CrowdStrike (CRWD -0.46%), the cybersecurity firm renowned for its AI-driven Falcon platform, released its fiscal 2025 second-quarter results on Aug. 28. The company delivered total revenue of $963.9 million, slightly exceeding the high end of its guidance range and reflecting a 32% year-over-year increase from $731.6 million in the prior-year period. Additionally, it reported non-GAAP net income of $260.8 million, compared to management's expectations of up to $247.8 million.
| Metric | Fiscal 2025 Q2 Result | Fiscal 2025 Q2 Guidance | Fiscal 2024 Q2 Result | % Change (YoY) |
|---|---|---|---|---|
| Total revenue | $963.9 million | $958.3 million to $961.2 million | $731.6 million | 32% |
| Non-GAAP income from operations | $226.8 million | $208.3 to $210.5 million | $155.7 million | 46% |
| Non-GAAP net income | $260.8 million | $245.7 million to $247.8 million | $180.0 million | 45% |
| Non-GAAP net income per share (diluted) | $1.04 | $0.98 to $0.99 | $0.74 | 41% |
Source: Guidance from fiscal Q1 2025 earnings report released June 4.
Understanding CrowdStrike
CrowdStrike specializes in providing comprehensive cybersecurity services, primarily through its cloud-native Falcon platform, which leverages artificial intelligence. Key recent focuses for the company have included driving wider adoption of its offerings, and repairing its client relationships in the wake of the July 19 global outage incident.
CrowdStrike's modular approach allows customers to choose from among multiple services to get cybersecurity that is tailored to their needs, enhancing lifetime customer value. Currently, 65% of its clients use five or more of its modules, 45% use six or more, and 29% use seven or more, demonstrating the success of this strategy. Additionally, the company is making strides in quick threat detection, validated by independent evaluations, and marked by low false positives.
Quarterly Highlights
Fiscal Q2, which ended July 31, witnessed significant financial and product achievements for CrowdStrike. Revenue grew by 32% year over year to $963.9 million. Non-GAAP net income rose 45% to $260.8 million. These figures surpassed management's guidance, indicating strong execution.
Net new annual recurring revenue (ARR) was $218 million, boosting the company's total ARR to $3.86 billion, a $935 million increase from the prior-year period. Subscription revenue also soared from $690.0 million to $918.3 million, underlining the company's success in retaining and expanding its customer base.
In particular, its LogScale, Identity Protection, and Cloud Security solutions contributed to over $1 billion in combined ARR.
Operationally, its GAAP subscription gross margin remained constant year over year at 78%, while its non-GAAP subscription gross margin improved slightly year over year from 80% to 81%. Operating cash flows reached $326.6 million, compared to $244.8 million in the same period last year. Free cash flow jumped to $272.2 million from $188.7 million.
While the financials showed robust growth, the company faced significant challenges, primarily due to the July 19 global outage incident. This disruption, caused by a software update, impacted 8.5 million devices running Microsoft (MSFT -0.21%) Windows and created substantial costs estimated at $5.4 billion for U.S. Fortune 500 companies. The outage has led to a series of lawsuits from affected customers and investors, with Delta Air Lines (DAL -2.11%) being a notable example. Although the company anticipates increased competition due to potential customer attrition, it remains resilient owing to its innovative areas of focus.
Look Ahead
For fiscal 2025 Q3, management projects total revenue will be in the range of $979.2 million to $984.7 million. Non-GAAP net income per share is expected to be between $0.80 and $0.81. For the fiscal year, the company's reduced guidance is for total revenue of $3.89 billion and $3.9 billion, and non-GAAP net income per share between $3.61 and $3.65.
Investors should keep a close watch on how the company's continuous innovations, like its Falcon platform developments, impact customer adoption and retention.
