CrowdStrike reports 32% revenue growth in fiscal Q2

CrowdStrike (CRWD -2.09%)the cybersecurity firm known for its artificial intelligence-driven Falcon platform, released its fiscal second quarter 2025 results on August 28. The company achieved total revenue of $963.9 million, slightly exceeding the upper end of the guidance range and reflecting a 32% year-over-year increase from $731.6 million in the prior-year period. Additionally, it reported non-GAAP net income of $260.8 million, compared to management’s expectations of up to $247.8 million.

Source: Guidance from the fiscal first quarter 2025 earnings report, released June 4.

Understanding CrowdStrike

CrowdStrike specializes in providing comprehensive cybersecurity services, primarily through its cloud-native Falcon platform that leverages artificial intelligence. The company’s main recent goals have included driving wider adoption of its offerings and repairing customer relationships following the July 19 global outage incident.

CrowdStrike’s modular approach allows customers to choose from multiple services to get cyber security tailored to their needs, enhancing lifetime customer value. Currently, 65% of its customers use five or more modules, 45% use six or more, and 29% use seven or more, demonstrating the success of this strategy. In addition, the company is making strides in rapid threat detection, validated by independent assessments and marked by low false positives.

Quarterly highlights

Fiscal Q2, which ended on July 31, saw significant financial and product achievements for CrowdStrike. Revenue rose 32% year-over-year to $963.9 million. Non-GAAP net income increased 45% to $260.8 million. These numbers exceeded management guidance, indicating strong execution.

Annual net recurring revenue (ARR) was $218 million, increasing the company’s total ARR to $3.86 billion, an increase of $935 million over the prior-year period. Subscription revenue also increased from $690.0 million to $918.3 million, underscoring the company’s success in retaining and expanding its customer base.

In particular, its LogScale, Identity Protection and Cloud Security solutions contributed more than $1 billion in combined ARR.

From an operational perspective, its GAAP subscription gross margin was flat year-over-year at 78%, while its non-GAAP subscription gross margin improved slightly year-over-year from 80% to 81%. Operating cash flow came in at $326.6 million, compared to $244.8 million in the same period last year. Free cash flow increased to $272.2 million from $188.7 million.

While the financials showed robust growth, the company faced significant challenges, mainly due to the July 19 global outage incident. This outage, caused by a software update, affected 8.5 million running devices Microsoft (MSFT -0.78%) Windows and created substantial costs estimated at $5.4 billion for US Fortune 500 companies. The outage led to a number of lawsuits from affected customers and investors, with Delta Air Lines (DAL -0.93%) being a notable example. Although the company anticipates increased competition due to attrition of potential customers, it remains resilient due to its innovative focus areas.

Look ahead

For the third quarter of 2025, total project management revenues will be between $979.2 million and $984.7 million. Non-GAAP net income per share is expected to be between $0.80 and $0.81. For the fiscal year, the company’s reduced guidance is for total revenue of $3.89 billion to $3.9 billion and non-GAAP net income per share of $3.61 to $3.65.

Investors should keep a close eye on how the company’s continued innovations, such as the development of the Falcon platform, impact customer adoption and retention.