CrowdStrike(CRWD) - 2025 Q4 - Annual Report

Financial Performance - The company achieved net income of $89.3 million for fiscal 2024, following net losses of$ 19.3 million and $183.2 million for fiscal 2025 and 2023, respectively[135]. - As of January 31, 2025, the company had an accumulated deficit of$ 1.1 billion[135]. - The company reported a total comprehensive loss attributable to CrowdStrike of $(27,201) for 2025, compared to a comprehensive income of$ 88,683 in 2024[423]. - For the year ended January 31, 2025, the net income was a loss of $16,596,000 compared to a net income of$ 90,585,000 in 2024 and a loss of $182,285,000 in 2023[429]. - Total revenue for the year ended January 31, 2025, was$ 3,953,624, representing a 29.4% increase from $3,055,555 in 2024[421]. - Subscription revenue increased to$ 3,761,480 in 2025, up 30.9% from $2,870,557 in 2024[421]. - Gross profit for 2025 was$ 2,962,143, a 29.0% increase compared to $2,299,832 in 2024[421]. - Total operating expenses rose to$ 3,082,573 in 2025, up 34.0% from $2,301,827 in 2024[421]. - Interest income for 2025 was$ 196,174, up 31.7% from $148,930 in 2024[421]. - Net cash provided by operating activities increased to$ 1,381,727,000 in 2025 from $1,166,207,000 in 2024, reflecting a growth of approximately 18.4%[429]. - The total cash, cash equivalents, and restricted cash at the end of the period reached$ 4,324,666,000, up from $3,377,597,000 in 2024, marking an increase of about 28%[429]. Operational Challenges - The July 19 Incident is expected to continue to adversely affect the company's business, sales, customer relations, and reputation, leading to potential deferrals in purchasing decisions by customers[129]. - The company has incurred significant costs related to the July 19 Incident, including remediation efforts and damage control, which may continue to impact financial results[128]. - The company has a history of losses prior to fiscal 2024 and may not achieve sustained profitability in the future due to increasing operating expenses[135]. - The company faces intense competition, which could lead to a loss of market share and adversely affect financial condition and results of operations[126]. - The company is involved in multiple legal proceedings related to the July 19 Incident, which may result in significant costs and operational distractions[131]. - The company faces challenges in attracting new customers due to competition from legacy security products, which may be perceived as more cost-effective[139]. - Customer subscription renewals for the Falcon platform are critical, with existing contracts typically lasting one to three years, and there is a risk of customers opting for shorter renewal terms[140]. - Sales cycles for the Falcon platform are long and unpredictable, often requiring significant time for evaluation and testing by customers, particularly large enterprises and government entities[141]. - The company operates in a highly competitive market, with numerous competitors that may have greater resources and capabilities, potentially leading to a loss of market share[144]. - Competitive pricing pressures may lead to reduced gross profits, affecting the company's financial results and overall business performance[147]. - The complexity of the Falcon platform may lead to undetected defects or vulnerabilities, which could harm the company's reputation and operational results[148]. - As the adoption of the Falcon platform increases, the risk of targeted cyberattacks against the company's systems and customers may also rise, potentially undermining market acceptance[150]. - Security breaches experienced by customers could lead to negative perceptions of the Falcon platform's effectiveness, regardless of the actual performance of the solutions[151]. - The company faces challenges in managing customer expectations and maintaining service delivery, as interruptions could lead to customer attrition and impact renewal rates[158]. Market and Competitive Landscape - The market for cloud-based SaaS-delivered endpoint security solutions is still evolving, and the company's future success depends on customer adoption and retention rates[136]. - The company faces risks associated with international operations, including regulatory changes and currency fluctuations[173]. - Sales to government organizations are subject to unpredictable demand and long sales cycles, impacting future growth[175]. - The company relies on channel partners for the majority of sales, and any loss of these partners could adversely affect results[170]. - Approximately 32% of total revenue was derived from international customers for fiscal 2025, fiscal 2024, and fiscal 2023[171]. Legal and Regulatory Risks - The company maintains insurance policies for cybersecurity incidents, but there is uncertainty regarding the adequacy of coverage for potential liabilities[154]. - Compliance with stringent data privacy and security laws is required, with potential fines of up to EUR 20 million or 4% of annual global revenue for violations of GDPR[196]. - The California Consumer Privacy Act (CCPA) imposes severe penalties for violations, increasing risks associated with data breach litigation[195]. - Legal complexities regarding data transfers from the EEA to the U.S. and other third countries have increased, with potential impacts on service provision and financial results[197]. - Increased regulatory scrutiny from the SEC regarding cybersecurity and data privacy could lead to investigations and impact business operations[199]. - Non-compliance with data privacy laws could result in significant fines, legal liabilities, and reputational damage[200]. - The company is subject to various export controls and economic sanctions that could limit international market competitiveness[205]. - Non-compliance with anti-corruption laws could lead to severe penalties and harm the company's reputation[206]. Financial Position and Capital Structure - The company had$ 750.0 million in principal amount of outstanding indebtedness as of January 31, 2025, with an additional availability of up to $750.0 million under its revolving facility[240]. - The company's indebtedness may limit its ability to obtain additional financing for working capital, capital expenditures, and acquisitions[241]. - The company may face substantial liquidity problems if cash flows are insufficient to service its debt obligations, potentially leading to asset sales or restructuring[243]. - The credit agreement contains restrictive covenants that may limit the company's operational flexibility and ability to respond to market changes[246]. - Failure to comply with the covenants could result in an event of default, leading to accelerated repayment of borrowings and potential bankruptcy[245]. - The company has aggregate U.S. federal net operating loss carryforwards of$ 1.4 billion and California net operating loss carryforwards of $307.9 million, which may offset future taxable income[265]. - The company is subject to a global minimum corporate tax rate of 15% for companies with revenue above €750 million, which could affect its effective tax rate and cash tax liabilities[264]. - The company may face additional taxes, penalties, and interest due to potential disagreements with taxing authorities regarding income and expenses attributable to specific jurisdictions[261]. Technology and Innovation - The company operates a cloud-delivered cybersecurity platform, focusing on various security markets including endpoint security and threat intelligence[432]. - The ability to scale technology to meet customer requirements is critical for future growth and performance[179]. - The complexity and rapid development of AI technology make it difficult to predict all legal and operational risks, which could impact the company's business[216]. - Incorporation of AI technologies presents risks of regulatory scrutiny, legal liability, and potential reputational harm due to flawed outputs[214]. - The evolving landscape of data privacy and security laws may require substantial resources to ensure compliance and mitigate risks[199]. - The EU's AI Act, effective August 1, 2024, introduces a risk-based governance framework for AI systems, categorizing them based on associated risks, which is expected to significantly impact AI regulation in the EU and beyond[215]. - California enacted new laws in 2024 regulating AI, focusing on transparency, privacy, and fairness, indicating a trend of increased regulatory oversight[215]. Human Resources and Corporate Culture - The company's headcount increased from 7,273 employees as of January 31, 2023, to 10,118 employees as of January 31, 2025[133]. - There is intense competition for skilled personnel in the cybersecurity industry, making it challenging for the company to attract and retain qualified employees[160]. - The company faces challenges in maintaining its corporate culture as it grows, which could impact innovation and operational effectiveness[183]. - Leadership transitions pose risks to operational efficiency and customer relationships, particularly if key personnel leave the company[159]. Investment and Growth Strategy - Significant investments are being made to support growth at data centers and improve the profitability of the cloud platform[180]. - The company has expanded its sales organization significantly and plans to continue adding sales capabilities, particularly in international markets[162]. - The company may need to raise additional capital to expand operations and invest in new solutions, which could reduce competitiveness if not secured[182]. - Future acquisitions may be difficult to identify and integrate, potentially diluting stockholder value and disrupting business operations[258]. - The company may incur increased fixed obligations and restrictions on operations if it incurs additional indebtedness for acquisitions[259].