Summary
CrowdStrike closed the fiscal third quarter, ended October 31, 2023, with revenue growth still above 30% and a swing to GAAP profitability. Total revenue was $786.0 million for the quarter, up 35.3% from $580.9 million a year earlier. Revenue for the nine months reached $2.21 billion, up 37.8% from $1.60 billion. Ending annual recurring revenue rose 35% year over year to $3.15 billion, a level management described as a first for a pure-play cybersecurity software vendor. Net new ARR was $223.1 million in the quarter and $593.5 million for the nine months, powered by platform consolidation and a record pipeline.
Profitability improved faster than the top line. Gross margin was 75.2% for the quarter, up 2.4 percentage points from a year earlier, and gross profit rose 39.8% to $591.0 million. Operating income was $3.2 million, a swing to a profit, and operating margin moved to 0.4% from a negative figure a year earlier. Net income was $26.7 million, also a swing to a profit from a prior-year loss. Diluted earnings per share was $0.11, against a loss per share in the prior-year quarter. On a non-GAAP basis, income from operations was $175.7 million, up from $89.7 million, non-GAAP net income attributable to CrowdStrike was $199.2 million, up from $96.1 million, and non-GAAP diluted earnings per share was $0.82, up from $0.40.
Cash generation also set records. Operating cash flow was $273.5 million for the quarter, up 12.6% from $242.9 million, and $819.2 million for the nine months, up 22.7% from $667.7 million. Free cash flow, a non-GAAP measure that also subtracts capitalized software and deferred compensation investments, was $239.0 million, compared with $174.1 million. Capital expenditures fell 65.3% to $21.3 million in the quarter and 31.0% to $123.9 million for the nine months. The balance sheet held $3.17 billion in cash, cash equivalents and short-term investments as of October 31, 2023. Deferred revenue grew 26.2% to $2.54 billion and remaining performance obligations grew 32.1% to $3.70 billion. Backlog was about $1.2 billion.
Guidance for the fourth quarter of fiscal 2024, ending January 31, 2024, points to non-GAAP income from operations of $186.5 million to $189.0 million and non-GAAP net income attributable to CrowdStrike of $199.6 million to $202.1 million, or $0.81 to $0.82 per diluted share on roughly 245 million diluted shares. For the full fiscal year 2024 the company lifted its outlook and now guides to non-GAAP income from operations of $633.6 million to $636.2 million and non-GAAP earnings of $2.95 to $2.96 per diluted share on roughly 243 million diluted shares. Those targets are non-GAAP only, and the company did not publish a reconciliation to the closest GAAP measures, citing items outside its control or that cannot be reasonably predicted.
Operationally, module adoption stood at 63% for five or more modules, 42% for six or more and 26% for seven or more as of October 31, 2023. The company bought Bionic, an application security posture management vendor, for $238.7 million net of cash acquired, and it became the first cybersecurity software vendor founded for the cloud to pass $1 billion of software sales through AWS Marketplace. The dollar-based net retention rate was slightly below the company's benchmark, which management tied to large upfront customer contracts and to faster new-customer additions. Management also described a long-term ambition of reaching $10 billion in ARR over the next five to seven years.
The risk list in the filing is broad. It covers managing rapid growth, execution challenges, defects or vulnerabilities in new products, intense competition, unpredictable sales cycles, retention of existing customers, integration of acquisitions, and general conditions such as inflation, geopolitical uncertainty, public health crises and volatility in the banking and financial services sector. Seasonality matters too. Net new ARR is usually stronger in the second half of the fiscal year, particularly in the fourth quarter, while operating margin tends to be lower in the first half because of payroll taxes and annual sales and marketing events. With 7,745 full-time employees and an accumulated deficit of $1.1 billion as of October 31, 2023, the company keeps spending heavily even as it turns profitable.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q3 FY2024 | Q2 FY2024 | QoQ | Q3 FY2023 | YoY |
|---|---|---|---|---|---|
| Revenue | $786.0M | $731.6M | +7.4% | $580.9M | +35.3% |
| Gross profit | $591.0M | $548.7M | +7.7% | $422.7M | +39.8% |
| Gross margin | 75.2% | 75.0% | +0.2 pp | 72.8% | +2.4 pp |
| Research & development | $196.1M | $179.4M | +9.3% | $155.3M | +26.3% |
| Sales & marketing | $286.2M | $282.9M | +1.2% | $239.7M | +19.4% |
| General & administrative | $105.6M | $101.8M | +3.7% | $84.1M | +25.5% |
| Total operating expenses | $587.8M | $564.1M | +4.2% | $479.1M | +22.7% |
| Operating income (loss) | $3.2M | -$15.4M | +120.6% | -$56.4M | +105.6% |
| Operating margin | 0.4% | -2.1% | +2.5 pp | -9.7% | +10.1 pp |
| Net income (loss) | $26.7M | $8.5M | +214.6% | -$54.6M | +148.8% |
| Net margin | 3.4% | 1.2% | +2.2 pp | -9.4% | +12.8 pp |
| Diluted EPS | $0.11 | $0.03 | +$0.08 | -$0.24 | +$0.35 |
Risks
ARR grew to $3.2 billion as of October 31, 2023, but dollar-based net retention rate was slightly below CrowdStrike's benchmark, and the company notes that strong success landing bigger deals with more modules and accelerating new customer acquisition create a natural trade off on near-term expansion with existing customers.
Economic weakness, inflation, rising interest rates, bank failures, and geopolitical conditions have caused and may continue to cause customers to delay or cut security and IT spending, lengthen sales cycles, increase churn, and reduce demand, with delays potentially falling disproportionately on cloud-based security solutions.
AI is a core component of CrowdStrike's business and it is incorporating generative AI, but competitors may more successfully incorporate AI, gain superior access to AI technologies, or achieve higher market acceptance, while increased public scrutiny of AI could cause reputational harm, legal liability, or delay adoption.
The security and IT operations market is intensely competitive and fragmented, with legacy antivirus, alternative endpoint, network security, and professional services competitors, many with greater resources, broader offerings, and ability to bundle or lower prices, which could reduce revenue and gross margins.
As a cybersecurity provider, CrowdStrike has been and expects to continue to be a target of cyberattacks, including from sophisticated nation-state actors, and a compromise of its internal systems or third-party providers could damage reputation and customer confidence.
Sales cycles for the Falcon platform can be long and unpredictable, especially with large enterprises and government entities, and uncertain economic conditions have led to additional budget scrutiny, longer sales cycles, and slower adoption of new technologies.
The vast majority of Falcon platform sales flow through channel partners, and loss of a substantial number of partners or failure to recruit additional partners could limit the ability to market, sell, and distribute the platform.
International customers accounted for 32% of total revenue for the nine months ended October 31, 2023, and expansion exposes CrowdStrike to regulatory, tax, compliance, currency, and geopolitical risks, including data localization and anti-bribery laws.
Sales to government organizations are subject to budgetary uncertainty, long sales cycles, FedRAMP certification maintenance costs, evolving certification and source code transparency requirements, and political changes that could reduce funding or demand.
CrowdStrike relies on third-party data centers, primarily AWS, and its own colocation facilities; service interruptions, AWS contract renegotiation on less favorable terms, or failure of redundancy and disaster recovery could harm customer trust and results.
Future success depends on key technical, sales, and management personnel, including CEO George Kurtz, and competition for cybersecurity professionals is intense; many employees have vested or will vest in substantial equity awards, which may affect retention.
CrowdStrike has made acquisitions such as Bionic for $238.7 million net of cash acquired in the nine months ended October 31, 2023, and may continue to do so; integration may divert management, disrupt business, dilute stockholders, or incur unanticipated liabilities.
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
Summary, forecast, risks and KPIs are extracted from CrowdStrike Holdings, Inc.'s SEC filings for Q3 FY2024 (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.