CrowdStrike(US:CRWD)2025-12-02 23:02Financial 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]