CrowdStrike(US:CRWD)2024-03-06 16:00Part I Business CrowdStrike provides a cloud-native, AI-powered cybersecurity platform, the Falcon XDR, operating on a SaaS subscription model to stop breaches - CrowdStrike positions itself as a leader in the "Security Cloud" category, leveraging its AI-native Falcon XDR platform to provide comprehensive cybersecurity solutions through a single, lightweight agent202122 Fiscal Year 2022-2024 Financial Performance | Metric | Fiscal 2024 | Fiscal 2023 | Fiscal 2022 | | :--- | :--- | :--- | :--- | | Total Revenue | $3.1 billion | $2.2 billion | $1.5 billion | | YoY Growth | 36% | 54% | - | | Subscription Revenue | $2.9 billion | $2.1 billion | $1.4 billion | | YoY Growth | 36% | 55% | - | | Net Income (Loss) | $89.3 million | ($183.2 million) | ($234.8 million) | Annual Recurring Revenue (ARR) Growth | As of | Jan 31, 2024 | Jan 31, 2023 | Jan 31, 2022 | | :--- | :--- | :--- | :--- | | ARR | $3.4 billion | $2.6 billion | $1.7 billion | | YoY Growth | 34% | 48% | - | - The company's growth strategy includes acquiring new customers, expanding within the existing customer base (evidenced by a 119% dollar-based net retention rate), entering new markets with additional cloud modules, and expanding internationally61 - As of January 31, 2024, the company had 29,000 subscription customers, a 26% increase from the previous year, and employed 7,925 full-time employees6176101 Risk Factors The company faces various risks including managing rapid growth, market adoption of cloud security, intense competition, operational failures, cyberattacks, and compliance with complex regulations - Business and Industry Risks: The company faces challenges in managing its rapid growth, maintaining profitability after a history of losses, and depends on the market's adoption of cloud-based SaaS security solutions130132135 - Competition and Performance Risks: Intense competition from legacy and alternative security providers could lead to loss of market share. Any failure of the Falcon platform to detect or prevent security incidents could harm the company's brand and reputation143147 - Operational and Cybersecurity Risks: CrowdStrike is a direct target for cyberattacks. A breach of its own systems could severely damage its reputation. The company also relies on third-party data centers (primarily AWS), making it vulnerable to service disruptions beyond its control150153 - Legal and Regulatory Risks: The company must comply with complex and evolving data privacy laws globally (e.g., GDPR, CCPA), and failure to do so could result in significant fines. It also faces risks from intellectual property infringement claims by others187193 - Financial and Stock-Related Risks: The dual-class stock structure concentrates voting power with pre-IPO stockholders, including executives and directors. The market price of the Class A common stock may be volatile, and the company does not intend to pay dividends in the foreseeable future225233237 Unresolved Staff Comments The company reports no unresolved staff comments from the Securities and Exchange Commission - There are no unresolved staff comments283 Cybersecurity CrowdStrike integrates cybersecurity risk management into its enterprise risk program, overseen by the Audit Committee, with no material incidents identified in fiscal 2024 - Cybersecurity risk management is a core part of the company's enterprise risk program, with oversight from the Board's Audit Committee and daily management by the CISO285290291 - The company's strategy includes regular testing of its incident response plan, penetration testing, third-party audits, and mandatory employee training to mitigate risks287 - In fiscal 2024, the company did not identify any cybersecurity threats or incidents that had a material effect in fiscal 2024 on its business strategy, results of operations, or financial condition289 Properties The company's principal executive offices are leased in Austin, Texas, with management deeming current facilities sufficient for present needs - The principal executive office is a leased space of approximately 47,618 square feet in Austin, Texas, with the lease expiring in 2030294 - CrowdStrike believes its existing facilities are adequate for current operational needs but may add or expand facilities in the future to support growth295 Legal Proceedings The company is involved in ordinary course litigation but believes no pending legal proceedings will have a material adverse effect on its business or financials - The company is subject to various legal claims in the ordinary course of business but does not believe any no pending proceedings will have a material adverse effect296297 Mine Safety Disclosures This item is not applicable to the company - Not applicable298 Part II Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities CrowdStrike's Class A common stock trades on Nasdaq under 'CRWD', with no dividends planned, and has significantly outperformed major indices since its IPO - Class A common stock is traded on the Nasdaq under the symbol "CRWD". There is no public market for Class B common stock301 - The company has never paid cash dividends and does not plan to in the foreseeable future, intending to reinvest earnings into the business303 Stock Performance Comparison (June 12, 2019 - January 31, 2024) | Company/Index | 6/12/19 (Base) | 1/31/24 (End) | Cumulative Return | | :--- | :--- | :--- | :--- | | CrowdStrike Holdings, Inc. | $100.00 | $504.31 | +404.31% | | S&P 500 | $100.00 | $190.27 | +90.27% | | S&P Information Technology | $100.00 | $294.24 | +194.24% | | Nasdaq 100 | $100.00 | $250.05 | +150.05% | [Reserved] This item is reserved - None636 Management's Discussion and Analysis of Financial Condition and Results of Operations CrowdStrike achieved 36% revenue growth to $3.06 billion in fiscal 2024, shifting to a net income of $89.3 million, driven by subscription growth and strong operating cash flow Key Financial Metrics (Fiscal 2024 vs. 2023) | Metric | Fiscal 2024 (in millions) | Fiscal 2023 (in millions) | % Change | | :--- | :--- | :--- | :--- | | Total Revenue | $3,055.6 | $2,241.2 | 36% | | Gross Profit | $2,299.8 | $1,640.0 | 40% | | Gross Margin | 75% | 73% | +2 p.p. | | Net Income (Loss) | $89.3 | ($183.2) | N/A | | Net Cash from Operations | $1,166.2 | $941.0 | 24% | Key Performance Indicators (as of Jan 31, 2024) | Metric | Value (in billions) | YoY Change | | :--- | :--- | :--- | | Annual Recurring Revenue (ARR) | $3.44 | +34% | | Dollar-Based Net Retention Rate | 119% | -6 p.p. | - Revenue growth was driven by acquiring new customers and expanding sales to existing customers. Subscription revenue increased by 36% to $2.87 billion340 - Operating expenses increased across the board, with Sales and Marketing up 26% to $1.14 billion, R&D up 26% to $768.5 million, and G&A up 24% to $392.8 million, primarily due to increased headcount and employee-related costs346347348 - The company's liquidity remains strong with $3.4 billion in cash and cash equivalents, supported by $1.2 billion in net cash provided by operating activities in fiscal 2024372377 Quantitative and Qualitative Disclosures about Market Risk The company is exposed to interest rate, foreign currency, and inflation risks, with foreign currency fluctuations potentially increasing operating loss by $75.8 million in fiscal 2024 - Interest Rate Risk: The company's investments and debt are exposed to interest rate fluctuations. However, a hypothetical 100 basis point change in rates is not expected to materially impact the fair market value of its portfolio409410 - Foreign Currency Risk: With nearly all sales in USD but some operating expenses in foreign currencies, the company is exposed to currency fluctuations. A hypothetical 10% adverse change in the USD exchange rate would have increased the operating loss by an estimated $75.8 million in fiscal 2024411 - Inflation Risk: Management does not believe that inflation had a material effect on the business during the last three fiscal years412 Financial Statements and Supplementary Data This section presents the company's audited consolidated financial statements for fiscal years 2022-2024, along with the independent auditor's report and detailed financial notes - The independent auditor, PricewaterhouseCoopers LLP, issued an unqualified opinion on the consolidated financial statements and the effectiveness of internal control over financial reporting as of January 31, 2024418419 Consolidated Balance Sheet Highlights (as of Jan 31, 2024) | Account | Amount (in thousands) | | :--- | :--- | | Total Assets | $6,646,520 | | Cash and cash equivalents | $3,375,069 | | Accounts receivable, net | $853,105 | | Goodwill | $638,041 | | Total Liabilities | $4,309,431 | | Deferred revenue (current & noncurrent) | $3,054,099 | | Long-term debt | $742,494 | | Total Stockholders' Equity | $2,337,089 | Consolidated Statement of Operations Highlights (FY 2024) | Account | Amount (in thousands) | | :--- | :--- | | Total Revenue | $3,055,555 | | Gross Profit | $2,299,832 | | Total Operating Expenses | $2,301,827 | | Net Income Attributable to CrowdStrike | $89,327 | | Diluted EPS | $0.37 | - The critical audit matter identified by the auditor was related to Revenue Recognition, specifically the identification and evaluation of terms and conditions in customer contracts, due to the high degree of subjectivity and effort involved426427 Changes in and Disagreements with Accountants on Accounting and Financial Disclosure The company reports no disagreements with its accountants regarding accounting principles, financial disclosure, or auditing scope - None reported636 Controls and Procedures Management concluded that the company's disclosure controls and internal control over financial reporting were effective as of January 31, 2024, with no material changes in Q4 fiscal 2024 - Management concluded that the company's disclosure controls and procedures were effective as of January 31, 2024638 - Management's report on internal control over financial reporting concluded that these controls were effective as of January 31, 2024, a conclusion audited and confirmed by PricewaterhouseCoopers LLP639640 - No material changes to internal control over financial reporting occurred during the fourth quarter of fiscal 2024641 Other Information During Q4 fiscal 2024, one director terminated a Rule 10b5-1 trading plan, while two officers adopted new plans for stock sales Officer and Director Trading Plan Activity (Q4 FY2024) | Name and Title | Action | Date | Plan Type | | :--- | :--- | :--- | :--- | | Godfrey Sullivan, Director | Termination | Dec 12, 2023 | Rule 10b5-1 | | Shawn Henry, CSO | Adoption | Dec 20, 2023 | Rule 10b5-1 | | Burt Podbere, CFO | Adoption | Dec 29, 2023 | Rule 10b5-1 | Disclosure Regarding Foreign Jurisdictions that Prevent Inspections This item is not applicable to the company - Not applicable646 Part III Directors, Executive Officers and Corporate Governance Information on directors, executive officers, and corporate governance is incorporated by reference from the forthcoming 2024 Proxy Statement - Information required for this item is incorporated by reference from the forthcoming 2024 Proxy Statement649 Executive Compensation Information on executive compensation is incorporated by reference from the forthcoming 2024 Proxy Statement - Information required for this item is incorporated by reference from the forthcoming 2024 Proxy Statement650 Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters Information on security ownership of beneficial owners and management is incorporated by reference from the forthcoming 2024 Proxy Statement - Information required for this item is incorporated by reference from the forthcoming 2024 Proxy Statement651 Certain Relationships and Related Transactions, and Director Independence Information on certain relationships, related transactions, and director independence is incorporated by reference from the forthcoming 2024 Proxy Statement - Information required for this item is incorporated by reference from the forthcoming 2024 Proxy Statement652 Principal Accountant Fees and Services Information on principal accountant fees and services is incorporated by reference from the forthcoming 2024 Proxy Statement - Information required for this item is incorporated by reference from the forthcoming 2024 Proxy Statement653 Part IV Exhibits and Financial Statement Schedules This section lists financial statements from Item 8 and incorporates the Exhibit Index by reference, with schedules omitted as not applicable - This item references the financial statements in Item 8 and the Exhibit Index656658 Form 10-K Summary The company has indicated that there is no Form 10-K summary - None659