What changed in this filing

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Item 7. Management’s Discussion and Analysis

2025-03-10 compared with 2024-03-07 · 122 added, 116 removed, 271 unchanged (47% of the section changed)

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When we started CrowdStrike, cyberattackers had an asymmetric advantage over legacy cybersecurity products that could not keep pace with the rapid changes in adversary tactics.

We took a fundamentally different approach to solve this problem with the AI-native CrowdStrike Falcon XDR platform – the first, true cloud-native platform built with AI at the core, capable of harnessing vast amounts of security and enterprise data to deliver highly modular solutions through a single lightweight agent.

We believe our approach has defined a new category called the Security Cloud, which has the power to transform the cybersecurity industry the same way the cloud has transformed the customer relationship management, human resources, and service management industries.

We took a fundamentally different approach to solve this problem with the AI-native CrowdStrike Falcon platform – the first, true cloud-native unified platform built with AI at the core, capable of harnessing vast amounts of security and enterprise data to deliver highly modular solutions through a single lightweight agent.

We believe our approach has defined a new category called the Security Cloud, which has transformed the cybersecurity industry the same way the cloud has transformed the customer relationship management, human resources, and service management industries.

Using cloud-scale AI, our Security Cloud enriches and correlates trillions of cybersecurity events per week with indicators of attack, threat intelligence, and enterprise data (including data from across endpoints, workloads, identities, DevOps, IT assets, and configurations) to create actionable data, identify shifts in adversary tactics, and automatically prevent threats in real-time across our customer base.

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We have expanded our sales focus to include any sized organization without the need to modify our Falcon platform for small and medium sized businesses.

A substantial majority of our customers purchase subscriptions with a term of one year.

A substantial majority of our customers purchase subscriptions with a term over one year.

Our subscriptions are generally priced on a per-endpoint and per-module basis.

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Maintain Customer Retention and Increase Sales.

Our ability to increase revenue depends in large part on our ability to retain our existing customers and increase the ARR of their subscriptions.

Our ability to increase revenue depends in large part on our ability to retain our existing customers and increase the size of their subscriptions.

We focus on increasing sales to our existing customers by expanding their deployments to more endpoints and selling additional cloud modules for increased functionality.

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Furthermore, we expect our general and administrative expenses to increase in dollar amount for the foreseeable future given the additional expenses for accounting, compliance, and investor relations as we grow as a public company.

July 19 Incident .

On July 19, 2024, we released a content configuration update for our Falcon sensor that resulted in system crashes for certain Windows systems (the “July 19 Incident”).

As a result of the July 19 Incident, we are subject to lawsuits, claims and inquiries as described in Note 10, Commitments and Contingencies, in Part II, Item 8 of this Annual Report on Form 10-K .

We have incurred, and expect to continue to incur, significant legal and professional services and other general and administrative expenses associated with the July 19 Incident in future periods.

It is not reasonably possible to quantify the precise impact of the July 19 Incident, but the incident has adversely affected our results of operations, and we currently expect a number of factors relating to the incident to adversely affect our key metrics and results of operations in future periods.

While we have maintained high dollar-based gross retention rates following the incident, we have experienced delays in creating sales opportunities and longer sales cycles, including delays in customer purchasing decisions.

We expect sales cycles to continue to be elongated in future periods.

In addition, because our customers typically sign contracts with terms of twelve months or longer, customer churn and any corresponding impact to our key metrics and revenue may occur in future periods.

Customer commitment packages introduced following the July 19 Incident have included discounting, additional modules, professional services, flexible payment terms or subscription period extensions.

Our customer commitment packages have resulted, and are expected to continue to result, in increased contraction, due to elongated subscription terms, and decreased upsell dollar values.

We monitor the following key metrics to help us evaluate our business, identify trends affecting our business, formulate business plans, and make strategic decisions.

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We do not consider our channel partners as customers, and we treat managed service security providers, who may purchase our products on behalf of multiple companies, as a single customer.

Our dollar-based net retention rate can fluctuate from period to period due to large customer contracts in a given period, which may reduce our dollar-based net retention rate in subsequent periods if the customer makes a larger upfront purchase and does not continue to increase the size of their purchases.

Our dollar-based net retention rate can fluctuate from period to period due to large customer contracts in a given period and incentives provided, which may reduce our dollar-based net retention rate in subsequent periods.

In addition, if our customers are not able to fully utilize their product subscriptions (including in connection with our flexible subscription offering), we may experience increased contraction as such customers may elect to renew with shorter subscription periods, fewer cloud modules, fewer endpoints or smaller contract values, which may reduce our dollar-based net retention rate.

As of January 31,

Dollar-based net retention rate 112 % 119 %

Components of Our Results of Operations

Subscription Revenue.

Subscription revenue primarily consists of subscription fees for our Falcon platform and additional cloud modules that are supported by our cloud-based platform.

Subscription revenue is driven primarily by the number of subscription customers, the number of endpoints per customer, and the number of cloud modules included in the subscription.

We recognize subscription revenue ratably over the term of the agreement, which is generally one to three years.

We generally invoice our subscription customers at the beginning of the subscription term, or in some instances, such as in multi-year arrangements, in installments.

Consequently, a substantial portion of the revenue that we report in each period is attributable to the recognition of deferred revenue relating to subscriptions that we entered into during previous periods.

Professional Services Revenue.

Professional services revenue includes incident response and proactive services, forensic and malware analysis, attribution analysis, operationalizing the Falcon Platform, residency program, and active defense services.

Professional services are generally sold separately from subscriptions to our Falcon platform, although customers frequently enter into a separate arrangement to purchase subscriptions to our Falcon platform at the conclusion of a professional services arrangement.

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

For time and materials and retainer-based arrangements, revenue is recognized as services are performed.

Fixed fee contracts account for an immaterial portion of our revenue.

Cost of Revenue

Subscription Cost of Revenue.

Subscription cost of revenue consists primarily of costs related to hosting our cloud-based Falcon platform in data centers, amortization of our capitalized internal-use software, employee-related costs such as salaries and bonuses, stock-based compensation expense, benefits costs associated with our operations and support personnel, software license fees, property and equipment depreciation, amortization of acquired intangibles, and an allocated portion of facilities and administrative costs.

As new customers subscribe to our platform and existing subscription customers increase the number of endpoints on our Falcon platform, our cost of revenue will increase due to greater cloud hosting costs related to powering new cloud modules and the incremental costs for storing additional data collected for such cloud modules and employee-related costs.

We intend to continue to invest additional resources in our cloud platform and our customer support organizations as we grow our business.

The level and timing of investment in these areas could affect our cost of revenue in the future.

Professional Services Cost of Revenue.

Professional services cost of revenue consists primarily of employee-related costs, such as salaries and bonuses, stock-based compensation expense, consulting expense, and an allocated portion of facilities and administrative costs.

Gross Profit and Gross Margin

Gross profit and gross margin have been and will continue to be affected by various factors, including the timing of our acquisition of new subscription customers, renewals from existing subscription customers, sales of additional modules to existing subscription customers, the data center and bandwidth costs associated with operating our cloud platform, the extent to which we expand our customer support and cloud operations organizations, and the extent to which we can increase the efficiency of our technology, infrastructure, and data centers through technological improvements.

We expect our gross profit to increase in dollar amount and our gross margin to increase modestly over the long term as we grow our business, although our gross margin could fluctuate from period to period depending on the interplay of these factors.

Demand for our incident response services is driven by the number of breaches experienced by non-customers.

Also, we view our professional services solutions in the context of our larger business and as a significant lead generator for new subscriptions.

Because of these factors, our services revenue and gross margin may fluctuate over time.

Operating Expenses

Our operating expenses consist of sales and marketing, research and development, and general administrative expenses.

For each of these categories of expense, employee-related expenses are the most significant component, which include salaries, employee bonuses, sales commissions, and employer payroll tax.

Operating expenses also include an allocated portion of overhead costs for facilities and other administrative functions.

Sales and Marketing.

Sales and marketing expenses primarily consist of employee-related expenses such as salaries, commissions, and bonuses.

Sales and marketing expenses also include stock-based compensation;

expenses related to our marketing programs;

and an allocated portion of facilities and administrative expenses.

Sales and marketing expenses also include the amortization of deferred contract acquisition costs, which includes commissions and any other incremental payments made upon the initial acquisition of a subscription or upsells to existing customers, which are capitalized and amortized over the estimated customer life.

We also capitalize and amortize any such expenses paid for the renewal of a subscription over the term of the renewal.

We expect sales and marketing expenses to increase in dollar amount as we continue to make significant investments in our sales and marketing organization to drive additional revenue, further penetrate the market, and expand our global customer base.

However, we anticipate sales and marketing expenses to decrease as a percentage of our total revenue over time as we grow our business, although our sales and marketing expenses may fluctuate as a percentage of our total revenue from period to period depending on the timing of these expenses.

Research and Development.

Research and development expenses primarily consist of employee-related expenses such as salaries and bonuses;

stock-based compensation;

cloud hosting and related costs;

and an allocated portion of facilities and administrative expenses.

Our cloud platform is software-driven, and our research and development teams employ software engineers in the design, and the related development, testing, certification, and support of these solutions.

We expect research and development expenses to increase in dollar amount as we continue to increase investments in our technology architecture and software platform.

However, we anticipate research and development expenses to decrease as a percentage of our total revenue over time as we grow our business, although our research and development expenses may fluctuate as a percentage of our total revenue from period to period depending on the timing of these expenses.

General and Administrative.

General and administrative expenses consist of employee-related expenses such as salaries and bonuses;

stock-based compensation;

and related expenses for our executive, finance, human resources, and legal organizations.

In addition, general and administrative expenses include outside legal, accounting, and other professional fees;

and an allocated portion of facilities and administrative expenses.

We expect general and administrative expenses to increase in dollar amount over time.

We expect to incur significant legal and professional services and other expenses associated with the July 19 Incident in future periods.

General and administrative expenses may fluctuate as a percentage of our total revenue from period to period depending on the timing of these expenses.

Interest Expense.

Interest expense consists primarily of amortization of debt issuance costs, contractual interest expense for our Senior Notes issued in January 2021, and amortization of debt issuance costs on our secured revolving credit facility (“Revolving Facility”).

Interest Income.

Interest income consists primarily of income earned on our cash, cash equivalents, and short-term investments.

Other Income, Net.

Other income, net consists primarily of gains and losses on strategic investments and foreign currency transaction gains and losses.

Provision for Income Taxes.

Provision for income taxes consists of state income taxes in the United States, foreign income taxes, and withholding taxes related to customer payments in certain foreign jurisdictions in which we conduct business.

We maintain a full valuation allowance on our U.S.

federal and state and certain foreign deferred tax assets, including net operating loss carryforwards and tax credits, which we have determined are not realizable on a more-likely-than-not basis.

We regularly evaluate the need for a valuation allowance.

Net Income Attributable to Non-controlling Interest .

Net income attributable to non-controlling interest consists of the Falcon Funds’ non-controlling interest share of gains and losses and interest income from our strategic investments.

Results of Operations

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Total revenue increased by $898.1 million, or 29%, in fiscal 2025, compared to fiscal 2024.

Subscription revenue accounted for 94% of our total revenue in both fiscal 2024 and fiscal 2023.

Professional services revenue accounted for 6% of our total revenue in both fiscal 2024 and fiscal 2023.

Subscription revenue accounted for 95% and 94% of our total revenue in fiscal 2025 and fiscal 2024, respectively.

Professional services revenue accounted for 5% and 6% of our total revenue in fiscal 2025 and fiscal 2024, respectively.

Subscription revenue increased by $890.9 million, or 31% in fiscal 2025, compared to fiscal 2024, which was primarily driven by a combination of the addition of new customers and the sale of additional sensors and modules to existing customers.

Professional services revenue increased by $55.4 million, or 43%, in fiscal 2024 , compared to fiscal 2023, which was primarily attributable to an increase in the number of professional service hours performed.

Professional services revenue increased by $7.1 million, or 4%, in fiscal 2025 , compared to fiscal 2024, which was primarily attributable to an increase in the number of professional service hours.

Cost of Revenue, Gross Profit, and Gross Margin

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Subscription cost of revenue increased by $204.8 million, or 32%, in fiscal 2025 , compared to fiscal 2024.

The increase in subscription cost of revenue was primarily due to an increase in employee-related expenses of $52.1 million driven by a 34% increase in average headcount, an increase in depreciation of data center equipment of $20.3 million, an increase in amortization of internal-use software of $15.8 million, an increase in allocated overhead costs of $12.6 million, an increase in stock-based compensation expense of $11.8 million, an increase in term-based software licenses of $5.2 million, and an increase in employee health benefits of $2.8 million.

The increase in subscription cost of revenue was primarily due to an increase in employee-related expenses of $55.6 million driven by a 28% increase in average headcount, an increase in depreciation of data center equipment of $38.4 million, an increase in stock-based compensation expense of $29.7 million, an increase in cloud hosting and related services costs of $28.5 million, an increase in allocated overhead costs of $20.3 million, an increase in amortization of internal-use software of $17.6 million, an increase in hardware maintenance costs of $5.4 million, and an increase in employee benefits of $4.2 million.

Professional services cost of revenue increased by $31.0 million, or 25%, in fiscal 2025 , compared to fiscal 2024.

The increase in professional services cost of revenue was primarily due to an increase in employee-related expenses of $17.2 million driven by an increase in average headcount of 27%, an increase in consulting expense of $8.8 million, an increase in stock-based compensation expense of $6.6 million, and an increase in allocated overhead costs of $3.1 million.

The increase in professional services cost of revenue was primarily due to an increase in employee-related expenses of $13.1 million driven by an 20% increase in average headcount, an increase in stock-based compensation expense of $8.8 million, an increase in allocated overhead costs of $5.0 million, an increase in consulting expense of $2.2 million, and an increase in employee benefits of $1.0 million.

The following shows gross profit and gross margin for subscriptions and professional services for fiscal 2025, as compared to fiscal 2024 (in thousands, except percentages):

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Total gross margin 75 % 75 % — %

Subscription gross margin increased by 2% in fiscal 2024 , compared to fiscal 2023.

The increase in subscription gross margin was primarily due to an increase in cloud hosting efficiency during fiscal 2024 compared to fiscal 2023.

Professional services gross margin increased by 1% in fiscal 2024, compared to fiscal 2023 .

The increase in professional services gross margin was primarily due to increased utilization during fiscal 2024 compared to fiscal 2023.

Subscription gross margin was flat in fiscal 2025 , compared to fiscal 2024.

Professional services gross margin decreased by 13% in fiscal 2025, compared to fiscal 2024 .

The decrease in professional services gross margin was primarily due to an increase in consulting expense and decreased utilization during fiscal 2025 compared to fiscal 2024.

Operating Expenses

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Sales and marketing expenses increased by $382.8 million, or 34%, in fiscal 2025 , compared to fiscal 2024.

The increase in sales and marketing expenses was primarily due to an increase in employee-related expenses of $119.9 million driven by an increase in sales and marketing average headcount of 20%, an increase in marketing programs of $45.3 million, an increase in stock-based compensation of $23.9 million, an increase in allocated overhead costs of $16.3 million, an increase in travel expenses of $6.7 million, an increase in company events expenses of $6.0 million, an increase in employee health benefits of $5.4 million, an increase in term-based software licenses of $2.6 million, an increase in taxes and licenses of $2.0 million, and an increase in marketing consulting expenses of $1.1 million.

The increase in sales and marketing expenses was primarily due to an increase in employee-related expenses of $159.0 million driven by a 14% increase in average headcount, an increase in stock-based compensation expense of $59.7 million, an increase in marketing programs of $55.5 million, an increase in allocated overhead costs of $28.4 million, $21.4 million of expenses relating to the July 19 Incident, an increase in travel expenses of $13.1 million, an increase in company events expenses of $8.6 million, an increase in employee benefits of $6.3 million, an increase in term-based software licenses of $5.4 million, an increase in cloud hosting and related costs of $4.2 million, an increase in other labor expenses of $2.8 million, and an increase in consulting expense of $2.5 million.

Research and Development

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Research and development expenses increased by $308.4 million, or 40% in fiscal 2025 , compared to fiscal 2024.

This increase was primarily due to an increase in employee-related expenses of $101.8 million driven by an increase in research and development average headcount of 24%, an increase in stock-based compensation of $31.2 million, an increase in cloud hosting and related costs of $26.0 million, an increase in allocated overhead costs of $19.0 million, an increase in depreciation of data center equipment of $8.1 million, an increase in employee health benefits of $4.6 million, an increase in consulting expense of $2.2 million, and an increase in term-based software licenses of $1.5 million, partially offset by an increase in software capitalization of $18.5 million, a decrease in company events expenses of $11.0 million, and a decrease in travel expenses of $3.2 million.

This increase was primarily due to an increase in stock-based compensation expense of $131.7 million, an increase in employee-related expenses of $119.3 million driven by a 18% increase in average headcount, an increase in cloud hosting and related costs of $64.2 million, $6.8 million of expenses relating to the July 19 Incident, an increase in term-based software licenses of $6.4 million, an increase in employee benefits of $5.1 million, an increase in travel expenses of $3.2 million, and an increase in consulting expense of $1.7 million, partially offset by a decrease in allocated engineering and overhead costs of $27.5 million, an increase in software capitalization of $11.4 million, and a decrease in other labor expenses of $9.7 million.

General and Administrative

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General and administrative expenses increased by $89.6 million, or 23%, in fiscal 2025, compared to fiscal 2024.

The increase in general and administrative expenses was primarily due to an increase in stock-based compensation expense of $31.5 million, an increase in legal expense of $15.1 million, an increase in employee-related expenses of $15.0 million driven by an increase in general and administrative average headcount of 23%, an increase in allocated overhead costs of $3.7 million, an increase in labor and other expenses of $3.6 million, an increase in travel expenses of $2.3 million, an increase in taxes and licenses of $1.9 million, and an increase in consulting expense of $1.6 million.

The increase in general and administrative expenses was primarily due to $31.9 million of expenses relating to the July 19 Incident, an increase in employee-related expenses of $27.2 million driven by a 19% increase in average headcount, an increase in allocated overhead costs of $6.3 million, an increase in consulting expense of $5.0 million, an increase in leased airfare costs of $4.5 million, an increase in stock-based compensation expense of $4.0 million, an increase in travel expenses of $2.3 million, an increase in company events expenses of $2.1 million, an increase in term-based software licenses of $2.1 million, an increase in taxes and licenses expenses of $2.0 million, an increase in employee related programs of $1.8 million, and an increase in other labor expenses of $1.7 million, partially offset by a decrease in legal expense of $7.5 million unrelated to the July 19 Incident.

Interest Expense, Interest Income and Other Income, Net

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Other income, net $ 5,101 $ 1,638 $ 3,463 211 %

Interest expense consists primarily of amortization of debt issuance costs, contractual interest expense, accretion of debt discount for our Senior Notes issued in January 2021, and amortization of debt issuance costs on our secured revolving credit facility.

The increase in interest income during fiscal 2024 compared to fiscal 2023 was driven by increases in market interest rates and an increase in our cash and cash equivalents.

The decrease in other income, net during fiscal 2024 compared to fiscal 2023 was primarily due to a decrease in mark to market adjustments of $3.3 million on our strategic investments and an increase in net foreign currency transaction losses of $2.3 million, partially offset by an increase in gains on sales of our strategic investments of $3.9 million.

The increase in interest income during fiscal 2025 compared to fiscal 2024 was driven by an increase in our cash and cash equivalents.

The increase in other income, net during fiscal 2025 compared to fiscal 2024 was primarily due to an increase in gains on our strategic investments of $2.4 million, a decrease in downward mark to market adjustments of $0.5 million on our strategic investments, and gains on deferred compensation assets of $0.4 million.

Provision for Income Taxes

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Provision for income taxes $ 71,130 $ 32,232 $ 38,898 121 %

The increase in provision for income taxes during fiscal 2024 compared to fiscal 2023 was primarily attributable to an increase in withholding taxes related to customer payments in certain foreign jurisdictions in which the Company conducts business.

Components of Our Results of Operations

Subscription Revenue.

Subscription revenue primarily consists of subscription fees for our Falcon platform and additional cloud modules that are supported by our cloud-based platform.

Subscription revenue is driven primarily by the number of subscription customers, the number of endpoints per customer, and the number of cloud modules included in the subscription.

We recognize subscription revenue ratably over the term of the agreement, which is generally one to three years.

Because the majority of our subscription customers are billed upfront, we have recorded significant deferred revenue.

The majority of our customers are invoiced annually in advance or multi-year in advance.

Professional Services Revenue.

Professional services revenue includes incident response and proactive services, forensic and malware analysis, and attribution analysis.

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

For time and materials and retainer-based arrangements, revenue is recognized as services are performed.

Fixed fee contracts account for an immaterial portion of our revenue.

Cost of Revenue

Subscription Cost of Revenue.

We intend to continue to invest additional resources in our cloud platform and our customer support organizations as we grow our business.

The level and timing of investment in these areas could affect our cost of revenue in the future.

Professional Services Cost of Revenue.

Professional services cost of revenue consists primarily of employee-related costs, such as salaries and bonuses, stock-based compensation expense, technology, property and equipment depreciation, and an allocated portion of facilities and administrative costs.

Gross Profit and Gross Margin

We expect our gross profit to increase in dollar amount and our gross margin to increase modestly over the long term, although our gross margin could fluctuate from period to period depending on the interplay of these factors.

Demand for our incident response services is driven by the number of breaches experienced by non-customers.

Also, we view our professional services solutions in the context of our larger business and as a significant lead generator for new subscriptions.

Because of these factors, our services revenue and gross margin may fluctuate over time.

Operating Expenses

Our operating expenses consist of sales and marketing, research and development, and general administrative expenses.

For each of these categories of expense, employee-related expenses are the most significant component, which include salaries, employee bonuses, sales commissions, and employer payroll tax.

Operating expenses also include an allocated portion of overhead costs for facilities and IT.

Sales and Marketing.

Sales and marketing expenses primarily consist of employee-related expenses such as salaries, commissions, and bonuses.

Sales and marketing expenses also include stock-based compensation;

expenses related to our Fal.Con customer conference and other marketing events;

an allocated portion of facilities and administrative expenses;

amortization of acquired intangibles;

and cloud hosting and related services costs related to proof of value efforts.

Sales and marketing expenses also include sales commissions and any other incremental payments made upon the initial acquisition of a subscription or upsells to existing customers, which are capitalized and amortized over the estimated customer life.

We also capitalize and amortize any such expenses paid for the renewal of a subscription over the term of the renewal.

However, we anticipate sales and marketing expenses to decrease as a percentage of our total revenue over time, although our sales and marketing expenses may fluctuate as a percentage of our total revenue from period-to-period depending on the timing of these expenses.

Research and Development.

Research and development expenses primarily consist of employee-related expenses such as salaries and bonuses;

stock-based compensation;

cloud hosting and related costs;

and an allocated portion of facilities and administrative expenses.

We expect research and development expenses to increase in dollar amount as we continue to increase investments in our technology architecture and software platform.

However, we anticipate research and development expenses to decrease as a percentage of our total revenue over time, although our research and development expenses may fluctuate as a percentage of our total revenue from period to period depending on the timing of these expenses.

General and Administrative.

General and administrative expenses consist of employee-related expenses such as salaries and bonuses;

stock-based compensation;

and related expenses for our executive, finance, human resources, and legal organizations.

In addition, general and administrative expenses include outside legal, accounting, and other professional fees;

and an allocated portion of facilities and administrative expenses.

We expect general and administrative expenses to increase in dollar amount over time.

However, we anticipate general and administrative expenses to decrease as a percentage of our total revenue over time, although our general and administrative expenses may fluctuate as a percentage of our total revenue from period to period depending on the timing of these expenses.

Interest Expense.

Interest Income.

Interest income consists primarily of income earned on our cash, cash equivalents, and short-term investments.

Other Income, Net.

Other income, net consists primarily of gain and losses on strategic investments, foreign currency transaction gains and losses, and gains and losses on cash and cash equivalents and short-term investments.

Provision for Income Taxes.

We maintain a full valuation allowance on our U.S.

federal and state and certain foreign deferred tax assets, including net operating loss carryforwards and tax credits, which we have determined are not realizable on a more-likely-than-not basis.

We regularly evaluate the need for a valuation allowance.

Due to recent profitability, a material reversal of our valuation allowance in U.S.

jurisdictions in the foreseeable future is reasonably possible.

Net Income Attributable to Non-controlling Interest .

Net income attributable to non-controlling interest consists of the Falcon Funds’ non-controlling interest share of gains and losses and interest income from our strategic investments.

The increase in provision for income taxes during fiscal 2025 compared to fiscal 2024 was primarily attributable to intercompany sales of intellectual property from acquired entities, pre-tax foreign earnings, withholding taxes related to customer payments in certain foreign jurisdictions, and change in the realizability of deferred tax assets in certain foreign jurisdictions.

Liquidity and Capital Resources

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(i) $4.3 billion in cash and cash equivalents, which mainly consists of cash on hand and highly liquid investments in money market funds and U.S.

Treasury bills, (ii) $99.6 million in short-term investments, which consists of U.S.

Treasury bills, (iii) cash we expect to generate from operations, and (iv) available capacity under our $750.0 million senior secured revolving credit facility (the “A&R Credit Agreement”).

We expect that the combination of our existing cash and cash equivalents, short-term investments, cash flows from operations, and the A&R Credit Agreement will be sufficient to meet our anticipated cash needs for working capital and capital expenditures for at least the next 12 months.

Treasury bills, (ii) cash we expect to generate from operations, and (iii) available capacity under our $750.0 million Revolving Facility.

It is not currently possible to reasonably estimate the amount of loss or range of possible loss that might result from adverse judgments, settlements, penalties, or other resolution of proceedings resulting from the July 19 Incident.

However, despite such uncertainties, we expect that the combination of our existing cash and cash equivalents, cash flows from operations, and the Revolving Facility will be sufficient to meet our anticipated cash needs for working capital and capital expenditures for at least the next 12 months.

Our Revolving Facility matures on January 2, 2026.

Our short-term and long-term liquidity requirements primarily arise from:

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Our ability to fund these requirements will depend, in part, on our future cash flows, which are determined by our future operating performance and, therefore, subject to prevailing global macroeconomic conditions and financial, business, and other factors, some of which are beyond our control.

We have historically generated operating losses prior to fiscal 2024, as reflected in our accumulated deficit of $1.1 billion as of January 31, 2024.

We have historically generated operating losses prior to fiscal 2024 and during fiscal 2025, as reflected in our accumulated deficit of $1.1 billion as of January 31, 2025.

We expect to continue to make investments, particularly in sales and marketing and research and development.

As a result, we may require additional capital resources in the future to execute strategic initiatives to grow our business.

We typically invoice our subscription customers annually in advance.

We generally invoice our subscription customers at the beginning of the subscription term, or in some instances, such as in multi-year arrangements, in installments.

Therefore, a substantial source of our cash is from such prepayments, which are included on our consolidated balance sheets as deferred revenue.

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Operating Activities

Net cash provided by operating activities during fiscal 2025 was $1.4 billion, which resulted from net loss of $16.6 million, adjusted for non-cash charges of $1.4 billion and net cash outflow of $6.0 million from changes in operating assets and liabilities.

Non-cash charges primarily consisted of $865.4 million in stock-based compensation expense, $318.8 million of amortization of deferred contract acquisition costs, $188.0 million of depreciation and amortization, $26.0 million of amortization of intangibles assets, $15.3 million of non-cash operating lease costs, $3.8 million of non-cash interest expense, and $2.3 million of accretion of short-term investments purchased at a discount, partially offset by $9.9 million of deferred income taxes and $6.3 million of realized gains on strategic investments.

The net cash outflow from changes in operating assets and liabilities was primarily due to a $584.5 million increase in deferred contract acquisition costs, a $274.2 million increase in accounts receivable, net, a $190.2 million increase in prepaid expenses and other assets, and a $15.7 million decrease in operating lease liabilities, partially offset by a $669.3 million increase in deferred revenue, a $218.5 million increase in accrued expenses and other liabilities, an $85.9 million increase in accrued payroll and benefits, and an $84.9 million increase in accounts payable.

Net cash provided by operating activities during fiscal 2024 was $1.2 billion, which resulted from net income of $90.6 million, adjusted for non-cash charges of $1.0 billion and net cash inflow of $51.5 million from changes in operating assets and liabilities.

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The net cash inflow from changes in operating assets and liabilities was primarily due to a $696.6 million increase in deferred revenue, a $65.1 million increase in accrued payroll and benefits, a $14.6 million increase in accrued expenses and other liabilities, partially offset by a $371.6 million increase in deferred contract acquisition costs, a $217.7 million increase in accounts receivable, net, a $102.5 million increase in prepaid expenses and other assets, a $18.9 million decrease in accounts payable, and a $14.0 million decrease in operating lease liabilities.

Net cash provided by operating activities during fiscal 2023 was $941.0 million, which resulted from a net loss of $182.3 million, adjusted for non-cash charges of $802.9 million and net cash inflow of $320.4 million from changes in operating assets and liabilities.

Non-cash charges primarily consisted of $526.5 million in stock-based compensation expense, $170.8 million of amortization of deferred contract acquisition costs, $77.2 million of depreciation and amortization, $16.6 million of amortization for intangibles assets, $9.4 million of non-cash operating lease costs, and $2.8 million of non-cash interest expense, partially offset by a $1.8 million change in the fair value of strategic investments.

The net cash inflow from changes in operating assets and liabilities was primarily due to a $825.8 million increase in deferred revenue, a $58.9 million increase in accrued expenses and other liabilities, and a $65.2 million increase in accrued payroll and benefits, partially offset by a $298.7 million increase in deferred contract acquisition costs, a $258.1 million increase in accounts receivable, net, a $46.8 million increase in prepaid expenses and other assets, a $15.5 million decrease in accounts payable, and a $10.4 million decrease in operating lease liabilities.

Investing Activities

Net cash used in investing activities during fiscal 2025 of $536.6 million was primarily due to business acquisitions, net of cash acquired, of $310.3 million, which was related to the Flow Security and Adaptive Shield acquisitions, purchases of property and equipment of $254.9 million, capitalized internal-use software and website development costs of $59.0 million, purchases of strategic investments of $19.7 million, and purchases of deferred compensation investments of $2.7 million, partially offset by proceeds from maturities of short-term investments of $97.3 million and proceeds from sales of strategic investments of $12.5 million.

Net cash used in investing activities during fiscal 2024 of $340.7 million was primarily due to business acquisitions, net of cash acquired, of $239.0 million, which was related to the Bionic acquisition, purchases of short-term investments of $195.6 million, purchases of property and equipment of $176.5 million, capitalized internal-use software and website development costs of $49.5 million, purchases of strategic investments of $17.2 million, purchases of intangible assets of $11.1 million, and purchases of deferred compensation investments of $2.0 million, partially offset by proceeds from maturities and sales of short-term investments of $348.3 million, and proceeds from sales of strategic investments of $2.0 million.

Net cash used in investing activities during fiscal 2023 of $556.7 million was primarily due to purchases of investments of $250.0 million, purchases of property and equipment of $235.0 million, capitalized internal-use software and website development costs of $29.1 million, purchases of strategic investments of $21.8 million, business acquisitions, net of cash acquired, of $18.3 million, which were primarily related to the Reposify acquisition, and purchases of intangible assets of $2.3 million

Financing Activities

Net cash provided by financing activities of $107.2 million during fiscal 2025 was primarily due to proceeds from our employee stock purchase plan of $99.6 million, capital contributions from non-controlling interest holders of $8.5 million, and proceeds from the exercise of stock options of $4.0 million, partially offset by distributions to non-controlling interest holders of $4.9 million.

Net cash provided by financing activities of $93.2 million during fiscal 2024 was primarily due to proceeds from our employee stock purchase plan of $76.4 million, proceeds from the exercise of stock options of $8.7 million, and capital contributions from non-controlling interests of $8.1 million.

Net cash provided by financing activities of $77.4 million during fiscal 2023 was primarily due to proceeds from our employee stock purchase plan of $59.4 million, $11.0 million of capital contributions from non-controlling interests, and proceeds from the exercise of stock options of $8.7 million, partially offset by the repayment of a loan acquired through Reposify of $1.6 million.

Supplemental Guarantor Financial Information

Our Senior Notes are guaranteed on a senior, unsecured basis by CrowdStrike, Inc., a wholly owned subsidiary of CrowdStrike Holdings, Inc.

(the “subsidiary guarantor,” and together with CrowdStrike Holdings, Inc., the “Obligor Group”).

Our Senior Notes are guaranteed on a senior, unsecured basis by CrowdStrike, Inc.

and CrowdStrike Financial Services, Inc., wholly owned subsidiaries of CrowdStrike Holdings, Inc.

(the “subsidiary guarantors,” and together with CrowdStrike Holdings, Inc., the “Obligor Group”).

The guarantee is full and unconditional and is subject to certain conditions for release.

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Summarized financial information is presented below for the Obligor Group on a combined basis after elimination of intercompany transactions and balances within the Obligor Group and equity in the earnings from and investments in any non-guarantor subsidiary.

The revenue amounts presented in the summarized financial information include all of our consolidated revenue, and there is no intercompany revenue from the non-guarantor subsidiaries.

The revenue amounts presented in the summarized financial information include substantially all of our consolidated revenue, and there is no intercompany revenue from the non-guarantor subsidiaries.

This summarized financial information has been prepared and presented pursuant to Regulation S-X Rule 13-01, “Financial Disclosures about Guarantors and Issuers of Guaranteed Securities” and is not intended to present the financial position or results of operations of the Obligor Group in accordance with U.S.

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Loss from operations (137,641)

Net income 35,530

Net income attributable to CrowdStrike 35,530

Net loss (36,365)

Net loss attributable to CrowdStrike (36,365)

Balance Sheet January 31, 2025

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Noncurrent intercompany receivables from non-Guarantors 613,732

Current liabilities 2,605,892

Current liabilities (excluding current intercompany payables to non-Guarantors) 3,331,647

Current intercompany payables to non-Guarantors 31,092

Noncurrent liabilities (excluding noncurrent intercompany payables to non-Guarantors) 1,897,235

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In addition, we have debt obligations related to $750.0 million aggregate principal amount of the Senior Notes due in fiscal 2030 and the interest payments associated with the Senior Notes of $22.5 million due in the next 12 months and $78.8 million due thereafter.

We have non-cancellable purchase commitments with various parties to purchase products and services entered in the normal course of business totaling $747.6 million as of January 31, 2024, with remaining terms in excess of 12 months.

We have non-cancellable purchase commitments with various parties to purchase products and services entered in the normal course of business totaling $2.7 billion as of January 31, 2025, with remaining terms in excess of 12 months.

We expect to fund these obligations with cash flows from operations and cash on our balance sheet.

Subsequent to January 31, 2024, we have committed to an additional $1.8 billion of non-cancellable purchase obligations from fiscal 2025 to fiscal 2031.

On March 3, 2024, we entered into a definitive agreement to acquire Flow Security Ltd., a privately held company.

The purchase price for the transaction will be approximately $115.0 million, subject to customary closing adjustments.

The acquisition is expected to close in the first quarter of fiscal 2025.

As of January 31, 2025, our unrecognized tax benefits included $53.1 million, which were classified as long-term liabilities due to the inherent uncertainty with respect to the timing of future cash outflows associated with our unrecognized tax benefits.

As of January 31, 2025, we had non-cancellable unfunded commitments from our financing arrangements totaling approximately $94.2 million.

Critical Accounting Policies and Estimates

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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 7. Management’s Discussion and Analysis