CrowdStrike Is the Real AI Powerhouse in Cybersecurity
Inside the earnings, AI moves, and platform plays fueling CrowdStrike’s next phase
Hi Multis 👋
You probably remember I picked CrowdStrike (CRWD) as a Potential Multibagger at $98.10. It's done well for us, but this isn’t a set-it-and-forget-it game. It’s buy-and-verify, always. So let’s dig into the latest results and see if the thesis still holds.
Anand will help us. As someone with a deep tech background, he's well-positioned to analyze Crowdstrike.
The company reported the result on Wednesday, August 27, and the stock was down around 6% after the release. The next day, the stock was up around 5%.
The Numbers
CrowdStrike's management team informed us about the reacceleration in the last quarter, and the numbers for this quarter confirmed the reacceleration.
CEO George Kurtz:
I'm proud of CrowdStrike's ability to deliver reacceleration, our return to year-over-year net new ARR growth a quarter early.
Revenue for Q2 came in at $1.17 billion, up 21% year-over-year, slightly ahead of expectations. More importantly, Annual Recurring Revenue or ARR grew 20% to $4.66 billion, with $221.1 million in net new ARR added during the quarter.
Source: Fiscal.ai
To put that in perspective, CrowdStrike's ARR has skyrocketed from $791 million to $4.66 billion in just four years, representing a 42.53% compound annual growth rate. That level of sustained growth at scale is truly remarkable.
Source: Fiscal.ai
In Q1, CrowdStrike customers who adopted 6 or more modules grew to 48% from 45% a year ago, 7 or more modules grew to 33% from 29% a year ago, and 8 or more modules grew to 23%. Notably, among customers with over $100,000 in ending ARR, 60% have adopted eight or more modules, highlighting the effectiveness of the CrowdStrike platform consolidation strategy.
Source: Fiscal.ai
The total GAAP gross margin was 77%, and the non-GAAP subscription gross margin remained at 80% of revenue.
On a non-GAAP basis, CrowdStrike reported net income of $237.4 million, compared to $221.6 million a year ago. Non-GAAP EPS came in at $0.93, compared to $0.88 in Q2 last year. Both figures came in ahead of internal estimates for the quarter.
GAAP results, however, were more heavily impacted by the compensations from the outage last year. The company reported a GAAP net loss of $77.2 million, which included $35.7 million in expenses for outage and related matters and $38.4 million in strategic plan-related charges, compared to a net income of $47 million in the same quarter last year. GAAP net loss per share was $0.31, versus a profit of $0.19 per share in Q2 last year.
Free cash flow was $283.6 million or 24% of revenue, compared to $272.2 million. Expenses for outage-related and strategic plan costs impacted Q2 free cash flow by approximately $29 million. Free cash flow began to tick up as the outage-related expenses started to fade away slowly. The Free cash flow margin was 25.9, and the management team guided to exit the year with 27% of free cash flow margin.
Source: Fiscal.ai
CrowdStrike reported that cash and cash equivalents grew to a record $4.97 billion.
Source: Fiscal.ai
CEO George Kurtz on the call:
Quarters like this one highlight our momentum and progress on the path to $10 billion in ending ARR, setting new records, achieving net new ARR reacceleration sooner than anticipated, and rising competitive win rates highlight CrowdStrike leading the way in cybersecurity.
Guidance:
Q2 2025 Outlook
Management is known for providing conservative guidance. They guided for revenue between $1.208 to $1.218 billion, a 20% growth compared to a year ago, which is in line with expectations. Here is an impressive number that the company expects at least 40% year-over-year net new ARR growth for the second half of 2025. Non-GAAP net income is in the $256 to $262 million range, and non-GAAP net income per share will be in the $0.93 to $0.95 range, also in line with the consensus estimate.
Full-year 2025 outlook
Management guided for revenue between $4.749 billion and $4.805 billion. Non-GAAP net income is expected to be between $1000.1 $1040.1 million, and non-GAAP net income per share will be in the $3.60 to $3.72 range. The revenue expectations for the year remain the same, while net income and net income per share full-year guidance increased from the previous quarter.
CrowdStrike annual conference Fal.Con 2025 begins on Monday, September 15. With over 100 sponsors and over 8,000 attendees, Fal.Con is going to be the largest customer event yet. That will help improve the second half of the year and the following year's pipeline.
CFO Burt Podbere on the call:
We have a clear line of sight to well exceed the $5 billion ending ARR milestone by fiscal year-end, achieving the ambitious goal we set in 2022 as we execute on our path to $10 billion in ending ARR by FY 31.
In less than 3 years, the company already has confidence of $5 billion in ARR, which will mark the halfway point from the long-term goal of $10 billion ARR. That is impressive.
Highlights from the conference call
CrowdStrike Platform Updates
CrowdStrike's cloud, Next-Gen Identity, and Next-Gen SIEM platform solutions are now more than $1.56 billion in ending ARR, growing more than 40% year-over-year. That's remarkable progress and strengthening CrowdStrike's lead in the cybersecurity space.
There are also more specialized solutions. The Exposure Management business, which includes capabilities such as vulnerability management and attack surface management, has surpassed $300 million in ending ARR and was named a leader in the 2025 IDC Worldwide Exposure Management MarketScape. CrowdStrike's market leadership was further reflected in Gartner's latest Magic Quadrant for Endpoint Protection Platforms, where CrowdStrike was placed in the Leader box for the sixth consecutive year.
Source: CrowdStrike investor presentation
Falcon Next-Gen SIEM had a stellar Q2 with year-over-year growth of more than 95% and an ending ARR of more than $430 million. Next-Gen SIEM is becoming synonymous with AI SOC transformation.
CrowdStrike recently announced the launch of Next-Gen Identity Protection, which extends the best-in-class identity protection to nonhuman identities or NHI, SaaS applications, and most importantly, AI agents. As agentic identities proliferate, customers require an identity security solution to safely leverage agentic AI, preventing exploitation, misuse, and breaches. Including Falcon Shield and Next-Gen Identity Protection business exceeded $435 million of ending ARR in Q2, growing more than 21% year-over-year.
Based on customer demand and another opportunity to innovate, CrowdStrike launched its own Privileged Access Management or PAM offering in Q1. CrowdStrike PAM solution delivers privileged account password rotation, privileged user identification and risk assessment, privileged escalation detection, user risk profile insights, and flexible MFA controls for different departments within the organization, helping its customers consolidate with confidence. Driven by the excitement for Next-Gen Identity Protection and Next-Gen Privilege Access, these new solutions significantly expand their identity solution opportunity.
You probably heard the news that Palo Alto Networks (PANW) announced the acquisition of CyberArk for $25 billion. That's a huge acquisition and clearly shows Palo Alto Networks' formal entry into Identity Security, establishing it as part of the company's multi-platform strategy. It combines CyberArk's long-standing leadership in Identity Security and Privileged Access Management (PAM).
This is where two schools of thought emerge: small acquisitions with unified platform offerings vs. big, bold acquisitions with a multi-platform strategy. There’s no right or wrong, but I like the former more.
CrowdStrike is a leader in cloud runtime protection, with the largest and most sophisticated enterprises trusting it to protect their most critical production environments. With the need to secure AI as a backdrop, CrowdStrike delivered impressive net new ARR in the cloud this past quarter. Total cloud ending ARR exceeded $700 million, growing more than 35% year-over-year.
Falcon Flex for the win
Falcon Flex is significantly evolving the go-to-market and customer experience. CrowdStrike surpassed the 1,000 Falcon Flex customer milestone, with the average Flex customer representing more than $1 million of ending ARR. CrowdStrike added more than 220 new Flex customers.
CrowdStrike and its partner channel see strong adoption of the unified Falcon platform. Utilization of Flex contracts is more than 75% across the Flex customer base. Building on last quarter's re-Flex momentum, now more than 100 customers have already re-Flexed. CrowdStrike had more than doubled the number of re-Flexed accounts to nearly 10% of all Flex customers.
Cybersecurity is more non-negotiable than ever
As organizations of all sizes embrace AI transformation, there are some worries and thematic concerns from executives and Boards. Worries like where shadow AI is emerging in businesses, how to control what data enters AI systems, and how to control what AI systems can do in the enterprise? That leads to the overall basic question: how to secure AI agents?
AI has made the role of Chief Information and Security Officer, or CISOs, and Chief Information Officer, or CIOs, more complicated than ever. Answering the above questions is difficult, expensive, nuanced, conditional, and incomplete. It is essential to adopt AI in a safe, secure, and meaningful way.
CrowdStrike's threat intelligence research uncovered Chollima, a North Korean nexus group, using GenAI to infiltrate more than 320 enterprises by automating fabricated resumes and conducting deepfake interviews. The threat is real. CrowdStrike's role in the agentic era is staying ahead of AI-armed threat actors to secure AI at every layer. If we believe in AI, and we think there's going to be meaningful AI in the future, in the next year, 3 or 5 years, then security is non-negotiable.
CrowdStrike's superhuman Charlotte
CrowdStrike is rapidly accelerating the pace of its AI innovation. Charlotte is its SOC analyst, automating actions and now end-to-end autonomous workflows across the SOC. Charlotte had a record quarter, growing more than 85% over Q1. The company is integrating Charlotte across the entirety of the Falcon platform, empowering customers to achieve their agentic security goals out of the box with immediate Return on Investment or ROI.
CrowdStrike has a unique competitive advantage of vast, clean, reliable cyber data, coupled with the data science expertise, which creates a reinforcement learning flywheel, continuously adapting and improving autonomous detection and response.
Charlotte is constantly learning and improving as they train it on its market-leading threat intelligence, battleground incident response and scaled Falcon Complete MDR analyst behavior. The outcome is Charlotte turning its data moat into a fortified and dynamic AI wall. The time and effort of training the model will be hard to compete in the AI era. CrowdStrike made an early investment and is creating meaningful solutions for its customers.
There’s a lot more under the hood this quarter including a stealth acquisition that could reshape the platform, a quiet turf war brewing with Datadog, CrowdStrike’s partnership with Nvidia and a GTM shift that could boost margins. Let’s break it down.
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