Key Takeaways CRWD's Falcon Flex ARR topped $1.35B in Q3 fiscal 2026, growing more than 200% year over year.Falcon Flex is driving larger deals, including multiple eight-figure contracts tied to SIEM and AI modules.Re-Flex activity surged, with several customers signing new deals at more than twice their original spend.CrowdStrike’s (CRWD) Falcon Flex subscription model is becoming a key driver of the company’s growth. In the third quarter of fiscal 2026, management said that more customers are choosing Fle ...

Core Insights - Palantir and CrowdStrike are identified as two of the most expensive AI stocks, with investor concerns primarily focused on valuation despite a general interest in AI stocks for 2026 [1] Palantir Technologies - Palantir's stock trades at a forward price-to-sales (P/S) ratio of 67 times 2025 analyst estimates and 49 times 2026 consensus, significantly exceeding the median enterprise value-to-sales multiple of around 20 times for software stocks in 2021 and 2022 [2] - The company has experienced accelerating revenue growth, reaching 63% last quarter, driven by increased adoption of its Artificial Intelligence Platform (AIP) among U.S. commercial customers [4] - Palantir's customer count increased by 45% in Q3 2025, and its net dollar retention rate is at 134%, indicating strong growth from existing customers [5] - The U.S. government, as Palantir's largest customer, is also expanding its contracts as it modernizes its defense and intelligence capabilities [6] - Despite its growth potential, the stock is considered overvalued, with historical examples of major tech companies experiencing significant stock price declines before eventual recoveries [7] CrowdStrike - CrowdStrike's stock trades at a forward P/S multiple of nearly 25 times the fiscal 2026 consensus and 20 times fiscal 2027 forecasts, raising concerns about its valuation [10] - The company's annual recurring revenue (ARR) growth had been decelerating but accelerated to 23% last quarter, while total revenue rose 22% [11] - The introduction of the Falcon Flex licensing model has significantly boosted ARR for customers adopting it, with some seeing their ARR triple in Q3 [12] - For CrowdStrike to justify its current valuation, revenue growth needs to accelerate to the 30% range and maintain that level [13]

Core Insights - CrowdStrike's Falcon Flex model is rapidly growing and is integral to the company's expansion strategy, with Annual Recurring Revenue (ARR) from Falcon Flex customers reaching $1.35 billion in Q3 fiscal 2026, more than tripling from the previous year [1][9] Group 1: Falcon Flex Growth and Impact - Falcon Flex facilitates quicker adoption of new modules without lengthy contract processes, resulting in increased platform usage and strong re-Flex activity, with over 200 customers expanding their contracts in Q3 [2][9] - The model is driving growth in key product areas such as Next-Generation Security Information and Event Management, cloud security, identity security, and endpoint protection, as it reduces procurement friction and encourages multi-module adoption [3][9] - Falcon Flex is expected to remain a significant growth engine for CrowdStrike, contributing to increased ARR, larger deal sizes, and deeper platform utilization, with revenue estimates indicating a year-over-year increase of around 21% for fiscal 2026 and 2027 [4] Group 2: Competitive Landscape - Competitors like Palo Alto Networks and SentinelOne are also experiencing growth through platform expansion and AI innovations, with Palo Alto Networks reporting a 29% year-over-year increase in its Next-Gen Security ARR in Q1 fiscal 2026 [5] - SentinelOne achieved a 23% year-over-year growth in its ARR for Q3 fiscal 2026, driven by the adoption of its AI-first Singularity platform [6] Group 3: Financial Performance and Valuation - CrowdStrike's shares have increased by 9.6% over the past three months, contrasting with a 3.3% decline in the Zacks Security industry [7] - The company trades at a forward price-to-sales ratio of 21.56, significantly higher than the industry average of 11.83 [11] - The Zacks Consensus Estimate for CrowdStrike's fiscal 2026 earnings suggests a year-over-year decline of 5.6%, while fiscal 2027 earnings are expected to grow by 28.8%, with recent upward revisions in estimates [14]

Core Insights - Meta Platforms, ASML, and CrowdStrike are potential candidates for stock splits in 2026, which could enhance accessibility for average investors and serve as a positive catalyst for their stock prices [1][2]. Meta Platforms - Meta Platforms is the only stock among the "Magnificent Seven" that has never split its stock, with a current price nearing $700, suggesting a possible split in 2026 [4]. - The company aims to bolster market confidence in its significant AI infrastructure investments while reducing spending on metaverse projects, indicating a strategic shift [5]. - Meta's AI initiatives have positively impacted ad revenue, contributing to a 26% revenue increase last quarter [7]. ASML - ASML's stock price exceeds $1,000, making it a strong candidate for a stock split in 2026, with its last split occurring in April 2000 [8]. - The company holds a monopoly on extreme ultraviolet lithography (EUV), essential for advanced semiconductor chips, positioning it well for the ongoing AI boom [9]. - ASML is developing a new generation of lithography technology, High-NA EUV, which will further enhance chip manufacturing capabilities [11]. CrowdStrike - CrowdStrike's stock price is over $500, and it has never split its stock, making 2026 a potential year for a split as its annual recurring revenue (ARR) begins to accelerate [12]. - Following a significant IT outage in 2024, CrowdStrike introduced a flexible licensing model, Falcon Flex, which has improved customer engagement and led to a 23% ARR growth last quarter [14]. - The company is experiencing strong momentum with its next-generation solutions, with nearly half of its customers using six or more modules [15].

Core Insights - CrowdStrike's annual recurring revenue (ARR) growth has reaccelerated, marking a positive shift after two years of decline [2] - The company reported strong fiscal Q3 results, with significant increases in net new ARR and total ARR [3] Financial Performance - Net new ARR increased by 73% to $265 million, while total ARR rose by 23% to $4.92 billion [3] - Revenue grew by 22% to $1.23 billion, surpassing the consensus estimate of $1.21 billion [3] - Subscription revenue also saw a 21% increase, reaching $1.17 billion [3] Growth Trends - Year-over-year revenue and ARR growth trends have shown fluctuations, with the latest quarter indicating a rebound [4] - The company’s revenue growth rates have been declining gradually over the past quarters, but Q3 FY25 shows a stabilization [4] Strategic Initiatives - The growth is attributed to the Falcon Flex licensing model, which allows customers to access the full product portfolio while paying for modules as needed [5] - Customers using Falcon Flex ended the quarter with $1.35 billion in ARR, more than tripling year-over-year [6] - The number of customers entering new contracts for Flex credits more than doubled, indicating strong demand [6] Product Adoption - A record quarter was noted for ARR in next-gen SIEM and Cloud Security [7] - 49% of customers are utilizing six or more modules, with 24% using eight or more, reflecting increased product adoption [7] Market Position - Despite the positive growth indicators, the stock is considered to have a high valuation, suggesting a cautious approach for potential investors [8]

Core Insights - CrowdStrike's Q3 FY'26 results have significantly countered the negative market sentiment following the July 2024 outage, showcasing strong performance and customer retention [2][10] - The company reported a 73% increase in Net New Annual Recurring Revenue (ARR), reaching $265 million, indicating robust demand for its services [3][10] - The narrative around CrowdStrike has shifted from being perceived as a liability to being recognized as an essential utility in the cybersecurity landscape [5] Financial Performance - CrowdStrike's revenue growth stands at 29% year-on-year, with a free cash flow margin of 25%, demonstrating a balance of rapid growth and profitability [8] - The company's price-to-sales (P/S) ratio is approximately 22x for FY'27, significantly higher than competitors like SentinelOne at 5x and Palo Alto Networks at ~11x [8] Competitive Landscape - Despite concerns about competition from Microsoft and SentinelOne, CrowdStrike's customer base appears to be growing, with 49% of subscription clients now using six or more modules [8] - The outage has inadvertently highlighted Microsoft's vulnerabilities, reinforcing CrowdStrike's position as a critical component of enterprise security [8][9] Product Innovation - The introduction of "Falcon Flex" has allowed customers to utilize multiple modules under a single contract, reducing friction and increasing module adoption [7][8] - Flex customers typically use an average of nine modules, which locks them into the CrowdStrike ecosystem and diminishes the threat from point solution competitors [8] Market Position - CrowdStrike is now viewed as a "Systemically Important Institution" trading at a discount relative to its capabilities, suggesting potential for future growth [4] - The company's management has emphasized record achievements in Next-Gen SIEM, positioning it as a leader in evolving security solutions [9]

Question-and-Answer SessionI felt like a very strong quarter on all regards. But in your words, what stood out?Yes. Cool. I think I want to talk a lot about the high-level strategy here. But given we're just off earnings last night and before we get into the bigger picture, maybe just review some of the highlights from last night.George KurtzCo-Founder, President, CEO & Director Well, I think if you look at the quarter, it was broad based performance. Obviously, our ARR stands out year-over-year, 73% growth ...

CrowdStrike Conference Call Summary Company Overview - **Company**: CrowdStrike (NasdaqGS:CRWD) - **Event**: 2025 Conference on December 03, 2025 Key Highlights Financial Performance - **Annual Recurring Revenue (ARR)**: Achieved 73% year-over-year growth, indicating strong demand across product lines [3][12] - **Free Cash Flow**: Recorded a record high, showcasing effective cash management [3][12] - **Gross Margin**: Subscription gross margin stood at 81%, reflecting operational efficiency [3][12] - **Net New ARR**: Best quarter since calendar Q4 2023, indicating robust customer acquisition [4] Acquisitions - **Recent Acquisitions**: Two companies were acquired, contributing a net new revenue of $2.8 million, which was clarified to avoid misinterpretation [6][7] - **Onum Acquisition**: Positioned as a game changer for next-gen SIEM, enhancing capabilities in data pipelining and observability [35][36] Product and Platform Strategy - **Falcon Flex**: $135 billion of ARR is now flowing through Flex contracts, which allows customers to commit to a broader range of services while enjoying flexibility [17][19] - **Next-Gen SIEM**: Close to 100% growth, with significant customer wins indicating a shift from legacy systems [24][25] - **AI Integration**: Emphasis on AI's role in security operations, with a focus on developing autonomous SOC capabilities [38][45] Market Dynamics - **Legacy Replacement Cycle**: Customers are increasingly frustrated with traditional SIEM solutions, driving demand for next-gen alternatives [24][25] - **Greenfield Opportunities**: Potential to penetrate the SIEM market at lower tiers, targeting smaller companies that require visibility into their security posture [28][29] Competitive Landscape - **AWS Partnership**: Announcement of Falcon Next-Gen SIEM as the default SIEM for AWS Security Hub, expected to open new customer opportunities [30][32] - **F5 Collaboration**: Integration with F5 appliances to enhance security offerings, attracting new customers [33][34] AI and Security - **AI Threat Landscape**: Increased concern among customers regarding AI-driven attacks, leading to elevated security budgets [39][40] - **Falcon Shield**: Significant growth in demand for Falcon Shield, which secures AI applications and SaaS environments [42][44] - **Charlotte AI**: Positive feedback on Charlotte's capabilities in improving security operations, with significant time savings in investigations [45][49] M&A Strategy - **Disciplined Approach**: CrowdStrike maintains a high bar for acquisitions, focusing on technology and team integration rather than just revenue growth [53][54] Future Outlook - **Fiscal 2027 Target**: CrowdStrike aims for 20% net new ARR growth, supported by a strong pipeline and market opportunities driven by AI [56][57] Additional Insights - **Customer Engagement**: Customers are increasingly looking for integrated solutions that reduce complexity and cost, driving the demand for CrowdStrike's platform [25][28] - **Data Control**: Owning and controlling the data fabric is seen as a competitive advantage in the evolving security landscape [37] This summary encapsulates the key points discussed during the CrowdStrike conference call, highlighting the company's strong financial performance, strategic initiatives, and market positioning.

Financial Data and Key Metrics Changes - Record Q3 net new ARR of $265 million, growing 73% year-over-year, exceeding expectations by over 10% [6][31] - Ending ARR reached $4.92 billion, accelerating to 23% growth year-over-year [6][31] - Record Q3 free cash flow of $296 million, representing 24% of revenue [7][31] - All-time record operating income of $265 million, or 21% of revenue, marking the second consecutive quarter of record operating income [7][31] - Total revenue grew 22% year-over-year to $1.23 billion, with subscription revenue growing 21% to $1.17 billion [35][31] Business Line Data and Key Metrics Changes - Broad-based ending ARR acceleration across cloud, next-gen identity, and next-gen SIEM, along with acceleration in the endpoint business [7][31] - Falcon Flex subscription model contributed over $1.35 billion in ending ARR, growing more than 200% year-over-year [7][33] - Falcon Shield had a record net new ARR quarter, growing nearly 50% sequentially [16][31] Market Data and Key Metrics Changes - Geographic revenue mix consisted of approximately 67% from the U.S. and 33% from international markets, with both U.S. and APAC revenue growth accelerating year-over-year [35][31] - The cloud security market is maturing, with customers realizing the need for active defense within their cloud environments [17][31] Company Strategy and Development Direction - CrowdStrike positions itself as the operating system for cybersecurity in the agentic era, emphasizing the need for a single platform to manage cybersecurity effectively [10][11] - The company is focused on consolidating its offerings through the Falcon platform, which integrates various security solutions to lower total cost of ownership for customers [33][31] - The acquisition of Onum and Pangea is aimed at enhancing the platform's capabilities and customer experience [31] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strong demand environment driven by AI adoption and the need for robust cybersecurity solutions [29][31] - The company anticipates continued growth in net new ARR, projecting at least 50% year-over-year growth in the second half of FY26 [37][31] - Management highlighted the importance of cybersecurity as a necessity in the evolving digital landscape, reinforcing CrowdStrike's critical role [7][29] Other Important Information - The company reported a GAAP net loss of $34 million, which included costs associated with a prior incident and acquisition-related expenses [36][31] - Cash and cash equivalents stood at $4.80 billion, with record cash flow from operations of $397.5 million [36][31] Q&A Session Summary Question: Insights on emerging segments and seasonality of net new ARR - Management noted that emerging products like Next-Gen SIEM and Identity performed exceptionally well, with strong customer adoption [44] Question: Value captured in SIEM displacements - Management indicated that customers are seeking better outcomes and lower costs, allowing CrowdStrike to offer competitive pricing and grow wallet share [47] Question: Further push into observability - Management acknowledged the opportunity for consolidation in observability, leveraging existing technology and customer data [51] Question: Dynamics of Flex licensing and its impact on NRR - Management emphasized that Flex licensing is designed for continuous growth, making it easier for customers to buy more over time [56] Question: AI's impact on customer conversations - Management highlighted that CrowdStrike's AI capabilities differentiate it from competitors, enabling faster and more effective security solutions [61]

Financial Data and Key Metrics Changes - Record Q3 net new ARR of $265 million, growing 73% year over year, exceeding expectations by over 10% [6][32] - Ending ARR reached $4.92 billion, accelerating to 23% growth year over year [6][32] - Record Q3 free cash flow of $296 million, representing 24% of revenue [7][32] - All-time record operating income of $265 million, or 21% of revenue, marking the second consecutive quarter of record operating income [7][32] - Non-GAAP net income attributable to CrowdStrike was a record $245.4 million, or $0.96 on a diluted per-share basis [37][41] Business Line Data and Key Metrics Changes - Broad-based ending ARR acceleration across cloud, next-gen identity, and next-gen SIEM, along with acceleration in the endpoint business [7][33] - Falcon Flex subscription model contributed over $1.35 billion in ending ARR, growing more than 200% year over year [7][34] - Falcon Shield had a record net new ARR quarter, growing nearly 50% sequentially [16][34] - Next-Gen SIEM achieved record net new ARR, reflecting strong customer adoption and performance [12][33] Market Data and Key Metrics Changes - Geographic revenue mix consisted of approximately 67% from the U.S. and 33% from international markets, with both U.S. and APAC year-over-year revenue growth accelerating compared to Q2 [36] - The cloud security market is maturing, with customers realizing the need for active defense within their cloud environments [17] Company Strategy and Development Direction - CrowdStrike positions itself as the operating system for cybersecurity in the agentic era, emphasizing the need for a single platform solution [10][11] - The company is focused on consolidating security needs and lowering total cost of ownership for customers, resulting in higher retention rates and increased module adoption [35] - The partnership with AWS enhances CrowdStrike's market position, providing native access to Falcon Next-Gen SIEM for AWS customers [14][27] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strong demand environment and robust pipeline entering Q4, anticipating continued profitable growth [36][38] - The AI-driven demand environment is seen as a significant opportunity, with AI adoption necessitating enhanced cybersecurity measures [29][30] - Management highlighted the importance of cybersecurity as a constant necessity amid technological transformations [30] Other Important Information - The company achieved record cash flow from operations of $397.5 million [37] - Non-GAAP gross margin was reported at 78%, with subscription gross margin increasing to 81% [36] - The company expects total revenue for Q4 FY26 to be in the range of $1.290-$1.300 billion, reflecting a year-over-year growth rate of 22%-23% [40] Q&A Session Summary Question: Insights on emerging segments and seasonality for net new ARR - Management noted that emerging products like Next-Gen SIEM and Identity performed well, with strong customer adoption and consolidation on the platform [46] Question: Value captured in SIM market displacements - Management indicated that customers are seeking better outcomes and lower costs, with CrowdStrike's existing EDR data providing a competitive advantage [50] Question: Further push into observability - Management views observability as a consolidation opportunity, leveraging existing technology and data collection capabilities [55] Question: Dynamics of Flex licensing and its sustainability - Management emphasized that Flex licensing is designed for continuous net ARR growth, making it easier for customers to buy more over time [62] Question: Impact of AI on customer conversations - Management highlighted that CrowdStrike's AI capabilities differentiate it from competitors, with AI agents embedded in the platform delivering significant value [66] Question: Key products driving growth impact for next year - Management identified Next-Gen SIEM, cloud, and Falcon Shield as key products with significant growth potential [72]