Crowdstrike Holdings Inc.
08/28/2025 | Press release | Distributed by Public on 08/28/2025 04:07
Quarterly Report for Quarter Ending July 31, 2025 (Form 10-Q)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the condensed consolidated financial statements and related notes thereto included elsewhere in this Quarterly Report on Form 10-Q and our Annual Report on Form 10-K for the year ended January 31, 2025, filed with the SEC. Some of the information contained in this discussion and analysis or set forth elsewhere in this Quarterly Report on Form 10-Q, including information with respect to our plans and strategy for our business, includes forward-looking statements that involve risks and uncertainties as described under the heading Special Note Regarding Forward-Looking Statements following the Table of Contents of this Quarterly Report on Form 10-Q. You should review the disclosure under Part II, Item 1A, "Risk Factors" in this Quarterly Report on Form 10-Q for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.
Overview
Founded in 2011, we reinvented cybersecurity for the cloud era and transformed the way cybersecurity is delivered and experienced by customers. When we started CrowdStrike, cyberattackers had an asymmetric advantage over legacy cybersecurity products that could not keep pace with the rapid changes in adversary tactics. We took a fundamentally different approach to solve this problem with the AI-native CrowdStrike Falcon platform - the first, true cloud-native unified platform built with artificial intelligence ("AI") at the core, capable of harnessing vast amounts of security and enterprise data to deliver highly modular solutions through a single lightweight agent.
We believe our approach has defined a new category called the Security Cloud, which has transformed the cybersecurity industry the same way the cloud has transformed the customer relationship management, human resources, and service management industries. Using cloud-scale AI, our Security Cloud enriches and correlates trillions of cybersecurity events per week with indicators of attack, threat intelligence, and enterprise data (including data from across endpoints, workloads, identities, DevOps, IT assets, and configurations) to create actionable data, identify shifts in adversary tactics, and automatically prevent threats in real-time across our customer base. The more data that is fed into our Falcon platform, the more intelligent our Security Cloud becomes, and the more our customers benefit, creating a powerful network effect that increases the overall value we provide.
Our Go-To-Market Strategy
We sell subscriptions to our Falcon platform and cloud modules to organizations across multiple industries. We primarily sell subscriptions to our Falcon platform and cloud modules through our direct sales team that leverages our network of channel partners. Our direct sales team is comprised of field sales and inside sales professionals who are segmented by a customer's number of endpoints.
We have a low friction land-and-expand sales strategy. When customers deploy our Falcon platform, they can start with any number of cloud modules and easily add additional cloud modules. Once customers experience the benefits of our Falcon platform, they often expand their adoption over time by adding more endpoints or purchasing additional modules. We also use our sales team to identify current customers who may be interested in free trials of additional cloud modules, which serves as a powerful driver of our land-and-expand model. By segmenting our sales teams, we can deploy a low-touch sales model that efficiently identifies prospective customers.
We began as a solution for large enterprises, but the flexibility and scalability of our Falcon platform has enabled us to seamlessly offer our solution to customers of any size. We have expanded our sales focus to include any sized organization without the need to modify our Falcon platform for small and medium sized businesses.
A substantial majority of our customers purchase subscriptions with a term over one year. Our subscriptions are generally priced on a per-endpoint and per-module basis. We recognize revenue from our subscriptions ratably over the term of the subscription. We also generate revenue from our incident response and proactive professional services, which are generally priced on a time and materials basis. We view our professional services business primarily as an opportunity to cross-sell subscriptions to our Falcon platform and cloud modules.
Certain Factors Affecting Our Performance
Adoption of Our Solutions. We believe our future success depends in large part on the growth in the market for cloud-based SaaS-delivered endpoint security solutions. Many organizations have not yet abandoned the on-premise legacy products in which they have invested substantial personnel and financial resources to design and maintain. As a result, it is difficult to predict customer adoption rates and demand for our cloud-based solutions.
New Customer Acquisition. Our future growth depends in large part on our ability to acquire new customers. If our efforts to attract new customers are not successful, our revenue and rate of revenue growth may decline. We believe that our go-to-market strategy and the flexibility and scalability of our Falcon platform allow us to rapidly expand our customer base. Our incident response and proactive services also help drive new customer acquisitions, as many of these professional services customers subsequently purchase subscriptions to our Falcon platform. Many organizations have not yet adopted cloud-based security solutions, and since our Falcon platform has offerings for organizations of all sizes, worldwide, and across industries, we believe this presents a significant opportunity for growth.
Maintain Customer Retention and Increase Sales. Our ability to increase revenue depends in large part on our ability to retain our existing customers and increase the size of their subscriptions. We focus on increasing sales to our existing customers by expanding their deployments to more endpoints and selling additional cloud modules for increased functionality. Over time we have transitioned our platform from a single offering into highly-integrated offerings of multiple cloud modules.
Invest in Growth. We believe that our market opportunity is large and requires us to continue to invest significantly in sales and marketing efforts to further grow our customer base, both domestically and internationally. Our open cloud architecture and single data model have allowed us to rapidly build and deploy new cloud modules, and we expect to continue investing in those efforts to further enhance our technology platform and product functionality. In addition to our ongoing investment in research and development, we may also pursue acquisitions of businesses, technologies, and assets that complement and expand the functionality of our Falcon platform, add to our technology or security expertise, or bolster our leadership position by gaining access to new customers or markets. Furthermore, we expect our general and administrative expenses to increase in dollar amount for the foreseeable future given the additional expenses for accounting, compliance, and investor relations as we grow as a public company.
July 19 Incident. On July 19, 2024, we released a content configuration update for our Falcon sensor that resulted in system crashes for certain Windows systems (the "July 19 Incident"). As a result of the July 19 Incident, we are subject to lawsuits, claims and inquiries as described in Note 10, "Commitments and Contingencies," to our condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q. We have incurred, and expect to continue to incur, significant legal and professional services and other general and administrative expenses associated with the July 19 Incident in future periods. It is not reasonably possible to quantify the precise impact of the July 19 Incident, but the incident has adversely affected our results of operations, and we currently expect a number of factors relating to the incident to adversely affect our key metrics and results of operations in future periods. While we have maintained high dollar-based gross retention rates following the incident, we have experienced delays in creating sales opportunities and longer sales cycles, including delays in customer purchasing decisions. We expect sales cycles to continue to be elongated in future periods. In addition, because our customers typically sign contracts with terms of twelve months or longer, customer churn and any corresponding impact to our key metrics and revenue may occur in future periods. Customer commitment packages introduced following the July 19 Incident have included discounting, additional modules, professional services, flexible payment terms or subscription period extensions. Our customer commitment packages have resulted, and are expected to continue to result, in increased contraction, due to elongated subscription terms, and decreased upsell dollar values.
Key Metrics
We monitor the following key metrics to help us evaluate our business, identify trends affecting our business, formulate business plans, and make strategic decisions.
Annual Recurring Revenue ("ARR")
ARR is calculated as the annualized value of our customer subscription contracts as of the measurement date, assuming any contract that expires during the next 12 months is renewed on its existing terms. To the extent that we are negotiating a renewal with a customer after the expiration of the subscription, we continue to include that revenue in ARR if we are actively in discussion with such organization for a new subscription or renewal, or until such organization notifies us that it is not renewing its subscription.
The following table sets forth our ARR as of the dates presented (dollars in thousands):
| As of July 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Annual recurring revenue | $ | 4,656,682 | $ | 3,864,512 | |||||||
| Year-over-year growth | 20 | % | 32 | % | |||||||
ARR grew to $4.7 billion as of July 31, 2025, of which $221.1 million and $414.8 million was net new ARR added for the three and six months ended July 31, 2025, respectively. ARR grew to $3.9 billion as of July 31, 2024, of which $217.6 million and $429.3 million was net new ARR added for the three and six months ended July 31, 2024, respectively.
Dollar-Based Net Retention Rate
Our dollar-based net retention rate compares our ARR from a set of subscription customers against the same metric for those subscription customers from the prior year. Our dollar-based net retention rate reflects customer renewals, expansion, contraction, and churn, and excludes revenue from our incident response and proactive services. We calculate our dollar-based net retention rate as of period end by starting with the ARR from all subscription customers as of 12 months prior to such period end, or Prior Period ARR. We then calculate the ARR from these same subscription customers as of the current period end, or Current Period ARR. Current Period ARR includes any expansion and is net of contraction or churn over the trailing 12 months but excludes revenue from new subscription customers in the current period. We then divide the Current Period ARR by the Prior Period ARR to arrive at our dollar-based net retention rate. For the purposes of calculating our dollar-based net retention rate, we define a subscription customer as a separate legal entity that has entered into a distinct subscription agreement for access to our Falcon platform for which the term has not ended or with which we are negotiating a renewal contract. We do not consider our channel partners as customers, and we treat managed service security providers, who may purchase our products on behalf of multiple companies, as a single customer.
Our dollar-based net retention rate continued to be strong as of July 31, 2025. Our dollar-based net retention rate can fluctuate from period to period due to large customer contracts in a given period and incentives provided, which may reduce our dollar-based net retention rate in subsequent periods. In addition, if our customers are not able to fully utilize their product subscriptions (including in connection with our flexible subscription offering), we may experience increased contraction as such customers may elect to renew with shorter subscription periods, fewer cloud modules, fewer endpoints or smaller contract values, which may reduce our dollar-based net retention rate.
Components of Our Results of Operations
Revenue
Subscription Revenue. Subscription revenue primarily consists of subscription fees for our Falcon platform and additional cloud modules that are supported by our cloud-based platform. Subscription revenue is driven primarily by the number of subscription customers, the number of endpoints per customer, and the number of cloud modules included in the subscription. We recognize subscription revenue ratably over the term of the agreement, which is generally one to three years. We generally invoice our subscription customers at the beginning of the subscription term, or in some instances, such as in multi-year arrangements, in installments. Consequently, a substantial portion of the revenue that we report in each period is attributable to the recognition of deferred revenue relating to subscriptions that we entered into during previous periods.
Professional Services Revenue. Professional services revenue includes incident response and proactive services, forensic and malware analysis, attribution analysis, operationalizing the Falcon Platform, residency program, and active defense services. Professional services are generally sold separately from subscriptions to our Falcon platform, although customers frequently enter into a separate arrangement to purchase subscriptions to our Falcon platform at the conclusion of a professional services arrangement. Professional services are available through hourly rate and fixed fee contracts, one-time and ongoing engagements, and retainer-based agreements. For time and materials and retainer-based arrangements, revenue is recognized as services are performed. Fixed fee contracts account for an immaterial portion of our revenue.
Cost of Revenue
Subscription Cost of Revenue. Subscription cost of revenue consists primarily of costs related to hosting our cloud-based Falcon platform in data centers, amortization of our capitalized internal-use software, employee-related costs such as salaries and bonuses, stock-based compensation expense, benefits costs associated with our operations and support personnel, software license fees, property and equipment depreciation, amortization of acquired intangibles, and an allocated portion of facilities and administrative costs.
As new customers subscribe to our platform and existing subscription customers increase the number of endpoints on our Falcon platform, our cost of revenue will increase due to greater cloud hosting costs related to powering new cloud modules and the incremental costs for storing additional data collected for such cloud modules and employee-related costs. We intend to continue to invest additional resources in our cloud platform and our customer support organizations as we grow our business. The level and timing of investment in these areas could affect our cost of revenue in the future.
Professional Services Cost of Revenue. Professional services cost of revenue consists primarily of employee-related costs, such as salaries and bonuses, stock-based compensation expense, consulting expense, and an allocated portion of facilities and administrative costs.
Gross Profit and Gross Margin
Gross profit and gross margin have been and will continue to be affected by various factors, including the timing of our acquisition of new subscription customers, renewals from existing subscription customers, sales of additional modules to existing subscription customers, the data center and bandwidth costs associated with operating our cloud platform, the extent to which we expand our customer support and cloud operations organizations, and the extent to which we can increase the efficiency of our technology, infrastructure, and data centers through technological improvements. We expect our gross profit to increase in dollar amount and our gross margin to increase modestly over the long term as we grow our business, although our gross margin could fluctuate from period to period depending on the interplay of these factors. Demand for our incident response services is driven by the number of breaches experienced by non-customers. Also, we view our professional services solutions in the context of our larger business and as a significant lead generator for new subscriptions. Because of these factors, our services revenue and gross margin may fluctuate over time.
Operating Expenses
Our operating expenses consist of sales and marketing, research and development, and general administrative expenses. For each of these categories of expense, employee-related expenses are the most significant component, which include salaries, employee bonuses, sales commissions, and employer payroll tax. Operating expenses also include an allocated portion of overhead costs for facilities and other administrative functions.
Sales and Marketing. Sales and marketing expenses primarily consist of employee-related expenses such as salaries, commissions, and bonuses. Sales and marketing expenses also include stock-based compensation; expenses related to our marketing programs; and an allocated portion of facilities and administrative expenses. Sales and marketing expenses also include the amortization of deferred contract acquisition costs, which includes commissions and any other incremental payments made upon the initial acquisition of a subscription or upsells to existing customers, which are capitalized and amortized over the estimated customer life. We also capitalize and amortize any such expenses paid for the renewal of a subscription over the term of the renewal.
We expect sales and marketing expenses to increase in dollar amount as we continue to make significant investments in our sales and marketing organization to drive additional revenue, further penetrate the market, and expand our global customer base. However, we anticipate sales and marketing expenses to decrease as a percentage of our total revenue over time as we grow our business, although our sales and marketing expenses may fluctuate as a percentage of our total revenue from period to period depending on the timing of these expenses.
Research and Development. Research and development expenses primarily consist of employee-related expenses such as salaries and bonuses; stock-based compensation; cloud hosting and related costs; and an allocated portion of facilities and administrative expenses. Our cloud platform is software-driven, and our research and development teams employ software engineers in the design, and the related development, testing, certification, and support of these solutions.
We expect research and development expenses to increase in dollar amount as we continue to increase investments in our technology architecture and software platform. However, we anticipate research and development expenses to decrease as a percentage of our total revenue over time as we grow our business, although our research and development expenses may fluctuate as a percentage of our total revenue from period to period depending on the timing of these expenses.
General and Administrative. General and administrative expenses consist of employee-related expenses such as salaries and bonuses; stock-based compensation; and related expenses for our executive, finance, human resources, and legal organizations. In addition, general and administrative expenses include outside legal, accounting, and other professional fees; and an allocated portion of facilities and administrative expenses.
We expect general and administrative expenses to increase in dollar amount over time. We expect to incur significant legal and professional services and other expenses associated with the July 19 Incident and related matters in future periods. General and administrative expenses may fluctuate as a percentage of our total revenue from period to period depending on the timing of these expenses.
Interest Expense.Interest expense consists primarily of amortization of debt issuance costs, contractual interest expense for our Senior Notes issued in January 2021, and amortization of debt issuance costs on our secured Revolving Facility.
Interest Income. Interest income consists primarily of income earned on our cash and cash equivalents.
Other Income (Expense), Net. Other income (expense), net consists primarily of gains and losses on strategic investments and foreign currency transaction gains and losses.
Provision for Income Taxes. Provision for income taxes consists of state income taxes in the United States, foreign income taxes, and withholding taxes related to customer payments in certain foreign jurisdictions in which we conduct business. We maintain a full valuation allowance on our U.S. federal and state and certain foreign deferred tax assets, including net operating loss carryforwards and tax credits, which we have determined are not realizable on a more-likely-than-not basis. We regularly evaluate the need for a valuation allowance.
On July 4, 2025, tax reform legislation included in the One Big Beautiful Bill Act (the "OBBBA") was enacted in the United States. The tax effects of the OBBBA have been accounted for in the second quarter of the fiscal year 2026. The OBBBA includes significant corporate tax reforms, including (i) the permanent reinstatement of deducting domestic research and development expenditures as incurred beginning in fiscal 2026 (under prior law such expenditures were capitalized and amortized over five years); (ii) the option to claim 100% accelerated depreciation deductions on qualified property; and (iii) international tax provisions modifying global intangible low-taxed income (GILTI), foreign-derived intangible income (FDII), and base erosion and anti-abuse tax (BEAT). The change in U.S. tax law resulted in an immaterial favorable effect on both our income tax provision due to the Company's valuation allowance and cash flows from operations due to lower cash tax payments.
Net Income (Loss) Attributable to Non-controlling Interest. Net income (loss) attributable to non-controlling interest consists of the Falcon Funds' non-controlling interest share of gains and losses and interest income from our strategic investments.
Results of Operations
The following tables set forth our condensed consolidated statements of operations for each period presented (in thousands, except percentages):
| Three Months Ended July 31, |
Change $ |
Change % |
Six Months Ended July 31, |
Change $ |
Change % |
||||||||||||||||||||||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||||||||||||||||||||||||||
| Revenue | |||||||||||||||||||||||||||||||||||||||||||||||
| Subscription | $ | 1,102,945 | $ | 918,257 | $ | 184,688 | 20 | % | $ | 2,153,713 | $ | 1,790,429 | $ | 363,284 | 20 | % | |||||||||||||||||||||||||||||||
| Professional services | 66,007 | 45,615 | 20,392 | 45 | % | 118,673 | 94,479 | 24,194 | 26 | % | |||||||||||||||||||||||||||||||||||||
| Total revenue | 1,168,952 | 963,872 | 205,080 | 21 | % | 2,272,386 | 1,884,908 | 387,478 | 21 | % | |||||||||||||||||||||||||||||||||||||
| Cost of revenue | |||||||||||||||||||||||||||||||||||||||||||||||
|
Subscription
|
253,640 | 199,910 | 53,730 | 27 | % | 496,014 | 389,567 | 106,447 | 27 | % | |||||||||||||||||||||||||||||||||||||
| Professional services | 56,643 | 37,491 | 19,152 | 51 | % | 103,412 | 72,837 | 30,575 | 42 | % | |||||||||||||||||||||||||||||||||||||
| Total cost of revenue | 310,283 | 237,401 | 72,882 | 31 | % | 599,426 | 462,404 | 137,022 | 30 | % | |||||||||||||||||||||||||||||||||||||
| Gross profit | 858,669 | 726,471 | 132,198 | 18 | % | 1,672,960 | 1,422,504 | 250,456 | 18 | % | |||||||||||||||||||||||||||||||||||||
| Operating expenses | |||||||||||||||||||||||||||||||||||||||||||||||
| Sales and marketing | 447,024 | 355,471 | 91,553 | 26 | % | 886,641 | 705,585 | 181,056 | 26 | % | |||||||||||||||||||||||||||||||||||||
| Research and development | 346,668 | 250,908 | 95,760 | 38 | % | 680,797 | 486,157 | 194,640 | 40 | % | |||||||||||||||||||||||||||||||||||||
| General and administrative | 177,956 | 106,434 | 71,522 | 67 | % | 343,157 | 210,168 | 132,989 | 63 | % | |||||||||||||||||||||||||||||||||||||
| Total operating expenses | 971,648 | 712,813 | 258,835 | 36 | % | 1,910,595 | 1,401,910 | 508,685 | 36 | % | |||||||||||||||||||||||||||||||||||||
| Income (loss) from operations | (112,979) | 13,658 | (126,637) | (927) | % | (237,635) | 20,594 | (258,229) | (1,254) | % | |||||||||||||||||||||||||||||||||||||
| Interest expense | (6,823) | (6,549) | (274) | 4 | % | (13,538) | (13,060) | (478) | 4 | % | |||||||||||||||||||||||||||||||||||||
| Interest income | 50,850 | 51,526 | (676) | (1) | % | 96,230 | 97,376 | (1,146) | (1) | % | |||||||||||||||||||||||||||||||||||||
| Other income (expense), net | (2,722) | (1,031) | (1,691) | 164 | % | (6,618) | 6,625 | (13,243) | (200) | % | |||||||||||||||||||||||||||||||||||||
| Income (loss) before provision for income taxes | (71,674) | 57,604 | (129,278) | (224) | % | (161,561) | 111,535 | (273,096) | (245) | % | |||||||||||||||||||||||||||||||||||||
| Provision for income taxes | 5,971 | 10,914 | (4,943) | (45) | % | 27,077 | 18,581 | 8,496 | 46 | % | |||||||||||||||||||||||||||||||||||||
| Net income (loss) | (77,645) | 46,690 | (124,335) | (266) | % | (188,638) | 92,954 | (281,592) | (303) | % | |||||||||||||||||||||||||||||||||||||
| Net income (loss) attributable to non-controlling interest | 30 | (323) | 353 | (109) | % | (756) | 3,121 | (3,877) | (124) | % | |||||||||||||||||||||||||||||||||||||
| Net income (loss) attributable to CrowdStrike | $ | (77,675) | $ | 47,013 | $ | (124,688) | (265) | % | $ | (187,882) | $ | 89,833 | $ | (277,715) | (309) | % | |||||||||||||||||||||||||||||||
The following table presents the components of our condensed consolidated statements of operations as a percentage of total revenue for the periods presented:
| Three Months Ended July 31, | Six Months Ended July 31, | ||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| % | % | ||||||||||||||||||||||
| Revenue | |||||||||||||||||||||||
| Subscription | 94 | % | 95 | % | 95 | % | 95 | % | |||||||||||||||
| Professional services | 6 | % | 5 | % | 5 | % | 5 | % | |||||||||||||||
| Total revenue | 100 | % | 100 | % | 100 | % | 100 | % | |||||||||||||||
| Cost of revenue | |||||||||||||||||||||||
| Subscription | 22 | % | 21 | % | 22 | % | 21 | % | |||||||||||||||
| Professional services | 5 | % | 4 | % | 5 | % | 4 | % | |||||||||||||||
| Total cost of revenue | 27 | % | 25 | % | 26 | % | 25 | % | |||||||||||||||
| Gross profit | 73 | % | 75 | % | 74 | % | 75 | % | |||||||||||||||
| Operating expenses | |||||||||||||||||||||||
| Sales and marketing | 38 | % | 37 | % | 39 | % | 37 | % | |||||||||||||||
| Research and development | 30 | % | 26 | % | 30 | % | 26 | % | |||||||||||||||
| General and administrative | 15 | % | 11 | % | 15 | % | 11 | % | |||||||||||||||
| Total operating expenses | 83 | % | 74 | % | 84 | % | 74 | % | |||||||||||||||
| Income (loss) from operations | (10) | % | 1 | % | (10) | % | 1 | % | |||||||||||||||
| Interest expense | (1) | % | (1) | % | (1) | % | (1) | % | |||||||||||||||
| Interest income | 4 | % | 5 | % | 4 | % | 5 | % | |||||||||||||||
| Other income (expense), net | - | % | - | % | - | % | - | % | |||||||||||||||
| Income (loss) before provision for income taxes | (6) | % | 6 | % | (7) | % | 6 | % | |||||||||||||||
| Provision for income taxes | 1 | % | 1 | % | 1 | % | 1 | % | |||||||||||||||
| Net income (loss) | (7) | % | 5 | % | (8) | % | 5 | % | |||||||||||||||
| Net income (loss) attributable to non-controlling interest | - | % | - | % | - | % | - | % | |||||||||||||||
| Net income (loss) attributable to CrowdStrike | (7) | % | 5 | % | (8) | % | 5 | % | |||||||||||||||
Comparison of the Three Months Ended July 31, 2025 and 2024
Revenue
The following shows total revenue from subscriptions and professional services for the three months ended July 31, 2025 as compared to the three months ended July 31, 2024 (in thousands, except percentages):
| Three Months Ended July 31, |
Change $ |
Change % |
|||||||||||||||||||||
| 2025 | 2024 | ||||||||||||||||||||||
| Subscription | $ | 1,102,945 | $ | 918,257 | $ | 184,688 | 20 | % | |||||||||||||||
| Professional services | 66,007 | 45,615 | 20,392 | 45 | % | ||||||||||||||||||
| Total revenue | $ | 1,168,952 | $ | 963,872 | $ | 205,080 | 21 | % | |||||||||||||||
Total revenue increased by $205.1 million, or 21%, for the three months ended July 31, 2025 compared to the three months ended July 31, 2024. Subscription revenue accounted for 94% and 95% of total revenue for the three months ended July 31, 2025 and July 31, 2024, respectively. Professional services revenue accounted for 6% and 5% of our total revenue for the three months ended July 31, 2025 and July 31, 2024, respectively.
Subscription revenue increased by $184.7 million, or 20%, for the three months ended July 31, 2025 compared to the three months ended July 31, 2024, which was primarily driven by a combination of the addition of new customers and the sale of additional sensors and modules to existing customers.
Professional services revenue increased by $20.4 million, or 45%, for the three months ended July 31, 2025, compared to the three months ended July 31, 2024, which was primarily attributable to an increase in the number of professional service hours.
Cost of Revenue, Gross Profit, and Gross Margin
The following shows cost of revenue related to subscriptions and professional services for the three months ended July 31, 2025 as compared to the three months ended July 31, 2024 (in thousands, except percentages):
| Three Months Ended July 31, |
Change $ |
Change % |
|||||||||||||||||||||
| 2025 | 2024 | ||||||||||||||||||||||
| Subscription | $ | 253,640 | $ | 199,910 | $ | 53,730 | 27 | % | |||||||||||||||
| Professional services | 56,643 | 37,491 | 19,152 | 51 | % | ||||||||||||||||||
| Total cost of revenue | $ | 310,283 | $ | 237,401 | $ | 72,882 | 31 | % | |||||||||||||||
Total cost of revenue increased by $72.9 million, or 31%, for the three months ended July 31, 2025 compared to the three months ended July 31, 2024. Subscription cost of revenue increased by $53.7 million, or 27%, for the three months ended July 31, 2025, compared to the three months ended July 31, 2024. The increase in subscription cost of revenue was primarily due to an increase in employee-related expenses of $13.6 million driven by a 19% increase in average headcount, an increase in cloud hosting and related services costs of $12.9 million, an increase in depreciation of data center equipment of $7.3 million, an increase in stock-based compensation expense of $6.6 million, an increase in amortization of internal-use software of $5.8 million, an increase in allocated overhead costs of $3.9 million, and charges related to the Plan (as defined
elsewhere in this Quarterly Report on Form 10-Q) of $3.6 million.
Professional services cost of revenue increased by $19.2 million, or 51%, for the three months ended July 31, 2025, compared to the three months ended July 31, 2024. The increase in professional services cost of revenue was primarily due to an increase in consulting expenses of $9.0 million, an increase in employee-related expenses of $4.1 million driven by a 13% increase in average headcount, charges related to the Plan of $3.3 million, and an increase in stock-based compensation expense of $1.7 million.
The following shows gross profit and gross margin for subscriptions and professional services for the three months ended July 31, 2025 as compared to the three months ended July 31, 2024 (in thousands, except percentages):
| Three Months Ended July 31, |
Change $ |
Change % |
|||||||||||||||||||||
| 2025 | 2024 | ||||||||||||||||||||||
| Subscription gross profit | $ | 849,305 | $ | 718,347 | $ | 130,958 | 18 | % | |||||||||||||||
| Professional services gross profit | 9,364 | 8,124 | 1,240 | 15 | % | ||||||||||||||||||
| Total gross profit | $ | 858,669 | $ | 726,471 | $ | 132,198 | 18 | % | |||||||||||||||
| Three Months Ended July 31, |
Change % |
||||||||||||||||
| 2025 | 2024 | ||||||||||||||||
| Subscription gross margin | 77 | % | 78 | % | (1) | % | |||||||||||
| Professional services gross margin | 14 | % | 18 | % | (4) | % | |||||||||||
| Total gross margin | 73 | % | 75 | % | (2) | % | |||||||||||
Subscription gross margin slightly decreased by one percentage point for the three months ended July 31, 2025, compared to the three months ended July 31, 2024. The decrease in subscription gross margin was primarily due to an increase in stock-based compensation expense, and an increase in depreciation of data center equipment during the three months ended July 31, 2025.
Professional services gross margin decreased by four percentage points for the three months ended July 31, 2025, compared to the three months ended July 31, 2024. The decrease in professional services gross margin was primarily due to an increase in consulting expense during the three months ended July 31, 2025.
Operating Expenses
Sales and Marketing
The following shows sales and marketing expenses for the three months ended July 31, 2025 as compared to the three months ended July 31, 2024 (in thousands, except percentages):
| Three Months Ended July 31, |
Change $ |
Change % |
|||||||||||||||||||||
| 2025 | 2024 | ||||||||||||||||||||||
| Sales and marketing expenses | $ | 447,024 | $ | 355,471 | $ | 91,553 | 26 | % | |||||||||||||||
Sales and marketing expenses increased by $91.6 million, or 26%, for the three months ended July 31, 2025 compared to the three months ended July 31, 2024. The increase in sales and marketing expenses was primarily due to an increase in employee-related expenses of $46.2 million driven by a 11% increase in average headcount, an increase in stock-based compensation expense of $11.1 million, an increase in marketing programs of $10.6 million, charges related to the Plan of $8.7 million, an increase in employee benefits of $5.1 million, an increase in allocated overhead costs of $4.6 million, and an increase in travel expenses of $2.2 million, partially offset by a decrease in expenses associated with the July 19 Incident and related matters of $3.0 million, and a decrease in company events expenses of $2.1 million.
Research and Development
The following shows research and development expenses for the three months ended July 31, 2025 as compared to the three months ended July 31, 2024 (in thousands, except percentages):
| Three Months Ended July 31, |
Change $ |
Change % |
|||||||||||||||||||||
| 2025 | 2024 | ||||||||||||||||||||||
| Research and development expenses | $ | 346,668 | $ | 250,908 | $ | 95,760 | 38 | % | |||||||||||||||
Research and development expenses increased by $95.8 million, or 38%, for the three months ended July 31, 2025 compared to the three months ended July 31, 2024. This increase was primarily due to an increase in stock-based compensation expense of $31.2 million, an increase in employee-related expenses of $30.2 million driven by a 19% increase in average headcount, charges related to the Plan of $16.7 million, an increase in cloud hosting and related costs of $10.6 million, an increase in allocated overhead costs of $6.1 million, and an increase in employee benefits of $4.5 million, partially offset by an increase in software capitalization of $2.8 million.
General and Administrative
The following shows general and administrative expenses for the three months ended July 31, 2025 as compared to the three months ended July 31, 2024 (in thousands, except percentages):
| Three Months Ended July 31, |
Change $ |
Change % |
|||||||||||||||||||||
| 2025 | 2024 | ||||||||||||||||||||||
| General and administrative expenses | $ | 177,956 | $ | 106,434 | $ | 71,522 | 67 | % | |||||||||||||||
General and administrative expenses increased by $71.5 million, or 67%, for the three months ended July 31, 2025 compared to the three months ended July 31, 2024. The increase in general and administrative expenses was primarily due to an increase in expenses associated with the July 19 Incident and related matters of $34.3 million, an increase in stock-based compensation expense of $17.8 million, charges related to the Plan of $6.1 million, an increase in employee-related expenses of $2.8 million driven by a 15% increase in average headcount, an increase in consulting expense of $2.3 million, an increase in legal expense of $1.7 million unrelated to the July 19 Incident or related matters, and an increase in term-based software licenses of $1.0 million.
Interest Expense, Interest Income, and Other Expense, Net
The following shows interest expense, interest income, and other expense, net for the three months ended July 31, 2025 as compared to the three months ended July 31, 2024 (in thousands, except percentages):
| Three Months Ended July 31, |
Change $ |
Change % |
|||||||||||||||||||||
| 2025 | 2024 | ||||||||||||||||||||||
| Interest expense | $ | (6,823) | $ | (6,549) | $ | (274) | 4 | % | |||||||||||||||
| Interest income | $ | 50,850 | $ | 51,526 | $ | (676) | (1) | % | |||||||||||||||
| Other expense, net | $ | (2,722) | $ | (1,031) | $ | (1,691) | 164 | % | |||||||||||||||
Interest expense consists primarily of amortization of debt issuance costs, contractual interest expense, accretion of debt discount for our Senior Notes issued in January 2021, and amortization of debt issuance costs on our Revolving Facility.
The decrease in interest income for the three months ended July 31, 2025 compared to the three months ended July 31, 2024 was driven by lower market rates, partially offset by a higher cash balance.
The increase in other expense, net for the three months ended July 31, 2025 compared to the three months ended July 31, 2024 was primarily due to an increase in net foreign currency transaction losses of $2.7 million, partially offset by a decrease in realized losses from strategic investments of $0.7 million and an increase in gains from deferred compensation assets of $0.6 million.
Provision for Income Taxes
The following shows the provision for income taxes for the three months ended July 31, 2025 as compared to the three months ended July 31, 2024 (in thousands, except percentage):
| Three Months Ended July 31, |
Change $ |
Change % |
|||||||||||||||||||||
| 2025 | 2024 | ||||||||||||||||||||||
| Provision for income taxes | $ | 5,971 | $ | 10,914 | $ | (4,943) | (45) | % | |||||||||||||||
The decrease in provision for income taxes of $4.9 million during the three months ended July 31, 2025 compared to the three months ended July 31, 2024 was primarily attributable to tax impacts from the enactment of the OBBBA, partially offset by valuation allowance in the U.S. and certain foreign jurisdictions where the Company does not benefit from losses and tax credits.
Comparison of the Six Months Ended July 31, 2025 and 2024
Revenue
The following shows total revenue from subscriptions and professional services for the six months ended July 31, 2025 as compared to the six months ended July 31, 2024 (in thousands, except percentages):
| Six Months Ended July 31, |
Change $ |
Change % |
|||||||||||||||||||||
| 2025 | 2024 | ||||||||||||||||||||||
| Subscription | $ | 2,153,713 | $ | 1,790,429 | $ | 363,284 | 20 | % | |||||||||||||||
| Professional services | 118,673 | 94,479 | 24,194 | 26 | % | ||||||||||||||||||
| Total revenue | $ | 2,272,386 | $ | 1,884,908 | $ | 387,478 | 21 | % | |||||||||||||||
Total revenue increased by $387.5 million, or 21%, for the six months ended July 31, 2025 compared to the six months ended July 31, 2024. Subscription revenue accounted for 95% total revenue for both the six months ended July 31, 2025 and July 31, 2024. Professional services revenue accounted for 5% of our total revenue for both the six months ended July 31, 2025 and July 31, 2024.
Subscription revenue increased by $363.3 million, or 20%, for the six months ended July 31, 2025 compared to the six months ended July 31, 2024, which was primarily driven by a combination of the addition of new customers and the sale of additional sensors and modules to existing customers.
Professional services revenue increased by $24.2 million, or 26%, for the six months ended July 31, 2025, compared to the six months ended July 31, 2024, which was primarily attributable to an increase in the number of professional service hours.
Cost of Revenue, Gross Profit, and Gross Margin
The following shows cost of revenue related to subscriptions and professional services for the six months ended July 31, 2025 as compared to the six months ended July 31, 2024 (in thousands, except percentages):
| Six Months Ended July 31, |
Change $ |
Change % |
|||||||||||||||||||||
| 2025 | 2024 | ||||||||||||||||||||||
| Subscription | $ | 496,014 | $ | 389,567 | $ | 106,447 | 27 | % | |||||||||||||||
| Professional services | 103,412 | 72,837 | 30,575 | 42 | % | ||||||||||||||||||
| Total cost of revenue | $ | 599,426 | $ | 462,404 | $ | 137,022 | 30 | % | |||||||||||||||
Total cost of revenue increased by $137.0 million, or 30%, for the six months ended July 31, 2025 compared to the six months ended July 31, 2024. Subscription cost of revenue increased by $106.4 million, or 27%, for the six months ended July 31, 2025, compared to the six months ended July 31, 2024. The increase in subscription cost of revenue was primarily due to an increase in employee-related expenses of $28.4 million driven by a 21% increase in average headcount, an increase in cloud hosting and related services costs of $23.2 million, an increase in stock-based compensation expense of $16.8 million, an increase in depreciation of data center equipment of $15.3 million, an increase in amortization of internal-use software of $10.5 million, an increase in allocated overhead costs of $8.7 million, and charges related to the Plan of $3.6 million.
Professional services cost of revenue increased by $30.6 million, or 42%, for the six months ended July 31, 2025, compared to the six months ended July 31, 2024. The increase in professional services cost of revenue was primarily due to an increase in employee-related expenses of $10.4 million driven by a 14% increase in average headcount, an increase in consulting expenses of $9.0 million, an increase in stock-based compensation expense of $5.1 million, charges related to the Plan of $3.3 million, and an increase in allocated overhead costs of $1.6 million.
The following shows gross profit and gross margin for subscriptions and professional services for the six months ended July 31, 2025 as compared to the six months ended July 31, 2024 (in thousands, except percentages):
| Six Months Ended July 31, |
Change $ |
Change % |
|||||||||||||||||||||
| 2025 | 2024 | ||||||||||||||||||||||
| Subscription gross profit | $ | 1,657,699 | $ | 1,400,862 | $ | 256,837 | 18 | % | |||||||||||||||
| Professional services gross profit | 15,261 | 21,642 | (6,381) | (29) | % | ||||||||||||||||||
| Total gross profit | $ | 1,672,960 | $ | 1,422,504 | $ | 250,456 | 18 | % | |||||||||||||||
| Six Months Ended July 31, |
Change % |
||||||||||||||||
| 2025 | 2024 | ||||||||||||||||
| Subscription gross margin | 77 | % | 78 | % | (1) | % | |||||||||||
| Professional services gross margin | 13 | % | 23 | % | (10) | % | |||||||||||
| Total gross margin | 74 | % | 75 | % | (1) | % | |||||||||||
Subscription gross margin slightly decreased by one percentage point for the six months ended July 31, 2025, compared to the six months ended July 31, 2024. The decrease in subscription gross margin was primarily due to an increase in stock-based compensation expense, and an increase in depreciation of data center equipment during the six months ended July 31, 2025.
Professional services gross margin decreased by ten percentage points for the six months ended July 31, 2025, compared to the six months ended July 31, 2024. The decrease in professional services gross margin was primarily due to an increase in consulting expense during the six months ended July 31, 2025.
Operating Expenses
Sales and Marketing
The following shows sales and marketing expenses for the six months ended July 31, 2025 as compared to the six months ended July 31, 2024 (in thousands, except percentages):
| Six Months Ended July 31, |
Change $ |
Change % |
|||||||||||||||||||||
| 2025 | 2024 | ||||||||||||||||||||||
| Sales and marketing expenses | $ | 886,641 | $ | 705,585 | $ | 181,056 | 26 | % | |||||||||||||||
Sales and marketing expenses increased by $181.1 million, or 26%, for the six months ended July 31, 2025 compared to the six months ended July 31, 2024. The increase in sales and marketing expenses was primarily due to an increase in employee-related expenses of $94.2 million driven by a 13% increase in average headcount, an increase in stock-based compensation expense of $24.1 million, an increase in marketing programs of $17.4 million, an increase in allocated overhead costs of $11.4 million, an increase in employee benefits of $9.8 million, charges related to the Plan of $8.7 million, an increase in travel expenses of $8.1 million, and an increase in term-based software licenses of $2.1 million, partially offset by a decrease in company events expenses of $5.3 million, and a decrease of $2.5 million of expenses associated with the July 19 Incident and related matters.
Research and Development
The following shows research and development expenses for the six months ended July 31, 2025 as compared to the six months ended July 31, 2024 (in thousands, except percentages):
| Six Months Ended July 31, |
Change $ |
Change % |
|||||||||||||||||||||
| 2025 | 2024 | ||||||||||||||||||||||
| Research and development expenses | $ | 680,797 | $ | 486,157 | $ | 194,640 | 40 | % | |||||||||||||||
Research and development expenses increased by $194.6 million, or 40%, for the six months ended July 31, 2025 compared to the six months ended July 31, 2024. This increase was primarily due to an increase in stock-based compensation expense of $71.7 million, an increase in employee-related expenses of $66.8 million driven by a 22% increase in average headcount, an increase in cloud hosting and related costs of $25.1 million, charges related to the Plan of $16.7 million, an increase in allocated overhead costs of $13.7 million, an increase in employee benefits of $8.9 million, and an increase in term-based software licenses of $1.9 million, partially offset by an increase in software capitalization of $10.4 million, a decrease in other labor expenses of $8.8 million, and a decrease in depreciation of data center equipment of $1.1 million.
General and Administrative
The following shows general and administrative expenses for the six months ended July 31, 2025 as compared to the six months ended July 31, 2024 (in thousands, except percentages):
| Six Months Ended July 31, |
Change $ |
Change % |
|||||||||||||||||||||
| 2025 | 2024 | ||||||||||||||||||||||
| General and administrative expenses | $ | 343,157 | $ | 210,168 | $ | 132,989 | 63 | % | |||||||||||||||
General and administrative expenses increased by $133.0 million, or 63%, for the six months ended July 31, 2025 compared to the six months ended July 31, 2024. The increase in general and administrative expenses was primarily due to an increase in expenses associated with the July 19 Incident and related matters of $72.9 million, an increase in stock-based compensation expense of $21.2 million, charges related to the Plan of $12.7 million, an increase in employee-related expenses of $11.8 million driven by a 16% increase in average headcount, an increase in legal expense of $3.1 million unrelated to the July 19 Incident or related matters, an increase in term-based software licenses of $2.5 million, an increase in travel expenses of $2.5 million, and an increase in allocated overhead costs of $2.4 million, partially offset by a decrease in consulting expense of $1.2 million.
Interest Expense, Interest Income, and Other Income (Expense), Net
The following shows interest expense, interest income, and other income (expense), net for the six months ended July 31, 2025 as compared to the six months ended July 31, 2024 (in thousands, except percentages):
| Six Months Ended July 31, |
Change $ |
Change % |
|||||||||||||||||||||
| 2025 | 2024 | ||||||||||||||||||||||
| Interest expense | $ | (13,538) | $ | (13,060) | $ | (478) | 4 | % | |||||||||||||||
| Interest income | $ | 96,230 | $ | 97,376 | $ | (1,146) | (1) | % | |||||||||||||||
| Other income (expense), net | $ | (6,618) | $ | 6,625 | $ | (13,243) | (200) | % | |||||||||||||||
Interest expense consists primarily of amortization of debt issuance costs, contractual interest expense, accretion of debt discount for our Senior Notes issued in January 2021, and amortization of debt issuance costs on our Revolving Facility.
The decrease in interest income for the six months ended July 31, 2025 compared to the six months ended July 31, 2024 was driven by lower market rates, partially offset by a higher cash balance.
The decrease in other income (expense), net for the six months ended July 31, 2025 compared to the six months ended July 31, 2024 was primarily due to a decrease in net realized gains on our strategic investments of $6.2 million, an increase in net foreign currency transaction losses of $5.3 million, and downward adjustments and impairment of $1.6 million of our strategic investments.
Provision for Income Taxes
The following shows the provision for income taxes for the six months ended July 31, 2025 as compared to the six months ended July 31, 2024 (in thousands, except percentage):
| Six Months Ended July 31, |
Change $ |
Change % |
|||||||||||||||||||||
| 2025 | 2024 | ||||||||||||||||||||||
| Provision for income taxes | $ | 27,077 | $ | 18,581 | $ | 8,496 | 46 | % | |||||||||||||||
The increase in provision for income taxes of $8.5 million during the six months ended July 31, 2025 compared to the six months ended July 31, 2024 was primarily attributable to income taxes in foreign jurisdictions and withholding taxes related to customer payments in certain foreign jurisdictions in which the Company conducts business.
Liquidity and Capital Resources
Our primary sources of liquidity as of July 31, 2025, consisted of: (i) $5.0 billion in cash and cash equivalents, which mainly consists of cash on hand and highly liquid investments in money market funds, U.S. Treasury bills, and time deposits, (ii) cash we expect to generate from operations, and (iii) available capacity under our $750.0 million Revolving Facility. It is not currently possible to reasonably estimate the amount of loss or range of possible loss that might result from adverse judgments, settlements, penalties, or other resolution of proceedings resulting from the July 19 Incident or related matters. However, despite such uncertainties, we expect that the combination of our existing cash and cash equivalents, cash flows from operations, and the Revolving Facility will be sufficient to meet our anticipated cash needs for working capital and capital expenditures for at least the next 12 months. Our Revolving Facility matures on January 2, 2026.
Our short-term and long-term liquidity requirements primarily arise from: (i) business acquisitions and investments we may make from time to time, (ii) working capital requirements, (iii) interest and principal payments related to our outstanding indebtedness, (iv) research and development and capital expenditure needs, and (v) license and service arrangements integral to our business operations. Our ability to fund these requirements will depend, in part, on our future cash flows, which are determined by our future operating performance and, therefore, subject to prevailing global macroeconomic conditions and financial, business and other factors, some of which are beyond our control.
We have historically generated operating losses, as reflected in our accumulated deficit of $1.3 billion as of July 31, 2025. We expect to continue to make investments, particularly in sales and marketing and research and development. As a result, we may require additional capital resources in the future to execute strategic initiatives to grow our business.
We generally invoice our subscription customers at the beginning of the subscription term, or in some instances, such as in multi-year arrangements, in installments. Therefore, a substantial source of our cash is from such prepayments, which are included on our condensed consolidated balance sheets as deferred revenue. Deferred revenue primarily consists of billed fees for our subscriptions, prior to satisfying the criteria for revenue recognition, which are subsequently recognized as revenue in accordance with our revenue recognition policy. As of July 31, 2025, we had deferred revenue of $3.8 billion, of which $2.8 billion was recorded as a current liability and is expected to be recorded as revenue in the next 12 months, provided all other revenue recognition criteria have been met.
We do not have any relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities. We do not have any outstanding derivative financial instruments, off-balance sheet guarantees, interest rate swap transactions, or foreign currency forward contracts.
Cash Flows
The following table summarizes our cash flows for the periods presented (in thousands):
| Six Months Ended July 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Net cash provided by operating activities | $ | 716,939 | $ | 709,869 | |||||||
| Net cash used in investing activities | (150,609) | (105,988) | |||||||||
| Net cash provided by financing activities | 76,321 | 59,978 | |||||||||
| Net change in cash, cash equivalents and restricted cash | 649,246 | 662,819 | |||||||||
Operating Activities
Net cash provided by operating activities during the six months ended July 31, 2025 was $716.9 million, which resulted from net loss of $188.6 million, adjusted for non-cash charges of $893.1 million and net cash inflow of $12.5 million from changes in operating assets and liabilities. Non-cash charges primarily consisted of $540.8 million in stock-based compensation expense, $209.9 million of amortization of deferred contract acquisition costs, $116.8 million of depreciation and amortization, $15.3 million of amortization of intangibles assets, $8.7 million of non-cash operating lease costs, $2.3 million of non-cash interest expense, and $1.6 million change in fair value of strategic investments, partially offset by $2.3 million of deferred income taxes. The net cash inflow from changes in operating assets and liabilities was primarily due to a $242.0 million decrease in accounts receivable, a $106.2 million increase in deferred revenue, and a $12.7 million increase in accrued expenses and other liabilities, partially offset by a $251.6 million increase in deferred contract acquisition costs, a $50.4 million increase in prepaid expenses and other assets, a $24.9 million decrease in accrued payroll and benefits, a $13.3 million decrease in accounts payable, and an $8.1 million decrease in operating lease liabilities.
Investing Activities
Net cash used in investing activities of $150.6 million during the six months ended July 31, 2025 was primarily due to purchases of property and equipment of $116.2 million, capitalized internal-use software and website development costs of $34.7 million, purchases of deferred compensation investments of $2.8 million, and purchases of strategic investments of $1.4 million, partially offset by proceeds from sales of strategic investments of $4.4 million.
Financing Activities
Net cash provided by financing activities of $76.3 million during the six months ended July 31, 2025 was primarily due to proceeds from our employee stock purchase plan of $74.6 million, proceeds from the exercise of stock options of $2.4 million, and capital contributions from non-controlling interests of $1.5 million, partially offset by distributions to non-controlling interest holders of $2.2 million.
Supplemental Guarantor Financial Information
Our Senior Notes are guaranteed on a senior, unsecured basis by CrowdStrike, Inc. and CrowdStrike Financial Services, Inc., wholly owned subsidiaries of CrowdStrike Holdings, Inc. (the "subsidiary guarantors," and together with CrowdStrike Holdings, Inc., the "Obligor Group"). The guarantee is full and unconditional and is subject to certain conditions for release. See Note 5, "Debt," to our condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q, for a brief description of the Senior Notes.
We conduct our operations almost entirely through our subsidiaries. Accordingly, the Obligor Group's cash flows and ability to service the notes will depend on the earnings of our subsidiaries and the distribution of those earnings to the Obligor Group, whether by dividends, loans or otherwise. Holders of the guaranteed registered debt securities will have a direct claim only against the Obligor Group.
Summarized financial information is presented below for the Obligor Group on a combined basis after elimination of intercompany transactions and balances within the Obligor Group and equity in the earnings from and investments in any non-guarantor subsidiary. The revenue amounts presented in the summarized financial information include substantially all of our condensed consolidated revenue, and there is no intercompany revenue from the non-guarantor subsidiaries. This summarized financial information has been prepared and presented pursuant to Regulation S-X Rule 13-01, "Financial Disclosures about Guarantors and Issuers of Guaranteed Securities" and is not intended to present the financial position or results of operations of the Obligor Group in accordance with U.S. GAAP.
| Statement of Operations |
Six Months Ended July 31, 2025 |
||||
| (in thousands) | |||||
| Revenue | $ | 2,270,124 | |||
| Cost of revenue | 637,297 | ||||
| Operating expenses | 1,922,898 | ||||
| Loss from operations | (290,071) | ||||
| Net loss | (231,316) | ||||
| Net loss attributable to CrowdStrike | (231,316) | ||||
| Balance Sheet | July 31, 2025 | January 31, 2025 | |||||||||
| (in thousands) | |||||||||||
| Current assets (excluding current intercompany receivables from non-Guarantors) | $ | 6,365,805 | $ | 5,922,562 | |||||||
| Current intercompany receivables from non-Guarantors | - | 49,417 | |||||||||
| Noncurrent assets (excluding noncurrent intercompany receivables from non-Guarantors) | 2,456,410 | 2,316,545 | |||||||||
| Noncurrent intercompany receivables from non-Guarantors | 622,205 | 613,732 | |||||||||
| Current liabilities (excluding current intercompany payables to non-Guarantors) | 3,334,261 | 3,331,647 | |||||||||
| Current intercompany payables to non-Guarantors | 72,200 | 31,092 | |||||||||
| Noncurrent liabilities (excluding noncurrent intercompany payables to non-Guarantors) | 1,984,734 | 1,897,235 | |||||||||
| Noncurrent intercompany payables to non-Guarantors | 208,436 | 234,643 | |||||||||
Strategic Investments
In July 2019, we agreed to commit up to $10.0 million to a newly formed entity, CrowdStrike Falcon Fund LLC (the "Original Falcon Fund") in exchange for 50% of the sharing percentage of any distribution by the Original Falcon Fund. In December 2021, we agreed to commit an additional $50.0 million to a newly formed entity, CrowdStrike Falcon Fund II LLC ("Falcon Fund II") in exchange for 50% of the sharing percentage of any distribution by Falcon Fund II. Further, entities associated with Accel also agreed to commit up to $10.0 million and $50.0 million, respectively, to the Original Falcon Fund and Falcon Fund II (collectively, the "Falcon Funds"), and collectively own the remaining 50% of the sharing percentage of the Falcon Funds. Both Falcon Funds are in the business of purchasing, selling, and investing in minority equity and convertible debt securities of privately-held companies that develop applications that have potential for substantial contribution to us and our platform. We are the manager of the Falcon Funds and control their investment decisions and day-to-day operations and accordingly have consolidated each of the Falcon Funds. Each Falcon Fund has a duration of ten years and may be extended for three additional years. At dissolution, the Falcon Funds will be liquidated, and the remaining assets will be distributed to the investors based on their respective sharing percentage.
Contractual Obligations and Commitments
During the six months ended July 31, 2025, there were no significant changes to our debt obligations related to the Senior Notes, as presented in Part II, Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the fiscal year ended January 31, 2025.
We have non-cancellable purchase commitments with various parties to purchase products and services entered in the normal course of business totaling $2.6 billion as of July 31, 2025, with remaining terms in excess of 12 months. We expect to fund these obligations with cash flows from operations and cash on our balance sheet.
Our commitments also consist of obligations under non-cancellable real estate arrangements on an undiscounted basis, of which $15.8 million is due in the next 12 months and $149.8 million is due thereafter.
As of July 31, 2025, our unrecognized tax benefits included $58.5 million, which were classified as long-term liabilities due to the inherent uncertainty with respect to the timing of future cash outflows associated with our unrecognized tax benefits.
As of July 31, 2025, we had non-cancellable unfunded commitments from our financing arrangements totaling approximately $40.6 million.
Critical Accounting Policies and Estimates
Our condensed consolidated financial statements were prepared in accordance with U.S GAAP. The preparation of the condensed consolidated financial statements requires our management to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. We base our estimates and judgments on our historical experience, knowledge of factors affecting our business and our belief as to what could occur in the future considering available information and assumptions that are believed to be reasonable under the circumstances.
The accounting estimates we use in the preparation of our condensed consolidated financial statements will change as new events occur, more experience is acquired, additional information is obtained and our operating environment changes. Changes in estimates are made when circumstances warrant. Such changes in estimates and refinements in estimation methodologies are reflected in our reported results of operations and, if material, the effects of changes in estimates are disclosed in the notes to our condensed consolidated financial statements. By their nature, these estimates and judgments are subject to an inherent degree of uncertainty and actual results could differ materially from the amounts reported based on these estimates.
There have been no significant changes in our critical accounting policies and estimates during the six months ended July 31, 2025, as compared to the critical accounting policies and estimates disclosed in Management's Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the year ended January 31, 2025, filed with the SEC on March 10, 2025.
Backlog
We enter into both single and multi-year subscription contracts for our solutions. We generally invoice our subscription customers at the beginning of the subscription term, or in some instances, such as in multi-year arrangements, in installments. Until we have the contractual right to invoice, these contract amounts are classified as backlog. They are not recorded in deferred revenue or elsewhere in our condensed consolidated financial statements. As of July 31, 2025, we had backlog of approximately $3.3 billion. We expect backlog will change from period to period for several reasons, including the timing and duration of customer agreements, varying billing cycles of subscription agreements, and the timing and duration of customer renewals. Because revenue for any period is a function of revenue recognized from deferred revenue under contracts in existence at the beginning of the period, as well as contract renewals and new customer contracts during the period, backlog at the beginning of any period is not necessarily indicative of future revenue performance. We do not utilize backlog as a key management metric internally.
Seasonality
Given the annual budget approval process of many of our customers, we see seasonal patterns in our business. Net new ARR generation is typically greater in the second half of the year, particularly in the fourth quarter, as compared to the first half of the year. In addition, we also experience seasonality in our operating margin, typically with a lower margin in the first half of our fiscal year due to a step up in costs for payroll taxes and annual sales and marketing events. This also impacts the timing of operating cash flow.
Employees
As of July 31, 2025, we had 10,047 full-time employees. We also engage temporary employees and consultants as needed to support our operations. None of our employees in the United States are represented by a labor union or subject to a collective bargaining agreement. In certain countries in which we operate, we are subject to local labor law requirements which may automatically make our employees subject to industry-wide collective bargaining agreements. We have not experienced any work stoppages, and we consider our relations with our employees to be good.
Corporate Information
Our principal executive offices are located at 206 E. 9th Street, Suite 1400, Austin, Texas 78701 and our telephone number is (888) 512-8906. We are a holding company and all of our business operations are conducted through our subsidiaries, including CrowdStrike, Inc. Our website address is www.crowdstrike.com. Information contained on, or that can be accessed through, our website does not constitute part of this Quarterly Report on Form 10-Q.
Recently Issued Accounting Pronouncements
See Note 1, "Description of Business and Significant Accounting Policies," to our condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q, for more information about the impact of certain recent accounting pronouncements on our condensed consolidated financial statements.
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