Crowdstrike Q3 2021 Earnings…

CrowdStrike Reports Fiscal Third Quarter 2021 Financial Results
December 2, 2020 at 4:05 PM EST
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Achieved $907 million in ARR and net new ARR of $117 million
Added 1,186 net new subscription customers
Continued strong module adoption as customers with four or more modules increased to 61%, five or more modules increased to 44% and six or more modules increased to 22%
SUNNYVALE, Calif.–(BUSINESS WIRE)–Dec. 2, 2020-- CrowdStrike Holdings, Inc., (Nasdaq: CRWD), a leader in cloud-delivered endpoint and cloud workload protection, today announced financial results for the third quarter of its fiscal 2021, ended October 31, 2020.



Third Quarter Fiscal 2021 Financial Highlights

Revenue: Total revenue was $232.5 million, an 86% increase, compared to $125.1 million in the third quarter of fiscal 2020.

Subscription revenue was $213.5 million, an 87% increase, compared to $114.2 million in the third quarter of fiscal 2020.

Annual Recurring Revenue (ARR) increased 81% year-over-year and grew to $907.4 million as of October 31, 2020, of which $116.8 million was net new ARR added in the quarter, including $6.8 million from the acquisition of Preempt Security.

Subscription Gross Margin: GAAP subscription gross margin was 77%, compared to 74% in the third quarter of fiscal 2020. Non-GAAP subscription gross margin was 78%, compared to 76% in the third quarter of fiscal 2020.

Income/Loss from Operations: GAAP loss from operations was $24.2 million, compared to $38.5 million in the third quarter of fiscal 2020. Non-GAAP income from operations was $18.9 million, compared to a loss of $16.5 million in the third quarter of fiscal 2020.

Net Income/Loss: GAAP net loss was $24.5 million, compared to $35.5 million in the third quarter of fiscal 2020. GAAP net loss per share, basic and diluted, was $0.11, compared to $0.17 in the third quarter of fiscal 2020. Non-GAAP net income was $18.6 million, compared to a loss of $13.4 million in the third quarter of fiscal 2020. Non-GAAP net income per share, diluted, was $0.08, compared to a loss of $0.07 in the third quarter of fiscal 2020.

Cash Flow: Net cash generated from operations was $88.5 million, compared to $38.6 million in the third quarter of fiscal 2020. Free cash flow was $76.1 million, compared to $7.0 million in the third quarter of fiscal 2020.

Cash and Cash Equivalents was $1,060 million as of October 31, 2020.

  1. Top line growth +86%! WOW, re-acceleration from previous Q
  2. Added 1186 new subscription customers, +85% yoy! WOW
  3. Gross Margin increased to 78%!
  4. Cash flow from operations - 88.5m!! WOW
  5. Free cash flow 76.1m!! WOW

Super stellar results!!



This company is like Tiger Woods in the early 2000’s. Every time this company reports, they keep improving just about every metric. We know what were are going to get when Crowdstrike steps onto the tee box. Here is what I mean -

**ARR Growth:       Q1 19	Q2 19	Q3 19	Q4 19	Q1 20	Q2 20	Q3 20	Q4 20	Q1 21	Q2 21	Q3 21**
ARR               $170 	 $208 	 $254 	 $313 	 $365 	 $424 	 $502 	 $600 	 $686 	 $791 	 $907 
YoY Change % 	  139%	 131%	 125%	 122%	 115%	 104%	  98%	  92%	  88%	  86%	  81%

**Revenue Growth:**
Revenue 	  $47 	 $56 	 $66 	 $80 	 $96 	 $108 	 $125 	 $152 	 $178 	 $199 	 $232 
QoQ Change % 		 18%	 19%	 21%	 19%	  13%	  16%	  22%	  17%	  12%	  17%
YoY Change %					 103%	  94%	  88%	  89%	  85%	  84%	  86%

**Customer Growth:** 
Customer Count 	 1,491 	 1,800 	 2,147 	 2,516 	 3,059 	 3,789 	 4,561 	 5,431 	 6,261 	 7,230 	 8,416 
QoQ Change %		  21%	  19%	  17%	  22%	  24%	  20%	  19%	  15%	  15%	  16%
YoY Change % 					  105%	  111%	  112%	  116%	  105%	  91%	  85%

Here is where things get really pretty. Check out how consistent Crowdstrike is at improving their profitability. Talk about operating leverage. As Snoop Dogg would say, “this man don’t miss.”

**Non-GAAP Op Margin Growth:** 
Op Margin	 -66%	 -50%	  -43%	  -35%	  -23%	  -19%	  -13%	  -4%	  1%	  4%	  8%

**Non-GAAP EPS Growth:** 
EPS 	        $(0.73)	$(0.69) $(0.64) $(0.60) $(0.47) $(0.18) $(0.07) $(0.02) $0.02 	$0.03 	$0.08 

Every single quarter, without fail, Crowdstrike has moved both of these two metrics up and to the right. Those tables should be hanging in the Louvre. What a beautiful sight to behold!

Kurtz and co sure make it easy to be a shareholder of this wonderful company. Up and to the right we go!



Executing as well as anyone could hope. I was expecting them to raise 4Q guidance from $229m implied (+51%) to $248m (+63%) and ultimately come in at $266m (+75%) for full year revenue of $866m (+80%).

Looks like they guided even higher, and with their typical 20% sequential growth in 4Q they will come in around $275m and register 83% growth for the year.

Their growth will continue to gradually decline and they’ll probably guide to something like 45% growth for FY22 but I expect them to continue at 70%+ with a $1b run rate.


This is my favorite thing to do with new revenue info these days. Looks great YoY and even better QoQ:

Q Ending	**Oct-20**	Jul-20	Apr-20	Jan-20	Oct-19	Jul-19
Revenue 	**232.5**	199	178.1	152.1	125.1	108.1
YoY     	**86%**	84%	85%	89%	89%	94%
QoQ     	**16.8%**	11.7%	17.1%	21.6%	15.7%	12.5%

I haven’t taken a dive in to the report but I took a quick break from work to look at this and figured I would share.

It is nice to glance at everything QoQ vs the YoY info companies tend to provide. If interested, put these side by side and scan the bullet points:


Really exciting results.

It was noted on the call that this was the first quarter of Preempt’s (recent acquisition) revenue contribution, so if you back out the $7m, the QOQ growth was actually an increase from 12% to 13%…

I think George Kurtz is almost up there with Jeff Green in terms of vision and selling a story. Not only does he come out all guns blazing with these stellar results, he then drops a few TAM bombs along the way…

Very bullish on workload security:

“As a result, we believe today’s cloud workloads are massively under protected and this could represent a 10x market opportunity in 2023”

And firming up the importance of rolling up identity protection and workload security:

“This solves a huge problem and closes a considerable hole in security that conventional Zero Trust models can’t address. Based on IDC estimates, we believe the identity protection market will be a $2.2 billion market in 2021”

And then some confidence on the outlook:

“We once again ended the quarter with a record pipeline, which we believe indicates a strong foundation for future growth”. Emphasis on the record pipeline here.

They were also questioned about 2021 outlook and comps vs the Covid numbers. George played this down saying he’s unconcerned with that considering the digital transformation trends that are just getting started.

So giving us plenty of reasons to believe the 80+% revenue growth may well continue into 2021.

All in all, I’m very happy to have them as my top position.


CRWD has prouced sterling results for the third quarter. I am posting summary highlights from the earnings call which I found interesting along with a bit of editorial comment in parenthesis. Hopefully some will find this useful.

Crowdstrike Q3 Earnings Call

Kurtz- In the third quarter we set a new record for net new ARR generated ; ending the quarter with over 900 million in ARR; delivering strong 87% subscription revenue growth and setting a new record for professional services revenue; adding a record 1,186 net new subscription customers; generating non-GAAP operating income for the third consecutive quarter and positive operating and free cash flow for the fifth consecutive quarter; introducing three new modules; acquiring Preempt Security which expands CrowdStrike’s Zero Trust capabilities and critical identity behavior data to prevent identity based attacks and insider threats; joined forces with EY to h strengthen their client cyber security posture with the Falcon platform.

… $117 million in net new ARR in the third quarter to end the quarter with $907 million in ARR. … our subscription customer base grew 85% year-over-year and dollar based net retention rate once again exceeded 120%.

No vendor is currently able to replicate our Threat Graph capabilities, which allows us to deepen our competitive moat.(CRWD has no serious competition on this score)

Our massive data lake within Threat Graph grows and gets smarter by the minute, providing visibility across all our customers. Threat Graph processes over 4 trillion high fidelity signals per week. Recent acquisition of Preempt Security, gives us access to a new set of user behaviors to drive new use cases such as preventing insider threats.(a massive opportunity)

… one data store, can analyze data almost instantaneously across our entire customer base providing real-time protection and community immunity and better training data for our AI algorithms. In the last nine months alone, close to 3,000 net new subscription customers have chosen Falcon.(competition can’t match this capability)

In total, we believe our addressable market will reach $32.4 billion in calendar year 2021, compared to the estimated $24.6 billion market in 2019, which we disclosed at the time of our IPO.

. In the third quarter, we continued to see rapid module adoption as percentage of all subscription customers with four or more modules increased to 61% and those with five or more modules increased to 44%.

In Q3 we reached a new milestone with 22% of our subscription customers having adopted six or more modules.

Stopping the breach is no longer just about protecting endpoints. It also encompasses cloud workload security and identity protection. We have been investing and innovating in both our cloud workload and Zero Trust capabilities… (Zero trust services are increasingly in demand)

………training agents built on legacy technology are often left behind because they can’t keep up with the speed, agility, and scalability required in the cloud. As a result, we believe today’s cloud workloads are massively under protected and this could represent a 10x market opportunity in 2023.,(and so there is a migration fromlegacy structures to CRWD services)

Based on IDC estimates, we believe the identity protection market will be a $2.2 billion market in 2021. CrowdStrike is a leading security provider in the market with a Zero Trust approach that combines endpoint and workload protection with identity protection, behavioral analytics, and AI.

We joined forces with Okta to help customers adopt a modern, identity-centric Zero Trust security ecosystem. This quarter, we are thrilled to announce that Okta is now a CrowdStrike customer.
Our Falcon platform is increasingly recognized as a mainstream market choice for enterprises around the world. We believe we are still in the early innings of our growth journey…

Podbere- In Q3, we delivered 81% ARR growth year-over-year to reach $907.4 million.New customer acquisition, and expansion business within existing customers drove substantial growth in the quarter resulting in record net new ARR of $116.8 million.We maintained our exceptional gross retention rate. Our dollar-based net retention rate once again exceeded 120%.

Revenue grew 86% over Q3 of last year to reach $232.5 million. Subscription revenue grew 87% over Q3 of last year to reach $213.5 million. Professional services revenue was $18.9 million, setting a new record and representing 74% year-over-year growth. We continued to see record demand for our services business.
This translated to a record number of seven-figure subscription ARR deals resulting from our services engagements for the second consecutive quarter.
We see strong growth in the U.S., as well as our international markets. Approximately 72% of third quarter revenue was derived from customers in the U.S., 14% from Europe, Middle East, and Africa markets, 9% from Asia Pacific, and 5% from other markets.

Third quarter non-GAAP gross margin improved to a record 76%, up from 72% a year ago. Our non-GAAP subscription gross margin increased to 78% compared with 76% in Q3 of last year.

Non-GAAP operating income was a record $18.9 million and operating margin improved 21 points over Q3 of last year to reach 8.1%. Non-GAAP operating income was a record $18.9 million and operating margin improved 21 points over Q3 of last year to reach 8.1%.

Cash and cash equivalents was approximately $1.1 billion. . Cash flow from operations was $88.5 million and free cash flow was $76.1 million.

For the fourth quarter, total revenue will be in the range of $245.5 million to $250.5 million, a Y/Y growth of 65% with subscription revenue being the dominant driver of growth. We expect total revenue to be in the range of $245.5 million to $250.5 million, reflecting a year-over-year growth rate of 61% to 65% with subscription revenue being the dominant driver of growth…

For the full fiscal year 2021, we currently expect total revenue to be in the range of $855 million to $860 million, reflecting a growth rate of 78% to 79% over the 2020 fiscal year. Non-GAAP income from operations is expected to be between $46.4 million and $50 million.


Q , … how will the year look like when you start comparing it to the COVID quarters, meaning 2Q, 3Q, was COVID such a big factor that we need to be careful with year-over-year comps?

A we’re extremely pleased with this quarter and we’re extremely pleased with the momentum that we’ve seen going into Q4. We enter Q4 with a record pipeline and that’s a good signal in terms of what we’re seeing out there in terms of demand for our products.

We continue to expand the capabilities across all the modules we have. We’ll have more modules at some point next year. So, it’s broad-based demand from lots of modules and we continue to see strong demand across the board and we’re excited about that

Q… could you dig in a little bit to some of the key growth drivers in terms of subscriber count, as well as revenue per subscriber and how things are changing relative to prior periods with regard to initial landed deal size versus selling into or expansion into your install base?
A George Kurtz
, we still see a lot of headroom with respect to both new logos and expansion and we’ve been able to see larger deals come in and obviously that is part and parcel with more modules that we have today and the value sell. So, as we continue to value sell, and as we continue to increase our offerings, the deal sizes end up being bigger.

The great news is, I think we have tremendous amount of headroom in both going after new logos and we have a tremendous opportunity for expansion opportunities.
I think when you look at our module expansion and you look at our ability to cross-sell with a frictionless process, in-app trials, things of that nature, it’s across the board and there isn’t one particular area that just stands out. ……

we certainly talk a lot about our enterprise deals, but our SMB business has been doing fantastic because of our cloud delivery modules –
, it’s very easy for smaller companies to adopt this in constrained cost times, they’re looking for ways to drive efficiency. So, across the board, I think broad based modules, segments and even geographies.
(evidently SMB growth is an increasingly significant future contributor.)

Q. Is there some reason you’re hitting an inflection point in your business at this point?
A George Kurtz…… you hit the nail on the head. To be clear, when we think about laptop purchases that’s well behind us, right? We’re talking about real transformation, real adoption of our technology, consolidation of agents, and winning in the market because we’ve got the best technology solving really big problems
…., it’s across the board, it’s not just enterprise, it’s not just mid-market, it’s not just SMB, it is across all of those particular areas because the technology works and we’re saving companies lots of money and delivering lots of value. So when you think about sort of the COVID piece of it, as I mentioned that’s well behind us and this is a much more sustainable trend that we see for the foreseeable (CRWD success is not Covid related. Expectation is growing demand for across the board for all services.)

Q… what factors specifically provided upside relative to maybe some of your conservatism around ARR

A…. for Q3 and the overperformance, there was a backdrop of the heightened threat environment, the strong positive secular tailwinds, and a favorable competitive environment. Those were the things that were in the backdrop and the biggest reason that we had overperformance in Q3 is that we executed extremely well on the record pipeline going in and so we saw customers continue to look for a security platform solution, which allowed them for easy adoption of modules and it’s clear that security remains mission critical to customers wherever they are regardless of size or the industry.( This is a major driver of current and future growth superior execution and strong customer demand).

Q.I’m curious what percentage of deals today are partner-led and where might that go in the future?

A…… the majority of the deals are all partner-led. As a channel first company, just about all the deals go through the channel … some of them are sourced by us, some of them are sourced by the channel and in general, what we’ve seen and we’re really excited about is the fact that we’ve seen more deal registration from our partners, so deals being brought by the channel.

Because there is a strong demand for our technology, our partners are winning, they’re making money with CrowdStrike and that will continue to grow, but then you have other areas like the AWS marketplace, right and these kind of unique marketplaces where we continue to see strong demand and success. So when we think about EY, we’re really excited because they’re just so embedded in large enterprises, they are so trusted and to have our technology as part of the solution worldwide is really a great win for us and them and the customer.( and it also strengthens an already formidable moat)

lots of food for thought here