Analyst(s): Krista Case, Steven Dickens
Publication Date: September 12, 2024
CrowdStrike delivered a strong Q2 FY2025, marked by significant growth in its Falcon platform, which now surpasses $1 billion in combined ARR for key modules such as LogScale Next-Gen SIEM, Identity Protection, and Cloud Security.
What Is Covered in This Article:
- CrowdStrike’s Q2 FY2025 revenue growth and financial highlights
- Significant increase in Annual Recurring Revenue (ARR) and subscription revenue
- Record-setting operating cash flow and free cash flow achievements
- Strategic advancements in platform adoption and cybersecurity innovation
- The company’s market positioning and response to evolving cybersecurity threats
- Guidance and outlook for Q3 FY2025 and full fiscal year 2025
The News: CrowdStrike Holdings, Inc. (Nasdaq: CRWD) reported robust Q2 FY2025 financial results, with total revenue reaching $963.9 million, a 32% year-over-year increase, driven by a 33% rise in subscription revenue to $918.3 million. The company’s Annual Recurring Revenue (ARR) grew by 32% to $3.86 billion, adding $217.6 million in net new ARR. CrowdStrike also posted GAAP net income of $47.0 million, up from $8.5 million the previous year, and non-GAAP net income of $260.8 million, or $1.04 per diluted share.
The quarter was highlighted by strategic advancements, including expanding the Falcon platform and strengthening partnerships, positioning CrowdStrike to continue its growth trajectory. The company provided strong guidance for Q3 and full-year FY2025, emphasizing its focus on innovation and customer-centric solutions in an increasingly complex cybersecurity environment.
CrowdStrike Q2 FY2025 Financial Results: Sustained Growth Amid Cybersecurity Complexity
Analyst Take: The recent CrowdStrike outage, occurring on July 19th, 2024, captured widespread attention across the tech industry. The timing was particularly critical as the cybersecurity landscape remains intensely scrutinized, with rising threats and increasing enterprise reliance on cloud-based security solutions. The outage disrupted operations for several high-profile customers, sparking concerns about the resilience of cloud-native security platforms. Coming amid heightened competition and growing market demands, the incident highlighted the potential vulnerabilities in even the most advanced cybersecurity infrastructures, underscoring the need for enhanced reliability and prompting a broader industry conversation on risk management in cloud security.
Against this backdrop the recent earnings for Crowdstrike are worthy of more detailed scrutiny, especially around forward guidance.
CrowdStrike’s Q2 FY2025 performance was marked by a 32% year-over-year increase in revenue, reaching $963.9 million, with subscription revenue accounting for $918.3 million of this total—a 33% increase from the previous year. This growth was primarily driven by the increasing adoption of CrowdStrike’s Falcon platform, which continues to meet the evolving needs of organizations facing sophisticated cyber threats.
The ARR also exhibited robust growth, expanding by 32% year-over-year to $3.86 billion. The company added a notable $217.6 million in net new ARR during the quarter, reflecting strong demand for comprehensive cybersecurity solutions.
A Look into CrowdStrike’s Q2 FY2025 Financials
CrowdStrike’s operational efficiency was further reflected in its cash flow performance. The company reported a record Q2 operating cash flow of $326.6 million, up from $244.8 million in Q2 FY2024. Free cash flow reached a record high of $272.2 million, compared to $188.7 million the previous year, highlighting the company’s strong cash generation capabilities.
As of July 31, 2024, CrowdStrike’s balance sheet remained robust, with cash and cash equivalents totaling $4.04 billion, providing a solid foundation for future investments in innovation and market expansion.
Regarding profitability, CrowdStrike reported a significant improvement in GAAP income from operations, which stood at $13.7 million, compared to a loss of $15.4 million in the same quarter last year. Non-GAAP income from operations also saw a substantial rise, increasing to $226.8 million from $155.7 million in Q2 FY2024.
Net income attributable to CrowdStrike on a GAAP basis was $47.0 million, a remarkable increase from $8.5 million in Q2 FY2024. This translated to a GAAP net income per diluted share of $0.19, up from $0.03 per share in the previous year. Non-GAAP net income also demonstrated impressive growth, reaching $260.8 million, up 45% year-over-year, translating to $1.04 per diluted share compared to $0.74 in the prior year.
Strategic Initiatives and Market Positioning
CrowdStrike’s Q2 FY2025 results underscore the company’s strategic focus on building from its traction in endpoint protection into a provider of a comprehensive, modern XDR platform. Notably, its Falcon platform crossed the $1 billion ARR mark for key modules LogScale Next-Gen SIEM, Identity Protection, and Cloud Security – a financial milestone and a clear indicator of the platform’s growing importance in addressing modern organizations’ multifaceted challenges. As cyber threats become more sophisticated and diverse, demand for more integrated cybersecurity tools is rising.
This being acknowledged, on July 19, 2024, a faulty update to CrowdStrike’s Falcon Sensor software caused a widespread outage affecting millions of Windows systems. This incident is notable for its scale and impact, disrupting businesses and government agencies worldwide. The Futurum Group anticipates that this will increase the hesitation of practitioners and decision-makers industry-wide when it comes to choosing consolidated cybersecurity platforms, versus the longstanding preference for point, best-of-breed offerings.
Deal Velocity and Outage Impact
CrowdStrike’s Q2 FY2025 ended on July 31, 2024 – meaning that the July 19 outage will have more of a material financial impact on subsequent quarters. It’s important to note that the long-term impact of the outage on CrowdStrike’s deal velocity remains to be seen.
While CrowdStrike hasn’t publicly disclosed specific deal velocity figures following the July 19th outage, it is highly likely that the incident has a negative impact on sales cycle length. The widespread disruption caused by the faulty update has likely led to customer concerns about the reliability of CrowdStrike’s products and services, likely slowing down the sales process for new deals and leading to some existing customers reconsidering their relationship with CrowdStrike.
However, CEO George Kurtz acknowledged the issue head on at the start of the earnings call, and CrowdStrike has taken steps to address the issue and has publicly acknowledged the impact of the outage. In addition to taking immediate actions to help customers get back online, CrowdStrike has implemented enhanced content visibility and sensor version control, offering new configurations so that customers can have more granular control over the deployment of new updates. It has also enhanced its content validator and interpreter to avoid shipping erroneous content. Finally, it has engaged two independent software security review teams to enhance the Falcon quality control process. These actions will help CrowdStrike to remediate customer trust and preserve customer loyalty.
Guidance and Future Outlook
CrowdStrike’s forward-looking guidance for Q3 FY2025 and the full fiscal year reflects confidence in its market positioning and its handling of the July 19th outage. The company’s revenue expectations, ranging from $979.2 million to $984.7 million for the next quarter and a projected non-GAAP net income per share of $0.80 to $0.81, suggest a continued upward trajectory fueled by sustained demand for its integrated cybersecurity solutions. For the full fiscal year, CrowdStrike anticipates revenues between $3.89 billion and $3.90 billion, with non-GAAP net income per share expected to be between $3.61 and $3.65, further solidifying its path toward long-term profitability.
This optimistic guidance is grounded in the ongoing expansion of the Falcon platform, which continues to attract a broadening customer base seeking comprehensive, scalable cybersecurity solutions. CrowdStrike’s strategic investments in AI-driven threat detection, cloud security, and identity protection are expected to drive further adoption and market penetration. The company’s ability to deliver consistent, high-performance outcomes amid an increasingly complex threat landscape will be crucial in sustaining its momentum. We will be looking at headwinds brought on by the July outage in our coverage.
Driving Consolidation in Cybersecurity Solutions
CrowdStrike’s Q2 results underscore the growing complexity of the cybersecurity landscape and the corresponding need for integrated solutions that can address a wide range of threats. As organizations face rising threats and point-product complexity, the shift toward comprehensive platforms such as CrowdStrike’s Falcon is accelerating.
CrowdStrike’s strategic investments in AI-driven threat detection and response and its partnerships with key technology players such as Hewlett Packard Enterprise (HPE) and NVIDIA position the company well to capitalize on emerging trends in cybersecurity. The company’s ability to detect and respond to sophisticated cyber threats, evidenced by its record-setting speed benchmark in MITRE Engenuity’s ATT&CK Evaluations, further solidifies its market leadership.
Moreover, CrowdStrike’s focus on expanding its footprint in Latin America through partnerships with distributors such as Ingram Micro and M3Corp and its success in winning multiple awards at the SC Awards Europe 2024 highlight its global reach and recognition.
See the complete Crowdstrike Q2 FY2025 earnings release on the Crowdstrike website.
Disclosure: The Futurum Group is a research and advisory firm that engages or has engaged in research, analysis, and advisory services with many technology companies, including those mentioned in this article. The author does not hold any equity positions with any company mentioned in this article.
Analysis and opinions expressed herein are specific to the analyst individually and data and other information that might have been provided for validation, not those of The Futurum Group as a whole.
Other insights from The Futurum Group:
The CrowdStrike Outage – A Detailed Post-Mortem
Talking Marvell, GlobalFoundries, Google, CrowdStrike, Intel, OpenAI
Author Information
Regarded as a luminary at the intersection of technology and business transformation, Steven Dickens is the Vice President and Practice Leader for Hybrid Cloud, Infrastructure, and Operations at The Futurum Group. With a distinguished track record as a Forbes contributor and a ranking among the Top 10 Analysts by ARInsights, Steven's unique vantage point enables him to chart the nexus between emergent technologies and disruptive innovation, offering unparalleled insights for global enterprises.
Steven's expertise spans a broad spectrum of technologies that drive modern enterprises. Notable among these are open source, hybrid cloud, mission-critical infrastructure, cryptocurrencies, blockchain, and FinTech innovation. His work is foundational in aligning the strategic imperatives of C-suite executives with the practical needs of end users and technology practitioners, serving as a catalyst for optimizing the return on technology investments.
Over the years, Steven has been an integral part of industry behemoths including Broadcom, Hewlett Packard Enterprise (HPE), and IBM. His exceptional ability to pioneer multi-hundred-million-dollar products and to lead global sales teams with revenues in the same echelon has consistently demonstrated his capability for high-impact leadership.
Steven serves as a thought leader in various technology consortiums. He was a founding board member and former Chairperson of the Open Mainframe Project, under the aegis of the Linux Foundation. His role as a Board Advisor continues to shape the advocacy for open source implementations of mainframe technologies.
With a focus on data security, protection, and management, Krista has a particular focus on how these strategies play out in multi-cloud environments. She brings approximately 15 years of experience providing research and advisory services and creating thought leadership content. Her vantage point spans technology and vendor portfolio developments; customer buying behavior trends; and vendor ecosystems, go-to-market positioning, and business models. Her work has appeared in major publications including eWeek, TechTarget and The Register.
Prior to joining The Futurum Group, Krista led the data protection practice for Evaluator Group and the data center practice of analyst firm Technology Business Research. She also created articles, product analyses, and blogs on all things storage and data protection and management for analyst firm Storage Switzerland and led market intelligence initiatives for media company TechTarget.
