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01/10 21:37
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call reflects strong financial performance with significant ARR growth, high gross margins, and record cash flow. Positive guidance and a $1 billion share repurchase plan bolster investor confidence. Despite competitive and regulatory risks, the company's innovation and strong product demand, particularly for Falcon Flex, are promising. The Q&A highlights management's strategic focus and adaptability, further supporting a positive outlook. The slight miss in revenue is offset by optimistic guidance and strategic initiatives, suggesting a positive stock price movement.
Net New ARR $194 million, up from previous year, driven by Falcon Flex momentum and re-Flexes.
Ending ARR $4.44 billion, up 22% year-over-year, reflecting strong demand and customer retention.
Subscription Gross Margin 80%, demonstrating efficiency of the AI platform.
Gross Retention Rate 97%, indicating strong customer commitment to Falcon.
Free Cash Flow $279 million or 25% of revenue, showing double-digit quarter-on-quarter growth.
Total Revenue $1.10 billion, up 20% year-over-year, driven by strong subscription revenue.
Subscription Revenue $1.05 billion, up 20% year-over-year, reflecting strong customer adoption.
Professional Service Revenue $52.7 million, a record high.
Total Gross Margin 78%, indicating overall profitability.
Non-GAAP Operating Income $201.1 million, with an operating margin of 18%, exceeding guidance.
GAAP Net Loss $110.2 million, including $39.7 million of expenses for outage and related matters.
Non-GAAP Net Income $184.7 million or $0.73 per diluted share, exceeding guidance.
Cash and Cash Equivalents $4.61 billion, a record high.
Cash Flow from Operations $384.1 million, a record high.
Falcon Flex: In less than 2 years since starting Falcon Flex, we've closed more than $3.2 billion of total account deal value across more than 820 accounts that have adopted the subscription model.
Cloud Data Protection: We built on our unified offering with the launch of cloud data protection, all on our unified sensor.
AI Model Scanning and AI Security Dashboard: We announced the general availability of both our AI model scanning and AI security dashboard technologies at RSA.
Charlotte AI: Charlotte AI's expanded detection triage enables autonomous expert-level triage, reasoning and response at machine speed.
M&A Activity: Recent M&A in the cloud space is increasing our relevance and competitiveness as a hyperscaler agnostic, independent solution.
Partnership with Microsoft: We announced a joint threat actor strategic collaboration with Microsoft to enhance adversary attribution.
MSSP Growth: Our MSSP business continues growing at a rapid pace, now representing more than 15% of our Q1 deal value.
Subscription Gross Margin: Subscription gross margin of 80%, demonstrating our AI platform efficiency.
Free Cash Flow: Free cash flow of $279 million or 25% of revenue, demonstrating double-digit quarter-on-quarter growth.
Strategic Realignment Plan: We identified opportunities to reallocate and focus investment in platform growth areas and AI to accelerate internal execution.
Share Repurchase Authorization: The company has authorized up to $1 billion in share repurchases, reflecting confidence in long-term strategy.
Focus on AI and Cybersecurity: CrowdStrike is positioned to protect workloads, identities, data, and infrastructure for the AI age.
Regulatory Issues: The company acknowledges potential risks related to regulatory compliance, particularly in the context of evolving cybersecurity laws and standards that could impact operations.
Competitive Pressures: CrowdStrike faces significant competitive pressures in the cybersecurity market, necessitating continuous innovation and platform consolidation to maintain its leadership position.
Supply Chain Challenges: There are mentions of supply chain challenges that could affect the delivery of services and products, particularly in the context of rapid technological advancements and market demands.
Economic Factors: The company is navigating evolving market conditions, which may include economic downturns or shifts in customer spending patterns that could impact revenue growth.
Operational Risks: The company reported a GAAP net loss attributable to CrowdStrike of $110.2 million, which included $39.7 million in expenses for outage and related matters, indicating operational risks that could affect financial performance.
Investment Risks: CrowdStrike's strategic realignment plan may incur cash charges and impact free cash flow, indicating potential risks associated with investment decisions and their timing.
Net New ARR: Q1 net new ARR of $194 million, double-digit millions ahead of expectations.
Ending ARR: Q1 ending ARR surpassing $4.4 billion, maintaining leadership as a pure-play cybersecurity software company.
Subscription Gross Margin: Subscription gross margin of 80%, demonstrating AI platform efficiency.
Free Cash Flow: Free cash flow of $279 million or 25% of revenue, demonstrating double-digit quarter-on-quarter growth.
Falcon Flex Adoption: Added $774 million of total Falcon Flex account value, bringing total deal value to $3.2 billion, growing 31% sequentially.
Share Repurchase Authorization: Authorized up to $1 billion in share repurchases, reflecting confidence in long-term strategy.
Strategic Realignment Plan: Identified opportunities to reallocate investment in platform growth areas, AI, and customer success.
Q2 Revenue Guidance: Expect total revenue in the range of $1,144.7 million to $1,151.6 million, reflecting a year-over-year growth rate of 19%.
FY 2026 Revenue Guidance: Expect total revenue in the range of $4,743.5 million to $4,805.5 million, reflecting a growth rate of 20% to 22%.
Non-GAAP Net Income Guidance: Expect non-GAAP net income per share for FY 2026 to be in the range of $3.44 to $3.56.
Operating Margin Guidance: Expect non-GAAP operating margin to increase to at least 24% in FY '27.
Free Cash Flow Margin Guidance: Anticipate FY '27 free cash flow margin of more than 30%.
Share Repurchase Authorization: CrowdStrike has authorized up to $1 billion in share repurchases, reflecting confidence in the company's long-term strategy and growth prospects.
The earnings call highlights strong financial performance, with record net income and high subscription gross margins. Product development is robust, with emerging segments performing well and AI integration enhancing offerings. Market strategy is solid, with strategic partnerships and a focus on observability. Financial health is strong, despite high operating expenses. Shareholder returns are not explicitly mentioned, but overall guidance is optimistic. The Q&A section supports these positives, with analysts showing interest in growth areas. The absence of market cap data suggests a moderate reaction, leading to a positive stock price prediction.
The earnings call summary and Q&A session reveal strong financial performance, strategic partnerships, and optimistic guidance. Key highlights include robust ARR growth, high subscription gross margins, and a significant share repurchase plan. The company is confident in its market strategy, with successful product adoption and strategic realignment for growth. While the management was unclear about growth sustainability beyond FY '26, the positive outlook for net retention, acquisitions, and market positioning supports a positive sentiment. The absence of specific market cap data suggests a moderate positive impact on stock price.
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