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Dec. 1, 2021, 4:05 p.m. EST

CrowdStrike Reports Third Quarter Fiscal Year 2022 Financial Results

Net new ARR growth acceleratesEnding ARR grows 67% year-over-year to surpass $1.5 billionAdds over 1,600 net new subscription customers for the second consecutive quarterDelivers record operating and free cash flow

SUNNYVALE, Calif., (BUSINESS WIRE) -- CrowdStrike Holdings, Inc. /zigman2/quotes/212513426/composite CRWD -0.70% , a leader in cloud-delivered endpoint and workload protection, today announced financial results for the third quarter fiscal year 2022, ended October 31, 2021.

"CrowdStrike delivered a robust third quarter with broad-based strength across multiple areas of the business leading to net new ARR growth accelerating and ending ARR growing 67% year-over-year to surpass the $1.5 billion milestone. Our outstanding results this quarter demonstrate the flywheel effect of our platform and reflect continued strong customer adoption for our core products in addition to the growing success of our newer product initiatives including identity protection, log management and cloud. With our leading technology, unmatched platform and approach to stopping breaches, we continue to eclipse our competitors and extend our leadership position," said George Kurtz, CrowdStrike’s co-founder and chief executive officer.

Commenting on the company's financial results, Burt Podbere, CrowdStrike’s chief financial officer, added, “CrowdStrike once again delivered exceptional results, maintained very high unit economics, drove leverage and generated strong operating and free cash flow as we expanded our leadership across the market from large enterprises to small businesses. Given the growth drivers of our business, as well as our exceptional third quarter performance and momentum into the fourth quarter, we are once again raising our guidance for the fiscal year 2022.”

Third Quarter Fiscal 2022 Financial Highlights

  • Revenue: Total revenue was $380.1 million, a 63% increase, compared to $232.5 million in the third quarter of fiscal 2021. Subscription revenue was $357.0 million, a 67% increase, compared to $213.5 million in the third quarter of fiscal 2021.

  • Annual Recurring Revenue (ARR) increased 67% year-over-year and grew to $1.51 billion as of October 31, 2021, of which $170.0 million was net new ARR added in the quarter. Net new ARR year-over-year growth accelerated to 46% on an as reported basis and 55% on an organic basis.

  • Subscription Gross Margin: GAAP subscription gross margin was 76%, compared to 77% in the third quarter of fiscal 2021. Non-GAAP subscription gross margin was 79%, compared to 78% in the third quarter of fiscal 2021.

  • Income/Loss from Operations: GAAP loss from operations was $40.3 million, compared to $24.2 million in the third quarter of fiscal 2021. Non-GAAP income from operations was $50.7 million, compared to $18.9 million in the third quarter of fiscal 2021.

  • Net Income/Loss Attributable to CrowdStrike: GAAP net loss attributable to CrowdStrike was $50.5 million, compared to $24.5 million in the third quarter of fiscal 2021. GAAP net loss per share attributable to CrowdStrike common stockholders was $0.22, compared to $0.11 in the third quarter of fiscal 2021. Non-GAAP net income attributable to CrowdStrike was $41.1 million, compared to $18.6 million in the third quarter of fiscal 2021. Non-GAAP net income per share attributable to CrowdStrike common stockholders, diluted, was $0.17, compared to $0.08 in the third quarter of fiscal 2021.

  • Cash Flow: Net cash generated from operations was $159.1 million, compared to $88.5 million in the third quarter of fiscal 2021. Free cash flow was $123.5 million, compared to $76.1 million in the third quarter of fiscal 2021.

  • Cash and Cash Equivalents grew to $1.91 billion as of October 31, 2021.

Recent Highlights

  • Added 1,607 net new subscription customers in the quarter for a total of 14,687 subscription customers as of October 31, 2021, representing 75% growth year-over-year.

  • CrowdStrike’s subscription customers that have adopted four or more modules, five or more modules and six or more modules increased to 68%, 55%, and 32%, respectively, as of October 31, 2021.

  • Unveiled a series of new offerings and partnerships during the fifth annual Fal.Con cybersecurity conference. Announcements included Falcon XDR, the CrowdXDR Alliance, Humio Community Edition, Falcon Fusion, Falcon FileVantage, Falcon CWP Complete, a joint initiative with Google to launch the Work Safer program, and a partnership with leading enterprise automation software company, UIPath.

  • Acquired SecureCircle, a SaaS-based cybersecurity service that extends Zero Trust security to data on the endpoint. CrowdStrike intends to leverage SecureCircle’s revolutionary technology and team to extend its industry leading Zero Trust endpoint security device and identity capabilities to include data.

  • Named a leader in IDC MarketScape: Worldwide Modern Endpoint Security for Enterprise 2021 [1] .

  • Won Best Endpoint Detection and Response Product for the second year in a row in SE Labs’ 2021 Annual Report.

  • Announced that the Cybersecurity and Infrastructure Security Agency (CISA) has worked with multiple federal agencies to select CrowdStrike as one of the major platforms to support the Executive Order endpoint detection and response initiative.

  • Enhanced the technology integration between CrowdStrike and AWS to offer additional features to help joint customers protect against ransomware attacks and identity-based threats.

  • Announced Falcon Horizon support for Google Cloud environments, extending CrowdStrike’s Cloud Security Posture Management solution to protect the three largest cloud providers.

  • Achieved FedRAMP authorization of CrowdStrike Falcon Forensics. Hosted within GovCloud, Falcon Forensics speeds the response time and remediation of critical security incidents for agencies by providing increased visibility and automated analysis.

  • Humio was awarded the Enterprise Management Associates Top 3 Award in the Log Management and Observability category of their Enterprise Decision Guide 2021 report.

[1] IDC MarketScape: Worldwide Modern Endpoint Security for Enterprise 2021 Vendor Assessment Doc #US48306021, November 2021.

Financial Outlook

CrowdStrike is providing the following guidance for the fourth quarter of fiscal 2022 (ending January 31, 2022) and increasing its guidance for fiscal year 2022 (ending January 31, 2022):

  Q4 FY22   Full Year FY22
Total revenue $406.5 - $412.3 million   $1,427.1 - $1,432.9 million
Non-GAAP income from operations $55.2 - $59.5 million   $171.0 - $175.3 million
Non-GAAP net income attributable to CrowdStrike $45.2 - $49.4 million   $135.4 - $139.7 million
Non-GAAP net income per share attributable to CrowdStrike common stockholders, diluted $0.19 - $0.21   $0.57 - $0.59
Weighted average shares used in computing non-GAAP net income per share attributable to CrowdStrike common stockholders, diluted 241 million   238 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 our actual results to differ materially from these forward-looking statements.

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, legal reserve and settlement charges or benefits, gain (loss) and other income from strategic investments, acquisition-related expenses, and tax costs for intellectual property integration relating to the Humio acquisition. We have not provided the most directly comparable GAAP measures because certain items are out of our 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.

Conference Call Information

CrowdStrike will host a conference call for analysts and investors to discuss its earnings results for the third quarter of fiscal 2022 and outlook for its fiscal third quarter and year 2022 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: December 1, 2021
Time: 2:00 p.m. Pacific time / 5:00 p.m. Eastern time
Dial-in number: 409-937-8967, conference ID: 9767096
Webcast: ir.crowdstrike.com

Forward-Looking Statements

This press release contains forward-looking statements that involve risks and uncertainties, including statements regarding our future growth, and future financial and operating performance, including our financial outlook for the fiscal fourth quarter and fiscal year 2022. There are a significant number of factors that could cause actual results to differ materially from statements made in this press release, including: our limited operating history; risks associated with our growth; our ability to identify and effectively implement the necessary changes to address execution challenges; the impact of the COVID-19 pandemic on our and our customers’ business; our 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; our ability to attract new and retain existing customers; our 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; our ability to collaborate and integrate our products with offerings from other parties to deliver benefits to customers; rapidly evolving technological developments in the market for security products and subscription and support offerings; length of sales cycles; and general market, political, economic, and business conditions, including those related to COVID-19.

Further information on risks, uncertainties and other factors that could affect our financial results are included in the filings we make with the Securities and Exchange Commission (“SEC”) from time to time, including our 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 us as of the date hereof, and we do 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

We believe that the presentation of non-GAAP financial information provides important supplemental information to management and investors regarding financial and business trends relating to our 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

We intend 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. We use these channels, as well as social media and our blog , to communicate with our investors, customers, and the public about our company, our offerings, and other issues. It is possible that the information we post on social media and our blog could be deemed to be material information. As such, we encourage investors, the media, and others to follow the channels listed above, including the social media channels listed on our investor relations website, and to review the information disclosed through such channels. Any updates to the list of disclosure channels through which we will announce information will be posted on the investor relations page on our website.

About CrowdStrike Holdings

CrowdStrike provides cloud-delivered endpoint and cloud workload protection. Leveraging artificial intelligence (AI), the CrowdStrike Falcon® platform protects customers against cyberattacks on endpoints on or off the network by offering visibility and protection across the enterprise.

Copyright © 2021 CrowdStrike, Inc. All rights reserved. CrowdStrike and CrowdStrike Falcon® are the registered trademarks of CrowdStrike, Inc. CrowdStrike owns other trademarks and service marks, and may use the brands of third parties to identify their products and services.

 
CROWDSTRIKE HOLDINGS, INC.
Condensed Consolidated Statements of Operations
(in thousands, except per share amounts)
(unaudited)
 
  Three Months Ended October 31,   Nine Months Ended October 31,
  2021   2020   2021   2020
Revenue              
Subscription $ 357,030     $ 213,530     $ 954,094     $ 560,008  
Professional services 23,021     18,930     66,490     49,501  
Total revenue 380,051     232,460     1,020,584     609,509  
Cost of revenue              
Subscription [(1)(2)] 85,464     49,583     226,360     130,864  
Professional services [ (1)] 16,200     11,944     44,241     31,949  
Total cost of revenue 101,664     61,527     270,601     162,813  
Gross profit 278,387     170,933     749,983     446,696  
Operating expenses              
Sales and marketing [ (1)(2)] 164,960     105,602     453,952     288,867  
Research and development [(1)(2)] 97,630     57,539     266,265     148,600  
General and administrative [(1)(2)(3)(4)] 56,061     31,951     148,780     85,955  
Total operating expenses 318,651     195,092     868,997     523,422  
Loss from operations (40,264)     (24,159)     (119,014)     (76,726)  
Interest expense [(5)] (6,403)     (193)     (18,929)     (510)  
Other income, net [(6)] 690     272     6,077     5,537  
Loss before provision for income taxes (45,977)     (24,080)     (131,866)     (71,699)  
Provision for income taxes [(7)] 4,473     451     58,773     1,928  
Net loss (50,450)     (24,531)     (190,639)     (73,627)  
Net income attributable to noncontrolling interest 5         2,183      
Net loss attributable to CrowdStrike $ (50,455)     $ (24,531)     $ (192,822)     $ (73,627)  
Net loss per share attributable to CrowdStrike common stockholders, basic and diluted $ (0.22)     $ (0.11)     $ (0.85)     $ (0.34)  
Weighted-average shares used in computing net loss per share attributable to CrowdStrike common stockholders, basic and diluted 228,293     219,401     226,292     216,432  
_____________________________
(1) Includes stock-based compensation expense as follows:
  Three Months Ended October 31,   Nine Months Ended October 31,
  2021   2020   2021   2020
               
  (in thousands)   (in thousands)
Subscription cost of revenue $ 5,969     $ 3,226     $ 15,548     $ 7,856  
Professional services cost of revenue 2,546     1,551     6,963     3,947  
Sales and marketing 25,499     12,811     68,178     35,101  
Research and development 27,333     11,771     70,942     25,700  
General and administrative 25,319     11,251     55,684     29,357  
Total stock-based compensation expense $ 86,666     $ 40,610     $ 217,315     $ 101,961  
_____________________________
(2) Includes amortization of acquired intangible assets, including purchased patents, as follows:
  Three Months Ended October 31,   Nine Months Ended October 31,
  2021   2020   2021   2020
               
  (in thousands)   (in thousands)
Subscription cost of revenue $ 2,784     $ 272     $ 7,550     $ 397  
Sales and marketing 540     91     1,509     153  
Research and development     9         29  
General and administrative 13         13      
Total amortization of acquired intangible assets $ 3,337     $ 372     $ 9,072     $ 579  
_____________________________
(3) Includes acquisition-related expenses as follows:
  Three Months Ended October 31,   Nine Months Ended October 31,
  2021   2020   2021   2020
               
  (in thousands)   (in thousands)
General and administrative $ 971     $ 2,119     $ 5,912     $ 2,119  
Total acquisition-related expenses $ 971     $ 2,119     $ 5,912     $ 2,119  
_____________________________
(4) Includes legal reserve and settlement charges as follows:
  Three Months Ended October 31,   Nine Months Ended October 31,
  2021   2020   2021   2020
               
  (in thousands)   (in thousands)
General and administrative $     $     $ 2,500     $  
Total legal reserve and settlement charges $     $     $ 2,500     $  
_____________________________
(5) Includes amortization of debt issuance costs and discount as follows:
  Three Months Ended October 31,   Nine Months Ended October 31,
  2021   2020   2021   2020
               
  (in thousands)   (in thousands)
Interest expense $ 546     $     $ 1,639     $  
Total amortization of debt issuance costs and discount $ 546     $     $ 1,639     $  
_____________________________
(6) Includes gains and other income from strategic investment as follows:
  Three Months Ended October 31,   Nine Months Ended October 31,
  2021   2020   2021   2020
               
  (in thousands)   (in thousands)
Other income, net $ 10     $     $ 4,366     $  
Total gains and other income from strategic investments $ 10     $     $ 4,366     $  
(7) Includes tax costs for intellectual property integration relating to the Humio acquisition as follows:
  Three Months Ended October 31,   Nine Months Ended October 31,
  2021   2020   2021   2020
               
  (in thousands)   (in thousands)
Provision for income taxes $     $     $ 48,824     $  
Total provision for income taxes $     $     $ 48,824     $  
 
CROWDSTRIKE HOLDINGS, INC.
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)
 
  October 31,   January 31,
  2021   2021
Assets      
Current assets:      
Cash and cash equivalents $ 1,907,508     $ 1,918,608  
Accounts receivable, net of allowance for credit losses 283,272     239,199  
Deferred contract acquisition costs, current 108,636     80,850  
Prepaid expenses and other current assets 60,670     53,617  
Total current assets 2,360,086     2,292,274  
Strategic investments 22,665     2,500  
Property and equipment, net 242,224     167,014  
Operating lease right-of-use assets 33,893     36,484  
Deferred contract acquisition costs, noncurrent 162,309     117,906  
Goodwill 373,889     83,566  
Intangible assets, net 82,870     15,677  
Other long-term assets 21,681     17,112  
Total assets $ 3,299,617     $ 2,732,533  
Liabilities and Stockholders’ Equity      
Current liabilities:      
Accounts payable $ 7,167     $ 12,065  
Accrued expenses 76,758     51,117  
Accrued payroll and benefits 94,738     71,907  
Operating lease liabilities, current 9,706     8,977  
Deferred revenue 974,571     701,988  
Other current liabilities 78,607     17,499  
Total current liabilities 1,241,547     863,553  
Long-term debt 739,145     738,029  
Deferred revenue, noncurrent 313,625     209,907  
Operating lease liabilities, noncurrent 27,895     31,986  
Other liabilities, noncurrent 17,835     17,184  
Total liabilities 2,340,047     1,860,659  
Commitments and contingencies      
Stockholders’ Equity      
Common stock, Class A and Class B 115     112  
Additional paid-in capital 1,870,120     1,598,259  
Accumulated deficit (922,938)     (730,116)  
Accumulated other comprehensive income 885     2,319  
Total CrowdStrike Holdings, Inc. stockholders’ equity 948,182     870,574  
Non-controlling interest 11,388     1,300  
Total stockholders’ equity 959,570     871,874  
Total liabilities and stockholders’ equity $ 3,299,617     $ 2,732,533  
 
CROWDSTRIKE HOLDINGS, INC.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
 
  Nine Months Ended October 31,
  2021   2020
Operating activities      
Net loss $ (190,639)     $ (73,627)  
Adjustments to reconcile net loss to net cash provided by operating activities:      
Depreciation and amortization 39,247     27,728  
Loss on disposal of property and equipment 259      
Amortization of intangible assets 9,072     579  
Amortization of deferred contract acquisition costs 79,712     44,940  
Non-cash operating lease costs 6,727     7,666  
Stock-based compensation expense 217,315     101,961  
Gain on sale of debt securities, net     (1,347)  
Amortization of marketable securities purchased at a premium     578  
Non-cash interest expense 1,824     506  
Change in fair value of strategic investments (4,356)      
Changes in operating assets and liabilities, net of impact of acquisitions      
Accounts receivable, net (40,644)     (6,603)  
Deferred contract acquisition costs (151,901)     (84,741)  
Prepaid expenses and other assets (9,788)     1,487  
Accounts payable (7,033)     6,556  
Accrued expenses and other current liabilities 81,826     1,643  
Accrued payroll and benefits 22,258     18,712  
Operating lease liabilities (7,394)     (1,434)  
Deferred revenue 375,582     189,582  
Other liabilities, noncurrent (7,001)     7,917  
Net cash provided by operating activities 415,066     242,103  
Investing activities      
Purchases of property and equipment (85,420)     (40,245)  
Capitalized internal-use software and website development (15,201)     (6,345)  
Purchase of strategic investments (15,809)     (1,500)  
Business acquisitions, net of cash acquired (353,746)     (85,469)  
Purchase of intangible assets (680)      
Purchases of marketable securities     (84,904)  
Proceeds from sales of marketable securities     639,586  
Maturities of marketable securities     91,605  
Net cash (used in) provided by investing activities (470,856)     512,728  
Financing activities      
Payment of debt issuance costs related to revolving line of credit (219)      
Payment of debt issuance costs related to Senior Notes (1,581)      
Proceeds from issuance of common stock upon exercise of stock options 12,796     21,522  
Proceeds from issuance of common stock under the employee stock purchase plan 27,452     17,284  
Capital contributions from non-controlling interest holders 7,905     800  
Net cash provided by financing activities 46,353     39,606  
       
Effect of foreign exchange rates on cash and cash equivalents (1,663)     691  
       
Net (decrease) increase in cash and cash equivalents (11,100)     795,128  
       
Cash and cash equivalents, beginning of period 1,918,608     264,798  
Cash and cash equivalents, end of period $ 1,907,508     $ 1,059,926  
 
CROWDSTRIKE HOLDINGS, INC.
       
Non-GAAP Financial Measures with Reconciliation to GAAP
(in thousands, except percentages)
(unaudited)
 
  Three Months Ended October 31,   Nine Months Ended October 31,
  2021   2020   2021   2020
GAAP subscription revenue $ 357,030     $ 213,530     $ 954,094     $ 560,008  
               
GAAP subscription gross profit $ 271,566     $ 163,947     $ 727,734     $ 429,144  
Add: Stock-based compensation expense 5,969     3,226     15,548     7,856  
Add: Amortization of acquired intangible assets 2,784     272     7,550     397  
Non-GAAP subscription gross profit $ 280,319     $ 167,445     $ 750,832     $ 437,397  
               
GAAP subscription gross margin 76 %   77 %   76 %   77 %
               
Non-GAAP subscription gross margin 79 %   78 %   79 %   78 %
  Three Months Ended October 31,   Nine Months Ended October 31,
  2021   2020   2021   2020
GAAP total revenue $ 380,051     $ 232,460     $ 1,020,584     $ 609,509  
               
GAAP loss from operations $ (40,264)     $ (24,159)     $ (119,014)     $ (76,726)  
Add: Stock-based compensation expense 86,666     40,610     217,315     101,961  
Add: Amortization of acquired intangible assets 3,337     372     9,072     579  
Add: Acquisition-related expenses 971     2,119     5,912     2,119  
Add: Legal reserve and settlement charges         2,500      
Non-GAAP income from operations $ 50,710     $ 18,942     $ 115,785     $ 27,933  
               
GAAP operating margin (11) %   (10) %   (12) %   (13) %
               
Non-GAAP operating margin 13 %   8 %   11 %   5 %
 
CROWDSTRIKE HOLDINGS, INC.
       
Non-GAAP Financial Measures with Reconciliation to GAAP (Continued)
(in thousands, except percentages and per share amounts)
(unaudited)
 
  Three Months Ended October 31,   Nine Months Ended October 31,
  2021   2020   2021   2020
GAAP net loss attributable to CrowdStrike $ (50,455)     $ (24,531)     $ (192,822)     $ (73,627)  
               
Add: Stock-based compensation expense $ 86,666     $ 40,610     $ 217,315     $ 101,961  
Add: Amortization of acquired intangible assets 3,337     372     9,072     579  
Add: Acquisition-related expenses 971     2,119     5,912     2,119  
Add: Amortization of debt issuance costs and discount 546         1,639      
Add: Legal reserve and settlement charges         2,500      
Add: Provision for income taxes [(1)]         48,824      
Less: Gains and other income from strategic investments attributable to CrowdStrike (5)         (2,183)      
               
Non-GAAP net income attributable to CrowdStrike $ 41,060     $ 18,570     $ 90,257     $ 31,032  
               
Weighted-average shares used in computing GAAP net loss per share attributable to CrowdStrike common stockholders, basic and diluted 228,293     219,401     226,292     216,432  
Weighted-average shares used in computing Non-GAAP net income per share attributable to CrowdStrike common stockholders, basic 228,293     219,401     226,292     216,432  
Weighted-average shares used in computing Non-GAAP net income per share attributable to CrowdStrike common stockholders, diluted 238,563     234,626     238,194     232,969  
               
GAAP net loss per share attributable to CrowdStrike common stockholders, basic and diluted $ (0.22)     $ (0.11)     $ (0.85)     $ (0.34)  
               
Non-GAAP net income per share attributable to CrowdStrike common stockholders, basic $ 0.18     $ 0.08     $ 0.40     $ 0.14  
Non-GAAP net income per share attributable to CrowdStrike common stockholders, diluted $ 0.17     $ 0.08     $ 0.38     $ 0.13  
  Three Months Ended October 31,   Nine Months Ended October 31,
  2021   2020   2021   2020
GAAP total revenue $ 380,051     $ 232,460     $ 1,020,584     $ 609,509  
               
GAAP net cash provided by operating activities 159,058     88,501     415,066     242,103  
Less: Purchases of property and equipment (29,627)     (9,911)     (85,420)     (40,245)  
Less: Capitalized internal-use software and website development (5,928)     (2,495)     (15,201)     (6,345)  
Free cash flow $ 123,503     $ 76,095     $ 314,445     $ 195,513  
               
GAAP net cash (used in) provided by investing activities $ (44,735)     $ (98,375)     $ (470,856)     $ 512,728  
GAAP net cash provided by financing activities $ 7,554     $ 5,171     $ 46,353     $ 39,606  
               
GAAP net cash provided by operating activities as a percentage of revenue 42 %   38 %   41 %   40 %
Less: Purchases of property and equipment as a percentage of revenue (8) %   (4) %   (8) %   (7) %
Less: Capitalized internal-use software and website development as a percentage of revenue (2) %   (1) %   (1) %   (1) %
Free cash flow margin 32 %   33 %   31 %   32 %
_____________________________
(1) We use our GAAP provision for income taxes for the purpose of determining our non-GAAP income tax expense. The tax costs for intellectual property integration relating to the Humio acquisition is included in the GAAP provision for income taxes during the first quarter of fiscal 2022. The income tax benefits related to stock-based compensation, amortization of intangibles, including purchased patents, acquisition related expenses, amortization of debt issuance costs and discount, and gains and other income from strategic investments attributable to CrowdStrike included in the GAAP provision for income taxes was not material for all periods presented.
 
CROWDSTRIKE HOLDINGS, INC.
 
Statements of Operations: GAAP to Non-GAAP Reconciliations
(in thousands)
(unaudited)
 
  Three Months Ended October 31,   Nine Months Ended October 31,
  2021   2020   2021   2020
GAAP cost of revenue $ 101,664     $ 61,527     $ 270,601     $ 162,813  
Less:              
Stock based compensation expense 8,515     4,777     22,511     11,803  
Amortization of acquired intangible assets 2,784     272     7,550     397  
Non-GAAP cost of revenue $ 90,365     $ 56,478     $ 240,540     $ 150,613  
               
GAAP subscription gross profit $ 271,566     $ 163,947     $ 727,734     $ 429,144  
Add:              
Stock based compensation expense 5,969     3,226     15,548     7,856  
Amortization of acquired intangible assets 2,784     272     7,550     397  
Non-GAAP subscription gross profit $ 280,319     $ 167,445     $ 750,832     $ 437,397  
               
GAAP professional services gross profit $ 6,821     $ 6,986     $ 22,249     $ 17,552  
Add:              
Stock based compensation expense 2,546     1,551     6,963     3,947  
Non-GAAP professional services gross profit $ 9,367     $ 8,537     $ 29,212     $ 21,499  
               
GAAP sales and marketing operating expenses $ 164,960     $ 105,602     $ 453,952     $ 288,867  
Less:              
Stock based compensation expense 25,499     12,811     68,178     35,101  
Amortization of acquired intangible assets 540     91     1,509     153  
Non-GAAP sales and marketing operating expenses $ 138,921     $ 92,700     $ 384,265     $ 253,613  
               
GAAP research and development operating expenses $ 97,630     $ 57,539     $ 266,265     $ 148,600  
Less:              
Stock based compensation expense 27,333     11,771     70,942     25,700  
Amortization of acquired intangible assets     9         29  
Non-GAAP research and development operating expenses $ 70,297     $ 45,759     $ 195,323     $ 122,871  
               
GAAP general and administrative operating expenses $ 56,061     $ 31,951     $ 148,780     $ 85,955  
Less:              
Stock based compensation expense 25,319     11,251     55,684     29,357  
Acquisition-related expenses 971     2,119     5,912     2,119  
Amortization of acquired intangible assets 13         13      
Legal reserve and settlement charges         2,500      
Non-GAAP general and administrative operating expenses $ 29,758     $ 18,581     $ 84,671     $ 54,479  
               
GAAP loss from operations $ (40,264)     $ (24,159)     $ (119,014)     $ (76,726)  
Add:              
Stock based compensation expense 86,666     40,610     217,315     101,961  
Amortization of acquired intangible assets 3,337     372     9,072     579  
Acquisition-related expenses 971     2,119     5,912     2,119  
Legal reserve and settlement charges         2,500      
Non-GAAP income from operations $ 50,710     $ 18,942     $ 115,785     $ 27,933  
 
CROWDSTRIKE HOLDINGS, INC.
 
Statements of Operations: GAAP to Non-GAAP Reconciliations (continued)
(in thousands, except per share amounts)
(unaudited)
 
  Three Months Ended October 31,   Nine Months Ended October 31,
  2021   2020   2021   2020
GAAP net loss attributable to CrowdStrike $ (50,455)     $ (24,531)     $ (192,822)     $ (73,627)  
Add:              
Stock based compensation expense 86,666     40,610     217,315     101,961  
Amortization of acquired intangible assets 3,337     372     9,072     579  
Acquisition-related expenses 971     2,119     5,912     2,119  
Amortization of debt issuance costs and discount 546         1,639      
Legal reserve and settlement charges         2,500      
Provision for income taxes [(1)]         48,824      
Less:              
Gains and other income from strategic investments attributable to CrowdStrike (5)         (2,183)      
Non-GAAP net income attributable to CrowdStrike $ 41,060     $ 18,570     $ 90,257     $ 31,032  
               
Weighted-average shares used in computing basic net income (loss) per share attributable to CrowdStrike common stockholders (GAAP and Non-GAAP) 228,293   219,401   226,292   216,432
               
GAAP basic net loss per share attributable to CrowdStrike common stockholders $ (0.22)     $ (0.11)     $ (0.85)     $ (0.34)  
               
Non-GAAP basic net income per share attributable to CrowdStrike common stockholders $ 0.18     $ 0.08     $ 0.40     $ 0.14  
               
GAAP diluted net loss per share attributable to CrowdStrike common stockholders $ (0.22)     $ (0.11)     $ (0.85)     $ (0.34)  
Add:              
Stock-based compensation 0.36     0.17     0.91     0.44  
Amortization of acquired intangible assets 0.01         0.04      
Acquisition-related expenses     0.01     0.02     0.01  
Amortization of debt issuance costs and discount         0.01      
Legal reserve and settlement charges         0.01      
Provision for income taxes [ (1)]         0.20      
Adjustment to fully diluted earnings per share [(2)] 0.02     0.01     0.05     0.02  
Less:              
Gains and other income from strategic investments attributable to CrowdStrike         (0.01)      
Non-GAAP diluted net income per share attributable to CrowdStrike common stockholders $ 0.17     $ 0.08     $ 0.38     $ 0.13  
               
Weighted-average shares used in diluted net income (loss) per share attributable to CrowdStrike common stockholders calculation:              
GAAP 228,293     219,401     226,292     216,432  
Non-GAAP 238,563     234,626     238,194     232,969  
____________________________
(1) We use our GAAP provision for income taxes for the purpose of determining our non-GAAP income tax expense. The tax costs for intellectual property integration relating to the Humio acquisition is included in the GAAP provision for income taxes during the first quarter of fiscal 2022. The income tax benefits related to stock-based compensation, amortization of intangibles, including purchased patents, acquisition related expenses, amortization of debt issuance costs and discount, gains and other income from strategic investments attributable to CrowdStrike and legal reserve and settlement charges or benefits included in the GAAP provision for income taxes was not material for all periods presented.
   
(2) For periods in which we 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.

Explanation of Non-GAAP Financial Measures

In addition to our results determined in accordance with U.S. generally accepted accounting principles (“GAAP”), we believe the following non-GAAP measures are useful in evaluating our operating performance. We use the following non-GAAP financial information to evaluate our ongoing operations and for internal planning and forecasting purposes. We believe that non-GAAP financial information, when taken collectively, may be helpful to investors because it provides consistency and comparability with past financial 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 our 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 our non-GAAP financial measures as tools for comparison. In addition, the utility of free cash flow as a measure of our financial performance and liquidity is limited as it does not represent the total increase or decrease in our cash balance for a given period.

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 our business.

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

We define 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. We believe non-GAAP subscription gross profit and non-GAAP subscription gross margin provide our management and investors consistency and comparability with our past financial performance and facilitate period-to-period comparisons of operations, as these measures eliminate the effects of certain variables unrelated to our overall operating performance.

Non-GAAP Income from Operations

We define 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 and legal reserve and settlement charges or benefits. We believe non-GAAP income from operations provides our management and investors consistency and comparability with our past financial performance and facilitate period-to-period comparisons of operations, as this metric generally eliminates the effects of certain variables unrelated to our overall operating performance.

Non-GAAP Net Income Attributable to CrowdStrike

We define 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, gains and other income from strategic investments, legal reserve and settlement charges or benefits and the tax costs for intellectual property integration relating to the Humio acquisition. We believe non-GAAP net income attributable to CrowdStrike provides our management and investors consistency and comparability with our past financial performance and facilitates period-to-period comparisons, as this metric generally eliminates the effects of certain variables unrelated to our overall performance.

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

We define 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 diluted common stock equivalents outstanding during the period. We may periodically incur charges or receive payments in connection with litigation settlements. We exclude these charges and payments received from non-GAAP net income attributable to CrowdStrike when associated with a significant settlement because we do not believe they are reflective of ongoing business and operating results.

Free Cash Flow

Free cash flow is a non-GAAP financial measure that we define as net cash provided by operating activities less purchases of property and equipment and capitalized internal-use software and website development. We monitor free cash flow as one measure of our overall business performance, which enables us to analyze our future performance without the effects of non-cash items and allow us to better understand the cash needs of our business. While we believe that free cash flow is useful in evaluating our 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 our liquidity is further limited as it does not represent the total increase or decrease in our 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 our 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 we are negotiating a renewal with a customer after the expiration of the subscription, we continue to include that revenue in ARR if we are actively in discussion with such an organization for a new subscription or renewal, or until such organization notifies us 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.

View source version on businesswire.com: https://www.businesswire.com/news/home/20211201006077/en/

SOURCE: CrowdStrike Holdings, Inc.

Investor Relations
CrowdStrike Holdings, Inc.
Maria Riley, Vice President of Investor Relations
investors@crowdstrike.com
669-721-0742 Media
CrowdStrike Holdings, Inc.
Kevin Benacci, Sr. Director, Corporate Communications
press@crowdstrike.com
216-409-5055

COMTEX_398105957/2456/2021-12-01T16:05:22

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/zigman2/quotes/212513426/composite
US : U.S.: Nasdaq
$ 159.81
-1.13 -0.70%
Volume: 3.89M
Jan. 27, 2022 4:00p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
$36.92 billion
Rev. per Employee
$378,760
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