01—Abstract
Summary
Summary of the 10-Q filed December 6, 2019. Cited figures are marked; the original filing is the authoritative source.
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 milliona 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 millionb 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 millionc 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 milliond 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.
02—Key points
Key Highlights
- Total revenue surged 88% year-over-year to $125.1 million for Q3 FY2020.
- Subscription revenue increased by 98% year-over-year to $114.2 million for Q3 FY2020, driven by customer growth and expansion.
- The subscription customer base grew by 112% year-over-year to 4,561 as of October 31, 2019.
- Subscription gross margin improved to 74% from 70% in the prior year's quarter.
- The company completed its Initial Public Offering (IPO) in June 2019, significantly strengthening its liquidity.
- Cash flow from operations turned positive at $33.8 million for the first nine months of FY2020, a substantial improvement from the previous year.
- Deferred revenue grew to $447.6 million, indicating strong future revenue potential.
03—One dollar
Follow one dollar
For each $1.00 of revenue in Q3 FY2020, CrowdStrike Holdings, Inc. lost $0.28.
- Revenue$125.1M100.0%
- Cost of revenue−$37.4M29.9%
- Gross profit$87.8M70.1%
- Operating costs−$126.3M100.9%
- Operating income−$38.5M30.8%
- Interest, other & tax$3.0M2.4%
- Net income−$35.5M28.4%
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2020filed December 6, 2019Financial Statements
Q3 FY2020 against Q3 FY2019
| Line item | Q3 FY2020Q3 FY2019 | Change |
|---|---|---|
| Revenue | $125.12M$66.38M | +88.5% |
| Cost of Revenue | $37.35M$22.27M | +67.7% |
| Gross Profit | $87.76M$44.10M | +99.0% |
| R&D Expenses | $35.99M$25.97M | +38.6% |
| Operating Expenses | $126.28M$86.20M | +46.5% |
| Operating Income | -$38.52M-$42.09M | +8.5% |
| Interest Expense | $132K$0 | — |
| Net Income | -$35.51M-$42.32M | +16.1% |
| EPS (Basic) | $-0.04$-0.23 | +81.7% |
| Shares Outstanding (Basic) | 816.38M181.15M | +350.7% |
05—Questions
Frequently Asked Questions
What is CrowdStrike's primary business and revenue model?
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.
How did CrowdStrike perform in terms of revenue growth and customer acquisition during this period?
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.
Is CrowdStrike profitable?
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.
What is the company's financial position and liquidity?
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.
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