CrowdStrike (CRWD) Q1 2026 Earnings Transcript

Core Insights - CrowdStrike Holdings, Inc. reported strong Q1 FY2026 results, with net new Annual Recurring Revenue (ARR) of $194 million, exceeding management expectations, and ending ARR of $4.44 billion, reflecting a 22% year-over-year growth [4][12][49] - The company emphasized the success of its FalconFlex subscription model, which has driven significant customer engagement and rapid expansion, with over $3.2 billion in total deal value across more than 820 accounts [6][12][25] - Management expressed confidence in achieving long-term margin targets and accelerating net new ARR growth, supported by investments in AI-driven automation and strategic partnerships, including a collaboration with Microsoft [12][14][45] Financial Performance - Total revenue for Q1 FY2026 reached $1.1 billion, a 20% increase year-over-year, with subscription revenue also growing by 20% to $1.05 billion [4][50] - Non-GAAP operating income was reported at $201.1 million, with a non-GAAP operating margin of 18%, exceeding company guidance [5][51] - Free cash flow for the quarter was $279.4 million, representing 25% of revenue, despite a $61 million impact from outage-related expenses [5][53] Customer Metrics - The subscription gross margin stood at 80%, indicating strong platform efficiency, while the gross retention rate was 97%, highlighting high customer loyalty [4][5] - Over 48% of subscription customers are using six or more Falcon modules, demonstrating deep platform adoption [7][50] - The FalconFlex model has resulted in an average deal size exceeding $1 million ARR, with a 31-month average contract length [6][25] Strategic Initiatives - The company announced a strategic realignment plan aimed at enhancing operational efficiency and targeting a non-GAAP operating margin of at least 24% by FY2027 [8][56] - A share repurchase authorization of up to $1 billion reflects management's confidence in the company's long-term strategy and cash flow strength [9][48] - The CCP program is expected to create a temporary separation between ARR and subscription revenue recognition, impacting revenue by approximately $11 million in Q1 FY2026 and $10 million to $15 million in subsequent quarters [10][55] Market Position and Future Outlook - CrowdStrike is positioned as a leader in the cybersecurity software market, with a focus on AI-driven solutions to address evolving threats, particularly in the context of increasing AI agent proliferation [12][33] - The company anticipates continued strong demand for its Falcon platform, with expectations for sequential net new ARR growth to double compared to the previous fiscal year [54][67] - Management highlighted the importance of consolidating point products and enhancing customer experience through the FalconFlex model, which is expected to drive further growth [12][63]