10-QPeriod: Q3 FY2020

CrowdStrike Holdings, Inc. Quarterly Report for Q3 Ended Oct 31, 2019

Filed December 6, 2019For Securities:CRWD

Summary

CrowdStrike Holdings, Inc. (CRWD) reported its third-quarter fiscal year 2020 results for the period ending October 30, 2019. The company demonstrated substantial year-over-year revenue growth, with total revenue increasing by 88% to $125.1 million for the quarter and by 94% to $329.3 million for the nine-month period. This growth was primarily driven by a significant surge in subscription revenue, which rose by 98% year-over-year for the quarter and 103% for the nine months, reflecting strong customer acquisition and expansion. The company's customer base more than doubled year-over-year, reaching 4,561 subscription customers by October 31, 2019. Despite robust top-line growth and an improvement in subscription gross margin to 74% for the quarter, CrowdStrike continued to operate at a loss, with a net loss of $35.5 million for the third quarter and $113.4 million for the nine months, reflecting continued significant investments in sales and marketing, research and development, and general administrative expenses, compounded by increased stock-based compensation. The company successfully closed its initial public offering (IPO) in June 2019, raising substantial capital. Financially, CrowdStrike's balance sheet shows significant growth in deferred revenue, reaching $447.6 million as of October 31, 2019, indicating strong future revenue potential. The company also reported a positive cash flow from operations of $33.8 million for the nine months ended October 31, 2019, a significant improvement from the prior year's negative cash flow. However, investing activities show a substantial use of cash for purchases of marketable securities and property and equipment. The company ended the period with a strong liquidity position, with over $743 million in cash and cash equivalents and $90 million in marketable securities. The company's focus remains on expanding its Security Cloud platform and acquiring new customers, which is driving its substantial revenue growth but also incurring significant operating expenses.

Financial Highlights

50 data points
Beta

Revenue

$125.12M

70.1% Gross Margin

Net Income

-$35.51M

-28.4% Net Margin

EPS (Diluted)

$-0.04

Total Assets

$1.26B

Cash & Equivalents

$743.61M

Free Cash Flow

$8.95M

Financial Statements
Beta
Revenue$125.12M
Cost of Revenue$37.35M
Gross Profit$87.76M
R&D Expenses$35.99M
Operating Expenses$126.28M
Operating Income-$38.52M
Interest Expense$132K
Net Income-$35.51M
EPS (Basic)$-0.04
Shares Outstanding (Basic)816.38M

Key Highlights

  • 1Total revenue surged 88% year-over-year to $125.1 million for Q3 FY2020.
  • 2Subscription revenue increased by 98% year-over-year to $114.2 million for Q3 FY2020, driven by customer growth and expansion.
  • 3The subscription customer base grew by 112% year-over-year to 4,561 as of October 31, 2019.
  • 4Subscription gross margin improved to 74% from 70% in the prior year's quarter.
  • 5The company completed its Initial Public Offering (IPO) in June 2019, significantly strengthening its liquidity.
  • 6Cash flow from operations turned positive at $33.8 million for the first nine months of FY2020, a substantial improvement from the previous year.
  • 7Deferred revenue grew to $447.6 million, indicating strong future revenue potential.

Frequently Asked Questions

CrowdStrike's primary business is providing cloud-native cybersecurity solutions through its Falcon platform, offered as a SaaS subscription. Revenue is generated from these subscriptions, based on factors like the number of solutions subscribed to and the number of endpoints protected. They also generate revenue from professional services, which are viewed as a lead generator for subscriptions.

CrowdStrike experienced significant revenue growth, with total revenue increasing by 88% year-over-year to $125.1 million for the third quarter. Subscription revenue, the main driver, grew by 98%. The customer base also saw substantial growth, increasing by 112% year-over-year to 4,561 subscription customers by the end of the quarter.

No, CrowdStrike is not yet profitable. The company reported a net loss of $35.5 million for the third quarter and a net loss of $113.4 million for the first nine months of the fiscal year. This is due to ongoing significant investments in sales and marketing, research and development, and general administrative expenses to support its rapid growth.

CrowdStrike maintains a strong liquidity position, with $743.6 million in cash equivalents and $90.1 million in marketable securities as of October 31, 2019. The company's balance sheet shows a healthy increase in deferred revenue to $447.6 million, signaling future revenue. They also achieved positive cash flow from operations for the nine-month period, a significant improvement.