CrowdStrike Holdings, Inc. Q3 FY2025 earnings call

• Trust: Customers, partners, and the market exhibit trust in CrowdStrike, with ending ARR growth and stable gross retention rates.
• Platform Adoption: The Falcon Flex subscription model is driving rapid Falcon platform adoption. Over 150 Falcon Flex transactions closed in Q3, totaling more than $600 million in deal value. Accounts with Falcon Flex now represent over $1.3 billion in deal value.
• Innovation: Significant advancements in Cloud Security, Identity Protection, Next-Gen SIEM, and AI. The acquisition of Adaptive Shield enhances SaaS security posture management. Falcon Next-Gen SIEM is experiencing hyper-growth, with net new ARR growth accelerating to over 150% year-over-year at multi-hundred million dollar scale.
• Partner Contributions: Nearly 70% of new subscription business was sourced through partners, with GSI, hyperscaler, and MSSP partners contributing to growth.

In Fiscal Third Quarter 2025, CrowdStrike's ending ARR surpassed $4 billion, growing 27% year-over-year to reach $4.02 billion. Q3 revenue exceeded $1 billion, with subscription revenue growing 31% year-over-year to $962.7 million. Free cash flow was $230.6 million, or 23% of revenue. Ending ARR included $153 million in net new additions for the quarter. The July 19th incident impacted net new ARR, but gross retention rate remained resilient at over 97%.

For the fourth quarter of FY 2025, total revenue is expected to range from $1,028.7 million to $1,035.4 million, reflecting a 22% year-over-year growth. Non-GAAP income from operations is projected to be between $184.0 million and $189.0 million, and non-GAAP net income attributable to CrowdStrike is expected to be between $210.9 million and $215.8 million. For full fiscal year 2025, total revenue is anticipated to be between $3,923.8 million and $3,930.5 million, with non-GAAP income from operations between $804.4 million and $809.4 million, and non-GAAP net income between $937.5 million and $942.6 million.

• Impact of the July 19th incident: Caused extended sales cycles, muted upsell rates, and potential contraction. The incident also led to delays in outbound pipeline generation and increased scrutiny from customers.
• Limited Visibility: Uncertainty remains due to the ongoing effects of the July 19th incident, continued deployment of customer commitment packages, and unclear customer behavior in Q4.
• Macro and Regulatory Factors: Uncertainty around federal policies and macroeconomic conditions may affect security spending, introducing risks to revenue and growth projections.

Q: What are customers telling you about security spending next year?

A: George Kurtz notes the security environment is worsening, customers desire the best products, consolidation, and cost reduction, and they will invest in the best technologies.

Q: Comment on ARR/net new ARR seasonality in Q4?

A: Burt Podbere states there is limited visibility in Q4 due to continued CCP packages, extended sales cycles, additional customer scrutiny, and uncertain trends in customer choices.

Q: Thoughts on agentic AI and CrowdStrike?

A: George Kurtz explains Charlotte AI is agentic AI, built to perform work on behalf of customers, enabling efficiency such as reducing sitrep creation from 4 days to 1 hour.

Q: Factors changing in Q4 and why Q4 might not be better than Q3?

A: Burt Podbere mentions delayed outbound pipeline, extended sales cycles, additional customer scrutiny, and uncertain CCP trends as factors impacting Q4, limiting its potential to be better than Q3.

Q: Falcon Flex and customer retention?

A: George Kurtz states Falcon Flex makes the platform stickier as customers use more modules, increasing retention. Burt Podbere adds confidence in reacceleration of growth in the back half of next year due to Falcon Flex's impact.