CrowdStrike Holdings, Inc. Q4 FY2025 earnings call

Management Statement and Operational Highlights

• Q4 net new ARR was $224 million, FY 2025 ending ARR was $4.24 billion. FY 2025 ending ARR for cloud security, identity protection, and next-gen SIEM was over $1.3 billion, growing nearly 50% year over year.
• Gross dollar retention was 97%. Q4 free cash flow was $240 million, full year free cash flow was $1.07 billion, setting a new record.
• Falcon Flex subscription model is driving module adoption, with over $2.5 billion in total deal value from Falcon Flex in Q4, growing 80% quarter over quarter and more than 10 times year over year.
• AI-specific trends include AI experimentation evolving into outcomes, geopolitical AI arms race, and CrowdStrike leveraging AI in cybersecurity with Charlotte AI, which is driving efficiencies and saving time for customers.
• Success of the customer commitment program, with estimated ARR value of customer commitment packages in Q4 at approximately $56 million, contributing to platform adoption and deeper customer relationships.

Segment Performance

• Cloud security: Ending ARR over $600 million, grew more than 45% year over year. Contributes significantly to the overall revenue.
• Identity protection: Ending ARR over $370 million, benefited from trends like the rapidly growing identity attack surface. Grew as customers consolidated on Falcon, e.g., a large state university hospital system.
• Next-gen SIEM: Ending ARR over $330 million, grew more than 115% year over year. Positioned as a foundational cornerstone of the integrated Falcon platform, with a key win from a major US airline.
• Exposure management: Quickly became a market disruptor, with line of sight to $300 million in ARR. Representative wins include a large digital radio station, a multinational shipping line, and a large healthcare provider in Asia Pacific.

Guidance

• First quarter of FY 2026: Total revenue expected $1,100.6 to $1,106.4 million, reflecting a year-over-year growth rate of approximately 20%. Non-GAAP income from operations expected $173.1 to $180.0 million, non-GAAP net income attributable to CrowdStrike Holdings, Inc. expected $162.1 to $167.5 million.
• Full fiscal year 2026: Total revenue expected $4,740 to $4,805.5 million, growth rate 20% to 22% over prior fiscal year. Non-GAAP income from operations expected $944.2 to $985.1 million, non-GAAP net income attributable to CrowdStrike Holdings, Inc. expected $851.2 to $883.0 million.
• Expectation of net new ARR reacceleration in the second half of FY 2026 as products are deployed, one-time discounts expire, and contracts are upsized and renewed.

Risks

• Forward-looking statements are subject to risks and uncertainties, and actual results could differ materially from current expectations.
• Geopolitical AI arms race leading to intensifying threat landscape, with nation-state cybercraft proliferation and increased adversarial AI adoption.
• Competition from point product vendors and those failing to deliver open and native single platforms.

Q: Saket Kalia asked about how Falcon Flex is driving better value for customers and examples of existing customers growing spending.

A: George Kurtz responded that Falcon Flex opens the entire product catalog to customers, allowing them to add new modules seamlessly. An example was a large transportation company where they consolidated three vendors and increased ARR by 67%.

Q: Brian Essex asked about emerging products and growth rates.

A: George Kurtz discussed how Falcon Flex is driving module adoption and that CCP packages have been a driver for identity and cloud segments, with the back half expected to see reacceleration.

Q: Gabriela Borges asked about guidance and external demand dynamics.

A: Burt Podbere talked about CCP programs and new products, expecting reacceleration in the back half due to customer usage of flex pools and new product offerings.

Q: Tal Liani asked about contribution from existing customers and NRR.

A: Burt Podbere mentioned that DBNR is a noisy metric, but there's room for upselling and cross-selling with a large customer base.

Q: Joel Fishbein asked about AI and pricing in AI security.

A: George Kurtz discussed Charlotte AI's uptake, saving customers time, and its role in agentic workflows.

Q: Matt Hedberg asked about exposure management and competition.

A: George Kurtz explained that exposure management is fully integrated, leverages agent data, and allows full endpoint replacements, competing effectively with pure-plays.

Q: Andrew Nowinski asked about net new ARR and CCP.

A: Burt Podbere stated that CCP churn was de minimis, and Adaptive Shield had small ARR impact, with excitement about back half reacceleration.

Q: Fatima Boolani asked about Falcon Flex in-kind dollars and renewal.

A: George Kurtz mentioned that Falcon Flex CCP dollars burn off in the back half, with demand plans ahead of schedule.

Q: Gregg Moskowitz asked about AWS marketplace growth.

A: George Kurtz was optimistic about continued growth on AWS marketplace due to customer demand for cloud consumption.

Q: Joseph Gallo asked about cloud competitive landscape.

A: George Kurtz discussed workload protection as key for stopping breaches, with CrowdStrike's strength in this area and consolidation trends.

Q: Patrick Colville asked about bottom line guidance.

A: Burt Podbere explained that profitability guidance reflects CCP amortization and investments, with expectations of margin expansion in the second half of FY 2026