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    CRWD
    Earnings call· Jul 2025(Q2 FY26)

    CrowdStrike Holdings, Inc. CRWD

    Aug 27, 2025 Source

    Executive summary

    CrowdStrike Q2 FY26 — Net New ARR Reacceleration and AI-Driven Demand

    CrowdStrike delivered a robust Q2 FY26, achieving net new ARR reacceleration a quarter ahead of schedule, driven by strong AI-necessitated demand for its Falcon platform and stellar execution. The company is seeing significant customer consolidation onto its platform, fueled by the Flex licensing model and the strategic acquisition of Onum to enhance Next-Gen SIEM capabilities. Management expressed confidence in sustained growth, targeting over 40% YoY net new ARR growth in the back half of FY26.

    Highlights

    5

    • Record Q2 net new ARR of $221 million, double-digit millions ahead of expectations.

    • Ending ARR reached $4.66 billion, growing over 20% year-over-year.

    • Record Q2 free cash flow of $284 million, representing 24% of revenue.

    • Record operating income of $255 million, achieving a 22% operating margin.

    • Total revenue grew 21% year-over-year to $1.17 billion, exceeding the high end of guidance.

    Concerns

    3

    • Outage-related and strategic plan costs impacted Q2 free cash flow by approximately $29 million.

    • Expected Q3 cash payments of approximately $51 million in connection with outage-related costs.

    • Partner rebate programs are expected to impact subscription revenue by $10 million to $15 million per quarter through Q4 FY26.

    Guidance & targets

    14
    CategoryTargetConfidence
    Net new ARR growth
    at least 40% versus last year
    high materiality
    High
    Ending ARR growth
    more than 22%
    high materiality
    High
    Total revenue
    $1,208.0 million to $1,218.0 million
    high materiality
    High
    Non-GAAP income from operations
    $256.0 million to $262.0 million
    medium materiality
    High
    Non-GAAP net income attributable to CrowdStrike
    $238.1 million to $242.8 million
    high materiality
    High
    Diluted non-GAAP net income per share attributable to CrowdStrike
    $0.93 to $0.95
    high materiality
    High
    Total revenue
    $4,749.5 million to $4,805.5 million
    high materiality
    High
    Non-GAAP income from operations
    $1,000.1 million and $1,040.1 million
    medium materiality
    High
    Non-GAAP net income attributable to CrowdStrike
    $922.4 million and $954.0 million
    high materiality
    High
    Non-GAAP net income per share attributable to CrowdStrike
    $3.60 to $3.72
    high materiality
    High
    Free cash flow margin
    27%
    high materiality
    High
    Free cash flow margin
    more than 30%
    high materiality
    High
    Non-GAAP tax rate
    21%
    low materiality
    High
    Net new ARR growth
    high single-digit sequential growth
    high materiality
    Medium

    Segment performance

    7
    SegmentRevenueYoYQoQMargin
    Cloud, Next-Gen Identity, and Next-Gen SIEM platform solutions (combined)
    This combined group of platform solutions is a significant growth driver for the company.
    Ending ARR: $1.56 billion
    		—more than 40%——
    Next-Gen SIEM
    Had a stellar Q2, becoming synonymous with AI SOC transformation and displacing legacy SIEMs.
    Ending ARR: $430 million
    		—more than 95%——
    Next-Gen Identity Protection (including Falcon Shield)
    Driven by customer demand for identity security solutions for human and nonhuman identities, including AI agents.
    Ending ARR: $435 million
    		—more than 21%——
    Total Cloud
    Rapid adoption of AI has placed a spotlight on securing cloud infrastructure at runtime, driving impressive net new ARR.
    Ending ARR: $700 million
    		—more than 35%——
    Exposure Management
    Surpassed $300 million in ending ARR and was named a leader in the 2025 IDC Worldwide Exposure Management MarketScape.
    Ending ARR: $300 million
    		————
    U.S. (geographic)
    Contributed the majority of the company's revenue.
    		67% of total revenueaccelerating compared to Q1——
    International (geographic)
    EMEA year-over-year growth accelerating compared to Q1.
    		33% of total revenue———

    Operational metrics

    23
    Non-GAAP gross margin
    78%
    Q2 FY26
    Non-GAAP subscription gross margin
    80%
    Q2 FY26

    Remained best-in-class.

    Non-GAAP operating expenses
    $652.5 million
    Q2 FY26
    Non-GAAP operating income
    $255.0 million
    Q2 FY26

    Record operating income for the quarter.

    Operating margin
    22%
    Q2 FY26

    Exceeded guidance due to strong top line performance and efficiency gains.

    Non-GAAP net income attributable to CrowdStrike
    $237.4 million
    Q2 FY26

    Record non-GAAP net income.

    Non-GAAP diluted EPS
    $0.93
    Q2 FY26

    Exceeded guidance.

    Cash and investments balance
    $4.97 billion
    Q2 FY26

    Record cash and cash equivalents.

    Free cash flow margin
    24%
    Q2 FY26
    Impact on FCF from outage and strategic plan costs
    $29 million
    Q2 FY26

    Impacted Q2 free cash flow.

    Cash payments for outage-related costs
    $51 million
    Q3 FY26

    Expected Q3 cash payments.

    Weighted average shares (diluted)
    257 million
    Q3 FY26

    Used for Q3 diluted non-GAAP EPS guidance.

    Weighted average shares (diluted)
    256 million
    FY26

    Used for full FY26 diluted non-GAAP EPS guidance.

    Falcon Flex customers
    1,000+
    Q2 FY26

    Surpassed the milestone of 1,000 Falcon Flex customers, adding over 220 new Flex customers in Q2.

    Average Flex customer ending ARR
    $1 million+
    Q2 FY26

    Average Flex customer represents more than $1 million of ending ARR.

    Flex contract utilization
    75%+
    Q2 FY26

    Utilization of Flex contracts across the Flex customer base.

    Re-Flexed accounts
    nearly 10%more than doubled
    Q2 FY26

    More than doubled the number of re-Flexed accounts to nearly 10% of all Flex customers.

    Re-Flex uplift in ending ARR
    nearly 50%
    Q2 FY26

    Re-Flexes on average are yielding a nearly 50% uplift in Flex customer ending ARR.

    Deals with total deal value over $10 million
    doubledYoY
    Q2 FY26
    Customers with ending ARR exceeding $1 million
    800
    Q2 FY26

    Reached a new milestone.

    Partner sourced new business
    60%+
    Q2 FY26

    Partners sourced over 60% of Q2 new business.

    Charlotte AI growth
    85%+over Q1
    Q2 FY26

    Charlotte had a record quarter, growing over 85% over Q1.

    Partner rebate program impact
    $10 million to $15 million
    per quarter through Q4 FY26

    Impact on ARR to subscription revenue assumptions due to CCP and related partner programs.

    Industry KPIs

    9
    MetricValueDetails
    Revenue growth$1.17 billionUSD
    Arr net new arr$4.66 billionUSD
    Bookings billings$221 millionUSD
    Pricing model mixnearly 50%%
    Customer account count1,000+customers
    Large deal new logo metricsdoubled
    Multi product platform attach48%%
    Operating FCF margin rule of 4022%%
    Ai product adoption monetization85%+%

    Orderbook & backlog

    10
    Ending ARR$4.66 billionQ2 FY26

    up 20% YoY

    Net new ARR$221 millionQ2 FY26
    Cloud, Next-Gen Identity, and Next-Gen SIEM platform solutions ending ARR$1.56 billion+Q2 FY26

    up 40%+ YoY

    Next-Gen SIEM ending ARR$430 million+Q2 FY26

    up 95%+ YoY

    Next-Gen Identity Protection ending ARR$435 million+Q2 FY26

    up 21%+ YoY

    Total cloud ending ARR$700 million+Q2 FY26

    up 35%+ YoY

    Exposure Management ending ARR$300 million+Q2 FY26
    Q3 pipelinerecordQ2 FY26
    Ending ARR milestoneexceed $5 billionFY26

    Clear line of sight to achieve this goal by fiscal year-end.

    Ending ARR target$10 billionFY31

    Executing on the path to achieve this target.

    Product announcements

    5
    ProductTypeDetails
    Onum acquisitionlaunch
    Next-Gen Identity Protectionlaunch
    PAM offeringlaunch
    Falcon Goexpansion
    Falcon Cloud Security integration with NVIDIAupdate

    Deals & partnerships

    4
    OnumAcquisition of a leading data pipeline platform to enhance Next-Gen SIEM.

    CrowdStrike announced its intent to acquire Onum, a data pipeline platform built on proprietary stateless in-memory architecture, to supercharge Next-Gen SIEM capabilities.

    Red CanaryMigration of Red Canary's EDR installed base to CrowdStrike Falcon.multimillion-dollar

    Red Canary, an MDR focused on mid-market to small enterprise, migrated its legacy point product EDR installed base of over 100,000 endpoints across hundreds of customers onto Falcon through a multimillion-dollar Q2 transaction.

    Amazon Business PrimeSelection of CrowdStrike Falcon Go for Business Prime members.

    Amazon Business Prime selected CrowdStrike Falcon Go for millions of businesses, making it part of their subscription, which opens a significant sub-100 user total addressable market.

    NVIDIAIntegration of Falcon Cloud Security with NVIDIA's AI microservices.

    Recently announced integration of Falcon Cloud Security with NVIDIA universal LLM NIM microservices and NeMo Safety, providing full AI life cycle protection for over 100,000 LLMs.

    Risks & headwinds

    4
    Shadow AI emergence

    unquantified

    Mitigation: CrowdStrike's platform helps control what data enters AI systems and what AI systems can do in an enterprise, securing AI agents.

    Adversaries using AI (democratizing destruction)

    Famous Chollima group used GenAI to infiltrate 320+ enterprises.

    Mitigation: CrowdStrike's role is staying ahead of AI-armed threat actors, securing AI at every layer from the model to workloads, hosts, identities, and end-user devices.

    Outage-related and strategic plan costs impacting free cash flowQ2 FY26, Q3 FY26

    $29 million impact in Q2 FY26; $51 million expected cash payments in Q3 FY26.

    Mitigation: Management expects payments related to strategic plan costs to be de minimis in Q3, and the company is committed to expanding free cash flow margin to 27% in Q4 FY26 and over 30% for FY27.

    Partner rebate program impact on subscription revenuethrough Q4 FY26

    $10 million to $15 million per quarter

    Mitigation: The program was an investment to sustain high retention rates and accelerate net new ARR, and its impact is expected to subside starting in Q4 FY26.

    What to watch in Q3 FY26

    5

    Net new ARR growth

    Q3 FY26, H2 FY26
    Current$221 million (Q2 FY26)
    TargetHigh single-digit sequential growth Q2 to Q3; at least 40% YoY growth for H2 FY26

    Why it matters

    This is a key indicator of business momentum and the reacceleration narrative, crucial for the investment thesis.

    Our revenue guidance includes the following assumptions: high single-digit sequential net new ARR growth Q2 to Q3 and at least 40% year-over-year net new ARR growth for the back half of the fiscal year

    Q&A highlights

    7

    Does the partner rebate program continue to impact revenue guidance for the remainder of the year, and is the $10M-$15M per quarter factored in?

    The partner rebate program, an investment made after the outage, remains in effect through Q4 FY26, impacting subscription revenue by $10M-$15M per quarter. This investment has paid off in sustaining high retention rates and accelerating net new ARR, and the impact is factored into guidance.

    “As previously stated, we expect the impact of CCP and special partner programs to subside starting in Q4 of FY '26. We would do this all again, Andy, 100% of the time. Making those investments really paid off for us.”

    asked by Andrew Nowinski · answered by Burt Podbere

    2 min read7 chapters

    Detailed Narrative

    01

    AI-Driven Demand and Security for AI

    CrowdStrike highlighted that AI is a significant driver of demand for its Falcon platform, particularly in securing AI models, workloads, hosts, identities, and end-user devices. The company positions itself to deliver both AI for security, through its Charlotte SOC agent, and security for AI, helping organizations safely adopt agentic outcomes. This dual approach, grounded in CrowdStrike's data foundation, is seen as a competitive moat against evolving AI-armed threats like Famous Chollima.

    02

    Next-Gen SIEM and Onum Acquisition

    The Next-Gen SIEM business demonstrated stellar performance in Q2, achieving over 95% year-over-year growth and exceeding $430 million in ending ARR. To further enhance this offering, CrowdStrike announced its intent to acquire Onum, a data pipeline platform. Onum is expected to supercharge Next-Gen SIEM by providing unparalleled speed, scale, and efficiency in data onboarding, enabling in-pipeline detection and reducing data storage costs by 50%.

    03

    Identity Security Expansion and PAM Offering

    CrowdStrike's Next-Gen Identity Protection business, including Falcon Shield, surpassed $435 million in ending ARR, growing over 21% year-over-year. The company launched its own PAM (Privileged Access Management) offering in Q1, driven by customer demand for alternatives to legacy solutions and the need to secure nonhuman identities and AI agents. This expansion significantly broadens CrowdStrike's identity opportunity, addressing critical breach vectors in the enterprise SaaS market.

    04

    Cloud Security Leadership and Consolidation

    Falcon Cloud Security achieved impressive net new ARR, with total cloud ending ARR exceeding $700 million, growing over 35% year-over-year. CrowdStrike emphasized its leadership in cloud runtime protection, contrasting it with out-of-band posture tools that lack enforcement capabilities. The platform's ease of adoption and native integration of ASPM are driving significant customer wins, consolidating over 10 point products across CNAPP, CSPM, ASPM, CDR, and container security.

    05

    Falcon Flex Model Success and Re-Flex Activity

    The revolutionary Falcon Flex model continues to drive platform adoption, with over 1,000 Flex customers now onboarded, including more than 220 new additions in Q2. Flex contracts show high utilization rates (over 75%), and 're-Flex' activity has more than doubled, yielding nearly a 50% uplift in ending ARR for those customers. This success validates the Flex model as a powerful mechanism for customer consolidation and sustained growth, distinct from one-time📎 ELAs.

    06

    Partner Ecosystem and Market Expansion

    CrowdStrike's robust ecosystem partners sourced over 60% of Q2 new business, highlighting their competitive advantage. Notable partnerships include Red Canary migrating over 100,000 endpoints to Falcon and Amazon Business Prime selecting Falcon Go for millions of SMBs. These collaborations demonstrate CrowdStrike's ability to strategically monetize new markets and migrate underserved segments from legacy technologies, further solidifying its market leadership.

    07

    Capital Allocation and Strategic Investments

    With a strong balance sheet, CrowdStrike maintains a thoughtful approach to acquisitions, focusing on tuck-ins that enhance the platform and provide a fantastic user experience. The acquisition of Onum is a prime example, aimed at supercharging the Next-Gen SIEM business rather than merely acquiring ARR. The company prioritizes integration and strategic fit, ensuring new technologies align with its vision of a unified, AI-native platform.

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