What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2022-03-16 compared with 2021-03-18 · 443 added, 521 removed, 892 unchanged (52% of the section changed)

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Index to Consolidated Financial Statements

Report of Independent Registered Public Accounting Firm

Report of Independent Registered Public Accounting Firm (PCAOB ID 238 )

Consolidated Financial Statements

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Notes to Consolidated Financial Statements

The supplementary financial information required by this Item 8, is included in Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, under the caption “Quarterly Results of Operations,” which is incorporated herein by reference.

Report of Independent Registered Public Accounting Firm

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The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Revenue Recognition – Identification and Evaluation of Terms and Conditions in Contracts

Revenue Recognition – Identification and Evaluation for Terms and Conditions in Contracts

As described in Note 2 to the consolidated financial statements, the Company generates its revenue from contracts with customers for subscriptions and professional services.

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Cash and cash equivalents $ 1,996,633 $ 1,918,608

Marketable securities — 647,266

Accounts receivable, net of allowance for doubtful accounts of $ 1.2 million and

Accounts receivable, net of allowance for credit losses of $ 1.6 million and

$ 1.2 million as of January 31, 2022 and January 31, 2021, respectively

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Accumulated deficit ( 964,918 ) ( 730,116 )

Accumulated other comprehensive income 2,319 1,009

Accumulated other comprehensive (loss) income ( 1,240 ) 2,319

Total CrowdStrike Holdings, Inc.

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Interest expense ( 25,231 ) ( 1,559 ) ( 442 )

Other income (expense), net 6,219 6,725 ( 1,418 )

Other income, net 7,756 6,219 6,725

Loss before provision for income taxes ( 160,023 ) ( 87,869 ) ( 139,782 )

Provision for income taxes 72,355 4,760 1,997

Net loss attributable to Class A and Class B common stockholders $ ( 92,629 ) $ ( 141,779 ) $ ( 140,077 )

Net loss per share attributable to Class A and Class B common stockholders, basic and diluted $ ( 0.43 ) $ ( 0.96 ) $ ( 3.12 )

Weighted-average shares used in computing net loss per share attributable to Class A and Class B common stockholders, basic and diluted 217,756 148,062 44,863

Net Loss ( 232,378 ) ( 92,629 ) ( 141,779 )

Net income attributable to noncontrolling interest 2,424 — —

Net loss attributable to CrowdStrike $ ( 234,802 ) $ ( 92,629 ) $ ( 141,779 )

Net loss per share attributable to CrowdStrike common stockholders, basic and diluted $ ( 1.03 ) $ ( 0.43 ) $ ( 0.96 )

Weighted-average shares used in computing net loss per share attributable to CrowdStrike common stockholders, basic and diluted 227,142 217,756 148,062

The accompanying notes are an integral part of these consolidated financial statements.

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Other comprehensive income (loss) ( 3,559 ) 1,310 911

Total comprehensive loss $ ( 91,319 ) $ ( 140,868 ) $ ( 140,949 )

Comprehensive income attributable to noncontrolling interest 2,424 — —

Total comprehensive loss attributable to CrowdStrike $ ( 238,361 ) $ ( 91,319 ) $ ( 140,868 )

The accompanying notes are an integral part of these consolidated financial statements.

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Comprehensive

Income (Loss) Non-controlling Interest Total Stockholders’

Income (Loss) Non-controlling Interest Total Stockholders’ Equity (Deficit)

Shares Amount Shares Amount

Balances at January 31, 2019 131,268 $ 557,912 47,421 $ 24 $ 31,211 $ ( 519,126 ) $ 98 $ — $ ( 487,793 )

Cumulative effect of accounting change — — — — 101 ( 101 ) — — —

Issuance of Series E and Series E-1 redeemable convertible preferred stock, net of issuance costs of $ 104

12,575 206,896 — — — — — — —

Issuance of common stock upon exercise of options

— — 3,046 2 3,910 — — — 3,912

Issuance of common stock related to early exercised options

— — 38 — — — — — —

Issuance of common stock — — 106 — — — — — —

Vesting of early exercised options

— — — — 543 — — — 543

Stock-based compensation expense

— — — — 20,505 — — — 20,505

Repurchase of stock options

— — — — ( 2,330 ) — — — ( 2,330 )

— — — — — ( 140,077 ) — — ( 140,077 )

Other comprehensive loss

— — — — — — ( 872 ) — ( 872 )

Balances at January 31, 2019 131,268 $ 557,912 47,421 $ 24 $ 31,211 $ ( 519,126 ) $ 98 $ — $ ( 487,793 )

Cumulative effect of accounting change- ASC 606 — — — — — 23,418 — — 23,418

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Issuance of common stock upon exercise of options — — 7,752 6 28,825 — — — 28,831

— — 7,752 6 28,825 — — — 28,831

Issuance of common stock under RSU release — — 1,994 — — — — — —

— — 1,994 — — — — — —

Issuance of common stock under employee stock purchase plan — — 1,030 — 34,263 — — — 34,263

Vesting of early exercised options — — — — 3,318 — — — 3,318

— — — — 3,318 — — — 3,318

Stock-based compensation expense — — — — 149,375 — — — 149,375

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Balances at January 31, 2021 — $ — 223,724 $ 112 $ 1,598,259 $ ( 730,116 ) $ 2,319 $ 1,300 $ 871,874

Issuance of common stock upon exercise of options — — 2,598 1 15,898 — — — 15,899

Issuance of common stock under RSU and PSU release — — 3,408 2 ( 2 ) — — — —

Issuance of common stock under employee stock purchase plan — — 904 — 50,277 — — — 50,277

Issuance of common stock related to early exercised options — — 57 — — — — — —

Vesting of early exercised options — — — — 3,165 — — — 3,165

Issuance of common stock for founders holdbacks related to acquisitions — — 15 — 3,528 — — — 3,528

Stock-based compensation expense — — — — 305,792 — — — 305,792

Capitalized stock-based compensation — — — — 10,879 — — — 10,879

Fair value of replacement equity awards attributable to pre-acquisition service — — — — 4,011 — — — 4,011

Net income (loss) — — — — — ( 234,802 ) — 2,424 ( 232,378 )

Non-controlling interest — — — — — — 8,155 8,155

Other comprehensive loss — — — — — — ( 3,559 ) — ( 3,559 )

Balances at January 31, 2022 — $ — 230,706 $ 115 $ 1,991,807 $ ( 964,918 ) $ ( 1,240 ) $ 11,879 $ 1,037,643

The accompanying notes are an integral part of these consolidated financial statements.

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Net loss $ ( 232,378 ) $ ( 92,629 ) $ ( 141,779 )

Adjustments to reconcile net loss to net cash provided by (used in) operating activities:

Adjustments to reconcile net loss to net cash provided by operating activities:

Depreciation and amortization 55,908 38,710 23,026

Loss on disposal of fixed assets 15 — 191

Amortization of intangible assets 12,902 1,448 487

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Change in fair value of redeemable convertible preferred stock warrant liability — — 6,022

Provision for bad debts ( 544 ) 556 551

Stock-based compensation expense 309,952 149,675 79,940

Gain on debt and equity securities, net ( 1,347 ) — —

Accretion (amortization) of marketable securities purchased at a premium (discount) 578 ( 1,247 ) ( 1,152 )

Deferred income taxes ( 13,956 ) ( 1,452 ) ( 681 )

Gain on sale of debt securities, net — ( 1,347 ) —

Amortization (accretion) of marketable securities purchased at a premium (discount) — 578 ( 1,247 )

Non-cash interest expense 2,469 853 435

Other non-cash charges — — ( 427 )

Changes in operating assets and liabilities

Accounts receivable ( 72,478 ) ( 73,067 ) ( 33,413 )

Change in fair value of strategic investments ( 4,823 ) — —

Changes in operating assets and liabilities, net of impact of acquisitions

Accounts receivable, net ( 125,354 ) ( 73,022 ) ( 72,511 )

Deferred contract acquisition costs ( 234,308 ) ( 150,975 ) ( 86,594 )

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Accounts payable 33,248 11,325 ( 6,570 )

Accrued expenses and other current liabilities 23,838 9,173 3,564

Accrued expenses and other liabilities 38,483 33,083 10,097

Accrued payroll and benefits 32,681 33,212 17,526

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Deferred revenue 616,408 338,803 280,768

Other liabilities 8,788 ( 298 ) 356

Net cash provided by (used in) operating activities 356,566 99,943 ( 22,968 )

Net cash provided by operating activities 574,784 356,566 99,943

Investing activities

Purchases of property and equipment ( 112,143 ) ( 52,799 ) ( 80,198 )

Capitalized internal-use software ( 10,864 ) ( 7,289 ) ( 6,794 )

Purchase of strategic investments ( 1,500 ) ( 1,000 ) —

Business acquisition, net of cash acquired ( 85,517 ) — —

Purchase of intangible assets ( 180 ) — —

Capitalized internal-use software and website development costs ( 20,866 ) ( 10,864 ) ( 7,289 )

Purchases of strategic investments ( 16,309 ) ( 1,500 ) ( 1,000 )

Business acquisitions, net of cash acquired ( 414,518 ) ( 85,517 ) —

Purchases of intangible assets ( 680 ) ( 180 ) —

Purchases of marketable securities — ( 84,904 ) ( 779,701 )

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Maturities of marketable securities — 91,605 228,976

Net cash provided by (used in) investing activities 495,427 ( 629,631 ) ( 142,030 )

Net cash (used in) provided by investing activities ( 564,516 ) 495,427 ( 629,631 )

Financing activities

Proceeds from the issuance of common stock upon initial public offering, net of underwriting discounts — — 665,092

Proceeds from issuance of redeemable convertible preferred stock, net of issuance costs — — 206,896

Repayment of loan payable — — ( 6,158 )

Proceeds from revolving line of credit — — 10,000

Issuance costs related to revolving line of credit ( 3,328 ) — —

Repayment of revolving line of credit — — ( 20,000 )

Payments of debt issuance costs related to revolving line of credit ( 219 ) ( 3,328 ) —

Payments of debt issuance costs related to Senior Notes ( 1,581 ) — —

Proceeds from issuance of Senior Notes, net of debt financing costs — 739,569 —

Repayment of notes receivable from related parties — — 198

Payments of contingent consideration — — ( 242 )

Payments of indemnity holdback — — ( 1,887 )

Repurchase of stock options — — ( 2,330 )

Payments of deferred offering costs — — ( 5,872 )

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Supplemental disclosure of non-cash investing and financing activities:

Contingent consideration associated with business combinations $ — $ — $ 474

Conversion of redeemable convertible preferred stock to common stock $ — $ — $ 557,912

Conversion of redeemable convertible preferred stock warrant liabilities reclassified to additional paid-in capital $ — $ — $ 10,559

Net (decrease) increase in deferred offering costs, accrued but not paid $ — $ ( 2,858 ) $ 2,858

Net (decrease) increase in property and equipment included in accounts payable and accrued expenses $ 1,042 $ ( 3,193 ) $ 3,004

Net decrease in deferred offering costs, accrued but not paid $ — $ — $ ( 2,858 )

Net increase (decrease) in property and equipment included in accounts payable and accrued expenses $ 6,522 $ 1,042 $ ( 3,193 )

Vesting of early exercised stock options $ 3,165 $ 3,318 $ 2,704

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(the “Company”) was formed on November 7, 2011.

The Company provides a leading cloud-delivered solution for next-generation endpoint and cloud workload protection that offers 19 cloud modules and its Falcon platform via a software as a service (“SaaS”) subscription-based model that spans multiple security markets, including corporate workload security, security and vulnerability management, managed security services, IT operations management, threat intelligence services, identity protection and log management.

The Company is headquartered in Sunnyvale, California.

The Company provides a leading cloud-delivered solution for next-generation endpoint and cloud workload protection via a software as a service (“SaaS”) subscription-based model that spans multiple security markets, including corporate workload security, security and vulnerability management, managed security services, IT operations management, threat intelligence services, identity protection and log management.

The Company’s principal executive offices are in Austin, Texas.

The Company conducts its business in the United States, as well as locations internationally, including in Australia, Germany, India, Israel, Romania, and the United Kingdom.

Initial Public Offering

On June 14, 2019, the Company closed its initial public offering (“IPO”), in which it sold 20,700,000 shares of Class A common stock.

The shares were sold at a public offering price of $ 34.00 per share for net proceeds of $ 659.2 million, after deducting underwriters’ discounts and commissions and offering expenses of $ 44.8 million.

Immediately prior to the closing of the IPO, all outstanding shares of redeemable convertible preferred stock automatically converted into 131,267,586 shares of Class B common stock on a one -to-one basis.

Additionally, in connection with the IPO all of the Company’s outstanding common stock was reclassified into shares of Class B common stock on a one -for-one basis.

Redeemable convertible preferred stock warrants also converted into 336,386 warrants to purchase Class B common stock on a one -to-one basis.

Basis of Presentation

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generally accepted accounting principles (“U.S.

Effective February 1, 2020, the Company adopted the Accounting Standards Update (“ASU”) 2016-02, Leases (Topic 842) as discussed in Note 2 below.

Prior periods were not retrospectively recast, and accordingly, the consolidated balance sheet as of January 31, 2020, and the consolidated statements of operations for the years ended January 31, 2020 and 2019 were prepared using the prior lease accounting standard referred to as ASC Topic 840.

Effective February 1, 2019, the Company adopted the Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers (“ASC 606”) as discussed in Note 2 below.

Prior periods were not retrospectively recast, and accordingly, the consolidated statements of operations for the year ended January 31, 2019 was prepared using the prior revenue recognition standard referred to as ASC 605.

Certain prior year amounts in the consolidated statements of cash flows were reclassified to conform to the current period presentation.

These reclassifications had no effect on net cash provided by (used in) operating, investing, and financing activities and cash and cash equivalent amounts.

Effective February 1, 2020, the Company adopted the Accounting Standards Update (“ASU”) 2016-02, Leases (Topic 842).

Prior periods were not retrospectively recast, and accordingly, the consolidated statements of operations for the fiscal year ended January 31, 2020 was prepared using the prior lease accounting standard referred to as Accounting Standard Codification (“ASC”) Topic 840.

Upon adoption, the Company recorded operating lease ROU assets of $ 37.4 million and corresponding operating lease liabilities of $ 37.4 million on its consolidated balance sheet.

Summary of Significant Accounting Policies

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Actual results may differ from these estimates and such difference could be material to the Company’s consolidated financial statements.

Estimates and assumptions used by management include, but are not limited to, revenue recognition, the allowance for doubtful accounts, the carrying value and the useful lives of long-lived assets, the fair values of financial instruments and strategic investments, the period of benefit for deferred contract acquisition costs, the discount rate used for operating leases, the recognition and disclosure of contingent liabilities, income taxes, stock-based compensation, the fair value of assets acquired and liabilities assumed for business combinations, and the accounting for the Senior Notes.

CrowdStrike Holdings, Inc.

Notes to Consolidated Financial Statements

Estimates and assumptions used by management include, but are not limited to, revenue recognition, the allowance for credit losses, the useful lives of long-lived assets, the fair values of strategic investments, the period of benefit for deferred contract acquisition costs, the discount rate used for operating leases, the recognition and disclosure of contingent liabilities, income taxes, stock-based compensation, and the fair value of assets acquired and liabilities assumed for business combinations.

Due to the Coronavirus (“COVID-19”) pandemic, there has been uncertainty and disruption in the global economy and financial markets.

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While there was not a material impact to the Company’s consolidated financial statements as of and for the year ended January 31, 2022, these estimates may change, as new events occur and additional information is obtained, as well as other factors related to COVID-19 that could result in material impacts to the Company’s consolidated financial statements in future reporting periods.

CrowdStrike Holdings, Inc.

Notes to Consolidated Financial Statements

Concentration of Credit Risk and Geographic Information

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The Company’s sales team, along with its channel partner network of system integrators and value-added resellers (collectively, “channel partners”), sells the Company’s services worldwide to organizations of all sizes.

Financial instruments that potentially subject the Company to concentrations of credit risk consist of cash, cash equivalents, marketable securities, accounts receivable, and strategic investments.

Financial instruments that potentially subject the Company to concentrations of credit risk consist of cash, cash equivalents, accounts receivable, and strategic investments.

The Company’s cash is placed with high-credit-quality financial institutions and issuers, and at times exceed federally insured limits.

The Company limits its concentration of risk in cash equivalents and marketable securities by diversifying its investments among a variety of industries and issuers.

The Company has not experienced any credit loss relating to its cash equivalents, marketable securities, and strategic investments.

The Company has not experienced any credit loss relating to its cash equivalents and strategic investments.

The Company performs periodic credit evaluations of its customers and generally does not require collateral.

As of January 31, 2021, the Company did not have any cash equivalents or marketable securities.

Channel partners or direct customers who represented 10% or more of the Company’s accounts receivable were as follows:

Channel partner A (1)

Channel partner B 4 % 10 %

Channel partner C (1)

Customer A (1)

_______________________________

(1) Channel Partner C and Customer A are controlled by the same Company.

(1) Channel Partner A and Customer A are controlled by the same company.

Channel partners who represented 10% or more of the Company’s total revenue were as follows:

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2022 2021 2020

Channel partner A 8 % 10 % 15 %

There were no direct customers who represented 10% or more of the Company’s total revenue during the years ended January 31, 2021, January 31, 2020, and January 31, 2019.

Cash Equivalents and Marketable Securities

Channel partner B 7 % 8 % 10 %

There were no direct customers who represented 10% or more of the Company’s total revenue during the fiscal years ended January 31, 2022, January 31, 2021, and January 31, 2020.

Cash Equivalents

The Company considers all highly liquid investments with original maturities of three months or less at date of purchase to be cash equivalents.

As of January 31, 2021, the Company did not have any cash equivalents or marketable securities.

Cash equivalents as of January 31, 2020 consisted of corporate debt securities and money market funds stated at fair value.

The Company classifies investments in marketable securities as available-for-sale securities at the time of purchase and re-evaluates the designations as of each balance sheet date.

The Company classifies its available-for-sale securities as short-term investments based on their nature and their availability for use in current operations.

Available-for-sale securities are carried at fair value with unrealized gains and losses, if any, included in accumulated other comprehensive income (loss).

Unrealized losses are recorded in Other income (expense), net, for declines in fair value below the cost of an individual investment that is deemed to be other-than-temporary.

The Company did not identify any marketable securities as other-than-temporarily impaired as of January 31, 2020.

The Company determines realized gains or losses on the sale of marketable securities on a specific identification method and records such gains or losses in Other income (expense), net.

Marketable securities as of January 31, 2020 consisted of corporate debt securities and U.S.

treasury securities.

As of January 31, 2022, the Company had $ 950.6 million of cash equivalents.

As of January 31, 2021, the Company did not have any cash equivalents.

Strategic Investments

In July 2019, the Company agreed to commit up to $ 10.0 million to a newly formed entity, CrowdStrike Falcon Fund LLC (the “Original Falcon Fund”) in exchange for 50 % of the sharing percentage of any distribution by the Original Falcon Fund.

In December 2021, the Company agreed to commit an additional $ 50.0 million to a newly formed entity, CrowdStrike Falcon Fund II LLC (“Falcon Fund II”) in exchange for 50 % of the sharing percentage of any distribution by the Falcon Fund II.

Further, entities associated with Accel also agreed to commit up to $ 10.0 million and $ 50.0 million, respectively, to the Original Falcon Fund and the Falcon Fund II (collectively, the “Falcon Funds”), and collectively own the remaining 50 % of the sharing percentage of the Falcon Funds.

Both Falcon Funds are in the business of purchasing, selling and investing in minority equity and convertible debt securities of privately-held companies that develop applications that have potential for substantial contribution to CrowdStrike and its platform.

The Company is the manager of the Falcon Funds and controls the investment decisions and day-to-day operations and accordingly has consolidated each of the Falcon Funds.

Each Falcon Fund has a duration of ten years and may be extended for three additional years.

At dissolution, the Falcon Funds will be liquidated and the remaining assets will be distributed to the investors based on their respective sharing percentage.

The Company elected the measurement alternative for the non-marketable equity investments of the Falcon Funds where eligible.

Under the measurement alternative, the non-marketable equity investments are measured at cost, less any impairment, plus or minus adjustments resulting from price changes from observable transactions of identical or similar securities of the

CrowdStrike Holdings, Inc.

Notes to Consolidated Financial Statements

Strategic Investments

In July 2019, the Company agreed to commit up to $ 10.0 million to a newly formed entity, CrowdStrike Falcon Fund LLC (“Falcon Fund”) in exchange for 50 % of the sharing percentage of any distribution by Falcon Fund.

Additionally, entities associated with Accel, a holder of more than 5 % of the Company’s capital stock, also agreed to commit up to $ 10.0 million to Falcon Fund, and collectively own the remaining 50 % of the sharing percentage of Falcon Fund.

Falcon Fund is in the business of purchasing, selling and investing in minority equity and convertible debt securities of privately-held companies that develop applications that have potential for substantial contribution to CrowdStrike and its platform.

The Company is the manager of the Falcon Fund and controls the investment decisions and day-to-day operations and accordingly has consolidated the Falcon Fund.

Falcon Fund has a duration of ten years and may be extended for three additional years.

At dissolution, Falcon Fund will be liquidated and the remaining assets will be distributed to the investors based on their respective sharing percentage.

The Company has made contributions to Falcon Fund totaling $ 1.3 million as of January 31, 2021.

The Company has elected the measurement alternative for the non-marketable equity investments of the Falcon Fund where eligible.

Under the measurement alternative, the carrying value of the strategic investments is adjusted to fair value for observable transactions for identical or similar investments of the same issuer or impairment.

All gains and losses on strategic investments, realized and unrealized, are recognized in Other income (expense), net.

Strategic investments are classified within Level 3 in the fair value hierarchy when a remeasurement occurs based on price changes from observable transactions of identical or similar securities of the same issuer or for impairment.

The fair value is estimated based on valuation methods using the observable transaction price at the transaction date and other unobservable inputs including volatility, rights, and obligations of the investments.

The Company classifies the investments in Falcon Fund as a non-current asset called Strategic Investments on the consolidated balance sheets as of January 31, 2021.

There have been no realized or unrealized gains or losses on the strategic investments during the year ended January 31, 2021.

Strategic investments are classified within Level 3 in the fair value hierarchy as only an impairment of observable adjustment is recognized based on price changes from observable transactions of identical or similar securities of the same issuer and other unobservable inputs including volatility, rights, and obligations of the investments.

The Company classifies the investments in the Falcon Funds as a non-current asset called Strategic Investments on the consolidated balance sheets as of January 31, 2022.

The Company has recognized an unrealized gain for its portion of ownership of the strategic investments in the amount of $ 2.4 million, net of gain attributable to non-controlling interest of $ 2.4 million, during the fiscal year ended January 31, 2022.

Fair Value of Financial Instruments

The Company’s financial instruments consist of cash equivalents, marketable securities, strategic investments, accounts receivable, accounts payable, accrued expenses, the redeemable convertible preferred stock warrant liability, and the Senior Notes.

The Company’s financial instruments consist of cash equivalents, strategic investments, accounts receivable, accounts payable, accrued expenses, the redeemable convertible preferred stock warrant liability, and the Senior Notes.

The carrying values of cash equivalents, accounts receivable, accounts payable, and accrued expenses approximate fair value due to their short-term nature.

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The Company discloses the fair value of the Senior Notes at each reporting period for disclosure purposes only.

Refer to Note 3, Fair Value Measurements and Marketable Securities, regarding the fair value of the Company’s marketable securities and non-marketable securities and Note 5, Debt, for the fair value of the Company’s Senior Notes.

The Company reports the redeemable convertible preferred stock warrant liability at fair value (see Note 3, Fair Value Measurements ).

The warrants issued by the Company for redeemable convertible preferred stock in January 2015, December 2016, and March 2017 (see Note 7, Redeemable Convertible Preferred Stock ) have been recorded as a liability based on “Level 3” inputs, which consist of unobservable inputs and reflect management’s estimates of assumptions that market participants would use in pricing the liability.

Refer to Note 3, Investments and Fair Value Measurements, regarding the fair value of the Company’s non-marketable securities and Note 5, Debt, for the fair value of the Company’s Senior Notes.

The Company reports the redeemable convertible preferred stock warrant liability at fair value (see Note 3, Investments and Fair Value Measurements).

The warrants issued by the Company for redeemable convertible preferred stock in January 2015, December 2016, and March 2017 have been recorded as a liability based on “Level 3” inputs, which consist of unobservable inputs and reflect management’s estimates of assumptions that market participants would use in pricing the liability.

The fair value of the warrants was determined using the Black-Scholes option-pricing model, which is affected by changes in inputs to that model including the Company’s stock price, expected stock price volatility, risk-free rate, and contractual term.

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Accounts receivable are recorded at the invoiced amount and are non-interest bearing.

Accounts receivable are stated at their net realizable value, net of allowance for doubtful accounts.

Accounts receivable are stated at their net realizable value, net of the allowance for credit losses.

The Company has a well-established collections history from its customers.

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however, the Company may require payment prior to commencing service in certain instances to limit credit risk.

The Company regularly reviews the adequacy of the allowance for doubtful accounts by considering various factors including the age of each outstanding invoice, each customer’s expected ability to pay, historical loss rates and expectations of forward-looking loss estimates to determine whether the allowance is

CrowdStrike Holdings, Inc.

Notes to Consolidated Financial Statements

Amounts deemed uncollectible are written off against the allowance for doubtful accounts.

As of January 31, 2021 and January 31, 2020, the allowance for doubtful accounts was $ 1.2 million and $ 1.1 million, respectively.

The Company regularly reviews the adequacy of the allowance for credit loss by considering various factors including the age of each outstanding invoice, each customer’s expected ability to pay, historical loss rates and expectations of forward-looking loss estimates to determine whether the allowance is appropriate.

Amounts deemed uncollectible are written off against the allowance for credit loss.

As of January 31, 2022 and January 31, 2021, the allowance for credit loss was $ 1.6 million and $ 1.2 million, respectively.

Software Implementation Costs

The Company contracts with third party information technology providers for various service arrangements including software, platform, and information technology infrastructure.

The Company capitalizes the implementation cost incurred to develop or obtain internal-use software in such arrangements and are recorded as part of property and equipment, net in the consolidated balance sheets.

The Company capitalizes the implementation cost incurred to develop or obtain internal-use software in such arrangements which are recorded as part of property and equipment, net in the consolidated balance sheets.

All capitalized implementation costs are amortized over the term of the arrangement which includes reasonably certain renewals.

Costs incurred during the preliminary project and post implement stage are expensed as the activities are performed.

Capitalized implementation costs was $ 0.3 million for the fiscal year ended January 31, 2021.

Deferred Offering Costs

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Upon the close of the IPO on June 14, 2019, total deferred offering costs of $ 5.9 million were reclassified to stockholders’ equity and recorded against the proceeds from the offering.

CrowdStrike Holdings, Inc.

Notes to Consolidated Financial Statements

Property and Equipment, Net

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Upon retirement or other disposition of property and equipment, the cost and accumulated depreciation are removed from the accounts, and any gain or loss is recorded in operating expenses in the consolidated statement of operations.

Capitalized Internal-Use Software

The Company capitalizes certain development costs incurred in connection with its internal-use software.

These capitalized costs are primarily related to the Company’s cloud-delivered solution for next-generation endpoint protection.

The Company reviews for impairment of long-lived assets whenever events or changes in circumstances indicate that the carrying amount of the asset (or asset group) may not be recoverable.

Events and changes in circumstances considered by the Company in determining whether the carrying value of long-lived assets may not be recoverable, include, but are not limited to:

significant changes in performance relative to expected operating results, significant changes in the use of the assets, significant negative industry or economic trends, and changes in the Company’s business strategy.

Impairment testing is performed at an asset level that represents the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities (an “asset group”).

An impairment loss would be recognized when estimated future cash flows expected to result from the use of the asset (or asset group) and its eventual disposition is less than its carrying amount.

No impairment indicators were identified by the Company and no impairment losses were recorded by the Company during the fiscal years ended January 31, 2022, January 31, 2021, and January 31, 2020.

Capitalized Internal-Use Software and Website Development Costs

The Company capitalizes certain development costs incurred in connection with its internal-use software and website development.

These capitalized costs are primarily related to the Company’s cloud-delivered solution for next-generation endpoint protection as well as redefining, redesigning, and rebuilding crowdstrike.com.

Costs incurred in the preliminary stages of development are expensed as incurred.

Once an application has reached the development stage, internal and external costs, if direct, are capitalized until the software is substantially complete and ready for its intended use.

Once an application has reached the development stage, internal and external costs, if direct, are capitalized until the software and website are substantially complete and ready for its intended use.

Capitalization ceases upon completion of all substantial testing.

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Maintenance and training costs are expensed as incurred.

Internal-use software is amortized to cost of revenue on a straight-line basis over its estimated useful life of three years .

Internal-use software and website development costs are amortized to cost of revenue on a straight-line basis over its estimated useful life of three years .

Management evaluates the useful lives of these assets on an annual basis and tests for impairment whenever events or changes in circumstances occur that could impact the recoverability of these assets.

Intangible Assets, Net

Intangible assets, net, consisting of developed technology, customer relationships, and other acquired intangibles, are stated at cost less accumulated amortization.

All intangible assets have been determined to have definite lives and are amortized on a straight-line basis over their estimated economic lives, which are generally one to five years .

Amortization expense related to developed technology is included in cost of revenue, amortization expense related to customer relationships is included in sales

CrowdStrike Holdings, Inc.

Notes to Consolidated Financial Statements

and marketing expenses, and amortization expense related to other acquired intangibles is included in research and development expenses.

Deferred Contract Acquisition Costs

Prior to the adoption of ASC606, sales commissions associated with the Falcon platform were amortized over the contract term and sales commissions associated with professional service contracts were expensed as incurred.

Under ASC 606, the Company capitalizes contract acquisition costs that are incremental to the acquisition of customer contracts.

Under ASC 340-40, Other Assets and Deferred Costs - Contracts with Customers, the Company capitalizes contract acquisition costs that are incremental to the acquisition of customer contracts.

Contract acquisition costs are accrued and capitalized upon execution of the sales contract by the customer.

Sales commissions for renewal of a contract are not considered commensurate with the commissions paid for the acquisition of the initial contract or follow-on upsell given the substantive difference in commission rates in proportion to their respective contract values.

Commissions, including referral fees paid to channel partners, earned upon the initial acquisition of a contract or subsequent upsell are amortized over an estimated period of benefit of four years while commissions earned for renewal contracts are amortized over the contractual term of the renewals.

Sales commissions associated with professional service contract are amortized ratably over an estimated period of benefit of six months .

The Company capitalized contract acquisition costs of $ 151.0 million and $ 86.6 million during the years ended January 31, 2021 and January 31, 2020, respectively.

Contract acquisition cost amortization expense was $ 66.4 million and $ 35.5 million under ASC 606 during the year ended January 31, 2021 and January 31, 2020, respectively.

Contract acquisition cost amortization expense was $ 28.6 million under ASC 605, during the year ended January 31, 2019.

Impairment of Long-Lived Assets

The Company reviews for impairment of long-lived assets whenever events or changes in circumstances indicate that the carrying amount of the asset (or asset group) may not be recoverable.

Events and changes in circumstances considered by the Company in determining whether the carrying value of long-lived assets may not be recoverable, include, but are not limited to:

An impairment loss would be recognized when estimated future cash flows expected to result from the use of the asset (or asset group) and its eventual disposition is less than its carrying amount.

No impairment indicators were identified by the Company and no impairment losses were recorded by the Company during the years ended January 31, 2021, January 31, 2020, and January 31, 2019.

Commissions, including referral fees paid to referral partners, earned upon the initial acquisition of a contract or subsequent upsell are amortized over an estimated period of benefit of four years while commissions earned for renewal contracts are amortized over the contractual term of the renewals.

Sales commissions associated with professional service contracts are amortized ratably over an estimated period of benefit of six months .

CrowdStrike Holdings, Inc.

Notes to Consolidated Financial Statements

Deferred Revenue

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Professional services are either invoiced upfront, invoiced in installments, or invoiced as the services are performed.

Accordingly, the Company’s deferred revenue balance does not include revenues for future years of multi-year non-cancellable contracts that have not yet been billed.

Accordingly, the Company’s deferred revenue balance does not include revenue for future years of multi-year non-cancellable contracts that have not yet been billed.

The Company recognizes subscription revenue ratably over the contract term beginning on the commencement date of each contract, the date that services are made available to customers.

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The warrants are subject to reassessment at each balance sheet date, and any change in fair value is recognized as a component of Other income (expense), net, in the consolidated statements of operations.

The Company will continue to adjust the liability for changes in fair value until the earlier of the expiration or exercise of the warrants, or upon their automatic conversion into warrants to purchase common stock in connection with a qualified initial public offering (as

CrowdStrike Holdings, Inc.

Notes to Consolidated Financial Statements

defined in Note 7, Redeemable Convertible Preferred Stock ) such that they qualify for equity classification and no further remeasurement is required.

Immediately prior to the closing of the IPO on June 14, 2019, the redeemable convertible preferred stock warrants converted into 336,386 warrants to purchase Class B common stock on a one -to-one basis.

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Revenue Recognition

The Company adopted ASC 606 on February 1, 2019, using the modified retrospective transition method.

Under this method, results for reporting periods beginning on February 1, 2019 are presented under Topic 606, while prior period amounts are not adjusted and continue to be reported in accordance with prior accounting under Topic 605.

In accordance with ASC 606, revenue is recognized when a customer obtains control of promised services.

In accordance with ASU 2014-09, Revenue from Contracts with Customers (“ASC 606”), revenue is recognized when a customer obtains control of promised services.

The amount of revenue recognized reflects the consideration that the Company expects to be entitled to receive in exchange for these services.

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(2) Identify the performance obligations in the contract

Performance obligations promised in a contract are identified based on the services that will be transferred to the customer that are both capable of being distinct, whereby the customer can benefit from the service either on its own or together with other resources that are readily available from the Company or from third parties, and are distinct in the context of the contract, whereby the transfer of the services is separately identifiable from other promises in the contract.

CrowdStrike Holdings, Inc.

Notes to Consolidated Financial Statements

whereby the transfer of the services is separately identifiable from other promises in the contract.

The Company’s performance obligations consist of (i) subscriptions and (ii) professional services.

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Revenue is recognized at the time the related performance obligation is satisfied by transferring the promised service to the customer.

Revenue is recognized when control of the services is transferred to the customer, in an amount that reflects the

CrowdStrike Holdings, Inc.

Notes to Consolidated Financial Statements

consideration expected to be received in exchange for those services.

Revenue is recognized when control of the services is transferred to the customer, in an amount that reflects the consideration expected to be received in exchange for those services.

The Company generates all its revenue from contracts with customers.

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The typical subscription term is one to three years .

Most of the Company’s contracts are non-cancelable over the contractual term.

The Company’s contracts with customers typically include a fixed amount of consideration and are generally non-cancellable and without any refund-type provisions.

Customers typically have the right to terminate their contracts for cause if the Company fails to perform in accordance with the contractual terms.

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Professional services do not result in significant customization of the subscription service.

The professional services are available through hourly rate and fixed fee contracts, one-time and ongoing engagements, and retainer-based agreements.

Revenue for time and materials arrangements is recognized as services are performed and revenue for fixed fees is recognized on a proportional performance basis as the services are performed.

The Company’s professional services are available through time and material and fixed fee agreements.

Revenue for time and material agreements is recognized as services are performed.

Fixed fee contracts account for an immaterial portion of the Company’s revenue.

Contracts with Multiple Performance Obligations

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The Company determines SSP based on its overall pricing objectives, taking into consideration the type of subscription or professional service and the number of endpoints.

CrowdStrike Holdings, Inc.

Notes to Consolidated Financial Statements

Variable Consideration

Revenue from sales is recorded at the net sales price, which is the transaction price, and includes estimates of variable consideration.

Revenue from sales is recorded at the net sales price, which is the transaction price, and may include estimates of variable consideration.

The amount of variable consideration that is included in the transaction price is constrained and is included in the net sales price only to the extent that it is probable that a significant reversal in the amount of the cumulative revenue will not occur when the uncertainty is resolved.

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Accordingly, any estimated refunds related to these agreements in the consolidated financial statements is not material during the periods presented.

The Company provides rebates and other credits within its contracts with certain resellers, which are estimated based on the most likely amounts expected to be earned or claimed on the related sales transaction.

The Company provides rebates and other credits within its contracts with certain resellers, which are estimated based on the expected value to be earned or claimed on the related sales transaction.

Overall, the transaction price is reduced to reflect the Company’s estimate of the amount of consideration to which it is entitled based on the terms of the contract.

Estimated rebates and other credits were not material during the periods presented.

CrowdStrike Holdings, Inc.

Notes to Consolidated Financial Statements

Research and Development Expense

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All advertising costs are expensed as incurred and are included in sales and marketing expense in the consolidated statements of operations .

The Company incurred $ 27.9 million, $ 8.0 million, and $ 3.1 million of advertising costs during the years ended January 31, 2021, January 31, 2020, and January 31, 2019, respectively.

The Company incurred $ 50.5 million, $ 27.9 million, and $ 8.0 million of advertising costs during the fiscal years ended January 31, 2022, January 31, 2021, and January 31, 2020, respectively.

Stock-Based Compensation

The Company accounts for stock-based awards granted to employees and directors based on the awards’ estimated grant date fair value.

Compensation related to stock-based awards to employees and directors are measured and recognized in the Company’s consolidated statements of operations based on the fair value of the awards granted.

The Company estimates the fair value of its stock options using the Black-Scholes option-pricing model.

The resulting fair value is recognized on a straight-line basis over the period during which the employee or director is required to provide service in exchange for the award, usually the vesting period, which is generally four years .

The Company accounts for forfeitures as they occur.

Restricted stock units (“RSUs”) granted under the 2011 Plan are subject to a service-based vesting condition and a performance-based vesting condition.

The service-based vesting condition is generally satisfied based on one of three vesting schedules:

(i) vesting of one-fourth of the RSUs on the first “Company vest date” (defined as March 20, June 20, September 20, or December 20) on or following the one-year anniversary of the vesting commencement date with the remainder of the RSUs vesting in twelve equal quarterly installments thereafter, subject to continued service, (ii) vesting in sixteen equal quarterly installments beginning on December 20, 2018, subject to continued service, or (iii) vesting in eight equal quarterly installments beginning on December 20, 2022, subject to continued service.

The performance-based vesting condition is satisfied on the earlier of (i) a change in control, in which the consideration paid to holders of shares is either cash, publicly traded securities, or a combination thereof, or (ii) the first Company vest date to occur following the expiration of the lock-up period upon an IPO, subject to continued service through such change in control or lock-up expiration, as applicable.

None of the RSUs vest unless the performance-based vesting condition is satisfied.

Upon the completion of the IPO, the performance-based vesting condition was met and the Company recognized $ 17.3 million of deferred expense related to RSUs as of that date in its consolidated statement of operations.

Upon its IPO, the Company began issuing RSUs to its employees and these RSUs generally have only a service condition.

The stock-based compensation expense relating to stock options are recognized on a straight-line basis over the period during which the employee or director is required to provide service in exchange for the award, usually the vesting period, which is generally four years .

Restricted stock units (“RSUs”) are generally subject to a service-based vesting condition.

The service-based vesting condition is generally with a vesting term of four years .

The valuation of such RSUs is based solely on the fair value of the Company’s stock price on the date of grant.

Expense for RSUs that have a service-based condition only are being amortized on a straight-line basis.

Performance-based stock units (“PSUs”) granted under the 2019 Plan are subject to a performance-based vesting condition.

With regard to the performance conditions, the fair value of new or modified awards is equal to the grant date fair market value of the Company’s common stock.

The valuation of such RSUs is based solely on the fair value of the Company’s stock price on the date of grant and the corresponding compensation expense are being amortized on a straight-line basis.

Performance-based stock units (“PSUs”) are generally subject to both a service-based vesting condition and a performance-based vesting condition.

The fair value of the award is equal to the grant date fair market value of the Company’s stock price.

PSUs generally vest over a four-year period and subject to continued service through the applicable vesting dates.

The compensation cost is recognized over the requisite service period when it is probable that the performance condition will be satisfied.

The stock-based compensation expense relating to PSUs are recognized using the accelerated attribution method over the requisite service period when it is probable that the performance condition will be satisfied.

The Special PSU Awards are subject to the Company’s achievement of specified stock price hurdles and a service-based vesting condition.

The Company measured the fair value of the Special PSU Awards using a Monte Carlo simulation valuation model.

The stock-based compensation expense relating to the Special PSU Awards are recognized using the accelerated attribution method over the requisite service period.

CrowdStrike Holdings, Inc.

Notes to Consolidated Financial Statements

Employee Stock Purchase Plan (“ESPP”) grants are measured based on grant date at fair value using the Black-Scholes option-pricing model.

The resulting fair value is recognized using the accelerated attribution method over a two -year offering period and accounted for as having four separate tranches starting on the same initial enrollment date.

The requisite service periods for the four tranches are approximately 6 , 12 , 18 , and 24 months.

The Company accounts for forfeitures as they occur for all stock-based awards.

Business Combinations

The Company allocates the fair value of purchase consideration to the tangible assets acquired, liabilities assumed, and intangible assets acquired based on their estimated fair values.

The Company allocates the purchase price of acquired companies to the tangible and intangible assets acquired and liabilities assumed based on their estimated fair values at the acquisition date.

The excess of the fair value of purchase consideration over the fair values of these identifiable assets and liabilities is recorded as goodwill.

Such valuations require management to make significant estimates and assumptions, especially with respect to intangible assets.

Significant estimates in valuing certain intangible assets include, but are not limited to, future expected cash flows from acquired users, acquired technology, trade names from a market participant perspective, useful lives and discount rates.

Management’s estimates of fair value are based upon assumptions believed to be reasonable, but which are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates.

The purchase price allocation process requires management to make significant estimates and assumptions with respect to intangible assets.

Although the Company believes the assumptions and estimates it has made are reasonable, they are based in part on historical experience, market conditions and information obtained from management of the acquired companies and are inherently uncertain.

Examples of judgments used to estimate the fair value of intangibles assets include, but are not limited to, future expected cash flows, expected customer attrition rates, estimated obsolescence rates, and discount rates.

These estimates are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates.

During the measurement period, which is one year from the acquisition date, the Company may record adjustments to the assets acquired and liabilities assumed, with the corresponding offset to goodwill.

Upon the conclusion of the measurement period, any subsequent adjustments are recorded in the consolidated statement of operations.

CrowdStrike Holdings, Inc.

Notes to Consolidated Financial Statements

Goodwill and Intangible Assets

The Company evaluates and tests the recoverability of goodwill for impairment at least annually, on January 31, or more frequently if circumstances indicate that goodwill may not be recoverable.

The Company performs the impairment testing by first assessing qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the fair value of its reporting unit is less than its carrying amount.

The Company has one reporting unit.

If, after assessing the totality of events or circumstances, the Company determines it is more likely than not that the fair value of a reporting unit is less than its carrying amount, the Company performs the first step of a two-step analysis by comparing the book value of net assets to the fair value of the reporting unit.

To calculate any potential impairment, the Company compares the fair value of a reporting unit with its carrying amount, including goodwill.

Any excess of the carrying amount of the reporting unit’s goodwill over its fair value is recognized as an impairment loss, and the carrying value of goodwill is written down.

A qualitative assessment is performed to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the fair value of its one reporting unit is less than its carrying value.

In assessing the qualitative factors, the Company considers the impact of certain key factors including macroeconomic conditions, industry and market considerations, management turnover, changes in regulation, litigation matters, changes in enterprise value, and overall financial performance.

No impairment was recorded during the years ended January 31, 2021, January 31, 2020, or January 31, 2019.

The change in goodwill balance during the year ended January 31, 2021 was due to the acquisition of Preempt Security, Inc.

and changes in foreign currency exchange rates.

The change in goodwill balance during the year ended January 31, 2020 was due to the changes in foreign currency exchange rates.

See Note 4 and Note 15 to the consolidated financial statements for more information.

Acquired intangible assets consisting of identifiable intangible assets are comprised of developed technology, customer relationships, and non-compete agreements resulting from acquisitions.

Acquired intangible assets are recorded at fair value on the date of acquisition and amortized over their estimated economic lives following the pattern in which the economic benefits of the assets will be consumed which is on a straight-line basis.

Acquired intangible assets are presented net of accumulated amortization on the consolidated balance sheets.

If the Company determines it is more likely than not that the fair value of its one reporting unit is less than its carrying value, a quantitative test is performed by estimating the fair value of its reporting unit, including goodwill, and comparing it to its carrying value.

If the fair value is lower than the carrying value, the excess is recognized as an impairment loss.

No impairment was recorded during the fiscal years ended January 31, 2022, January 31, 2021, or January 31, 2020.

The change in the goodwill balance during the fiscal year ended January 31, 2022 was due to the acquisitions of Humio Limited (“Humio”) and Secure Circle, LLC (“SecureCircle”) and changes in foreign currency exchange rates.

The change in the goodwill balance during the fiscal year ended January 31, 2021 was due to the acquisition of Preempt Security, Inc.

(“Preempt Security”) and changes in foreign currency exchange rates.

See Note 4, Balance Sheet Components, and Note 14, Acquisitions, to the consolidated financial statements for more information.

Intangible assets, net, consisting of developed technology, customer relationships, and other acquired intangibles, are stated at cost less accumulated amortization on the consolidated balance sheets.

All intangible assets have been determined to have definite lives and are amortized on a straight-line basis over their estimated economic lives, which are generally one to 20 years.

Amortization expense related to developed technology is included in cost of revenue, amortization expense related to customer relationships is included in sales and marketing expenses, and amortization expense related to other acquired intangibles is included in cost of revenue, research and development expense and general and administrative expense.

The Company reviews the carrying amounts of intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable.

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If the Company considers any of these assets to be impaired, the impairment to be recognized equals the amount by which the carrying value of the asset exceeds its fair value.

In addition, the Company periodically evaluates the estimated remaining useful lives of long-lived assets to determine whether events or changes in circumstances warrant a revision to the remaining period of depreciation or amortization.

Operating Leases

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The Company determines if an arrangement is or contains a lease at inception by evaluating various factors, including whether a vendor’s right to substitute an identified asset is substantive.

Lease classification is determined at the lease commencement date, which is the date the leased assets are made available for use.

Lease classification is determined at the lease commencement date, which is the

CrowdStrike Holdings, Inc.

Notes to Consolidated Financial Statements

date the leased assets are made available for use.

Operating leases are included in “Operating lease right-of-use assets”, “Operating lease liabilities, current”, and “Operating lease liabilities, noncurrent” in the consolidated balance sheets.

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Leases with a term of twelve months or less are not recognized on the consolidated balance sheets but are recognized as expense on a straight-line basis over the term of the lease.

CrowdStrike Holdings, Inc.

Notes to Consolidated Financial Statements

Available-for-sale debt securities

The Company evaluates investments with unrealized loss positions by assessing if they are related to deterioration in credit risk and whether the Company expects to recover the entire amortized cost basis of the security, the Company’s intent to sell and whether it is more likely than not that the Company will be required to sell the securities before the recovery of its cost basis.

Credit-related impairment losses, not to exceed fair value less the amortized cost basis, are recognized through an allowance for credit losses with changes in the allowance for credit losses recorded in Other income (expense), net in the consolidated statements of operations.

Impairment that has not been recorded through an allowance for credit losses will be recorded in the consolidated statements of comprehensive income (loss).

As of January 31, 2021, there were no marketable securities held by the Company.

Debt Issuance Costs

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Debt issuance costs related to the revolving credit facility are being amortized over the term of the financing arrangement under the straight-line method.

The Company’s amortization of these costs was $ 0.8 million, $ 0.4 million and $ 0.1 million for the fiscal years ended January 31, 2021, 2020 and 2019, respectively.

Foreign Currency Translation

The Company’s amortization of these costs were $ 1.0 million, $ 0.8 million and $ 0.4 million for the fiscal years ended January 31, 2022, 2021 and 2020, respectively.

Foreign Currency Translation and Transactions

The functional currencies of the Company’s foreign subsidiaries are each country’s local currency.

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The Company establishes a liability for tax-related uncertainties based on estimates of whether, and the extent to which, additional taxes will be due.

The Company records an income tax liability, if any, for the difference between the benefit recognized and measured and the tax position taken or expected to be taken on the Company’s tax returns.

To the extent that the assessment of such tax positions changes, the change in estimate is recorded in the period in which the determination is made.

The liability is adjusted considering changing facts and circumstances, such as the outcome of a tax audit.

The provision for income taxes includes the impact of liability provisions and changes to the liability that are considered appropriate.

As the Company maintains a full valuation allowance against its deferred tax assets in the United States and United Kingdom, the changes resulted in no material tax expense during the years ended January 31, 2021, January 31, 2020, and January 31, 2019.

As of January 31, 2021, the Company does not expect that changes in the liability for unrecognized tax benefits for the next twelve months will have a material impact on its consolidated financial statements.

The Company’s assumptions, judgments and estimates relative to the current provision for income taxes take into account current

CrowdStrike Holdings, Inc.

Notes to Consolidated Financial Statements

When sales and other taxes are billed, such amounts are recorded as accounts receivable with a corresponding increase to other current liabilities, respectively.

The balances are then removed from the consolidated balance sheets as cash is collected from the customer and as remitted to the respective tax authority.

Segment and Geographic Information

tax laws, the Company’s interpretation of current tax laws and possible outcomes of current and future audits conducted by foreign and domestic tax authorities.

The Company has established reserves for income taxes to address potential exposures involving tax positions that could be challenged by tax authorities.

In addition, the Company is subject to the continual examination of its income tax returns by the U.S.

Internal Revenue Service (“IRS”) and other domestic and foreign tax authorities.

The Company regularly assess the likelihood of outcomes resulting from these examinations to determine the adequacy of its provision for income taxes and have reserved for potential adjustments that may result from such examinations.

The Company believes such estimates to be reasonable;

however, the final determination of any of these examinations could significantly impact the amounts provided for income taxes in the Company’s consolidated financial statements.

Segment Information

The Company’s chief operating decision maker (“CODM”) is its chief executive officer.

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Accordingly, management has determined that the Company operates as one operating and reportable segment.

The Company presents financial information about its geographic areas in Note 13 to the consolidated financial statements.

Net Loss per Share

The Company computes basic and diluted net loss per share attributable to common stockholders for Class A and Class B common stock using the two-class method required for participating securities.

The Company considers all series of its redeemable convertible preferred stock to be participating securities.

Net loss is attributed to Class A and Class B common stock based on their participation rights.

Under the two-class method, basic net loss per share attributable to common stockholders is computed by dividing the net loss attributable to common stockholders by the weighted-average number of shares of common stock outstanding during the period.

Diluted earnings per share attributable to common stockholders adjusts basic earnings per share for the potentially dilutive impact of outstanding stock options, RSUs, PSUs, ESPP obligations, warrants and redeemable convertible preferred stock.

As the Company has reported losses for all periods presented, all potentially dilutive securities are antidilutive and accordingly, basic net loss per share equals diluted net loss per share.

Recently Adopted Accounting Pronouncements

In February 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2016-02, “Leases (Topic 842),” which requires lessees to generally recognize on the balance sheet operating and financing lease liabilities and corresponding ROU assets, and to recognize on the income statement the expenses in a manner similar to prior practice.

The Company adopted Topic 842 using the modified retrospective method on February 1, 2020.

The Company elected the following practical expedients:

• The package of practical expedients which allows for not reassessing 1) whether existing contracts contain leases, 2) the lease classification of existing leases, and 3) whether existing initial direct costs meet the new definition.

• The practical expedient in ASC Subtopic 842-10 to not separate non-lease components from lease components and instead account for each separate lease component and non-lease components associated with that lease component as a single lease component by class of the underlying assets.

• Not to recognize right of use assets and lease liabilities for short-term leases, which have a lease term of twelve months or less and do not include an option to purchase the underlying asset that the Company is reasonably certain to exercise.

The Company did not elect the hindsight practical expedient.

Lease payments consist primarily of the fixed payments under the arrangement, less any lease incentives such as tenant improvement allowance.

The Company uses an estimate of its IBR based on the information available at the lease commencement date in determining the present value of lease payments, unless the implicit rate is readily determinable.

In determining the appropriate IBR, management considers information including, but not limited to, the Company’s credit rating, the lease term, and the currency in which the arrangement is denominated.

For leases which commenced prior to the adoption of Topic 842, the Company used the IBR on January 31, 2020.

CrowdStrike Holdings, Inc.

Notes to Consolidated Financial Statements

The adoption of this new standard on February 1, 2020, and the application of the modified retrospective transition approach resulted in the following changes:

Assets increased by $ 37.4 million, primarily representing the recognition of ROU asset for operating leases;

Liabilities increased by $ 37.4 million, primarily representing the recognition of lease liabilities for operating leases partially offset by derecognition of liabilities for deferred rent previously designated under ASC Topic 840

In June 2016, the FASB issued ASU No.

2016-13, Financial Instruments—Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments.

This ASU requires a financial asset measured at amortized cost basis to be presented at the net amount expected to be collected, with further clarifications made more recently regarding the treatment of accrued interest, transfers between classifications for loans and debt securities, recoveries and the option to irrevocably elect the fair value option (on an instrument-by-instrument basis) for eligible financial assets at amortized costs.

For trade receivables, loans, and other financial assets, the Company will be required to use a forward-looking expected loss model rather than the incurred loss model for recognizing credit losses which reflects losses that are probable.

Credit losses relating to available-for-sale debt securities are required to be recorded through an allowance for credit losses in the consolidated statements of operation rather than as a reduction in the amortized cost basis of the securities.

The Company adopted this guidance on February 1, 2020, which did not have a material effect on its consolidated financial statements.

In January 2017, the FASB issued ASU No.

2017-04, Intangibles—Goodwill and Other (Topic 350):

Simplifying the Test for Goodwill Impairment.

This ASU simplifies the measurement of goodwill by eliminating step two of the two-step impairment test.

Step two measures a goodwill impairment loss by comparing the implied fair value of a reporting unit’s goodwill with the carrying amount of that goodwill.

This ASU requires an entity to compare the fair value of a reporting unit with its carrying amount and recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value.

Additionally, an entity should consider income tax effects from any tax-deductible goodwill on the carrying amount of the reporting unit when measuring the goodwill impairment loss, if applicable.

The Company adopted this guidance on February 1, 2020 which did not have a material effect on its consolidated financial statements.

In August 2018, the FASB issued ASU No.

2018-13, Fair Value Measurement (Topic 820):

Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement.

This ASU modifies the disclosure requirements on fair value measurements in Topic 820, Fair Value Measurement.

The Company adopted this guidance on February 1, 2020 which did not have a material effect on its consolidated financial statements.

In August 2018, the FASB issued ASU No.

2018-15, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40):

Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract (a consensus of the FASB Emerging Issues Task Force).

This ASU aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal use software.

In December 2019, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) 2019-12, Income Taxes (Topic 740):

Simplifying the Accounting for Income Taxes, which enhances and simplifies various aspects of the income tax accounting guidance, including requirements such as tax basis step-up in goodwill obtained in a transaction that is not a business combination, ownership changes in investments, and interim-period accounting for enacted changes in tax law.

The Company adopted this guidance on February 1, 2021, which did not have a material effect on its consolidated financial statements.

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848):

Facilitation of the Effects of Reference Rate Reform on Financial Reporting.

The ASU provides optional expedients and exceptions for applying generally accepted accounting principles to contract modifications and hedging relationships, subject to meeting certain criteria, that reference LIBOR or another reference rate expected to be discontinued.

This ASU may be applied prospectively through December 31, 2022.

The Company adopted this guidance on May 1, 2020 which did not have a material effect on its consolidated financial statements.

Per the terms of the Company’s secured revolving credit facility (see Note 5), outstanding Eurodollar Loans incur interest at the Eurodollar Rate, which is defined in the Credit Agreement as LIBOR (or any successor thereto), plus a margin.

The Company’s lender is currently preparing to use the Secured Overnight Funding Rate if LIBOR becomes unavailable.

No amounts were outstanding under the Credit Agreement as of January 31, 2021.

Recently Issued Accounting Pronouncements

In December 2019, the Financial Accounting Standards Board (the “FASB”) issued ASU 2019-12, Income Taxes (Topic 740), which enhances and simplifies various aspects of the income tax accounting guidance, including requirements such as tax basis step-up in goodwill obtained in a transaction that is not a business combination, ownership changes in investments, and interim-period accounting for enacted changes in tax law.

In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805):

Accounting for Contract Assets and Contract Liabilities from Contracts with Customers, which requires that an entity recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with Topic 606 as if it had originated the contracts.

For public business entities, this ASU is effective for fiscal years beginning after December 15, 2022, and interim periods within those fiscal years.

The Company does not anticipate that the adoption of this guidance will have a material impact on its consolidated financial statements.

CrowdStrike Holdings, Inc.

Notes to Consolidated Financial Statements

Fair Value Measurements and Marketable Securities

The Company follows ASC 820, Fair Value Measurements, with respect to marketable securities that are measured at fair value on a recurring basis.

The Company is currently evaluating the impact of the adoption of this ASU on its consolidated financial statements.

Investments and Fair Value Measurements

The Company follows ASC 820, Fair Value Measurements, with respect to cash equivalents that are measured at fair value on a recurring basis.

Under the standard, fair value is defined as the exit price, or the amount that would be received to sell an asset or a liability in an orderly transaction between market participants as of the measurement date.

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Unobservable inputs are inputs that reflect the Company’s assumptions about the factors market participants would use in valuing the asset or liability developed based upon the best information available in the circumstances.

CrowdStrike Holdings, Inc.

Notes to Consolidated Financial Statements

The hierarchy is broken down into three levels as follows:

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Categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement.

The Company’s fair value hierarchy for its financial assets and liabilities that are measured at fair value on a recurring basis are as follows:

The Company’s fair value hierarchy for its financial assets and liabilities that are measured at fair value on a recurring basis are as follows (in thousands):

January 31, 2022 January 31, 2021

Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total

(in thousands)

Cash equivalents (1)

Money market funds $ 300,027 $ — $ — $ 300,027 $ — $ — $ — $ —

Corporate debt securities — — — — — 39,940 — 39,940

Total cash equivalents — — — — 205,379 39,940 — 245,319

Marketable securities

Corporate debt securities — — — — — 495,022 — 495,022

treasury securities — — — — 84,431 — — 84,431

Asset backed securities — — — — — 67,813 — 67,813

Total marketable securities — — — — 84,431 562,835 — 647,266

Total assets $ 300,027 $ — $ — $ 300,027 $ — $ — $ — $ —

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(1) Included in “Cash and cash equivalents” on the consolidated balance sheets.

There were no transfers between the levels of the fair value hierarchy during the years ended January 31, 2021 or January 31, 2020.

CrowdStrike Holdings, Inc.

Notes to Consolidated Financial Statements

As of January 31, 2021, there were no marketable securities held by the Company.

As of January 31, 2020, the amortized cost of the Company’s cash equivalents and marketable securities approximated their fair value and there were no material realized or unrealized gains or losses, either individually or in the aggregate.

In addition, the securities that had been in continuous unrealized loss position per security type and in aggregate are not material as of January 31, 2020.

There were no impairments considered “other-than-temporary” as it is more likely than not the Company will hold the securities until maturity or a recovery of the cost basis as of January 31, 2020.

The following summarizes the changes in strategic investments:

There were no transfers between the levels of the fair value hierarchy during the periods presented.

The following summarizes the changes in strategic investments, which are Level 3 within the fair value hierarchy (in thousands):

Year Ended January 31

(in thousands)

Total initial cost $ 18,809 $ 2,500

Cumulative gain — —

Unrealized gains due to changes in fair value 4,823 —

Carrying value $ 23,632 $ 2,500

There was no unrealized gain and loss included as an adjustment to the carrying value related to non-marketable securities as of January 31, 2021.

The following summarizes the changes in the redeemable convertible preferred stock warrant liability, which is classified as a Level 3 instrument:

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2022 2021 2020

(in thousands)

Balance at beginning of period $ — $ — $ 4,537

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The fair value of the redeemable convertible preferred stock warrant liability was estimated using the Black-Scholes option-pricing model and was based on significant inputs not observable in the market, and therefore was classified as a Level 3 instrument.

The inputs include the Company’s preferred stock price, expected stock price volatility, risk-free interest rate, and contractual term.

A loss of $ 6.0 million and $ 3.6 million was recorded as a component of Other income (expense), net, because of the remeasurement of the redeemable convertible preferred stock warrant liability during the years ended January 31, 2020, and January 31, 2019, respectively.

The inputs include the Company’s preferred stock price, expected stock price volatility, risk-free interest rate, and

CrowdStrike Holdings, Inc.

Notes to Consolidated Financial Statements

contractual term.

A loss of $ 6.0 million was recorded as a component of Other income (expense), net, because of the remeasurement of the redeemable convertible preferred stock warrant liability during the fiscal year ended January 31, 2020.

Balance Sheet Components

Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets consisted of the following:

(in thousands)

Prepaid expenses $ 23,072 $ 20,390

Prepaid expenses and other current assets consisted of the following (in thousands):

Prepaid software licenses $ 26,085 $ 20,596

Prepaid hosting services 5,383 8,056

Prepaid expenses 18,829 12,220

Prepaid marketing 17,629 10,852

Other current assets 12,783 4,566

Prepaid hosting services 4,026 5,383

Prepaid expenses and other current assets $ 79,352 $ 53,617

CrowdStrike Holdings, Inc.

Notes to Consolidated Financial Statements

Property and Equipment, Net

Property and equipment, net consisted of the following:

(in thousands)

Property and equipment, net consisted of the following (in thousands):

Data center and other computer equipment $ 198,297 $ 146,220

Capitalized internal-use software 44,358 30,354

Capitalized internal-use software and website development costs 70,476 44,358

Leasehold improvements 22,029 19,733

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Data center equipment that was purchased but not yet been placed into service was $ 89.8 million and $ 30.0 million as of January 31, 2022 and January 31, 2021, respectively.

Depreciation and amortization expense of property and equipment was $ 38.7 million, $ 23.0 million, and $ 14.8 million, during the years ended January 31, 2021, January 31, 2020, and January 31, 2019, respectively.

There were no impairments of internal-use software during the years ended January 31, 2021, January 31, 2020, and January 31, 2019 .

The Company capitalized $ 14.0 million, $ 8.1 million, and $ 6.8 million in internal-use software during the years ended January 31, 2021, January 31, 2020, and January 31, 2019, respectively.

Amortization expense associated with internal-use software totaled $ 7.9 million, $ 6.2 million and $ 5.2 million during the years ended January 31, 2021, January 31, 2020, and January 31, 2019, respectively.

The net book value of capitalized internal-use software was $ 19.5 million and $ 13.4 million as of January 31, 2021 and January 31, 2020, respectively.

Depreciation and amortization expense of property and equipment was $ 54.4 million, $ 38.7 million, and $ 23.0 million, during the fiscal years ended January 31, 2022, January 31, 2021, and January 31, 2020, respectively.

There were no impairments for property and equipment during the fiscal years ended January 31, 2022, January 31, 2021, and January 31, 2020 .

The Company capitalized $ 30.7 million, $ 14.0 million, and $ 8.1 million in internal-use software and website development costs during the fiscal years ended January 31, 2022, January 31, 2021, and January 31, 2020, respectively.

Amortization expense associated with internal-use software and website development costs totaled $ 12.4 million, $ 7.9 million and $ 6.2 million during the fiscal years ended January 31, 2022, January 31, 2021, and January 31, 2020, respectively.

The net book value of capitalized internal-use software and website development costs was $ 38.6 million and $ 19.5 million as of January 31, 2022 and January 31, 2021, respectively.

CrowdStrike Holdings, Inc.

Notes to Consolidated Financial Statements

Intangible Assets, Net

Total intangible assets, net consisted of the following:

Total intangible assets, net consisted of the following (dollars in thousands):

January 31, 2022 Weighted-Average Remaining Useful Life

Gross Carrying Amount Accumulated Amortization Net Amount

(in thousands) (in months)

Developed technology $ 97,668 $ 12,000 $ 85,668 79

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Gross Carrying Amount Accumulated Amortization Net Amount

(in thousands) (in months)

Developed technology $ 14,513 $ 2,193 $ 12,320 56

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Total $ 18,681 $ 3,004 $ 15,677

CrowdStrike Holdings, Inc.

Notes to Consolidated Financial Statements

Amortization of developed technology, customer relationships, and other acquired intangible assets are recorded within cost of revenue, sales and marketing expense, and research and development expense, respectively, in the consolidated statements of operations.

Amortization expense of intangible assets was $ 1.4 million, $ 0.5 million, and $ 0.6 million, during the years ended January 31, 2021, January 31, 2020, and January 31, 2019, respectively.

The estimated aggregate future amortization expense of intangible assets as of January 31, 2021 is as follows:

(in thousands)

Amortization expense of intangible assets was $ 12.9 million, $ 1.4 million, and $ 0.5 million, during the fiscal years ended January 31, 2022, January 31, 2021, and January 31, 2020, respectively.

Amortization expense of other acquired intangible assets is recorded within cost of revenue, research and development expense and general and administrative expense in the consolidated statements of operations.

The estimated aggregate future amortization expense of intangible assets as of January 31, 2022 is as follows (in thousands):

Fiscal 2023 $ 16,300

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Total amortization expense $ 97,336

The developed technology, customer relationships, and other acquired intangible assets are generally being amortized over 5 years, 5 years, and 1 year, respectively.

Goodwill during the year ended January 31, 2021 consisted of the following:

(in thousands)

The developed technology, customer relationships, and other acquired intangible assets are amortized over their estimated useful lives, generally on a straight-line basis for periods ranging from 2 to 20 years.

CrowdStrike Holdings, Inc.

Notes to Consolidated Financial Statements

The changes in goodwill during the fiscal year ended January 31, 2022 consisted of the following (in thousands):

Goodwill as of January 31, 2021 $ 83,566

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Goodwill as of January 31, 2022 $ 416,445

__________________________________

(1) Goodwill acquired resulted from the acquisition of Humio and SecureCircle.

Refer to Note 14, Acquisitions, for additional information.

Other Assets, Noncurrent

Other assets, noncurrent consisted of the following (in thousands):

Other assets $ 13,348 $ 8,627

Deferred income tax asset 4,802 1,328

Deferred finance cost 4,620 4,355

Deposits 2,576 2,802

Other assets, noncurrent $ 25,346 $ 17,112

Accrued Expenses

Accrued expenses consisted of the following:

(in thousands)

Accrued marketing $ 14,592 $ 1,970

Accrued expenses consisted of the following (in thousands):

Web hosting services $ 23,711 $ 14,187

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Accrued purchases of property and equipment 10,878 4,570

Accrued interest expense 10,375 687

Accrued marketing 9,801 14,592

Accrued expenses $ 83,382 $ 51,117

CrowdStrike Holdings, Inc.

Notes to Consolidated Financial Statements

Accrued Payroll and Benefits

Accrued payroll and benefits consisted of the following:

(in thousands)

Accrued payroll and benefits consisted of the following (in thousands):

Accrued commissions $ 47,298 $ 32,300

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Accrued payroll and benefits $ 104,563 $ 71,907

CrowdStrike Holdings, Inc.

Notes to Consolidated Financial Statements

In April 2020, the Company began deferring payment on its share of payroll taxes owed, as permitted by the CARES Act, through December 31, 2020.

As of January 31, 2021, the Company had deferred $ 5.1 million of payroll taxes in “other current liabilities” and $ 5.1 million of payroll taxes in “other liabilities, noncurrent” on the consolidated balance sheet .

As of January 31, 2022, the Company had deferred $ 5.1 million of payroll taxes in other current liabilities.

Other Current Liabilities

Other current liabilities consisted of the following (in thousands):

Other current liabilities $ 12,820 $ 9,652

Income tax payable 5,781 2,639

Accrued taxes 4,914 2,837

Customer deposits 1,414 2,371

Other current liabilities $ 24,929 $ 17,499

Secured Revolving Credit Facility

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The A&R Credit Agreement extended the maturity date of April 19, 2022 to January 2, 2026.

Under the A&R Credit Agreement, revolving loans may be either Eurodollar Loans or Alternate Base Rate (“ABR”) Loans.

Outstanding Eurodollar Loans incur interest at the Eurodollar Rate, which is defined as LIBOR (or any successor thereto), subject to a 0.00 % LIBOR floor, plus a margin between 1.50 % and 2.00 %, depending on the Company’s senior secured leverage ratio.

Outstanding ABR Loans incur interest at the highest of (a) the Prime Rate, as published by the Wall Street Journal, (b) the federal funds rate in effect for such day plus 0.50 %, and (c) the Eurodollar Rate plus 1.00 %, in each case plus a margin between ( 0.25 %) and 0.25 %, depending on the senior secured leverage ratio.

On January 6, 2022, the Company modified the A&R Credit Agreement (the “Amended A&R Credit Agreement”) among CrowdStrike, Inc., as borrower, CrowdStrike Holdings, Inc., as guarantor, and Silicon Valley Bank and the other lenders party thereto.

There were no changes to the borrowing amounts or maturity date.

Under the Amended A&R Credit Agreement, revolving loans are Alternate Base Rate (“ABR”) Loans.

Outstanding ABR Loans incur interest at the highest of (a) the Prime Rate, as published by the Wall Street Journal, (b) the federal funds rate in effect on such day plus 0.50 %, and (c) the Term Secured Overnight Finance Rate (the “Term SOFR”) for a one-month tenor in effect on such day plus 1.00 %, in each case plus a margin between ( 0.25 )% and 0.25 %, depending on the senior secured leverage ratio.

The Company will be charged a commitment fee of 0.15 % to 0.25 % per year for committed but unused amounts, depending on the senior secured leverage ratio.

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The Company was in compliance with the financial covenants as of January 31, 2022.

The A&R Credit Agreement is secured by substantially all of the Company’s current and future consolidated assets, property and rights, including, but not limited to, intellectual property, cash, goods, equipment, contractual rights, financial assets, and intangible assets of the Company and certain of its subsidiaries.

The A&R Credit Agreement contains customary covenants limiting the Company’s ability and the ability of its subsidiaries to, among other things, dispose of assets, undergo a change in control, merge or consolidate, make acquisitions, incur debt, incur liens, pay dividends, repurchase stock, and make investments, in each case subject to certain exceptions.

No amounts were outstanding under the A&R Credit Agreement as of January 31, 2021.

The Amended A&R Credit Agreement is secured by substantially all of the Company’s current and future consolidated assets, property and rights, including, but not limited to, intellectual property, cash, goods, equipment, contractual rights, financial assets, and intangible assets of the Company and certain of its subsidiaries.

The Amended A&R Credit Agreement contains customary covenants limiting the Company’s ability and the ability of its subsidiaries to, among other things, dispose of assets, undergo a change in control, merge or consolidate, make acquisitions, incur debt, incur liens, pay dividends, repurchase stock, and make investments, in each case subject to certain exceptions.

No amounts were outstanding under the Amended A&R Credit Agreement as of January 31, 2022.

CrowdStrike Holdings, Inc.

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Interest payments are payable semiannually on February 15 and August 15 of each year, commencing on August 15, 2021.

The Company may voluntarily redeem the Senior Notes, in whole or in part, 1) at any time prior to February 15, 2024 at (a) 100.00 % of their principal amount, plus a “make whole” premium or (b) with the net cash proceeds received from an equity offering at a redemption price equal to 103.00 % of the principal amount, provided the aggregate principal amount of all such redemptions does not to exceed 40 % of the original aggregate principal amount of the notes;

2) at any time on or after February 15, 2024 at a prepayment price equal to 101.50 % of the principal amount;

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in each case, plus accrued and unpaid interest, if any, to but excluding, the date of redemption.

The net proceeds from the debt offering were $ 739.6 million after deducting the underwriting commissions of $ 9.4 million and $ 1.0 million of issuance costs, which were paid as of January 31, 2021.

An additional $ 1.6 million of issuance costs are expected to be paid in the first quarter of fiscal 2022.

Debt issuance costs of $ 2.6 million are being amortized to interest expense using the effective interest method over the term of the Senior Notes.

Interest expense related to contractual interest expense and amortization of debt issuance costs was $ 0.7 million and $ 0.1 million, respectively, during the fiscal year ended January 31, 2021.

In certain circumstances involving a change of control events, the Company will be required to make an offer to repurchase all or, at the holder’s option, any part, of each holder’s notes of that series at 101 % of the aggregate principal amount thereof, plus accrued and unpaid interest, if any, to, but excluding, the repurchase date.

The net proceeds from the debt offering were $ 738.0 million after deducting the underwriting commissions of $ 9.4 million and $ 2.6 million of issuance costs.

The debt issuance costs are being amortized to interest expense using the effective interest method over the term of the Senior Notes.

Interest expense related to contractual interest expense, amortization of debt issuance

costs and accretion of debt discount was $ 24.0 million and $ 0.8 million, respectively, during the fiscal year ended January 31, 2022 and January 31, 2021, respectively.

In certain circumstances involving a change of control event, the Company will be required to make an offer to repurchase all or, at the holder’s option, any part, of each holder’s notes of that series at 101 % of the aggregate principal amount thereof, plus accrued and unpaid interest, if any, to, but excluding, the repurchase date.

The indenture governing the Senior Notes (the “Indenture”) contain covenants limiting the Company’s ability and the ability of its subsidiaries to create liens on certain assets to secure debt;

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accordingly, the Senior Notes is categorized as Level 2 for purposes of the fair value measurement hierarchy.

The Company’s geographical breakdown of its loss before provision for income taxes for the years ended January 31, 2021, January 31, 2020, and January 31, 2019 is as follows:

The Company’s geographical breakdown of its loss before provision for income taxes for the fiscal years ended January 31, 2022, January 31, 2021, and January 31, 2020 is as follows (in thousands):

Year Ended January 31,

2022 2021 2020

(in thousands)

Domestic $ ( 179,334 ) $ ( 94,713 ) $ ( 149,807 )

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Notes to Consolidated Financial Statements

The components of the provision for income taxes as of January 31, 2021, January 31, 2020, and January 31, 2019 are as follows:

The components of the provision for income taxes during the fiscal years ended January 31, 2022, January 31, 2021, and January 31, 2020 are as follows (in thousands):

Year Ended January 31,

2022 2021 2020

(in thousands)

Federal $ — $ — $ —

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Provision for income taxes $ 72,355 $ 4,760 $ 1,997

The following table provides a reconciliation between income taxes computed at the federal statutory rate and the provision for income taxes as of January 31, 2021 , January 31, 2020, and January 31, 2019:

Year Ended January 31,

The following table provides a reconciliation between income taxes computed at the federal statutory rate and the provision for income taxes during the fiscal years ended January 31, 2022 , January 31, 2021, and January 31, 2020 (in thousands):

As of January 31,

2022 2021 2020

(in thousands)

Provision for income taxes at statutory rate $ ( 33,605 ) $ ( 18,453 ) $ ( 29,354 )

State income taxes, net of federal benefit — 25 245

Foreign earnings at different rates 1,994 207 97

State income taxes, net of federal benefits 673 — 25

Foreign tax rate differential

574 1,994 207

Research and other credits ( 19,113 ) ( 9,373 ) ( 1,534 )

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Change in unrecognized tax benefits — — ( 2,659 )

Valuation allowance 168,869 77,016 29,676

Change in valuation allowance 210,680 168,869 77,016

Tax impact of restructuring 57,236 — —

Other ( 909 ) — —

Provision for income taxes $ 72,355 $ 4,760 $ 1,997

The Company recognized an income tax expense of $ 72.4 million, $ 4.8 million, and $ 2.0 million for the fiscal years January 31, 2022, January 31, 2021 and January 31, 2020, respectively.

The tax expense for the fiscal years ended January 31, 2021 and January 31, 2020 was primarily attributable to pre-tax foreign earnings and withholding taxes related to customer payments in certain foreign jurisdictions in which the Company conducts business.

The tax expense for the fiscal year ended January 31, 2022 was primarily attributable to pre-tax foreign earnings and the intercompany sale of intellectual property from Humio.

The Company transferred acquired intellectual property from the foreign subsidiary to the U.S.

Although the transfer of the intellectual property between consolidated entities did not result in any gain in the consolidated statement of operations, the Company generated a taxable gain in the foreign jurisdiction resulting in an additional tax expense of $ 57.2 million.

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.

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Notes to Consolidated Financial Statements

Significant components of the Company’s deferred tax assets and liabilities as of January 31, 2021 and January 31, 2020 are as follows:

Year Ended January 31,

(in thousands)

Significant components of the Company’s deferred tax assets and liabilities as of January 31, 2022 and January 31, 2021 are as follows (in thousands):

As of January 31,

Deferred tax assets

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The Company periodically evaluates the recoverability of the deferred tax assets and, when it is determined to be more-likely-than-not that the deferred tax assets are realizable, the valuation allowance is reduced.

During the years ended January 31, 2021, January 31, 2020 and January 31, 2019, the valuation allowance increased by $ 206.2 million, $ 87.2 million, and $ 36.0 million, respectively.

The increase in the valuation allowance during the years ended January 31, 2021, January 31, 2020 and January 31, 2019 was primarily driven by losses generated in the United States and the United Kingdom.

During the years ended January 31, 2021, January 31, 2020, and January 31, 2019, the valuation allowance for deferred taxes balance was $ 413.8 million, $ 207.6 million, and $ 120.4 million, respectively.

During the fiscal years ended January 31, 2022, January 31, 2021, and January 31, 2020, the valuation allowance increased by $ 357.0 million, $ 206.2 million, and $ 87.2 million, respectively.

The increase in the valuation allowance during the fiscal years ended January 31, 2022, January 31, 2021 and January 31, 2020 was primarily driven by losses generated in the United States and United Kingdom.

As of January 31, 2022, January 31, 2021, and January 31, 2020 the valuation allowance for deferred taxes balance was $ 770.9 million, $ 413.8 million, and $ 207.6 million, respectively.

As of January 31, 2022, the Company had aggregate federal and California net operating loss carryforwards of $ 1.6 billion and $ 168.9 million, respectively, which may be available to offset future taxable income for income tax purposes.

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As of January 31, 2022, net operating loss carryforwards for United Kingdom total $ 81.1 million which are carried forward indefinitely.

As of January 31, 2021, the Company had federal and California research and development (“R&D”) credit carryforwards of $ 38.7 million and $ 8.7 million, respectively.

As of January 31, 2022, the Company had federal and California research and development credit (“R&D credit”) carryforwards of $ 65.6 million and $ 13.7 million, respectively.

The federal R&D credit carryforwards will begin to expire in fiscal 2035 though fiscal 2042.

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If an ownership change has occurred, or were to occur, utilization of the Company’s NOLs and credit carryovers could be restricted.

The Company’s net operating losses and credit carryovers are not currently subject to a limitation due to an ownership change.

The total gross unrecognized tax benefit as of January 31, 2022, January 31, 2021 and January 31, 2020 were $ 26.3 million, $ 24.4 million, and $ 5.5 million, respectively.

As of January 31, 2021, the Company had $ 0.6 million of unrecognized tax benefits, which, if recognized, would affect the Company’s effective tax rate due to the full valuation allowance.

As of January 31, 2022, the Company had $ 1.9 million of unrecognized tax benefits, which, if recognized, would affect the Company’s effective tax rate.

The Company’s policy is to classify interest and penalties related to unrecognized tax benefits as part of the income tax provision in the consolidated statements of operations.

The Company had no accrued interest and penalties related to unrecognized tax benefits as of January 31, 2021, January 31, 2020 or January 31, 2019.

During the year ended January 31, 2021, the uncertain tax benefits balance increased as a result of additional guidance released by the IRS.

During the year ended January 31, 2020, the uncertain tax benefits balance decreased due to the application of the IRS’ simplified approach for determining research credits.

The potential reduction in unrecognized tax benefits during the next 12 months is not expected to be material.

The following is a rollforward of the total gross unrecognized tax benefits for the years ended January 31, 2021, January 31, 2020, and January 31, 2019 (in thousands):

The Company had incurred insignificant amounts of interest and penalties related to unrecognized tax benefits as of January 31, 2022 and did not accrue interest and penalties in prior periods.

During the fiscal years ended January 31, 2022 and 2021, the net increase in uncertain tax benefits was a result of research and development credits.

During the fiscal year ended January 31, 2020, the uncertain tax benefits balance decreased due to the application of IRS directive in determining the research credit.

The potential change in unrecognized tax benefits during the next 12 months is not expected to be material.

The following is a rollforward of the total gross unrecognized tax benefits for the fiscal years ended January 31, 2022, January 31, 2021, and January 31, 2020 (in thousands):

Balance as of February 1, 2019 $ 8,128

Increases in current period tax positions —

Decreases in current period tax positions ( 2,659 )

Balance as of January 31, 2020 5,469

Reductions in prior period tax positions ( 2,659 )

Increases in prior period tax positions 6,926

Increase in current period tax positions 12,052

Balance as of January 31, 2021 24,447

Increases in prior period tax positions 186

Decreases in prior period tax positions ( 9,772 )

Increase in current period tax positions 11,463

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federal jurisdiction and various state jurisdictions.

As the Company expands its global operations in the normal course of business, the Company could be subject to examination by taxing authorities throughout the world.

These audits could include questioning the timing and amount of deductions;

the nexus of income among various tax jurisdictions;

and compliance with federal, state, local, and foreign tax laws.

The Company is not currently under audit by the Internal Revenue Service or other similar state, local, and foreign authorities.

All tax years remain subject to examination by U.S.

Tax years 2011 and onwards remain subject to examination by U.S.

taxing authorities due to the Company’s net operating losses and R&D credit carryforwards.

The Company attributes net revenue, costs, and expenses to domestic and foreign components based on the terms of its agreements with its subsidiaries.

The Company does not provide for federal and state income taxes on the undistributed earnings of its foreign subsidiaries as such earnings are to be reinvested offshore indefinitely.

As a result of the Tax Act, if the Company repatriated these earnings, the tax impact of future distributions of foreign earnings would generally be limited to withholding tax from local jurisdictions, and the resulting income tax liability would be insignificant.

On March 27, 2020, the United States enacted the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”),

as a response to the economic uncertainty resulting from the global COVID-19 pandemic.

The CARES Act did not have a material impact on the Company’s condensed consolidated financial statements for the fiscal year ended January 31, 2021.

The Company continues to monitor any effects that may result from the CARES Act.

CrowdStrike Holdings, Inc.

Notes to Consolidated Financial Statements

Redeemable Convertible Preferred Stock

Upon the close of the Company’s IPO on June 14, 2019, all shares of convertible preferred stock then outstanding, totaling 131,267,586 shares, were automatically converted into an equivalent number of shares of Class B common stock on a one -to-one basis and the carrying value, totaling $ 557.9 million, was reclassified into Class B common stock and additional paid-in capital on the consolidated balance sheets.

Equity Transactions

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Each share of Class A common stock is entitled to one vote per share.

Each share of Class B common stock is entitled to ten votes per share and is convertible into one share of Class A common stock.

Each share of Class B common stock is entitled to ten votes per share and is convertible

CrowdStrike Holdings, Inc.

Notes to Consolidated Financial Statements

into one share of Class A common stock.

Class A and Class B common stockholders are not entitled to receive dividends unless declared by the Company’s board of directors.

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Certain lease agreements include options to renew or terminate the lease, which are not reasonably certain to be exercised and therefore are not factored into the determination of lease payments.

For the fiscal year ended January 31, 2021, cash paid for amounts included in the measurement of operating lease liabilities were $ 11.0 million.

Operating lease liabilities arising from obtaining operating right of-use assets was $ 6.2 million during the fiscal year ended January 31, 2021.

As of January 31, 2021, the weighted-average remaining lease term is 4.1 years, and the weighted-average discount rate is 5.9 %.

The component of lease costs was as follows:

January 31, 2021

(in thousands)

Cash paid for amounts included in the measurement of operating lease liabilities were $ 11.8 million and $ 11.0 million for the fiscal years ended January 31, 2022 and January 31, 2021, respectively.

Operating lease liabilities arising from obtaining operating right of-use assets were $ 4.9 million and $ 6.2 million for the fiscal years ended January 31, 2022 and January 31, 2021, respectively.

The weighted-average remaining lease term are 3.0 years and 4.1 years as of January 31, 2022 and January 31, 2021, respectively.

The weighted-average discount rates are 5.4 % and 5.9 % as of January 31, 2022 and January 31, 2021, respectively.

The component of lease costs was as follows (in thousands):

Year Ended January 31,

Operating lease cost $ 11,262 $ 10,308

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Total lease cost $ 18,054 $ 15,272

CrowdStrike Holdings, Inc.

Notes to Consolidated Financial Statements

There was no sublease income for the fiscal year ended January 31, 2021.

Total lease expense recognized prior to the adoption of Topic 842 were $ 10.3 million and $ 6.9 million for the year ended January 31, 2020 and January 31, 2019, respectively.

The maturities of the Company’s non-cancelable operating lease liabilities are as follows:

Total rent expense recognized prior to the adoption of Topic 842 were $ 10.3 million for the year ended January 31, 2020.

There was no sublease income for the fiscal year ended January 31, 2022 or January 31, 2021.

As of January 31, 2022, the Company has not entered into any non-cancelable operating leases with a term greater than 12 months that have not yet commenced.

The maturities of the Company’s non-cancelable operating lease liabilities are as follows (in thousands):

January 31, 2022

(in thousands)

Fiscal 2023 $ 10,539

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Fiscal 2027 558

Thereafter 279

Total operating lease payments 38,477

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Present value of operating lease liabilities $ 35,199

Future minimum payments under non-cancelable operating leases determined using the prior accounting guidance consisted of the following as of January 31, 2020:

Real Estate Arrangements

(in thousands)

Fiscal 2021 $ 9,958

Fiscal 2022 9,869

Fiscal 2023 9,377

Fiscal 2024 9,370

Fiscal 2025 8,441

Thereafter 3,671

Total $ 50,686

CrowdStrike Holdings, Inc.

Notes to Consolidated Financial Statements

Stock-Based Compensation

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Any shares underlying stock options that expire or terminate or are forfeited or repurchased under the 2011 Plan will be automatically transferred to the 2019 Plan.

CrowdStrike Holdings, Inc.

Notes to Consolidated Financial Statements

Stock Options

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Dividend yield — % — % — %

The following table is a summary of stock option activity for the year ended January 31, 2021:

The following table is a summary of stock option activity for the fiscal year ended January 31, 2022:

Shares Weighted-

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The aggregate intrinsic value of options vested and exercisable was $ 480.5 million, $ 711.4 million, and $ 469.6 million as of January 31, 2022, January 31, 2021, and January 31, 2020, respectively.

The weighted-average remaining contractual term of options vested and exercisable was 6.4 years, 6.7 years, and 7.1 years as of January 31, 2021, January 31, 2020, and January 31, 2019, respectively.

The weighted-average grant date fair values of all options granted was $ 66.31 , $ 9.51 , and $ 5.70 per share during the years ended January 31, 2021, January 31, 2020, and January 31, 2019, respectively.

The total intrinsic value of all options exercised was $ 847.5 million, $ 407.9 million, and $ 26.9 million during the years ended January 31, 2021, January 31, 2020, and January 31, 2019, respectively.

The aggregate intrinsic value of stock options outstanding as of January 31, 2021, January 31, 2020, and January 31, 2019 was $ 1.4 billion, $ 816.3 million, and $ 286.1 million, respectively, which represents the excess of the fair value of the Company’s common stock over the exercise price of the options multiplied by the number of options outstanding.

The weighted-average remaining contractual term of stock options outstanding was 7.0 years, 7.4 years, and 7.9 years as of January 31, 2021, January 31, 2020, and January 31, 2019, respectively.

The weighted-average remaining contractual term of

CrowdStrike Holdings, Inc.

Notes to Consolidated Financial Statements

options vested and exercisable was 5.7 years, 6.4 years, and 6.7 years as of January 31, 2022, January 31, 2021, and January 31, 2020, respectively.

The weighted-average grant date fair values of all options granted was $ 180.08 , $ 66.31 , and $ 9.51 per share during the fiscal years ended January 31, 2022, January 31, 2021, and January 31, 2020, respectively.

The total intrinsic value of all options exercised was $ 570.9 million, $ 847.5 million, and $ 407.9 million during the fiscal years ended January 31, 2022, January 31, 2021, and January 31, 2020, respectively.

The aggregate intrinsic value of stock options outstanding as of January 31, 2022, January 31, 2021, and January 31, 2020 was $ 678.0 million, $ 1.4 billion, and $ 816.3 million, respectively, which represents the excess of the fair value of the Company’s common stock over the exercise price of the options multiplied by the number of options outstanding.

The weighted-average remaining contractual term of stock options outstanding was 6.1 years, 7.0 years, and 7.4 years as of January 31, 2022, January 31, 2021, and January 31, 2020, respectively.

Total unrecognized stock-based compensation expense related to unvested options was $ 16.6 million as of January 31, 2022.

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If a stock option is early exercised, the unvested shares may be repurchased by the Company in case of employment termination or for any reason, including death and disability, at the price paid by the purchaser for such shares.

There were no issued shares of common stock related to early exercised stock option during the fiscal year ended January 31, 2021.

During the fiscal year ended January 31, 2020, the Company issued 1,037,356 shares of common stock for total proceeds of $ 10.3 million related to early exercised stock options.

There were no issued shares of common stock related to early exercised stock options during the fiscal year ended January 31, 2022 or January 31, 2021.

As of January 31, 2022, the number of shares of common stock related to early exercised stock options subject to repurchase was 197,994 shares for $ 2.2 million.

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Common stock purchased pursuant to an early exercise of stock options is not deemed to be outstanding for accounting purposes until those shares vest.

The Company includes unvested shares subject to repurchase in the number of shares outstanding in the consolidated statement of redeemable convertible preferred stock and stockholders’ equity (deficit).

Tender Offer Transaction

In October 2018, the Company facilitated a tender offer of its common stock.

Under the terms of the offer, certain existing Series E Preferred Stock investors purchased an aggregate of 2.4 million shares of common stock from certain eligible employees and directors for $ 15.64 per share for an aggregate purchase price of $ 37.6 million.

The Company recognized stock-based compensation expense of $ 10.8 million during the year ended January 31, 2019 in connection with the tender offer, which represented the difference between the purchase price and the fair value of the common stock on the date of the sale.

The Company includes unvested shares subject to repurchase in the number of shares outstanding in the consolidated balance sheet and statements of stockholders’ equity (deficit).

Restricted Stock Units

Beginning in September 2018, the Company began issuing RSUs to certain employees.

These RSUs include a service-based vesting condition and a performance-based vesting condition.

The service-based vesting condition is generally satisfied based on one of three vesting schedules:

None of the RSUs vest unless the performance-based vesting condition is satisfied.

Upon its IPO, the Company began issuing RSUs to its employees that generally have only service-based vesting condition.

Restricted Stock Units (“RSUs”) granted under the 2019 Plan are generally subject to only service-based vesting condition.

The service-based vesting condition is generally satisfied based on one of four vesting schedules:

(i) vesting of one-fourth of the RSUs on the first “Company vest date” (defined as March 20, June 20, September 20, or December 20) on or following the one-year anniversary of the vesting commencement date with the remainder of the RSUs vesting in twelve equal quarterly installments thereafter, subject to continued service, (ii) vesting in sixteen equal quarterly installments, subject to continued service, (iii) vesting in eight equal quarterly installments, subject to continued service, or (iv) vesting sixteen quarterly installments with 10 % in the first year, 15 % in the second year, 25 % in the third year and 50 % in the fourth year, subject to continued service.

The valuation of such RSUs is based solely on the fair value of the Company’s stock price on the date of grant.

Expense for RSUs that have a service-based vesting condition only are being amortized on a straight-line basis.

Expense for RSUs that have both a service-based and a performance-based vesting condition are being amortized under the accelerated attribution method.

Expense for RSUs are generally amortized on a straight-line basis.

Total unrecognized stock-based compensation expense related to unvested RSUs was $ 702.3 million as of January 31, 2022.

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This expense is expected to be amortized on an accelerated attribution method over a weighted-average vesting period of 2.6 years.

CrowdStrike Holdings, Inc.

Notes to Consolidated Financial Statements

Performance-based Stock Units

Performance-based stock units (“PSUs”) granted under the 2019 Plan are generally subject to both a service-based vesting condition and a performance-based vesting condition.

PSUs will vest upon the achievement of specified performance targets and subject to continued service through the applicable vesting dates.

PSUs will vest upon the achievement of specified performance targets

CrowdStrike Holdings, Inc.

Notes to Consolidated Financial Statements

and subject to continued service through the applicable vesting dates.

The compensation cost is recognized over the requisite service period when it is probable that the performance condition will be satisfied.

During fiscal 2021, the Company’s compensation committee granted PSUs for certain employees.

The performance goal for certain grants primarily relate to the revenue growth percentage for the fiscal year ended January 31, 2021, with the number of PSUs earned corresponding to the performance period of fiscal 2021, which can range between 0 % and 130 % of the target number of shares granted depending on the Company’s actual performance.

The performance goal for other grants primarily relate to the achievement of product related deliverables or other engineering objectives.

Expense for PSUs are being amortized under the accelerated attribution method and may be adjusted over the vesting period based on interim estimates of performance against pre-set objectives.

Expense for PSUs is being amortized under the accelerated attribution method and may be adjusted over the vesting period based on interim estimates of performance against pre-set objectives.

Total unrecognized stock-based compensation expense related to unvested PSUs was $ 42.9 million as of January 31, 2022.

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This expense is expected to be amortized over a weighted-average vesting period of 1.3 years.

The following table is a summary of RSU and PSU activities for the year ended January 31, 2021:

Special PSU Awards

In fiscal 2022 the Company’s Board of Directors granted 655,000 performance stock units (the “Special PSU Awards”) to certain executives under the 2019 Plan.

The Special PSU Awards will vest upon the satisfaction of the Company’s achievement of specified stock price hurdles, which is based on the average of the closing stock price per share of the Company’s Class A common stock during any 45 consecutive trading day period during the applicable performance period, and a service-based vesting condition.

The service condition applicable to each tranche of the Special PSU Awards will be satisfied in installments as follows, subject to continued employment with the Company through each applicable vesting date:

(i) 50 % of the Special PSU Awards underlying the applicable tranche will service vest on the first anniversary of the vesting commencement date applicable to such tranche of the Special PSU Awards (i.e., February 1, 2022, February 1, 2023, February 1, 2024 and February 1, 2025) and (ii) the remaining PSUs with respect to such tranche will thereafter service vest in four equal quarterly installments of 12.5 %.

The Company measured the fair value of the Special PSU Awards using a Monte Carlo simulation valuation model.

The risk-free interest rates used were 0.85 % - 1.51 %, which was based on the zero-coupon-risk-free interest rate derived from the Treasury Constant Maturities yield curve for the expected term of the award on the grant date.

The expected volatility was a blended volatility rate of 54.89 % - 55.36 %, which includes 50 % weight on the Company’s historical volatility calculated from daily stock returns over a 2.21 - 2.58 year look-back from the grant date and 50 % weight based on the Company’s implied volatility as of the grant date.

Stock-based compensation expense relating to the Special PSU Awards are recognized using the accelerated attribution method over the longer of the derived service period and the explicit service period.

Total unrecognized stock-based compensation expense related to the unvested portion of the Special PSU Awards was $ 118.4 million as of January 31, 2022.

This expense is expected to be amortized over a weighted-average vesting period of 2.8 years.

The following table is a summary of RSUs, PSUs and the Special PSU Awards activities for the fiscal year ended January 31, 2022:

Shares Weighted-Average

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Released ( 3,408 ) $ 62.62

Performance adjustment (1)

Forfeited ( 695 ) $ 99.78

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RSUs and PSUs expected to vest at January 31, 2022 7,886 $ 125.04

___________________________

CrowdStrike Holdings, Inc.

Notes to Consolidated Financial Statements

(1) Performance adjustment represents adjustments in shares outstanding due to the actual achievement of performance-based awards, the achievement of which was based upon predefined financial performance targets.

Employee Stock Purchase Plan

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(i) one percent ( 1 %) of outstanding shares of the Company’s capital stock as of the last day of the immediately preceding fiscal year or (ii) such other amount as its board of directors may determine.

In May 2021, the Company’s compensation committee adopted an amendment and restatement of the ESPP, which was approved by the Company’s stockholders in June 2021.

The amended and restated ESPP clarified the original intent that the annual increase will in no event exceed 5,000,000 shares of the Company’s Class A common stock in any year.

The ESPP provides for consecutive offering periods that will typically have a duration of approximately 24 months in length and is comprised of four purchase periods of approximately six months in length.

The offering periods are scheduled to start on the first trading day on or after June 11 and December 11 of each year.

The first offering period commenced on June 11, 2019 and is scheduled to end on the first trading day on or before June 10, 2021.

CrowdStrike Holdings, Inc.

Notes to Consolidated Financial Statements

The first offering period commenced on June 11, 2019 and ended on June 10, 2021.

The ESPP provides eligible employees with an opportunity to purchase shares of the Company’s Class A common stock through payroll deductions of up to 15 % of their eligible compensation.

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The pre- and post-modification fair values are calculated on the date of the modification, and the incremental expense is then amortized over the remaining purchase period.

Incremental expense as a result of such modification was $ 3.5 million for year ended January 31, 2021.

Incremental expense as a result of such modification was $ 6.2 million and $ 3.5 million for the fiscal years ended January 31, 2022 and January 31, 2021, respectively.

The ESPP offers a two-year look-back feature as well as a rollover feature that provides for an offering period to be rolled over to a new lower-priced offering if the offering price of the new offering period is less than that of the current offering period.

An ESPP rollover occurred when the Company’s closing stock price on December 10, 2021 was below the closing stock price on June 11, 2021, which triggered a new 24-month offering period through December 10, 2023 and resulted in an immaterial modification charge during the fiscal year ended January 31, 2022.

Employee payroll contributions ultimately used to purchase shares are reclassified to stockholders’ equity on the purchase date.

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Year Ended January 31,

2022 2021 2020

Expected term (in years) 0.5 – 2.0

Risk-free interest rate 0.0 % – 1.9 %

0.1 % – 2.0 %

1.6 % – 2.2 %

Expected stock price volatility 33.0 % – 55.9 %

30.1 % – 54.3 %

30.1 % – 35.7 %

Dividend yield — % — %

CrowdStrike Holdings, Inc.

Notes to Consolidated Financial Statements

Stock-Based Compensation Expense

Stock-based compensation expense included in the consolidated statements of operations is as follows:

Stock-based compensation expense included in the consolidated statements of operations is as follows (in thousands):

Year Ended January 31,

2022 2021 2020

(in thousands)

Subscription cost of revenue $ 22,044 $ 11,705 $ 5,226

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Revenue, Deferred Revenue and Remaining Performance Obligations

The following table summarizes the revenue from contracts by type of customer:

The following table summarizes the revenue from contracts by type of customer (in thousands, except percentages):

Year Ended January 31,

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Amount % Revenue Amount % Revenue Amount % Revenue

(in thousands, except percentages)

Channel Partners $ 1,093,336 75 % $ 655,031 75 % $ 331,279 69 %

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The Company recognizes revenue from the sales to the end customers ratably over the term of the contract once access to the Company’s solution has been provided to the end customer.

The following table summarizes the revenue by region based on the shipping address of customers who have contracted to use the Company’s platform or service:

The following table summarizes the revenue by region based on the shipping address of customers who have contracted to use the Company’s platform or service (in thousands, except percentages):

Year Ended January 31,

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Amount % Revenue Amount % Revenue Amount % Revenue

(in thousands, except percentages)

United States $ 1,046,474 72 % $ 627,402 72 % $ 356,513 74 %

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Total revenue $ 1,451,594 100 % $ 874,438 100 % $ 481,413 100 %

No single country other than the United States represented 10% or more of the Company’s total revenue during the years ended January 31, 2021, January 31, 2020 or January 31, 2019.

No single country other than the United States represented 10% or more of the Company’s total revenue during the fiscal years ended January 31, 2022, January 31, 2021 or January 31, 2020.

CrowdStrike Holdings, Inc.

Notes to Consolidated Financial Statements

Contract Balances

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Such amounts are recognized as revenue over the contractual period.

The Company recognized revenue of $ 410.7 million and $ 217.9 million for the years ended January 31, 2021 and January 31, 2020, respectively, that were included in the corresponding contract liability balance at the beginning of the period.

The Company recognized revenue of $ 696.7 million and $ 410.7 million for the fiscal years ended January 31, 2022 and January 31, 2021, respectively, that were included in the corresponding contract liability balance at the beginning of the period.

The Company receives payments from customers based upon contractual billing schedules.

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Changes in deferred revenue were as follows (in thousands):

Carrying Amount

Year Ended January 31,

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As of January 31, 2022, the aggregate amount of the transaction price allocated to remaining performance obligations was $ 2.3 billion.

The Company expects to recognize 72 % of the remaining performance obligations in the 12 months following January 31, 2021, with the remainder to be recognized thereafter.

The Company expects to recognize approximately 65 % of the remaining performance obligations in the 12 months following January 31, 2022 and 34 % between 13 to 36 months, with the remainder to be recognized thereafter.

Costs to Obtain and Fulfill a Contract

The Company capitalizes referral fees paid to partners and sales commission and associated payroll taxes paid to internal sales personnel that are incremental to the acquisition of channel partner and direct customer contracts and would not have occurred absent the customer contract.

The Company capitalizes referral fees paid to partners and sales commission and associated payroll taxes paid to internal sales personnel, contractors or sales agents that are incremental to the acquisition of channel partner and direct customer contracts and would not have occurred absent the customer contract.

These costs are recorded as deferred contract acquisition costs, current and deferred contract acquisition costs, noncurrent on the consolidated balance sheets.

Commissions, including referral fees paid to channel partners, earned upon the initial acquisition of a contract or subsequent upsell are amortized over an estimated period of benefit of 4 years while commissions earned for renewal contracts are amortized over the contractual term of the renewals.

Commissions, including referral fees paid to referral partners, earned upon the initial acquisition of a contract or subsequent upsell are amortized over an estimated period of benefit of 4 years while commissions earned for renewal contracts are amortized over the contractual term of the renewals.

Sales commissions associated with professional service contracts are amortized ratably over an estimated period of benefit of six months and included in sales and marketing expense in the consolidated statements of operations.

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The Company did no t recognize any material impairment losses of deferred contract acquisition costs during the year ended January 31, 2022.

The following table summarizes the activity of deferred contract acquisition costs:

CrowdStrike Holdings, Inc.

Notes to Consolidated Financial Statements

The following table summarizes the activity of deferred contract acquisition costs (in thousands):

Year Ended January 31,

(in thousands)

Beginning balance $ 198,756 $ 114,206

Adjustment due to adoption of ASU 606 — 24,306

Capitalization of contract acquisition costs 234,308 150,975

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In the normal course of business, the Company enters into non-cancelable purchase commitments with various parties to purchase products and services such as technology, equipment, office renovations, corporate events, and consulting services.

A summary of noncancellable purchase obligations in excess of one year as of January 31, 2021 with expected date of payment is as follows:

(In thousands)

A summary of noncancellable purchase obligations in excess of one year as of January 31, 2022 with expected date of payment is as follows (in thousands):

Fiscal 2023 $ 67,540

5 unchanged sentences

Total purchase commitments $ 177,619

In October 2021, the Company entered into a new private pricing addendum with Amazon Web Services (“AWS”), which provides the Company with cloud computing infrastructure.

Under the new pricing addendum, the minimum commitment is $ 600.0 million of cloud services from AWS through September 2026.

As of January 31, 2022, the Company had utilized $ 53.2 million of this commitment.

The remaining commitment is excluded from the table above and the Company expects to meet its remaining commitment with AWS.

Letters of Credit

As of January 31, 2021 and January 31, 2020, the Company had an unused standby letter of credit for $ 0.4 million and $ 0.6 million, respectively, securing its headquarters facility in Sunnyvale, California.

As of January 31, 2021 and January 31, 2020, the Company had an unused standby letter of credit for $ 1.0 million securing its facility in Austin, Texas.

As of January 31, 2022 and January 31, 2021, the Company had an unused standby letter of credit for $ 0.4 million securing its facility in Sunnyvale, California.

As of January 31, 2022 and January 31, 2021, the Company had an unused standby letter of credit for $ 0.8 million and $ 1.0 million, respectively, securing the facility housing its principal executive offices in Austin, Texas.

In November 2016, Fair Isaac Corporation (“FICO”) filed a petition before the Trademark Trial and Appellate Board (“TTAB”) at the U.S.

Patent and Trademark Office, seeking cancellation of the Company’s registration of its “CrowdStrike Falcon” trademark, and a notice of opposition of the Company’s trademark application for “Falcon OverWatch.” The Company denies that any of the relief FICO seeks is appropriate, and has itself moved to cancel, or in the alternative amend, FICO’s “Falcon” trademark registrations before the TTAB.

The proceedings have been consolidated and are in the discovery phase with trial periods scheduled to begin in October 2021.

Patent and Trademark Office, seeking cancellation of the Company’s registration of its “CrowdStrike

CrowdStrike Holdings, Inc.

Notes to Consolidated Financial Statements

Falcon” trademark, and a notice of opposition of the Company’s trademark application for “Falcon OverWatch.” The Company denies that any of the relief FICO seeks is appropriate, and has itself moved to cancel, or in the alternative amend, FICO’s “Falcon” trademark registrations before the TTAB.

The proceedings have been consolidated and are in the discovery phase.

The Company is vigorously defending the case, but given the early stage, although a loss may reasonably be possible, the Company is unable to predict the likelihood of success of FICO’s claims or estimate a loss or range of loss.

As a result, no liability has been recorded as of January 31, 2021 or January 31, 2020.

In addition, the Company is involved in various other legal proceedings and subject to claims that arise in the ordinary course of business, including a letter demand from a former employee purportedly on behalf of himself and similarly situated employees alleging various wage and hour violations.

The Company is vigorously defending the claim, but given the early stage, although a loss may reasonably be possible, the Company is unable to predict the likelihood of the claim’s success or estimate a loss or range of loss.

As a result, no material liability has been recorded as of January 31, 2022 or January 31, 2021.

In March 2022, Webroot, Inc.

and Open Text, Inc.

(collectively, “Webroot”) filed a lawsuit against the Company in federal court in the Western District of Texas alleging that certain of the Company’s products infringe six patents held by them.

In the complaint, Webroot sought unspecified damages, attorneys’ fees and a permanent injunction.

The Company is evaluating Webroot’s claims and intends to vigorously defend against them.

In addition, the Company is involved in various other legal proceedings and subject to claims that arise in the ordinary course of business.

For any claims for which the Company believes a liability is both probable and reasonably estimable, the Company records a liability in the period for which it makes this determination.

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In addition, the expense of litigation and the timing of this expense from period to period are difficult to estimate, subject to change and could adversely affect the Company’s consolidated financial statements.

CrowdStrike Holdings, Inc.

Notes to Consolidated Financial Statements

Warranties and Indemnification

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In addition, for its Falcon Complete customers, the Company offers a limited warranty, subject to certain conditions, to cover certain costs incurred by the customer in case of a cybersecurity breach.

The Company has entered into an insurance policy to cover its potential liability arising from this limited warranty arrangement.

The Company has entered into an insurance policy to reduce its potential liability arising from this limited warranty arrangement.

To date, the Company has not incurred any material costs because of such obligations and has not accrued any liabilities related to such obligations in the consolidated financial statements.

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Geographic Information

The Company’s long-lived assets are composed of property and equipment, net, and operating lease right-of-use assets, are summarized by geographic area as follows:

(in thousands)

The Company’s long-lived assets are composed of property and equipment, net, and operating lease right-of-use assets, are summarized by geographic area as follows (in thousands):

United States $ 256,282 $ 174,889

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Total property and equipment, net and operating lease right-of-use assets $ 292,312 $ 203,498

CrowdStrike Holdings, Inc.

Notes to Consolidated Financial Statements

No single country other than the United States represented 10% or more of the Company’s total long-lived assets as of January 31, 2022 and January 31, 2021.

1 unchanged sentence

Subscription and Professional Services Revenue from Related Parties

During the years ended January 31, 2021, January 31, 2020 and January 31, 2019, certain investors and companies with whom the Company’s Board of Directors are affiliated with, purchased subscriptions and professional services.

The Company recorded revenue from subscriptions and professional services from related parties of $ 4.3 million, $ 9.0 million, and $ 6.6 million during the years ended January 31, 2021, January 31, 2020 and January 31, 2019, respectively.

Accounts receivable associated with these related parties was $ 1.3 million, and $ 0.2 million during the years ended January 31, 2021 and January 31, 2020, respectively.

During the fiscal years ended January 31, 2022, January 31, 2021 and January 31, 2020, certain investors and companies with whom the Company’s Board of Directors are affiliated with, purchased subscriptions and professional services.

The Company recorded revenue from subscriptions and professional services from related parties of $ 7.7 million, $ 4.3 million, and $ 9.0 million during the fiscal years ended January 31, 2022, January 31, 2021 and January 31, 2020, respectively.

Accounts receivable associated with these related parties was $ 2.2 million, and $ 1.3 million as of January 31, 2022 and January 31, 2021, respectively.

Accounts Payable to Related Parties

During the years ended January 31, 2021, January 31, 2020 and January 31, 2019, the Company purchased goods and services totaling $ 8.8 million, $ 3.2 million, and $ 2.2 million, respectively, from certain investors and companies with whom its Board of Directors are affiliated with.

There were no accounts payable to such vendors as of January 31, 2021 or January 31, 2020 .

During the fiscal years ended January 31, 2022, January 31, 2021 and January 31, 2020, the Company purchased goods and services totaling $ 26.0 million, $ 8.8 million, and $ 3.2 million, respectively, from certain investors and companies with whom its Board of Directors are affiliated with.

The accounts payable to such vendors was $ 3.7 million and immaterial as of January 31, 2022 and January 31, 2021, respectively.

Secure Circle, LLC

On November 29, 2021, the Company acquired 100 % of the equity interest of Secure Circle, LLC (“SecureCircle”), a SaaS-based cybersecurity service that extends Zero Trust security to data on, from and to the endpoint.

The acquisition has been accounted for as a business combination.

The total consideration transferred was $ 60.8 million, which consisted solely of cash.

The purchase price was allocated, on a preliminary basis, to identified intangible assets, which include developed technology and customer relationships of $ 18.3 million, net tangible assets acquired of $( 0.5 ) million and goodwill of $ 43.0 million allocated to the Company’s one reporting unit, representing the excess of the purchase price over the fair value of net tangible and intangible assets acquired.

The goodwill was primarily attributable to the assembled workforce of SecureCircle, planned growth in new markets and synergies expected to be achieved from the integration of SecureCircle.

Goodwill was deductible for income tax purposes.

Subsequent to the closing of the acquisition, SecureCircle employees were granted RSUs and PSUs under the 2019 Plan.

The awards which are subject to continued service will be recognized ratably as stock-based compensation expense over the requisite service period.

The awards which are based on specified performance targets will be recognized under the accelerated attribution method.

The following table sets forth the components of identifiable intangible assets acquired and their estimated useful lives as of the date of acquisition (dollars in thousands):

Fair Value Useful Life

Developed technology $ 15,300 72

Customer relationships 3,000 72

Total intangible assets acquired $ 18,300

The Company incurred acquisition expense of $ 1.2 million for the fiscal year ended January 31, 2022.

The acquisition costs are recorded in general and administrative expenses on the Company’s consolidated statement of operations.

CrowdStrike Holdings, Inc.

Notes to Consolidated Financial Statements

The results of operations of SecureCircle have been included in the Company’s consolidated financial statements from the date of acquisition.

The acquisition of SecureCircle did not have a material impact on the Company’s consolidated financial statements, and therefore historical and pro forma disclosures have not been presented.

Humio Limited

On March 5, 2021, the Company acquired 100 % of the equity interest of Humio Limited (“Humio”), a privately-held company that is a leading provider of high-performance cloud log management and observability technology.

The total consideration transferred was $ 370.3 million which consisted of $ 353.8 million in cash, net of $ 12.5 million cash acquired, and $ 4.0 million representing the fair value of replacement equity awards attributable to pre-acquisition service.

The purchase price was allocated, to identified intangible assets, which include developed technology, customer relationships, and trade names, of $ 75.6 million, net tangible assets acquired of $ 3.4 million, and goodwill of $ 291.3 million allocated to the Company’s one reporting unit, representing the excess of the purchase price over the fair value of net tangible and intangible assets acquired.

The goodwill was primarily attributable to the assembled workforce of Humio, planned growth in new markets, and synergies expected to be achieved from the integration of Humio.

Goodwill is not deductible for income tax purposes.

Per the terms of the share purchase agreement with Humio, certain unvested stock options held by Humio employees were canceled and exchanged for replacement stock options under the 2019 Plan.

Additionally, certain shares of stock issued pursuant to share-based compensation awards to entities affiliated with certain Humio employees were exchanged for replacement RSAs of the Company, which are subject to future vesting.

The portion of the fair value of the replacement equity awards associated with pre-acquisition service of Humio’s employees represented a component of the total purchase consideration.

The remaining fair value of these issued awards is subject to the recipients’ continued service and thus were excluded from the purchase price.

In addition, Humio employees were granted RSUs and PSUs under the 2019 Plan.

The awards which are subject to continued service will be recognized ratably as stock-based compensation expense over the requisite service period.

The awards which are based on specified performance targets will be recognized under the accelerated attribution method.

The following table sets forth the preliminary fair value of the identifiable intangible assets acquired and their estimated useful lives as of the date of acquisition (dollars in thousands):

Fair Value Useful Life

Developed technology $ 68,800 96

Customer relationships 5,400 96

Trade names 1,400 24

Total intangible assets acquired $ 75,600

The Company incurred acquisition expense of $ 5.0 million for the fiscal year ended January 31, 2022.

The acquisition costs are recorded in general and administrative expenses on the Company’s consolidated statement of operations.

The results of operations of Humio have been included in the Company’s consolidated financial statements from the date of acquisition.

The acquisition of Humio did not have a material impact on the Company’s consolidated financial statements, and therefore historical and pro forma disclosures have not been presented.

Preempt Security, Inc.

On September 30, 2020, the Company acquired 100 % of the equity interest of Preempt Security, Inc.

2 unchanged sentences

The total consideration transferred was $ 91.2 million which consisted of $ 87.4 million in cash and $ 3.8 million representing the fair value of replacement equity awards attributable to pre-acquisition service.

The purchase price was allocated, on a preliminary basis, to identified intangible assets, which include developed technology, customer relationships and trade names, of $ 16.4 million, net tangible assets acquired of $( 0.5 ) million and goodwill of $ 75.3 million allocated to the Company’s one reporting segment, representing the excess of the purchase price over the fair value of net tangible and intangible assets acquired.

The goodwill was primarily attributable to the assembled workforce of Preempt Security, planned growth in new markets and synergies expected to be achieved from the integration of Preempt Security.

The purchase price was allocated to identified intangible assets, which include developed technology, customer relationships and trade names, of $ 16.4 million, net tangible assets acquired of $( 0.5 ) million and goodwill of $ 75.3 million allocated to the Company’s one reporting segment, representing the excess of the purchase price over the fair value of net tangible and intangible assets acquired.

The goodwill was primarily attributable to the assembled workforce

CrowdStrike Holdings, Inc.

Notes to Consolidated Financial Statements

of Preempt Security, planned growth in new markets and synergies expected to be achieved from the integration of Preempt Security.

Goodwill is not deductible for income tax purposes.

5 unchanged sentences

The awards which are based on specified performance targets will be recognized under the accelerated attribution method.

The Company is still finalizing the allocation of the purchase price, which may be subject to change as additional information becomes available.

The following table sets forth the components of identifiable intangible assets acquired and their estimated useful lives as of the date of acquisition:

The following table sets forth the components of identifiable intangible assets acquired and their estimated useful lives as of the date of acquisition (dollars in thousands):

Fair Value Useful Life

(in thousands) (in months)

Developed technology $ 13,200 60

2 unchanged sentences

Total intangible assets acquired $ 16,385

The Company incurred acquisition expense of $ 2.5 million for the year ended January 31, 2021.

The Company incurred an immaterial amount of acquisition expense for the fiscal year ended January 31, 2022.

The acquisition costs are recorded in general and administrative expenses on the Company’s consolidated statement of operations.

1 unchanged sentence

The acquisition of Preempt Security did not have a material impact on the Company’s consolidated financial statements, and therefore historical and pro forma disclosures have not been presented.

CrowdStrike Holdings, Inc.

Notes to Consolidated Financial Statements

Net Loss Per Share Attributable to Common Stockholders

The following table sets forth the computation of basic and diluted net loss per share attributable to common stockholders:

Basic and diluted net loss per share attributable to CrowdStrike’s common stockholders is computed in conformity with the two-class method required for participating securities.

Basic net loss per share attributable to CrowdStrike common stockholders is computed by dividing the net loss attributable to CrowdStrike by the weighted-average number of shares of common stock outstanding during the period.

Diluted net loss per share is the same as basic net loss per share because the effects of potentially dilutive items were antidilutive given the Company’s net loss position in the periods presented.

The rights of the holders of Class A and Class B common stock are identical, except with the respect to voting and conversion rights.

As such, the undistributed earnings are allocated equally to each share of common stock without class distinction and the resulting basic and diluted net loss per share attributable to CrowdStrike common stockholders are the same for shares of Class A and Class B common stock.

The following table sets forth the computation of basic and diluted net loss per share attributable to CrowdStrike common stockholders (in thousands, except per share data):

Year Ended January 31,

2022 2021 2020

(in thousands, except per share data)

Net loss $ — $ — $ ( 140,077 )

Net loss attributable to common stockholders — — ( 140,077 )

Weighted-average shares used in computing net loss per share attributable to common stockholders, basic and diluted

Net loss per share attributable to common stockholders, basic and diluted $ — $ — $ ( 3.12 )

Class A Common Stock

Net loss attributable to common stockholders $ ( 71,226 ) $ ( 23,369 ) $ —

Weighted-average shares used in computing net loss per share attributable to common stockholders, basic and diluted

167,442 24,405 —

Net loss per share attributable to common stockholders, basic and diluted $ ( 0.43 ) $ ( 0.96 ) $ —

Class B Common Stock

Net loss attributable to common stockholders $ ( 21,403 ) $ ( 118,410 ) $ —

Weighted-average shares used in computing net loss per share attributable to common stockholders, basic and diluted

Net loss attributable to Class A and Class B CrowdStrike common stockholders $ ( 234,802 ) $ ( 92,629 ) $ ( 141,779 )

Weighted-average shares used in computing net loss per share attributable to Class A and Class B of CrowdStrike common stockholders, basic and diluted

227,142 217,756 148,062

Net loss per share attributable to common stockholders, basic and diluted $ ( 0.43 ) $ ( 0.96 ) $ —

Since the Company was in a net loss position for all periods presented, basic net loss per share is the same as diluted net loss per share as the inclusion of all potential common shares outstanding would have been antidilutive.

The potential shares of common stock that were excluded from the computation of diluted net loss per share attributable to common stockholders for the periods presented because including them would have been antidilutive are as follows:

Net loss per share attributable to Class A and Class B CrowdStrike common stockholders, basic and diluted $ ( 1.03 ) $ ( 0.43 ) $ ( 0.96 )

Year Ended January 31,

2022 2021 2020

(in thousands)

Shares of common stock issuable upon conversion of redeemable convertible preferred stock

Shares of common stock issuable upon conversion of redeemable convertible preferred stock warrants

Shares of common stock subject to repurchase from outstanding stock options

4 unchanged sentences

The above table excludes founder holdbacks related to business combinations.

A variable number of shares will be issued upon vesting to settle a fixed monetary amount of $ 5.3 million which are contingent upon continued employment with the Company for two years .

One-half of the founder holdbacks will vest after one year of continued employment, with the remainder vesting monthly during the second year.

The share price will be determined based on the Company’s average stock price 5 days prior to each vesting date.

CrowdStrike Holdings, Inc.

Notes to Consolidated Financial Statements

Subsequent Events

On March 5, 2021, the Company announced that it completed its acquisition of Humio, a leading provider of high-performance cloud log management and observability technology.

The Company paid approximately $ 352.0 million in cash (net of cash acquired) and $ 40.0 million in stock and options, subject to vesting conditions, to acquire Humio.

Due to the proximity of the acquisition date to the Company’s filing of its annual report on Form 10-K for the year ended January 31, 2021, the initial accounting for the acquisition of Humio is incomplete, and therefore the Company is unable to disclose certain information required by ASC 805, Business Combinations at this time, including the provisional amounts recognized as of the acquisition date for each major class of assets acquired, liabilities assumed, and goodwill.

A variable number of shares will be issued upon vesting to settle a fixed monetary amount of $ 18.5 million, which shares are contingent upon continued employment with the Company.

The share price will be determined based on the Company’s average stock price or the volume weighted average stock price 5 days prior to each vesting date.

As of January 31, 2022, 14,667 shares were issued to settle founder holdbacks at a weighted average price of $ 243.72 per share.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data