Summary
CrowdStrike reported second quarter fiscal 2026 results for the period ended July 31, 2025. Revenue rose 21.3% from the prior-year quarter to $1.17 billion. Gross profit increased 18.2% to $858.67 million, though gross margin slipped 1.9 percentage points to 73.5%. The company swung to an operating loss of $112.98 million from positive operating income in the prior-year quarter. Net loss was $77.68 million, down from net income in the prior-year quarter. Diluted loss per share was $0.31, a swing from positive diluted EPS a year earlier.
For the first six months of fiscal 2026, revenue rose 20.6% to $2.27 billion. Gross profit rose 17.6% to $1.67 billion. The six-month operating loss was $237.64 million, down from positive operating income in the prior-year six-month period. Six-month net loss was $187.88 million, down from net income in the prior-year six-month period. Diluted loss per share was $0.75, down from positive diluted EPS in the prior-year six-month period. Top-line growth is solid. The bottom line is not.
Cash generation held up. Operating cash flow was $332.83 million in the quarter, up 1.9% from the prior-year quarter. Capital expenditures were $30.50 million, down 22.3%. Free cash flow, a non-GAAP measure, was $283.6 million, compared with $272.2 million a year earlier. Deferred revenue ended the quarter at $3.83 billion, up 24.0% year over year. Remaining performance obligations were $7.20 billion, up 46.9%.
Operationally, annual recurring revenue reached $4.66 billion as of July 31, 2025, up 20% year over year. Net new ARR was $221.1 million for the quarter and $414.8 million for the six months. Module adoption rates were 48% for six or more modules, 33% for seven or more, and 23% for eight or more. The company pointed to over 1,000 Flex customers and more than 100 re-flexes. Management said it expects net new ARR acceleration to continue in the back half of fiscal year 2026.
Non-GAAP profitability was stronger than the GAAP picture. Non-GAAP income from operations was a record $255.0 million, compared with $241.1 million in the prior-year quarter. Non-GAAP net income attributable to CrowdStrike was a record $237.4 million, compared with $221.6 million. Non-GAAP diluted earnings per share was a record $0.93, compared with $0.88. The gap between GAAP and non-GAAP results reflects stock-based compensation and other items the company excludes. CrowdStrike also adopted a 21.0% long-term projected non-GAAP tax rate in the quarter, down from 22.5%, after the One Big Beautiful Bill Act was enacted.
Guidance covers the third quarter of fiscal 2026 and the full fiscal year 2026. Non-GAAP income from operations guidance is $256.0 million to $262.0 million for the third quarter and $1,000.1 million to $1,040.1 million for the full year. Non-GAAP net income attributable to CrowdStrike is guided to $238.1 million to $242.8 million for the third quarter and $922.4 million to $954.0 million for the full year. Non-GAAP diluted earnings per share guidance is $0.93 to $0.95 for the third quarter and $3.60 to $3.72 for the full year. The company expects to use 257 million weighted average shares for the third quarter and 256 million for the full year. The non-GAAP tax rate guidance is 21.0% for both periods.
Risks remain. The July 19 Incident still hangs over the business. CrowdStrike faces lawsuits, claims and inquiries tied to the incident, and it expects legal and professional services costs to continue. Sales cycles have been elongated. Customer commitment packages have led to increased contraction because of longer subscription terms and lower upsell dollar values, and churn could still affect future periods. On the product side, CrowdStrike agreed to acquire Onum Technology Inc., a real-time telemetry pipeline management company. It released Falcon Next-Gen Identity Security, CrowdStrike Signal, and new AI security offerings. It was named a Leader in the 2025 Gartner Magic Quadrant for Endpoint Protection Platforms for the sixth consecutive time.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q2 FY2026 | Q1 FY2026 | QoQ | Q2 FY2025 | YoY |
|---|---|---|---|---|---|
| Revenue | $1.17B | $1.10B | +5.9% | $963.9M | +21.3% |
| Gross profit | $858.7M | $814.3M | +5.4% | $726.5M | +18.2% |
| Gross margin | 73.5% | 73.8% | -0.3 pp | 75.4% | -1.9 pp |
| Research & development | $346.7M | $334.1M | +3.8% | $250.9M | +38.2% |
| Sales & marketing | $447.0M | $439.6M | +1.7% | $355.5M | +25.8% |
| General & administrative | $178.0M | $165.2M | +7.7% | $106.4M | +67.2% |
| Total operating expenses | $971.6M | $938.9M | +3.5% | $712.8M | +36.3% |
| Operating income (loss) | -$113.0M | -$124.7M | +9.4% | $13.7M | -927.2% |
| Operating margin | -9.7% | -11.3% | +1.6 pp | 1.4% | -11.1 pp |
| Net income (loss) | -$77.6M | -$111.0M | +30.0% | $46.7M | -266.3% |
| Net margin | -6.6% | -10.1% | +3.4 pp | 4.8% | -11.5 pp |
| Diluted EPS | -$0.31 | -$0.44 | +$0.13 | $0.19 | -$0.50 |
Risks
The July 19 Incident continues to adversely affect business, sales, customer and partner relations, reputation, results of operations and financial condition. The company has incurred and expects to continue incurring significant remediation, legal and professional services costs, and insurance may not cover all liabilities.
CrowdStrike faces securities litigation, derivative litigation, consumer class actions, governmental inquiries and potential indemnification claims related to the July 19 Incident. Governmental authorities may seek undertakings, injunctive relief, consent decrees or penalties that could materially increase expenses or alter operations.
MD&A states the company has experienced delays in creating sales opportunities and longer sales cycles, including delays in customer purchasing decisions, and expects sales cycles to continue to be elongated in future periods. Risk factors also cite longer sales cycles in connection with the July 19 Incident.
Customer commitment packages introduced after the July 19 Incident have resulted, and are expected to continue to result, in increased contraction due to elongated subscription terms and decreased upsell dollar values. Customers may also renew with shorter subscription periods, fewer cloud modules, fewer endpoints or smaller contract values.
The company had an accumulated deficit of $1.3 billion as of July 31, 2025. For FY2026 Q2, operating income was down and swung to a loss at -$112.98 million, net income was down and swung to a loss at -$77.68 million, and operating margin was down 11.1 percentage points.
ARR grew 20% year over year to $4.7 billion as of July 31, 2025, compared with 32% year-over-year growth as of July 31, 2024. Net new ARR was $221.1 million for the three months ended July 31, 2025.
Competitors may more successfully incorporate AI into their products, gain or leverage superior access to certain AI technologies, and achieve higher market acceptance of their AI solutions. Competitive pressures could result in price reductions, fewer orders, reduced revenue and gross margins, increased net losses and loss of market share.
Gross margin was down 1.9 percentage points to 73.5% for FY2026 Q2, with subscription gross margin down 1 percentage point and professional services gross margin down 4 percentage points. Competitive pricing pressure and discounting may further reduce gross profits.
The company is highly dependent on CEO George Kurtz and other key personnel, and competition for cybersecurity and sales personnel is intense. The strategic plan announced May 6, 2025 could negatively affect the ability to recruit and retain skilled personnel.
International customers accounted for 33% of total revenue for the six months ended July 31, 2025. International operations expose the company to tariffs, trade restrictions, data localization requirements, foreign tax laws, FCPA compliance and foreign currency fluctuations.
Future growth depends in part on increasing sales to government organizations, which are subject to budgetary uncertainty, long sales cycles, evolving certification and software supply chain requirements, and potential loss of FedRAMP certification.
The OBBBA was enacted on July 4, 2025, and its tax effects were accounted for in FY2026 Q2. OECD Pillar Two global minimum tax and digital services taxes may adversely impact the provision for income taxes, net income and cash flows.
SaaS KPIs
All quarters →Free Cash Flow Margin
Non-GAAP Operating Margin
Net New ARR
Free Cash Flow
Non-GAAP Subscription Gross Margin
Backlog
Module Adoption Rate (6+ modules)
Module Adoption Rate (7+ modules)
ARR
Module Adoption Rate (8+ modules)
Summary, forecast, risks and KPIs are extracted from CrowdStrike Holdings, Inc.'s SEC filings for Q2 FY2026 (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.