01—Abstract
Summary
Summary of the 10-Q filed September 3, 2020. Cited figures are marked; the original filing is the authoritative source.
CrowdStrike Holdings, Inc. (CRWD) filed its 10-Q for the period ending July 30, 2020, on September 2, 2020.
As an emerging growth company, CrowdStrike continues to leverage certain exemptions from regulatory requirements, which may affect comparability with other companies and potentially influence investor perception of its Class A common stock. The company's corporate structure includes a dual-class stock system and provisions that could make a change of control more difficult for potential acquirers and limit the ability of stockholders to replace board members or current management. These structural elements, including the board's ability to issue preferred stock without stockholder approval, are important considerations for investors assessing governance and potential dilution risks.
02—Key points
Key Highlights
- CrowdStrike is operating as an 'emerging growth company' until January 31, 2021, taking advantage of regulatory exemptions, including those related to SOX 404 auditor attestation and executive compensation disclosures.
- The company has elected an extended transition period for adopting new or revised accounting standards, which may impact the comparability of its financial statements with those of companies that have adopted them earlier.
- Potential for significant dilution exists due to the authorization to issue a large number of Class A common stock, preferred stock, and other securities, which could be used in financings, acquisitions, or stock incentive plans.
- CrowdStrike's charter documents and Delaware law contain provisions designed to make a takeover more difficult, including a dual-class common stock structure, a classified board of directors, and the board's ability to issue preferred stock without stockholder approval.
- The dual-class stock structure gives significant voting influence to Class B common stock holders, irrespective of their proportional ownership.
- There were no unregistered sales of equity securities during the reported period.
- No material changes have been made to the planned use of proceeds from the company's Initial Public Offering (IPO) as described in its final prospectus.
03—One dollar
Follow one dollar
For each $1.00 of revenue in Q2 FY2021, CrowdStrike Holdings, Inc. lost $0.15.
- Revenue$199.0M100.0%
- Cost of revenue−$54.4M27.3%
- Gross profit$144.6M72.7%
- Operating costs−$174.6M87.7%
- Operating income−$30.0M15.1%
- Interest, other & tax$117,0000.1%
- Net income−$29.9M15.0%
04—Financials
Financial Highlights
Figures from 10-QQ2 FY2021filed September 3, 2020Financial Statements
Q2 FY2021 against Q2 FY2020
| Line item | Q2 FY2021Q2 FY2020 | Change |
|---|---|---|
| Revenue | $198.97M$108.11M | +84.0% |
| Cost of Revenue | $54.39M$31.58M | +72.2% |
| Gross Profit | $144.58M$76.53M | +88.9% |
| R&D Expenses | $50.48M$31.63M | +59.6% |
| Operating Expenses | $174.57M$127.17M | +37.3% |
| Operating Income | -$29.99M-$50.64M | +40.8% |
| Interest Expense | $174K$164K | +6.1% |
| Net Income | -$29.87M-$51.89M | +42.4% |
| EPS (Basic) | $-0.04$-0.10 | +65.0% |
| EPS (Diluted) | $-0.04— | — |
| Shares Outstanding (Basic) | 866.78M520.36M | +66.6% |
| Shares Outstanding (Diluted) | 866.78M— | — |
05—Questions
Frequently Asked Questions
What does it mean that CrowdStrike is an 'emerging growth company'?
As an 'emerging growth company' until January 31, 2021, CrowdStrike is exempt from certain reporting and compliance requirements applicable to larger public companies, such as auditor attestation for internal controls under SOX 404 and certain executive compensation disclosures. This can lead to reduced disclosures and potentially affect comparability with other companies.
How might CrowdStrike's corporate structure affect investors?
CrowdStrike's corporate structure, including its dual-class stock system and provisions for a classified board, is designed to make hostile takeovers more difficult. The dual-class structure means Class B shareholders have disproportionate voting power, potentially limiting the influence of Class A shareholders on company decisions and leadership changes.
What are the risks associated with potential stock issuances?
CrowdStrike has the authority to issue a substantial number of additional shares of Class A common stock, Class B common stock, and preferred stock. Issuing these shares, for example, through financings, acquisitions, or stock incentive plans, could significantly dilute existing stockholders' ownership and potentially decrease the market price of the Class A common stock.
Are there any concerns regarding CrowdStrike's accounting standards?
The company is taking advantage of an extended transition period for new or revised accounting standards. This means CrowdStrike's financial results may not be directly comparable to those of companies that have adopted these standards earlier, which is an important consideration for investors performing financial analysis.
06—Continue