CrowdStrike(CRWD) - 2026 Q2 - Quarterly Report

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS The report contains forward-looking statements based on current projections that involve risks and uncertainties - The report contains forward-looking statements regarding future operating results, financial position, business strategy, and objectives, identified by words like 'believe,' 'may,' 'will,' 'expect,' etc[13] - These statements are subject to risks and uncertainties, including future financial performance, market acceptance, competition, security of the cloud platform, customer base expansion, and macroeconomic factors[14][15] - The company uses its investor relations website, SEC filings, press releases, and social media for material information disclosure[16] Summary of Risk Factors This section summarizes key risks that could adversely affect the company's business, including the July 19 Incident, growth management, and competition - Key risks include the July 19 Incident's adverse effects, challenges in managing rapid growth, and the inability to achieve or sustain profitability[19][20] - Other significant risks involve market acceptance of cloud-based SaaS solutions, ability to enhance products, customer acquisition and retention, long sales cycles, and intense competition[20][21] - Risks also cover product failures, cyberattacks targeting the company, reliance on third-party data centers, key personnel retention, fluctuating results, brand reputation, intellectual property claims, and compliance with data privacy laws[21] PART I. FINANCIAL INFORMATION Item 1. Financial Statements (unaudited) This section presents the unaudited condensed consolidated financial statements and accompanying notes for the reported periods Condensed Consolidated Balance Sheets Condensed Consolidated Balance Sheets (in thousands) | Metric | July 31, 2025 | January 31, 2025 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $4,972,436 | $4,323,295 | | Total current assets | $6,534,354 | $6,113,345 | | Total assets | $9,288,859 | $8,701,578 | | Liabilities | | | | Total current liabilities | $3,475,938 | $3,461,050 | | Long-term debt | $744,727 | $743,983 | | Total liabilities | $5,494,168 | $5,382,661 | | Stockholders' Equity | | | | Total stockholders' equity | $3,794,691 | $3,318,917 | Condensed Consolidated Statements of Operations Condensed Consolidated Statements of Operations (in thousands, except per share data) | Metric | Three Months Ended July 31, 2025 | Three Months Ended July 31, 2024 | Six Months Ended July 31, 2025 | Six Months Ended July 31, 2024 | | :--- | :--- | :--- | :--- | :--- | | Total revenue | $1,168,952 | $963,872 | $2,272,386 | $1,884,908 | | Gross profit | $858,669 | $726,471 | $1,672,960 | $1,422,504 | | Income (loss) from operations | $(112,979) | $13,658 | $(237,635) | $20,594 | | Net income (loss) attributable to CrowdStrike | $(77,675) | $47,013 | $(187,882) | $89,833 | | Basic EPS | $(0.31) | $0.19 | $(0.75) | $0.37 | | Diluted EPS | $(0.31) | $0.19 | $(0.75) | $0.36 | - The company reported a net loss attributable to CrowdStrike of $(77.7) million for the three months ended July 31, 2025, a significant decrease from a net income of $47.0 million in the prior year period; for the six months ended July 31, 2025, the net loss was $(187.9) million, compared to a net income of $89.8 million in the prior year[26] Condensed Consolidated Statements of Comprehensive Income (Loss) Condensed Consolidated Statements of Comprehensive Income (Loss) (in thousands) | Metric | Three Months Ended July 31, 2025 | Three Months Ended July 31, 2024 | Six Months Ended July 31, 2025 | Six Months Ended July 31, 2024 | | :--- | :--- | :--- | :--- | :--- | | Net income (loss) | $(77,645) | $46,690 | $(188,638) | $92,954 | | Other comprehensive income (loss) | $145 | $1,658 | $15,593 | $(1,439) | | Total comprehensive income (loss) attributable to CrowdStrike | $(77,530) | $48,671 | $(172,289) | $88,394 | Condensed Consolidated Statements of Stockholders' Equity Condensed Consolidated Statements of Stockholders' Equity (in thousands) | Metric | July 31, 2025 | April 30, 2025 | July 31, 2024 | April 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Total Stockholders' Equity | $3,794,691 | $3,491,014 | $2,890,590 | $2,568,782 | | Additional Paid-in Capital (July 31, 2025) | $5,016,544 | $4,633,211 | $3,824,897 | $3,556,194 | | Accumulated Deficit (July 31, 2025) | $(1,265,989) | $(1,188,314) | $(969,003) | $(1,016,016) | - Total stockholders' equity increased to $3.79 billion as of July 31, 2025, from $3.32 billion as of January 31, 2025, primarily due to stock-based compensation expense and issuance of common stock under employee plans, despite a net loss[31][34] Condensed Consolidated Statements of Cash Flows Condensed Consolidated Statements of Cash Flows (in thousands) | Metric | Six Months Ended July 31, 2025 | Six Months Ended July 31, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $716,939 | $709,869 | | Net cash used in investing activities | $(150,609) | $(105,988) | | Net cash provided by financing activities | $76,321 | $59,978 | | Net increase in cash, cash equivalents and restricted cash | $649,246 | $662,819 | | Cash, cash equivalents and restricted cash at end of period | $4,973,912 | $4,040,416 | - Net cash provided by operating activities increased slightly to $716.9 million for the six months ended July 31, 2025, from $709.9 million in the prior year, despite a net loss, driven by non-cash adjustments and changes in operating assets and liabilities[36][238] Notes to Unaudited Condensed Consolidated Financial Statements This section provides detailed disclosures and explanations for the unaudited condensed consolidated financial statements Note 1. Description of Business and Significant Accounting Policies CrowdStrike is a global cybersecurity leader providing an AI-native platform via a SaaS subscription model - CrowdStrike is a global cybersecurity leader, providing an AI-native platform for the XDR era, purpose-built to stop breaches, with operations in the U.S. and internationally[38] - The company's revenue is generated from SaaS subscription-based cloud platform and professional services, sold worldwide through direct sales and channel partners[38][44] - No single channel partner or direct customer represented 10% or more of accounts receivable or total revenue for the periods presented[46] - The company is evaluating the impact of new FASB ASUs: 2025-05 (Credit Losses for Accounts Receivable), 2024-03 (Expense Disaggregation Disclosures), and 2023-09 (Improvements to Income Tax Disclosures)[49][50][51] Note 2. Investments and Fair Value Measurements This note details the company's financial assets measured at fair value, primarily cash equivalents and strategic investments Fair Value Hierarchy of Financial Assets (in thousands) | Metric | July 31, 2025 (Total) | January 31, 2025 (Total) | | :--- | :--- | :--- | | Money market funds (Level 1) | $845,191 | $1,470,040 | | U.S. Treasury securities (Level 2) | $2,489,080 | $2,490,097 | | Deferred compensation investments (Level 1) | $8,598 | $5,496 | | Total assets at fair value | $3,342,869 | $3,965,633 | Strategic Investments in Privately Held Securities (in thousands) | Metric | July 31, 2025 | January 31, 2025 | | :--- | :--- | :--- | | Initial total cost | $70,657 | $69,140 | | Cumulative net gains | $1,825 | $3,404 | | Carrying amount, end of period | $72,482 | $72,544 | Gains and Losses on Strategic Investments (in thousands) | Metric | Three Months Ended July 31, 2025 | Three Months Ended July 31, 2024 | Six Months Ended July 31, 2025 | Six Months Ended July 31, 2024 | | :--- | :--- | :--- | :--- | :--- | | Unrealized losses, net | $— | $— | $(1,579) | $— | | Realized gains (losses), net | $— | $(655) | $— | $6,226 | | Gains (losses) on strategic investments, net | $— | $(655) | $(1,579) | $6,226 | Note 3. Financing Receivables The company's financing receivables increased significantly, with a concentrated end-user base Financing Receivables (in thousands) | Metric | July 31, 2025 | January 31, 2025 | | :--- | :--- | :--- | | Short-term financing receivables, net | $37,827 | $7,164 | | Long-term financing receivables, net | $99,551 | $37,842 | | Amortized cost basis of financing receivables | $138,881 | $45,424 | - Four end users represented 59% of financing receivables as of July 31, 2025, compared to two end users representing 78% as of January 31, 2025[47] Note 4. Balance Sheet Components This note details increases in property and equipment and decreases in intangible assets due to amortization Property and Equipment, Net (in thousands) | Metric | July 31, 2025 | January 31, 2025 | | :--- | :--- | :--- | | Data center and other computer equipment | $896,236 | $755,728 | | Capitalized internal-use software and website development costs | $327,606 | $265,987 | | Construction in progress | $214,608 | $220,088 | | Total property and equipment, net | $869,240 | $788,640 | Intangible Assets, Net (in thousands) | Metric | July 31, 2025 | January 31, 2025 | | :--- | :--- | :--- | | Developed technology, net | $91,898 | $104,633 | | Customer relationships, net | $14,218 | $16,048 | | Intellectual property and other acquired intangible assets, net | $11,742 | $12,433 | | Total intangible assets, net | $117,858 | $133,114 | - Goodwill increased slightly to $913.3 million as of July 31, 2025, from $912.8 million as of January 31, 2025, primarily due to foreign currency translation[69] Note 5. Debt The company maintains a $750 million credit facility and $750 million in Senior Notes, remaining in compliance with all covenants - The company has a $750.0 million revolving credit facility, maturing January 2, 2026, with no outstanding amounts as of July 31, 2025[71][74] - Issued $750.0 million in 3.00% Senior Notes maturing in February 2029, with interest payable semiannually[75] - Fair value of Senior Notes was approximately $702.4 million as of July 31, 2025, and $688.4 million as of January 31, 2025[81] Note 6. Income Taxes The company recognized income tax expense primarily from foreign earnings, with negative effective tax rates due to pre-tax losses Income Tax Expense (in thousands) | Metric | Three Months Ended July 31, 2025 | Three Months Ended July 31, 2024 | Six Months Ended July 31, 2025 | Six Months Ended July 31, 2024 | | :--- | :--- | :--- | :--- | :--- | | Provision for income taxes | $5,971 | $10,914 | $27,077 | $18,581 | Effective Tax Rates | Period | Effective Tax Rate | | :--- | :--- | | Three Months Ended July 31, 2025 | (8.3)% | | Three Months Ended July 31, 2024 | 18.9% | | Six Months Ended July 31, 2025 | (16.8)% | | Six Months Ended July 31, 2024 | 16.7% | - The One Big Beautiful Bill Act (OBBBA) enacted on July 4, 2025, resulted in an immaterial favorable effect on the income tax provision due to the company's valuation allowance[83] - Total gross unrecognized tax benefits were $132.3 million as of July 31, 2025, primarily from R&D credits[85] Note 7. Leases The company holds non-cancellable operating leases with total liabilities of $65.8 million and additional future commitments Maturities of Non-Cancelable Operating Lease Liabilities (in thousands) | Fiscal Year | Total Operating Lease Payments | | :--- | :--- | | Fiscal 2026 (remaining six months) | $6,630 | | Fiscal 2027 | $16,503 | | Fiscal 2028 | $15,849 | | Fiscal 2029 | $11,206 | | Fiscal 2030 | $9,219 | | Thereafter | $16,465 | | Total operating lease payments | $75,872 | | Less: imputed interest | $(10,071) | | Present value of operating lease liabilities | $65,801 | - As of July 31, 2025, the company had non-cancelable operating leases not yet commenced with undiscounted future minimum payments of $89.7 million[90] Note 8. Stock-Based Compensation Stock-based compensation expense increased significantly, with substantial unrecognized expenses for unvested awards - Total unrecognized stock-based compensation expense related to unvested RSUs was $1.9 billion as of July 31, 2025, expected to be amortized over 2.4 years[101] - Total unrecognized stock-based compensation expense related to unvested PSUs was $195.9 million as of July 31, 2025, expected to be amortized over 1.3 years[103] Stock-Based Compensation Expense (in thousands) | Metric | Three Months Ended July 31, 2025 | Three Months Ended July 31, 2024 | Six Months Ended July 31, 2025 | Six Months Ended July 31, 2024 | | :--- | :--- | :--- | :--- | :--- | | Total stock-based compensation expense | $287,153 | $200,877 | $540,757 | $384,002 | Note 9. Revenue, Deferred Revenue and Remaining Performance Obligations This note details revenue by geography, deferred revenue growth, and substantial remaining performance obligations Revenue by Geographic Region (in thousands, except percentages) | Region | Three Months Ended July 31, 2025 (Amount) | Three Months Ended July 31, 2025 (% Revenue) | Six Months Ended July 31, 2025 (Amount) | Six Months Ended July 31, 2025 (% Revenue) | | :--- | :--- | :--- | :--- | :--- | | United States | $784,675 | 67% | $1,526,527 | 67% | | Europe, Middle East, and Africa | $188,423 | 16% | $364,865 | 16% | | Asia Pacific | $117,538 | 10% | $230,365 | 10% | | Other | $78,316 | 7% | $150,629 | 7% | | Total revenue | $1,168,952 | 100% | $2,272,386 | 100% | Deferred Revenue Activity (in thousands) | Metric | Six Months Ended July 31, 2025 | Six Months Ended July 31, 2024 | | :--- | :--- | :--- | | Beginning balance | $3,728,677 | $3,054,099 | | Additions to deferred revenue | $2,378,566 | $1,924,006 | | Recognition of deferred revenue | $(2,272,386) | $(1,884,908) | | Ending balance | $3,834,857 | $3,093,197 | - As of July 31, 2025, the aggregate amount of transaction price allocated to remaining performance obligations was $7.2 billion, with 52% expected to be recognized in the next 12 months[119] Note 10. Commitments and Contingencies This note details significant legal proceedings and expenses related to the July 19 Incident and other commitments - The July 19 Incident, a content configuration update causing system crashes, led to multiple legal proceedings including class action lawsuits, derivative lawsuits, and government inquiries[123][125][127] - The company expects to incur significant legal and professional services expenses related to the July 19 Incident, with $75.4 million incurred (net of insurance receivable) for the six months ended July 31, 2025[129][130] Accrued and Incurred Expenses for July 19 Incident (in thousands) | Metric | Amounts | | :--- | :--- | | Balance at January 31, 2025 | $21,145 | | Expenses incurred, net of insurance receivable recorded | $75,383 | | Payments made/ cash received | $(45,917) | | Balance at July 31, 2025 | $50,611 | - Non-cancellable purchase commitments in excess of one year totaled $2.6 billion as of July 31, 2025[133] - Unfunded loan commitments for financing arrangements with end-users totaled approximately $40.6 million as of July 31, 2025[134] Note 11. Acquisitions The company completed two acquisitions, Adaptive Shield and Flow Security, resulting in goodwill from expected synergies - Acquired Adaptive Shield on November 20, 2024, for $213.7 million cash (net) and $0.7 million in equity awards, adding SaaS security posture management solutions[137][138] - Acquired Flow Security on March 26, 2024, for $96.4 million cash (net) and $0.5 million in equity awards, enhancing data security solutions[142][143] - Goodwill of $191.0 million from Adaptive Shield and $84.0 million from Flow Security was recognized, primarily for assembled workforce and expected synergies[138][143] Note 12. Net Income (Loss) Per Share Attributable to Common Stockholders Diluted EPS equaled basic EPS for the current periods due to the company's net loss position Net Income (Loss) Per Share Attributable to CrowdStrike Common Stockholders | Metric | Three Months Ended July 31, 2025 | Three Months Ended July 31, 2024 | Six Months Ended July 31, 2025 | Six Months Ended July 31, 2024 | | :--- | :--- | :--- | :--- | :--- | | Basic EPS | $(0.31) | $0.19 | $(0.75) | $0.37 | | Diluted EPS | $(0.31) | $0.19 | $(0.75) | $0.36 | | Weighted-average shares used in computing diluted EPS | 249,909 | 251,265 | 249,182 | 250,724 | - Potential common shares excluded from diluted EPS calculation due to anti-dilutive effect were 10.4 million for the three and six months ended July 31, 2025[149] Note 13. Segment Information The company operates as a single operating and reportable segment, managed at a consolidated level - The company operates as a single operating and reportable segment, with the CEO as the Chief Operating Decision Maker[151] Property and Equipment, Net and Operating Lease Right-of-Use Assets by Geographic Area (in thousands) | Region | July 31, 2025 | January 31, 2025 | | :--- | :--- | :--- | | United States | $773,121 | $688,766 | | Germany | $97,694 | $88,443 | | Other countries | $61,824 | $54,194 | | Total | $932,639 | $831,403 | Note 14. Strategic Plan A strategic plan involving a 5% workforce reduction resulted in significant charges for severance and stock-based compensation - Strategic plan announced May 6, 2025, involved a 5% reduction in global workforce (approx 500 positions) to yield greater efficiencies[154] Charges Related to Strategic Plan (in thousands) | Metric | Three Months Ended July 31, 2025 | Six Months Ended July 31, 2025 | | :--- | :--- | :--- | | Severance payments and employee benefits | $20,100 | $20,100 | | Stock-based compensation expense | $17,900 | $17,900 | | Non-employee costs | $400 | $7,000 | | Total charges | $38,400 | $45,000 | Note 15. Subsequent Events The company entered into an agreement to acquire Onum Technology Inc subsequent to the reporting period - On August 25, 2025, the company agreed to acquire Onum Technology Inc for approximately $290.0 million, expected to close in Q3 fiscal 2026[157] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on financial results, highlighting revenue growth offset by increased expenses and the July 19 Incident impact Overview CrowdStrike is a cybersecurity leader with an AI-native Falcon platform that leverages cloud-scale AI to stop threats in real-time - CrowdStrike's Falcon platform is an AI-native, cloud-native unified platform built with artificial intelligence at its core, designed to stop breaches[160] - The Security Cloud enriches and correlates trillions of cybersecurity events per week, creating actionable data and preventing threats in real-time[161] Our Go-To-Market Strategy The company employs a low-friction 'land-and-expand' sales strategy through a direct sales team and channel partners - Primary sales channel is a direct sales team leveraging a network of channel partners, segmented by customer endpoint numbers[163] - Employs a 'low friction land-and-expand' sales strategy, where customers start with some modules and expand over time by adding more endpoints or modules[164] - Professional services (incident response, proactive services) are viewed as an opportunity to cross-sell Falcon platform subscriptions[166] Certain Factors Affecting Our Performance Performance is affected by market adoption, customer acquisition, and investment, with the July 19 Incident expected to have an adverse impact - Future success depends on the growth of the cloud-based SaaS-delivered endpoint security solutions market and the company's ability to attract and retain new customers[168][169] - The company plans to continue significant investments in sales and marketing, research and development, and potential acquisitions to manage growth[171] - The July 19 Incident has caused delays in sales opportunities, longer sales cycles, and is expected to result in increased contraction and decreased upsell dollar values due to customer commitment packages[172] Key Metrics The company monitors Annual Recurring Revenue (ARR) and Dollar-Based Net Retention Rate to evaluate business performance Annual Recurring Revenue (ARR) (dollars in thousands) | Metric | As of July 31, 2025 | As of July 31, 2024 | | :--- | :--- | :--- | | Annual recurring revenue | $4,656,682 | $3,864,512 | | Year-over-year growth | 20% | 32% | | Net new ARR (3 months ended) | $221,100 | $217,600 | | Net new ARR (6 months ended) | $414,800 | $429,300 | - Dollar-based net retention rate remained strong as of July 31, 2025, but is subject to fluctuations from large customer contracts, incentives, and customer utilization of subscriptions[178] Components of Our Results of Operations This section outlines revenue components and operating expenses, which are driven by employee costs and strategic investments - Subscription revenue is recognized ratably over the agreement term (generally 1-3 years), driven by customer count, endpoints, and cloud modules[180] - Professional services revenue includes incident response and proactive services, recognized as services are performed[181] - Operating expenses (Sales & Marketing, R&D, G&A) are primarily driven by employee-related costs and stock-based compensation[186] - The company expects general and administrative expenses to increase due to significant legal and professional services costs associated with the July 19 Incident[192] - The OBBBA tax reform, enacted July 4, 2025, permanently reinstates deducting domestic R&D expenditures as incurred and offers 100% accelerated depreciation, resulting in an immaterial favorable effect on income tax provision[196] Results of Operations Revenue grew but the company shifted to net losses, driven by increased operating expenses from the July 19 Incident and strategic plan charges Total Revenue and Net Income (Loss) Attributable to CrowdStrike (in thousands, except percentages) | Metric | Three Months Ended July 31, 2025 | Three Months Ended July 31, 2024 | Six Months Ended July 31, 2025 | Six Months Ended July 31, 2024 | | :--- | :--- | :--- | :--- | :--- | | Total revenue | $1,168,952 | $963,872 | $2,272,386 | $1,884,908 | | Total revenue YoY growth | 21% | - | 21% | - | | Net income (loss) attributable to CrowdStrike | $(77,675) | $47,013 | $(187,882) | $89,833 | | Net income (loss) YoY change | (265)% | - | (309)% | - | Gross Margin and Operating Expenses as % of Total Revenue | Metric | Three Months Ended July 31, 2025 | Three Months Ended July 31, 2024 | Six Months Ended July 31, 2025 | Six Months Ended July 31, 2024 | | :--- | :--- | :--- | :--- | :--- | | Total gross margin | 73% | 75% | 74% | 75% | | Sales and marketing | 38% | 37% | 39% | 37% | | Research and development | 30% | 26% | 30% | 26% | | General and administrative | 15% | 11% | 15% | 11% | | Total operating expenses | 83% | 74% | 84% | 74% | Comparison of the Three Months Ended July 31, 2025 and 2024 Revenue increased 21% year-over-year, but rising costs and incident-related expenses led to an operating loss Revenue (Three Months Ended July 31, in thousands) | Revenue Type | 2025 | 2024 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Subscription | $1,102,945 | $918,257 | $184,688 | 20% | | Professional services | $66,007 | $45,615 | $20,392 | 45% | | Total revenue | $1,168,952 | $963,872 | $205,080 | 21% | Cost of Revenue and Gross Margin (Three Months Ended July 31, in thousands, except percentages) | Metric | 2025 | 2024 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Total cost of revenue | $310,283 | $237,401 | $72,882 | 31% | | Subscription gross margin | 77% | 78% | - | (1)% | | Professional services gross margin | 14% | 18% | - | (4)% | | Total gross margin | 73% | 75% | - | (2)% | Operating Expenses (Three Months Ended July 31, in thousands, except percentages) | Expense Type | 2025 | 2024 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Sales and marketing | $447,024 | $355,471 | $91,553 | 26% | | Research and development | $346,668 | $250,908 | $95,760 | 38% | | General and administrative | $177,956 | $106,434 | $71,522 | 67% | - General and administrative expenses increased significantly by 67% due to $34.3 million in July 19 Incident-related expenses, $17.8 million in stock-based compensation, and $6.1 million in strategic plan charges[212] Comparison of the Six Months Ended July 31, 2025 and 2024 Revenue grew 21% year-over-year, but a surge in operating expenses, particularly G&A, resulted in a substantial operating loss Revenue (Six Months Ended July 31, in thousands) | Revenue Type | 2025 | 2024 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Subscription | $2,153,713 | $1,790,429 | $363,284 | 20% | | Professional services | $118,673 | $94,479 | $24,194 | 26% | | Total revenue | $2,272,386 | $1,884,908 | $387,478 | 21% | Cost of Revenue and Gross Margin (Six Months Ended July 31, in thousands, except percentages) | Metric | 2025 | 2024 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Total cost of revenue | $599,426 | $462,404 | $137,022 | 30% | | Subscription gross margin | 77% | 78% | - | (1)% | | Professional services gross margin | 13% | 23% | - | (10)% | | Total gross margin | 74% | 75% | - | (1)% | Operating Expenses (Six Months Ended July 31, in thousands, except percentages) | Expense Type | 2025 | 2024 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Sales and marketing | $886,641 | $705,585 | $181,056 | 26% | | Research and development | $680,797 | $486,157 | $194,640 | 40% | | General and administrative | $343,157 | $210,168 | $132,989 | 63% | - General and administrative expenses increased by 63% due to $72.9 million in July 19 Incident-related expenses, $21.2 million in stock-based compensation, and $12.7 million in strategic plan charges[226] Liquidity and Capital Resources The company maintains strong liquidity with $5.0 billion in cash, positive operating cash flow, and an undrawn credit facility - Primary liquidity sources: $5.0 billion in cash and cash equivalents, cash from operations, and a $750.0 million revolving facility[232] - Accumulated deficit of $1.3 billion as of July 31, 2025, with expected continued investments in sales & marketing and R&D[234] - Deferred revenue was $3.8 billion as of July 31, 2025, with $2.8 billion expected to be recognized as current revenue[235] Cash Flows (in thousands) | Metric | Six Months Ended July 31, 2025 | Six Months Ended July 31, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $716,939 | $709,869 | | Net cash used in investing activities | $(150,609) | $(105,988) | | Net cash provided by financing activities | $76,321 | $59,978 | Supplemental Guarantor Financial Information This section provides summarized financial information for the Obligor Group on a combined basis - Senior Notes are guaranteed by CrowdStrike, Inc and CrowdStrike Financial Services, Inc (subsidiary guarantors)[242] Obligor Group Summarized Statement of Operations (Six Months Ended July 31, 2025, in thousands) | Metric | Amount | | :--- | :--- | | Revenue | $2,270,124 | | Cost of revenue | $637,297 | | Operating expenses | $1,922,898 | | Loss from operations | $(290,071) | | Net loss | $(231,316) | Obligor Group Summarized Balance Sheet (in thousands) | Metric | July 31, 2025 | January 31, 2025 | | :--- | :--- | :--- | | Current assets (excl intercompany) | $6,365,805 | $5,922,562 | | Noncurrent assets (excl intercompany) | $2,456,410 | $2,316,545 | | Current liabilities (excl intercompany) | $3,334,261 | $3,331,647 | | Noncurrent liabilities (excl intercompany) | $1,984,734 | $1,897,235 | Contractual Obligations and Commitments The company has significant non-cancellable purchase commitments, real estate obligations, and unfunded loan commitments - Non-cancellable purchase commitments totaled $2.6 billion as of July 31, 2025, with remaining terms over 12 months[249] - Obligations under non-cancellable real estate arrangements (undiscounted) include $15.8 million due in the next 12 months and $149.8 million thereafter[250] - Unrecognized tax benefits of $58.5 million were classified as long-term liabilities[250] - Non-cancellable unfunded commitments from financing arrangements totaled approximately $40.6 million[251] Critical Accounting Policies and Estimates Management makes key estimates for revenue recognition, credit losses, and contingencies, with no significant changes in the period - Key estimates and assumptions include revenue recognition, allowance for credit losses, valuation of common stock, carrying value and useful lives of long-lived assets, loss contingencies, and income tax provisions[253][426] - No significant changes in critical accounting policies and estimates during the six months ended July 31, 2025[255] Backlog The company's backlog of uninvoiced contractual amounts was approximately $3.3 billion but is not used as a key internal metric - Backlog was approximately $3.3 billion as of July 31, 2025, representing contractual amounts not yet invoiced[257] - Backlog is not recorded in deferred revenue and is not used as a key management metric internally[257] Seasonality The business experiences seasonality, with higher net new ARR in the second half and lower operating margins in the first half - Net new ARR generation is typically greater in the second half of the year, particularly in the fourth quarter, due to annual budget approval processes[259] - Operating margin is typically lower in the first half of the fiscal year due to increased costs for payroll taxes and annual sales and marketing events[259] Employees As of July 31, 2025, the company had 10,047 full-time employees and considers employee relations to be good - As of July 31, 2025, CrowdStrike had 10,047 full-time employees[261] Corporate Information CrowdStrike Holdings, Inc is a holding company with principal executive offices in Austin, Texas - CrowdStrike Holdings, Inc is a holding company, with all business operations conducted through its subsidiaries[263] Recently Issued Accounting Pronouncements Information on recent accounting pronouncements is available in Note 1 of the financial statements Item 3. Quantitative and Qualitative Disclosures about Market Risk There have been no material changes to the company's market risks during the reported period - No material changes to market risks during the three and six months ended July 31, 2025[266] Item 4. Controls and Procedures Management concluded that disclosure controls and procedures were effective, with no material changes to internal controls - Disclosure controls and procedures were evaluated as effective at the reasonable assurance level as of July 31, 2025[268] - No material changes in internal control over financial reporting occurred during the period[269] - Management acknowledges inherent limitations in control systems, which can only provide reasonable, not absolute, assurance[270] PART II. OTHER INFORMATION Item 1. Legal Proceedings The company is involved in various legal proceedings, including those related to the July 19 Incident, with unpredictable outcomes - The company is a party to various litigation matters and claims, including those related to the July 19 Incident[272] - For claims deemed probable and reasonably estimable, a liability is recorded; however, the results of legal proceedings are inherently unpredictable[273] Item 1A. Risk Factors This section outlines numerous risks that could adversely affect the business, including the July 19 Incident, competition, and regulations Risks Related to Our Business and Industry The company faces significant risks from the July 19 Incident, managing growth, competition, and reliance on third-party infrastructure - The July 19 Incident has had, and is expected to continue to have, an adverse effect on business, sales, customer and partner relations, reputation, results of operations, and financial condition, including elongated sales cycles and increased contraction[275][276] - The company has a history of losses and may not achieve or sustain profitability in the future, despite revenue growth, due to significant investments in growth and increased public company expenses[281] - Intense competition in the security and IT operations market, characterized by rapid technological changes and evolving threats, could lead to loss of market share and reduced financial results[292][293] - Reliance on third-party data centers (e.g., AWS) and colocation facilities means any disruption could negatively affect the performance and reliability of the Falcon platform[303] - International operations expose the company to risks such as greater difficulty in contract negotiation, compliance with foreign laws, and foreign currency fluctuations[321][322] Risks Related to Intellectual Property, Legal, and Regulatory Matters The company faces risks related to protecting intellectual property, infringement claims, and compliance with evolving data privacy laws - Inability to protect and enforce intellectual property rights (patents, copyrights, trademarks, trade secrets) could harm business and competitive position[337][338] - Claims of infringement by third parties could result in substantial costs, diversion of management attention, and requirements to pay damages or obtain licenses[339][342] - Compliance with stringent and evolving data privacy and security laws (e.g., GDPR, CCPA) in multiple jurisdictions increases operating costs and risks of non-compliance, fines, and litigation[345][350][354] - Incorporation of AI technologies, including generative AI, exposes the company to risks of governmental/regulatory scrutiny, litigation, ethical concerns, and potential for flawed or biased output[367][368] - Use of open source software could restrict the ability to sell products, create security vulnerabilities, or require public release of proprietary source code[364][365] Risks Related to Ownership of Our Common Stock Common stock ownership risks include price volatility, potential dilution from future share sales, and a no-dividend policy - The market price of common stock may be volatile due to factors unrelated to operating performance, including changes in financial estimates, competitive developments, and litigation (e.g., July 19 Incident-related securities litigation)[379][380] - The Share Repurchase Program, authorized for up to $1.0 billion, may not result in benefits to stockholder value and could reduce cash available for other corporate purposes[381][382] - Sales of substantial amounts of common stock by insiders or future issuances could dilute existing stockholders' ownership and depress the stock price[384][385] - The company does not intend to pay dividends in the foreseeable future, meaning investor returns depend solely on stock price appreciation[387] Risks Related to our Indebtedness The company's outstanding debt exposes it to financial risks, including limits on financing, cash flow diversion, and restrictive covenants - Outstanding indebtedness of $750.0 million (Senior Notes) and available $750.0 million revolving facility could limit future financing and divert cash flow[393][395] - Inability to generate sufficient cash to service debt could lead to liquidity problems, forced asset sales, or restructuring, potentially resulting in default and acceleration of all indebtedness[397][398][400] - Restrictive covenants in the revolving facility and Senior Notes indenture limit operational flexibility, including incurring additional debt, disposing of assets, and making investments[401][403] General Risk Factors General risks include maintaining internal controls, integrating acquisitions, complex tax laws, and potential catastrophic events - Failure to maintain effective internal controls could impair timely and accurate financial statements, lead to restatements, or cause a decline in stock price[410][413] - Future acquisitions may be difficult to identify and integrate, divert management attention, disrupt business, and dilute stockholder value[414][415] - Subject to complex international tax laws and potential for additional taxes due to transfer pricing disagreements, changes in tax rates, or new legislation like Pillar Two[416][421] - Risks associated with equity investments in private companies include partial or complete loss of capital and volatility in financial results due to valuation changes[428][429] - Catastrophic events (natural disasters, power disruptions, cyberattacks) could disrupt operations, harm reputation, and lead to significant losses[432] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds A $1.0 billion share repurchase program was authorized, but no repurchases were made under it during the period - No unregistered sales of equity securities during the period[433] Issuer Purchases of Equity Securities (Three Months Ended July 31, 2025) | Period | Total number of shares purchased | Average price paid per share | | :--- | :--- | :--- | | June 1, 2025 to June 30, 2025 | 23 | $461.999 | - A Share Repurchase Program of up to $1.0 billion was authorized on June 3, 2025; no repurchases were made under this program during the three months ended July 31, 2025[434] Item 3. Defaults Upon Senior Securities This item is not applicable for the reported period - Not applicable[435] Item 4. Mine Safety Disclosures This item is not applicable for the reported period - Not applicable[436] Item 5. Other Information This section discloses the adoption of Rule 10b5-1 trading arrangements by certain directors and officers Rule 10b5-1 Trading Arrangements Adopted (Three Months Ended July 31, 2025) | Name and Title | Action | Date | Rule 10b5-1 | Shares to be Sold | Expiration | | :--- | :--- | :--- | :--- | :--- | :--- | | Michael Sentonas, President | Adoption | June 24, 2025 | X | Up to 45,000 | Earlier of when all shares under the plan are sold and June 24, 2026 | | Sameer K Gandhi, Director | Adoption | June 27, 2025 | X | Up to 80,000 | Earlier of when all shares under the plan are sold and September 30, 2026 | Item 6. Exhibits This section lists all exhibits filed with the Quarterly Report, including organizational documents and certifications - The report includes various exhibits such as the Amended and Restated Certificate of Incorporation, Bylaws, Outside Director Compensation Policy, and certifications from executive officers[442] - XBRL Instance Document, Taxonomy Extension Schema, Calculation Linkbase, Definition Linkbase, Label Linkbase, and Presentation Linkbase Documents are filed[442] Signatures This section contains the signatures of the registrant's authorized officers certifying the report filing - The report is signed by Burt W Podbere, Chief Financial Officer, and Anurag Saha, Chief Accounting Officer, on August 27, 2025[446]