Summary
CrowdStrike's fiscal 2021 third quarter revenue rose 85.8% year over year to $232.5 million. Gross profit rose 94.8% to $170.9 million. Gross margin was 73.5%, up 3.4 percentage points from the prior-year quarter. The operating loss narrowed to $24.2 million, a 37.3% improvement. Net loss narrowed to $24.5 million, an improvement of 30.9%. Diluted EPS was -$0.11. Operating margin improved to negative 10.4%, up 20.4 percentage points.
For the first nine months, revenue was $609.5 million, up 85.1%. Gross profit was $446.7 million, up 93.3%. Gross margin was 73.3%, up 3.1 percentage points. Operating loss was $76.7 million, a 33.2% improvement. Net loss was $73.6 million, a 35.1% improvement. Diluted EPS was -$0.34. Operating margin was negative 12.6%, up 22.3 percentage points. Operating cash flow was $242.1 million, up 615.5%. Capital expenditures were $40.2 million, down 39.8%. In the quarter alone, operating cash flow was $88.5 million, up 129.1%, and capital expenditures were $9.9 million, down 66.6%. Deferred revenue was $762.7 million, up 70.4%. RPO was $1.07 billion, up 85.4%.
Free cash flow, a non-GAAP measure that the company defines as operating cash flow less purchases of property and equipment and capitalized internal-use software, was $76.1 million in the quarter, compared with $7.0 million a year earlier. Free cash flow margin was 33%, up from 6%. On a year-to-date basis, free cash flow was $195.5 million, compared with negative $38.2 million in the prior-year period, and free cash flow margin was 32%, up from negative 12%.
Operationally, CrowdStrike ended the quarter with 8,416 subscription customers, up 85% from 4,561 a year earlier. It added 1,186 net new subscription customers, including 64 from the Preempt Security acquisition. ARR reached $907.4 million, up 81% year over year, with $116.8 million of net new ARR, including $6.8 million from Preempt. Dollar-based net retention once again exceeded 120%. Module adoption continued to broaden: 61% of customers had adopted four or more modules and 44% had adopted five or more, compared with 52% and 31% a year earlier. The platform now has 16 cloud modules. On September 30, 2020, the company acquired Preempt Security for total consideration of $91.2 million, including $87.4 million in cash and $3.8 million in replacement equity awards. Backlog was $310.5 million, of which $101.9 million is not expected to be billed in the next twelve months.
Management frames the rest of fiscal 2021 around continued investment and uneven costs. The filing says gross margin will fluctuate quarter to quarter as new cloud data centers open in new geographies. Operating expenses are expected to increase in dollar terms, particularly in sales and marketing and research and development, while those expenses should decline as a percentage of revenue over time. The company also expects to keep incurring operating losses for the foreseeable future. Seasonality is another factor: net new ARR generation is expected to be greater in the second half of the year, especially the fourth quarter, and operating margin is expected to be lower in the first half because of payroll taxes, new hires, and annual sales and marketing events. The main risk in the filing is the COVID-19 pandemic. Management says the impact so far has been modest, but some customers, especially in heavily affected industries, have asked for special billing or payment terms. The pandemic could affect sales cycles, customer and industry events, vendors, and the pace of reopening, and the subscription model may delay the full effect in reported results. The company also cites risks around new customer acquisition, retention, and expansion, plus the need to keep investing significantly in sales and marketing.
Forecast
No forward guidance in this quarter's filings.
Reported figures
GAAP, from SEC filings| Metric | Q3 FY2021 | Q2 FY2021 | QoQ | Q3 FY2020 | YoY |
|---|---|---|---|---|---|
| Revenue | $232.5M | $199.0M | +16.8% | $125.1M | +85.8% |
| Gross profit | $170.9M | $144.6M | +18.2% | $87.8M | +94.8% |
| Gross margin | 73.5% | 72.7% | +0.9 pp | 70.1% | +3.4 pp |
| Research & development | $57.5M | $50.5M | +14.0% | $36.0M | +59.9% |
| Sales & marketing | $105.6M | $95.1M | +11.0% | $68.7M | +53.8% |
| General & administrative | $32.0M | $29.0M | +10.3% | $21.6M | +47.8% |
| Total operating expenses | $195.1M | $174.6M | +11.8% | $126.3M | +54.5% |
| Operating income (loss) | -$24.2M | -$30.0M | +19.4% | -$38.5M | +37.3% |
| Operating margin | -10.4% | -15.1% | +4.7 pp | -30.8% | +20.4 pp |
| Net income (loss) | -$24.5M | -$29.9M | +17.9% | -$35.5M | +30.9% |
| Net margin | -10.6% | -15.0% | +4.5 pp | -28.4% | +17.8 pp |
| Net retention rate | 100.0% | 100.0% | ±0.0 pp | 100.0% | ±0.0 pp |
Risks
The COVID-19 pandemic could materially and adversely affect future revenue, and MD&A notes some customers requested special billing or payment terms while effects may not be fully reflected until future periods because of the subscription model. The company reported gross retention remained high and dollar-based net retention exceeded 120 percent in FY2021 Q3.
Headcount grew from 910 employees as of January 31, 2018 to 3,163 as of October 31, 2020, and subscription customers grew 85% year over year to 8,416 as of October 31, 2020. Failure to manage rapid growth could impair platform quality, compliance, and competitive position.
As a cybersecurity provider, CrowdStrike has been and expects to continue to be a target of sophisticated cyber adversaries, including nation-state actors, seeking to compromise its systems or use its Falcon platform as an entry point into customer environments.
The market is intensely competitive and fragmented, with larger competitors such as McAfee, Broadcom/Symantec, Microsoft, Palo Alto Networks, and FireEye having greater resources and ability to bundle or discount, which could reduce CrowdStrike's market share and gross margins.
Future success depends on key personnel including CEO George Kurtz and highly technical incident response staff; competition for cybersecurity talent is intense and employees work at will, so loss of key employees could harm the business.
MD&A and risk factors note net new ARR generation is greater in the second half, particularly the fourth quarter, and operating margin is lower in the first half due to payroll taxes, new hires, and annual sales and marketing events, causing period-to-period variability.
The September 30, 2020 acquisition of Preempt Security for $91.2 million moved CrowdStrike into identity protection and carries integration, due diligence, retention, and financial forecasting risks.
CrowdStrike will cease to be an emerging growth company as of January 31, 2021 and will become a large accelerated filer, ending its exemption from auditor attestation over internal control over financial reporting. Any failure to maintain effective controls could lead to restatement, reporting delays, or loss of investor confidence.
SaaS KPIs
All quarters →Free Cash Flow Margin
Non-GAAP Operating Margin
Net New ARR
Free Cash Flow
Annual Recurring Revenue (ARR)
Non-GAAP Subscription Gross Margin
Backlog
Dollar-Based Net Retention Rate
Subscription Customers
Net New Subscription Customers
Non-GAAP Income from Operations
ARR YoY Growth
Subscription Customers YoY Growth
Summary, forecast, risks and KPIs are extracted from CrowdStrike Holdings, Inc.'s SEC filings for Q3 FY2021 (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.