS
    $1.03
    Q4 FY25

    Non-GAAP diluted EPS for the fourth quarter, well ahead of guidance.

    Cash and investments balance
    $4.32 billion
    Q4 FY25

    Cash and cash equivalents at the end of the quarter.

    Q1 FY26 Cash Impact - Outage-related costs
    $73 million
    Q1 FY26

    Expected cash impact for outage-related costs, including incremental sales compensation.

    Q1 FY26 Cash Impact - Flexible payment terms
    $43 million
    Q1 FY26

    Expected cash impact due to flexible payment terms provided under customer commitment packages for deals closed in H2 FY25.

    Google Marketplace deal value
    $150 million
    First year of partnership

    Deal value achieved in the first year of partnership with Google Marketplace.

    Total organizations trusted
    74,000more than 30% year-over-year
    Q4 FY25

    Total number of organizations trusting CrowdStrike, including end customers and MSSP clients.

    Deals greater than $10 million
    20new record
    Q4 FY25

    Number of deals exceeding $10 million in Q4.

    Deals greater than $1 million
    350new record
    Q4 FY25

    Number of deals exceeding $1 million in Q4.

    Deals greater than $100,000
    2,300new record
    Q4 FY25

    Number of deals exceeding $100,000 in Q4.

    Employee AI capabilities time savings
    1 full workday
    monthly

    Average reported time savings per employee from strong adoption of AI capabilities.

    Industry KPIs

    8
    MetricValueDetails
    EPS$1.03USD
    Gross margin78%%
    Free cash flow$1.07 billionUSD
    Operating margin21%%
    Operating expenses$607.8 millionUSD
    Revenue growth rate$1.06 billionUSD
    Customer account count74,000organizations
    Cash investments balance$4.32 billionUSD

    Orderbook & backlog

    4
    Net new ARR$224 millionQ4 FY25
    Ending ARR$4.24 billionFY25

    23% YoY

    Cloud Security, Identity Protection and Next-Gen SIEM ending ARR$1.3 billionFY25

    nearly 50% YoY

    Total contract value (TCV)$6 billionFY25

    40% YoY

    Product announcements

    3
    ProductTypeDetails
    Charlotte AImilestone
    Falcon Shield (formerly Adaptive Shield)launch
    Exposure Managementexpansion

    Deals & partnerships

    4
    AWS MarketplaceCloud marketplace sales channel>$1 billionsingle calendar year

    CrowdStrike is the first cybersecurity ISV to achieve more than $1 billion in sales on the AWS Marketplace in a single calendar year. This partnership is a key growth lever, with customers using marketplace dollars to procure CrowdStrike.

    Google MarketplaceCloud marketplace sales channel>$150 millionfirst year of partnership

    In its first year of partnership with Google Marketplace, CrowdStrike achieved over $150 million in deal value. This aligns with the strategy of leveraging hyperscaler marketplaces for larger deals and faster cycles.

    Adaptive ShieldAcquisition to enhance identity protection capabilities

    The acquisition of Adaptive Shield was completed, and its technology is now integrated into the Falcon platform as Falcon Shield, enhancing identity protection across on-premises, SaaS, and hyperscaler infrastructure.

    Various GSIs (Accenture, Deloitte, EY, HCL, Wipro, NTT, TCS, Infosys, Cognizant)Global System Integrator (GSI) collaborations

    Leading GSIs are investing in their Falcon Services practice, particularly attracted by Next-Gen SIEM and the Falcon Flex subscription model. This ecosystem is a key growth lever for CrowdStrike.

    Risks & headwinds

    4
    Impact of Customer Commitment Packages (CCPs) on DBNRQ4 FY25

    Dollar-based net retention rate was 112%, reflecting the impact of customer commitment packages.

    Mitigation: The CCP program has concluded, and the company expects net new ARR reacceleration as products are deployed, one-time discounts drop off, and contracts are upsized and renewed. Management views DBNR as a noisy metric and focuses on larger, longer deals.

    Cash impacts from outage-related costs and flexible payment termsQ1 FY26

    Approximately $73 million for outage-related costs (including incremental sales compensation) and $43 million due to flexible payment terms provided under CCPs for deals closed in H2 FY25.

    Mitigation: These are expected one-time impacts. The company anticipates operating margin and free cash flow margin expansion in the second half of FY26, with Q4 FY26 FCF margin at ~27% and FY27 annual FCF margin at 30%+.

    Upfront investments impacting FY26 operating marginFY26

    FY26 non-GAAP operating margin guidance of approximately 21%.

    Mitigation: The guidance reflects amortization of FY25 sales and marketing costs from CCPs and strategic upfront investments in marketing, innovation (Cloud, Identity, SIEM, AI), internal AI tools for future savings, and platform resiliency. These investments are expected to yield clear ROI by H2 FY26 and drive FY27 operating margin to 23%.

    Geopolitical AI arms race and increasing threat landscapeOngoing

    China Nexus adversaries escalating state-sponsored cyber operations by 150%, with targeted attacks in financial services, media, manufacturing, and industrial sectors soaring up to 300%.

    Mitigation: CrowdStrike's threat intelligence expertise and AI-native platform are positioned to counter these threats. Q4 was the largest threat intelligence quarter in company history, with governments and enterprises increasingly turning to CrowdStrike to stop breaches.

    What to watch in Q1 FY26

    5

    Net new ARR reacceleration

    H2 FY26
    CurrentQ4 FY25 net new ARR of $224 million
    TargetReacceleration in H2 FY26

    Why it matters

    This is a key indicator of underlying demand and the effectiveness of the Falcon Flex model and post-CCP customer engagement.

    We expect net new ARR reacceleration as well as operating margin and free cash flow margin expansion in the second half of FY '26.

    Q&A highlights

    7

    How does Falcon Flex drive value for customers, and can you provide examples of existing customers growing spending through it?

    Falcon Flex opens the entire product catalog, allowing customers to add modules without new procurement cycles, with better discounts for larger commitments. Customers are ahead of schedule in consuming their Flex pools. An example cited was a large transportation company consolidating three vendors, increasing ARR by 67% through Flex.

    “So when we think about Falcon Flex, again, it opens the entire product catalog up to our customers, and then they can add new modules without necessarily going through a procurement cycle. They commit -- the more they commit, the better the discounts and they can basically use that very seamlessly in their environment.”

    asked by Saket Kalia · answered by George Kurtz

    2 min read6 chapters

    Detailed Narrative

    01

    AI-Native Platform and Geopolitical Landscape

    CrowdStrike positions itself at the epicenter of a rapidly evolving demand environment, driven by new technology and threat landscapes. The company emphasizes its AI-native single platform, Falcon, as critical for securing environments in the AI age. Management highlighted the shift from AI experimentation to AI outcomes, the accelerating geopolitical AI arms race, and the necessity of robust data and innovation to win the AI war. The Falcon platform is presented as an AI-native SOC, leveraging proprietary data and Charlotte AI to accelerate threat response.

    02

    Falcon Flex Driving Customer Consolidation and Adoption

    The Falcon Flex subscription model is a key accelerant for module adoption and customer consolidation. It allows customers to adopt modules across their subscription term without new procurement cycles, leading to larger and longer deals. Falcon Flex deal value reached $2.5 billion, growing 80% QoQ and over 10x YoY, with over 60% already deployed. The Customer Commitment Package (CCP) program, now concluded, also leveraged Falcon Flex to drive significant platform adoption and strengthen customer relationships.

    03

    Emerging Products and Market Disruption

    CrowdStrike's emerging products—Cloud Security, Identity Protection, and Next-Gen SIEM—collectively represent over $1.3 billion in ending ARR, growing nearly 50% YoY. Cloud Security surpassed $600 million in ending ARR, growing over 45%, driven by demand for runtime protection and integrated platforms. Identity Protection grew to over $370 million, benefiting from the expanding identity attack surface and the integration of Adaptive Shield (now Falcon Shield). Next-Gen SIEM grew over 115% YoY to over $330 million, disrupting legacy SIEMs with its speed, scalability, and cost efficiency, coupled with Charlotte AI.

    04

    Exposure Management as a New Growth Driver

    For the first time, CrowdStrike highlighted its Exposure Management business, which combines native vulnerability management with integrated attack surface management. This offering is displacing legacy vulnerability management products and has line of sight to $300 million in ARR. The ability to scan over the network, in addition to agent-based capabilities, has unlocked significant competitive replacement opportunities, making it an easy module attach to Falcon Flex deals.

    05

    Ecosystem and Marketplace Momentum

    Partnerships are a significant growth lever, with partners sourcing 60% of new business in FY25. The GSI community is increasingly interested in Next-Gen SIEM, with the GSI business nearing $1 billion in FY25, growing over 40% YoY. MSSPs contributed nearly 15% of new business. CrowdStrike achieved over $1 billion in sales on AWS Marketplace in a single calendar year and over $150 million on Google Marketplace in its first year, indicating a strong shift towards hyperscaler marketplaces for larger deals and faster cycles.

    06

    Financial Services and Internal AI Efficiencies

    CrowdStrike Financial Services (CFS), launched in Q3 FY25, closed over $140 million in deals in FY25, enabling larger and longer-term customer engagements. Internally, AI investments are driving significant efficiencies, with employees reporting time savings equivalent to over 24,000 work weeks annually. AI is also leveraged to automate sales processes and streamline workflows, contributing to business efficiencies while supporting growth initiatives.

    AI-generated summary of the company’s earnings call. Not investment advice.