Here's our initial take on CrowdStrike's (CRWD 0.48%) financial report.
| Metric | Q1 FY25 | Q1 FY26 | Change | vs. Expectations |
|---|---|---|---|---|
| Revenue | $921 million | $1.1 billion | 19% | Met |
| Earnings per share | $0.79 | $0.73 | -8% | Beat |
| Net new ARR | $212 million | $194 million | -8% | N/A |
| Free cash flow | $323 million | $279 million | -14% | N/A |
Coming up on the one-year anniversary of CrowdStrike's disastrous July 2024 global outage, the cybersecurity company continues to make progress moving past the incident. CrowdStrike beat earnings per share (EPS) estimates for the quarter and matched on revenue, though earnings, free cash flow, and growth in annual recurring revenue (ARR) all were down year over year.
Similar to previous quarters, CrowdStrike is showing solid growth, but the growth is coming at a higher cost than prior to the meltdown. Subscription gross margin fell 100 basis points to 77% in the quarter, and on a generally accepted accounting principles (GAAP) basis, the company reported a $110.2 million net loss. Total operating expenses climbed 36% year over year to $939 million, with sales and marketing expenses responsible for much of those gains.
Still, it is clear that customers are not abandoning the cybersecurity platform. CrowdStrike said its "Falcon Flex" licensing program, a consumption-based model that allows customers to expand or swap modules as needed, is gaining traction, with total Falcon Flex deal value up more than 6x year over year.
The company also announced that its board had approved a new $1 billion share-repurchase program. That should help offset stock-based compensation and help counter CrowdStrike's nearly 14% growth in shares outstanding over the past five years.
CrowdStrike came into earnings with a lot of momentum, with the stock up 40% year to date. The results left investors underwhelmed, with shares trading down 7% in aftermarket trading following the release of results but ahead of the call with investors.
CrowdStrike sees further growth from here. The company is forecasting fiscal 2026 second-quarter earnings of between $0.82 and $0.84 per share, ahead of the $0.81 consensus estimate, and slight sequential revenue growth of $1.14 billion to $1.15 billion. Wall Street had modeled $1.16 billion in revenue for the quarter.
The company also boosted its full-year earnings per share guidance by $0.11 per share on both the top and bottom end of the range, to $3.44 to $3.56 per share.
The results appear not to be enough to make investors forget about CrowdStrike's summer of 2024 misstep but also offer no indication that the franchise product is suffering. And management remains bullish on what is to come.
CFO Burt Podbere, commenting on the report, said CrowdStrike remains committed to "net new ARR reacceleration and margin expansion in the second half of fiscal year 2026," fueled by Falcon Flex and the company's robust pipeline.
If CrowdStrike can deliver on that goal, the stock has plenty of room to run from here.
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