Summary
CrowdStrike closed FY2023 Q2 on July 31, 2022 with total revenue of $535.2 million, up 58.5% from the prior-year quarter. Gross profit was $394.6 million, up 59.6%, and gross margin reached 73.7%, up 0.5 percentage points. The company still posted an operating loss of $48.3 million, and that loss widened from the prior-year quarter. Operating margin was negative 9.0%, up 5.0 percentage points. Net loss attributable to CrowdStrike was $49.3 million, and that loss narrowed year over year. Diluted EPS was negative $0.21, also a narrowed loss per share.
The demand signals remain strong. Ending ARR grew 59% to $2.14 billion, with net new ARR of $218.1 million in the quarter. CrowdStrike added 1,741 net new subscription customers for a total of 19,686, up 51% year over year. Dollar-based net retention was above 120%. Adoption of multiple modules stayed high: 59% of subscription customers used five or more modules, 36% used six or more, and 20% used seven or more as of July 31, 2022. Backlog was $661.7 million. Non-GAAP income from operations was $87.3 million, compared with $35.3 million in the prior-year quarter. Non-GAAP net income attributable to CrowdStrike was $85.9 million, compared with $25.9 million. Non-GAAP diluted EPS was $0.36, compared with $0.11.
Cash generation was a bright spot. Operating cash flow was $209.9 million, up 93.5% year over year. Free cash flow, which is a non-GAAP measure, was $135.8 million, up 84% year over year. Capital expenditures were $66.1 million, up 120.4%. Deferred revenue rose 58.4% to $1.84 billion. Remaining performance obligations were $2.50 billion, up 47.1%. Recent product moves include Falcon Identity Threat Protection for GovCloud-1, CrowdStrike Asset Graph, and Falcon OverWatch Cloud Threat Hunting. The company also announced the Open Cybersecurity Schema Framework project.
Management raised guidance for fiscal year 2023 and provided a third-quarter outlook. For the third quarter ending October 31, 2022, total revenue is expected to be $569.1 million to $575.9 million. For the full fiscal year ending January 31, 2023, total revenue is expected to be $2,223.0 million to $2,232.0 million. Non-GAAP income from operations is guided to $72.7 million to $77.7 million for the third quarter and $321.8 million to $328.5 million for the full fiscal year. Non-GAAP net income attributable to CrowdStrike is guided to $73.0 million to $78.0 million for the third quarter and $313.7 million to $320.5 million for the full fiscal year. Non-GAAP diluted EPS is guided to $0.30 to $0.32 for the third quarter and $1.31 to $1.33 for the full fiscal year. The company assumes 241 million weighted average diluted shares for the third quarter and 240 million for the full fiscal year. It also targets 30% or more free cash flow margin for the full fiscal year.
Risks remain material. The company cites macroeconomic conditions, inflation, COVID-19, and geopolitical uncertainty as factors that could affect results. It also points to challenges from rapid growth, execution, new product introductions, product defects, customer acquisition and retention, acquisition integration, market acceptance, and long sales cycles. CrowdStrike has an accumulated deficit of $1.0 billion and expects operating losses for the foreseeable future, and it may need additional capital. Non-cancelable data center commitments total $124.0 million, with $84.9 million due in more than 12 months. Purchase commitments total $118.4 million, with $100.0 million due in more than 12 months. The AWS cloud commitment is $600.0 million through September 2026, of which $158.4 million has been utilized. Seasonality should make net new ARR greater in the second half of the year, particularly in the fourth quarter, while operating margin is lower in the first half because of payroll taxes, new hires, and annual sales and marketing events. The company had 6,250 full-time employees as of July 31, 2022.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q2 FY2023 | Q1 FY2023 | QoQ | Q2 FY2022 | YoY |
|---|---|---|---|---|---|
| Revenue | $535.2M | $487.8M | +9.7% | $337.7M | +58.5% |
| Gross profit | $394.6M | $361.0M | +9.3% | $247.3M | +59.6% |
| Gross margin | 73.7% | 74.0% | -0.3 pp | 73.2% | +0.5 pp |
| Research & development | $137.9M | $123.4M | +11.7% | $90.5M | +52.4% |
| Sales & marketing | $224.8M | $193.5M | +16.1% | $153.9M | +46.1% |
| General & administrative | $80.3M | $68.0M | +18.1% | $50.3M | +59.4% |
| Total operating expenses | $442.9M | $384.9M | +15.1% | $294.7M | +50.3% |
| Operating income (loss) | -$48.3M | -$23.9M | -102.3% | -$47.4M | -1.9% |
| Operating margin | -9.0% | -4.9% | -4.1 pp | -14.0% | +5.0 pp |
| Net income (loss) | -$48.3M | -$30.4M | -58.9% | -$57.3M | +15.7% |
| Net margin | -9.0% | -6.2% | -2.8 pp | -17.0% | +7.9 pp |
| Diluted EPS | -$0.21 | -$0.14 | -$0.07 | -$0.25 | +$0.04 |
| Net retention rate | 120.0% | 120.0% | ±0.0 pp | 100.0% | +20.0 pp |
Risks
Deterioration in general economic conditions, including inflation and rising interest rates, could cause current and prospective customers to cut security and IT operations spending, with cuts potentially falling disproportionately on cloud-based security solutions like CrowdStrike's, leading to decreased revenue, reduced sales, lengthened sales cycles, and increased churn.
CrowdStrike faces intense competition from legacy antivirus providers, alternative endpoint security vendors, and network security vendors, many of which have greater financial and technical resources, broader product suites, and the ability to bundle competing functionality, which could result in price reductions, fewer orders, reduced revenue, and loss of market share.
As a cybersecurity provider involved in identifying organized cybercriminals and nation-state actors, CrowdStrike has been and may continue to be specifically targeted by sophisticated adversaries; a compromise of internal systems or customer data could damage its reputation, reduce customer confidence, and harm financial results.
CrowdStrike relies heavily on third-party data centers, primarily Amazon Web Services, and has committed to purchase a minimum of $600.0 million of cloud services from AWS through September 2026; service disruptions, less favorable renegotiation terms, or increased cloud hosting costs could adversely affect operations and financial results.
Long and unpredictable sales cycles, particularly with large organizations and government entities, require considerable time and expense and are subject to budget constraints, multiple approvals, and administrative delays, making revenue difficult to predict and potentially causing results to fall below expectations.
Intense competition for experienced sales professionals and cybersecurity engineers, combined with substantial equity vesting and the critical dependence on CEO George Kurtz, could impair CrowdStrike's ability to attract, retain, and motivate key personnel needed to execute its growth strategy.
Customers have no obligation to renew subscriptions after the generally one-year contract term and may renew for shorter periods or cease using certain cloud modules; while dollar-based net retention was above 120% as of July 31, 2022, retention and expansion may decline due to satisfaction, pricing, competition, or economic conditions.
CrowdStrike relies on a limited number of suppliers for components of its cloud platform equipment and generally purchases on a purchase order basis without long-term supply guarantees, exposing it to component shortages and delivery delays that could delay data center expansion, capacity increases, or equipment replacement and increase operating costs.
International customers generated 30% of total revenue for the six months ended July 31, 2022, compared with 28% for fiscal 2022, exposing CrowdStrike to regulatory, tax, foreign currency, collection, and geopolitical risks as it continues to expand globally.
SaaS KPIs
All quarters →Backlog
Dollar-Based Net Retention Rate
Subscription Customers
ARR
Customers with 5+ Modules
Customers with 6+ Modules
Customers with 7+ Modules
Subscription Customer Growth (YoY)
Summary, forecast, risks and KPIs are extracted from CrowdStrike Holdings, Inc.'s SEC filings for Q2 FY2023 (10-Q / 10-K and the 8-K earnings release); GAAP figures in the summary are checked against the reported XBRL data. They can contain errors; the filings are authoritative. Processed Oct 2, 2026.