Crowdstrike reports third quarter fiscal year 2023 financial results
Austin, texas--(business wire)--crowdstrike holdings, inc. (nasdaq: crwd), a global cybersecurity leader that provides cloud-delivered protection of endpoints, cloud workloads, identity and data, today announced financial results for the third quarter fiscal year 2023, ended october 31, 2022. “crowdstrike delivered robust growth at scale, strong retention rates, growing module adoption, record net new arr from emerging products and a record number of customers contributing at least $1 million to net new arr,” said george kurtz, crowdstrike’s co-founder and chief executive officer. “however, total net new arr was below our expectations as increased macroeconomic headwinds elongated sales cycles with smaller customers and caused some larger customers to pursue multi-phase subscription start dates, which delays arr recognition until future quarters. as a platform consolidator with industry leading efficacy, we differentiate ourselves from the competition and empower customers, which we believe positions us to capture enduring industry trends and generate durable long-term growth.” commenting on the company's financial results, burt podbere, crowdstrike’s chief financial officer, added, “in the face of increased macroeconomic headwinds, crowdstrike delivered revenue and earnings results ahead of our guidance. we will continue to focus on delivering strong unit economics as we balance growth with profitability and free cash flow.” third quarter fiscal 2023 financial highlights revenue: total revenue was $580.9 million, a 53% increase, compared to $380.1 million in the third quarter of fiscal 2022. subscription revenue was $547.4 million, a 53% increase, compared to $357.0 million in the third quarter of fiscal 2022. annual recurring revenue (arr) increased 54% year-over-year and grew to $2.34 billion as of october 31, 2022, of which $198.1 million was net new arr added in the quarter. the acquisition of reposify contributed less than $1.0 million to net new arr in the third quarter of fiscal 2023. subscription gross margin: gaap subscription gross margin was 75%, compared to 76% in the third quarter of fiscal 2022. non-gaap subscription gross margin was 78%, compared to 79% in the third quarter of fiscal 2022. income/loss from operations: gaap loss from operations was $56.4 million, compared to $40.3 million in the third quarter of fiscal 2022. non-gaap income from operations was $89.7 million, compared to $50.7 million in the third quarter of fiscal 2022. net income/loss attributable to crowdstrike: gaap net loss attributable to crowdstrike was $55.0 million, compared to $50.5 million in the third quarter of fiscal 2022. gaap net loss per share attributable to crowdstrike, basic and diluted was $0.24, compared to $0.22 in the third quarter of fiscal 2022. non-gaap net income attributable to crowdstrike was $96.1 million, compared to $41.1 million in the third quarter of fiscal 2022. non-gaap net income attributable to crowdstrike per share, diluted, was $0.40, compared to $0.17 in the third quarter of fiscal 2022. cash flow: net cash generated from operations was $242.9 million, compared to $159.1 million in the third quarter of fiscal 2022. free cash flow was $174.1 million, compared to $123.5 million in the third quarter of fiscal 2022. cash and cash equivalents was $2.47 billion as of october 31, 2022. recent highlights added 1,460 net new subscription customers in the quarter for a total of 21,146 subscription customers as of october 31, 2022, representing 44% growth year-over-year. crowdstrike’s subscription customers that have adopted five or more, six or more and seven or more modules was 60%, 36% and 21%, respectively, as of october 31, 2022. acquired reposify, an external attack surface management (easm) platform, to help crowdstrike's customers bolster visibility and reduce the risk exposure of external assets. highlights of the sixth annual fal.con cybersecurity conference included falcon insight xdr, falcon discover for iot, falcon logscale, falcon complete logscale and new cloud native application protection platform (cnapp) capabilities. expanded the crowdstrike and ey global alliance to deliver cloud security and observability services. achieved 99% detection coverage of adversary behavior in the mitre engenuity att&ck evaluations for security service providers. received a aaa rating in se labs enterprise advanced security ransomware test and achieved 100% protection with zero false positives. chosen as a winner for the 2022 crn tech innovator awards for crowdstrike cloud security, a cloud native application protection platform (cnapp) solution. named one of the best workplaces for women by great place to work® and fortune magazine 2022. expanded charitable giving strategy to include a partnership with operation motorsport foundation and nextgen scholarship awards. financial outlook crowdstrike is providing the following guidance for the fourth quarter and the full fiscal year 2023 (ending january 31, 2023): q4 fy23 guidance full year fy23 guidance total revenue $619.1 - $628.2 million $2,223.0 - $2,232.0 million non-gaap income from operations $87.2 - $93.7 million $347.2 - $353.8 million non-gaap net income attributable to crowdstrike $100.9 - $107.5 million $357.6 - $364.4 million non-gaap net income per share attributable to crowdstrike common stockholders, diluted $0.42 - $0.45 $1.49 - $1.52 weighted average shares used in computing non-gaap net income per share attributable to common stockholders, diluted 241 million 240 million these statements are forward-looking and actual results may differ materially as a result of many factors. refer to the forward-looking statements safe harbor below for information on the factors that could cause the company's actual results to differ materially from these forward-looking statements. guidance for non-gaap financial measures excludes stock-based compensation expense, amortization expense of acquired intangible assets, including purchased patents, amortization of debt issuance costs and discount, legal reserve and settlement charges or benefits, gain (loss) and other income from strategic investments, and acquisition-related expenses. the company has not provided the most directly comparable gaap measures because certain items are out of the company's control or cannot be reasonably predicted. accordingly, a reconciliation for non-gaap income from operations, non-gaap net income attributable to crowdstrike, and non-gaap net income per share attributable to crowdstrike common stockholders is not available without unreasonable effort. conference call information crowdstrike will host a conference call for analysts and investors to discuss its earnings results for the third quarter of fiscal 2023 and outlook for its fiscal fourth quarter and fiscal year 2023 today at 2:00 p.m. pacific time (5:00 p.m. eastern time). a recorded webcast of the event will also be available for one year on the crowdstrike investor relations website ir.crowdstrike.com. date: november 29, 2022 time: 2:00 p.m. pacific time / 5:00 p.m. eastern time pre-registration link for dial-in access: register.vevent.com/register/bi484fb19cb3404f508c39eccfd03a1e86 webcast: ir.crowdstrike.com forward-looking statements this press release contains forward-looking statements that involve risks and uncertainties, including statements regarding crowdstrike’s future growth, and future financial and operating performance, including crowdstrike’s financial outlook for the fiscal fourth quarter and fiscal year 2023. there are a significant number of factors that could cause actual results to differ materially from statements made in this press release, including: risks associated with managing crowdstrike’s rapid growth; crowdstrike’s ability to identify and effectively implement necessary changes to address execution challenges; crowdstrike’s limited experience with new product and subscription and support introductions and the risks associated with new products and subscription and support offerings, including the risk of defects, errors, or vulnerabilities; length and unpredictability of sales cycles; crowdstrike’s ability to attract new and retain existing customers; crowdstrike’s ability to successfully integrate acquisitions; the failure to timely develop and achieve market acceptance of new products and subscriptions as well as existing products and subscriptions and support; crowdstrike’s ability to collaborate and integrate its products with offerings from other parties to deliver benefits to customers; industry trends; rapidly evolving technological developments in the market for security products and subscription and support offerings; and general market, political, economic, and business conditions, including those related to a deterioration in macroeconomic conditions, inflation, geopolitical uncertainty and covid-19. additional risks and uncertainties that could affect crowdstrike’s financial results are included in the filings crowdstrike makes with the securities and exchange commission (“sec”) from time to time, particularly under the captions “risk factors” and “management’s discussion and analysis of financial condition and results of operations”, including crowdstrike’s most recently filed annual report on form 10-k, most recently filed quarterly report on form 10-q and subsequent filings. you should not rely on these forward-looking statements, as actual outcomes and results may differ materially from those contemplated by these forward-looking statements as a result of such risks and uncertainties. all forward-looking statements in this press release are based on information available to crowdstrike as of the date hereof, and crowdstrike does not assume any obligation to update the forward-looking statements provided to reflect events that occur or circumstances that exist after the date on which they were made. use of non-gaap financial information crowdstrike believes that the presentation of non-gaap financial information provides important supplemental information to management and investors regarding financial and business trends relating to crowdstrike’s financial condition and results of operations. for further information regarding these non-gaap measures, including the reconciliation of these non-gaap financial measures to their most directly comparable gaap financial measures, please refer to the financial tables below, as well as the “explanation of non-gaap financial measures” section of this press release. channels for disclosure of information crowdstrike intends to announce material information to the public through the crowdstrike investor relations website ir.crowdstrike.com, sec filings, press releases, public conference calls, and public webcasts. crowdstrike uses these channels, as well as social media and its blog, to communicate with its investors, customers, and the public about the company, its offerings, and other issues. it is possible that the information crowdstrike posts on social media and its blog could be deemed to be material information. as such, crowdstrike encourages investors, the media, and others to follow the channels listed above, including the social media channels listed on crowdstrike’s investor relations website, and to review the information disclosed through such channels. any updates to the list of disclosure channels through which crowdstrike will announce information will be posted on the investor relations page on crowdstrike’s website. about crowdstrike holdings crowdstrike holdings, inc. is a global cybersecurity leader that provides cloud-delivered protection of endpoints, cloud workloads, identity and data. powered by the crowdstrike security cloud and advanced artificial intelligence, the crowdstrike falcon® platform delivers better outcomes to customers through rapid and scalable deployment, superior protection and performance, reduced complexity and immediate time-to-value. crowdstrike falcon leverages a single lightweight-agent architecture with integrated cloud modules spanning multiple security markets, including corporate workload security, managed security services, security and vulnerability management, it operations management, threat intelligence services, identity protection and log management. for more information, please visit: ir.crowdstrike.com crowdstrike, the crowdstrike logo, and other crowdstrike marks are trademarks and/or registered trademarks of crowdstrike, inc., or its affiliates or licensors. other words, symbols, and company product names may be trademarks of the respective companies with which they are associated. crowdstrike holdings, inc. condensed consolidated statements of operations (in thousands, except per share amounts) (unaudited) three months ended october 31, nine months ended october 31, 2022 2021 2022 2021 revenue subscription $ 547,376 $ 357,030 $ 1,513,397 $ 954,094 professional services 33,506 23,021 90,472 66,490 total revenue 580,882 380,051 1,603,869 1,020,584 cost of revenue subscription (1)(2) 134,229 85,464 362,258 226,360 professional services (1) 23,999 16,200 63,369 44,241 total cost of revenue 158,228 101,664 425,627 270,601 gross profit 422,654 278,387 1,178,242 749,983 operating expenses sales and marketing (1)(2) 239,672 164,960 657,970 453,952 research and development (1)(2) 155,256 97,630 416,519 266,265 general and administrative (1)(3)(4) 84,148 56,061 232,365 148,780 total operating expenses 479,076 318,651 1,306,854 868,997 loss from operations (56,422) (40,264) (128,612) (119,014) interest expense(5) (6,334) (6,403) (18,967) (18,929) interest income 16,245 1,019 25,479 2,654 other income (expense), net(6) 750 (329) 5,835 3,423 loss before provision for income taxes (45,761) (45,977) (116,265) (131,866) provision for income taxes(7) 8,870 4,473 17,088 58,773 net loss (54,631) (50,450) (133,353) (190,639) net income attributable to non-controlling interest 325 5 2,411 2,183 net loss attributable to crowdstrike $ (54,956) $ (50,455) $ (135,764) $ (192,822) net loss per share attributable to crowdstrike common stockholders, basic and diluted $ (0.24) $ (0.22) $ (0.58) $ (0.85) weighted-average shares used in computing net loss per share attributable to crowdstrike common stockholders, basic and diluted 233,785 228,293 232,502 226,292 _____________________________ (1) includes stock-based compensation expense as follows (in thousands): three months ended october 31, nine months ended october 31, 2022 2021 2022 2021 subscription cost of revenue $ 8,108 $ 5,969 $ 21,957 $ 15,548 professional services cost of revenue 4,093 2,546 10,596 6,963 sales and marketing 41,895 25,499 109,172 68,178 research and development 46,268 27,333 120,347 70,942 general and administrative 39,749 25,319 112,085 55,684 total stock-based compensation expense $ 140,113 $ 86,666 $ 374,157 $ 217,315 (2) includes amortization of acquired intangible assets, including purchased patents, as follows (in thousands): three months ended october 31, nine months ended october 31, 2022 2021 2022 2021 subscription cost of revenue $ 3,484 $ 2,784 $ 10,336 $ 7,550 sales and marketing 641 540 1,938 1,509 general and administrative 22 13 65 13 total amortization of acquired intangible assets $ 4,147 $ 3,337 $ 12,339 $ 9,072 (3) includes acquisition-related expenses as follows (in thousands): three months ended october 31, nine months ended october 31, 2022 2021 2022 2021 general and administrative $ 1,886 $ 971 $ 2,187 $ 5,912 total acquisition-related expenses $ 1,886 $ 971 $ 2,187 $ 5,912 (4) includes legal reserve and settlement charges as follows (in thousands): three months ended october 31, nine months ended october 31, 2022 2021 2022 2021 general and administrative $ — $ — $ — $ 2,500 total legal reserve and settlement charges $ — $ — $ — $ 2,500 (5) includes amortization of debt issuance costs and discount as follows (in thousands): three months ended october 31, nine months ended october 31, 2022 2021 2022 2021 interest expense $ 546 $ 546 $ 1,639 $ 1,639 total amortization of debt issuance costs and discount $ 546 $ 546 $ 1,639 $ 1,639 (6) includes gains and other income from strategic investments as follows (in thousands): three months ended october 31, nine months ended october 31, 2022 2021 2022 2021 other income, net $ 652 $ 10 $ 4,824 $ 4,366 total gains and other income from strategic investments $ 652 $ 10 $ 4,824 $ 4,366 (7) includes tax costs for intellectual property integration relating to acquisitions as follows (in thousands): three months ended october 31, nine months ended october 31, 2022 2021 2022 2021 provision for income taxes $ 4,658 $ — $ 4,658 $ 48,824 total provision for income taxes $ 4,658 $ — $ 4,658 $ 48,824 crowdstrike holdings, inc. condensed consolidated balance sheets (in thousands) (unaudited) october 31, january 31, 2022 2022 assets current assets: cash and cash equivalents $ 2,466,551 $ 1,996,633 accounts receivable, net of allowance for credit losses 485,313 368,145 deferred contract acquisition costs, current 162,260 126,822 prepaid expenses and other current assets 89,489 79,352 total current assets 3,203,613 2,570,952 strategic investments 46,395 23,632 property and equipment, net 430,030 260,577 operating lease right-of-use assets 25,621 31,735 deferred contract acquisition costs, noncurrent 218,635 192,358 goodwill 430,285 416,445 intangible assets, net 89,500 97,336 other long-term assets 25,364 25,346 total assets $ 4,469,443 $ 3,618,381 liabilities and stockholders’ equity current liabilities: accounts payable $ 89,289 $ 47,634 accrued expenses 88,918 83,382 accrued payroll and benefits 122,558 104,563 operating lease liabilities, current 10,423 9,820 deferred revenue 1,483,223 1,136,502 other current liabilities 22,642 24,929 total current liabilities 1,817,053 1,406,830 long-term debt 740,633 739,517 deferred revenue, noncurrent 532,316 392,819 operating lease liabilities, noncurrent 17,984 25,379 other liabilities, noncurrent 23,825 16,193 total liabilities 3,131,811 2,580,738 commitments and contingencies stockholders’ equity common stock, class a and class b 117 115 additional paid-in capital 2,424,038 1,991,807 accumulated deficit (1,100,682) (964,918) accumulated other comprehensive loss (9,184) (1,240) total crowdstrike holdings, inc. stockholders’ equity 1,314,289 1,025,764 non-controlling interest 23,343 11,879 total stockholders’ equity 1,337,632 1,037,643 total liabilities and stockholders’ equity $ 4,469,443 $ 3,618,381 crowdstrike holdings, inc. condensed consolidated statements of cash flows (in thousands) (unaudited) nine months ended october 31, 2022 2021 operating activities net loss $ (133,353) $ (190,639) adjustments to reconcile net loss to net cash provided by operating activities: depreciation and amortization 53,622 39,506 amortization of intangible assets 12,338 9,072 amortization of deferred contract acquisition costs 121,550 79,712 non-cash operating lease costs 6,818 6,727 stock-based compensation expense 374,157 217,315 deferred income taxes 2,286 (1,338) non-cash interest expense 2,077 1,824 change in fair value of strategic investments (4,757) (4,356) changes in operating assets and liabilities, net of impact of acquisitions accounts receivable, net (117,240) (40,644) deferred contract acquisition costs (183,265) (151,901) prepaid expenses and other assets (14,121) (8,051) accounts payable 25,007 (7,033) accrued expenses and other liabilities 21,820 74,426 accrued payroll and benefits 21,635 22,258 operating lease liabilities (7,037) (7,394) deferred revenue 486,177 375,582 net cash provided by operating activities 667,714 415,066 investing activities purchases of property and equipment (179,609) (85,420) capitalized internal-use software and website development costs (20,739) (15,201) purchases of strategic investments (18,006) (15,809) business acquisitions, net of cash acquired (18,464) (353,746) purchases of intangible assets (700) (680) net cash used in investing activities (237,518) (470,856) financing activities payments of debt issuance costs related to revolving line of credit — (219) payment of debt issuance costs related to senior notes — (1,581) repayment of loan payable (1,591) — proceeds from issuance of common stock upon exercise of stock options 6,396 12,796 proceeds from issuance of common stock under the employee stock purchase plan 34,445 27,452 capital contributions from non-controlling interest holders 9,053 7,905 net cash provided by financing activities 48,303 46,353 effect of foreign exchange rates on cash, cash equivalents and restricted cash (7,074) (1,663) net increase (decrease) in cash, cash equivalents and restricted cash 471,425 (11,100) cash, cash equivalents and restricted cash, beginning of period 1,996,633 1,918,608 cash, cash equivalents and restricted cash, end of period $ 2,468,058 $ 1,907,508 crowdstrike holdings, inc. gaap to non-gaap reconciliations (in thousands, except percentages) (unaudited) three months ended october 31, nine months ended october 31, 2022 2021 2022 2021 gaap subscription revenue $ 547,376 $ 357,030 $ 1,513,397 $ 954,094 gaap professional services revenue 33,506 23,021 90,472 66,490 gaap total revenue $ 580,882 $ 380,051 $ 1,603,869 $ 1,020,584 gaap subscription gross profit $ 413,147 $ 271,566 $ 1,151,139 $ 727,734 stock based compensation expense 8,108 5,969 21,957 15,548 amortization of acquired intangible assets 3,484 2,784 10,336 7,550 non-gaap subscription gross profit $ 424,739 $ 280,319 $ 1,183,432 $ 750,832 gaap subscription gross margin 75 % 76 % 76 % 76 % non-gaap subscription gross margin 78 % 79 % 78 % 79 % gaap professional services gross profit $ 9,507 $ 6,821 $ 27,103 $ 22,249 stock based compensation expense 4,093 2,546 10,596 6,963 non-gaap professional services gross profit $ 13,600 $ 9,367 $ 37,699 $ 29,212 gaap professional services gross margin 28 % 30 % 30 % 33 % non-gaap professional services gross margin 41 % 41 % 42 % 44 % total gaap gross margin 73 % 73 % 73 % 73 % total non-gaap gross margin 75 % 76 % 76 % 76 % gaap sales and marketing operating expenses $ 239,672 $ 164,960 $ 657,970 $ 453,952 stock based compensation expense (41,895) (25,499) (109,172) (68,178) amortization of acquired intangible assets (641) (540) (1,938) (1,509) non-gaap sales and marketing operating expenses $ 197,136 $ 138,921 $ 546,860 $ 384,265 gaap sales and marketing operating expenses as a percentage of revenue 41 % 43 % 41 % 44 % non-gaap sales and marketing operating expenses as a percentage of revenue 34 % 37 % 34 % 38 % gaap research and development operating expenses $ 155,256 $ 97,630 $ 416,519 $ 266,265 stock based compensation expense (46,268) (27,333) (120,347) (70,942) non-gaap research and development operating expenses $ 108,988 $ 70,297 $ 296,172 $ 195,323 gaap research and development operating expenses as a percentage of revenue 27 % 26 % 26 % 26 % non-gaap research and development operating expenses as a percentage of revenue 19 % 18 % 18 % 19 % gaap general and administrative operating expenses $ 84,148 $ 56,061 $ 232,365 $ 148,780 stock based compensation expense (39,749) (25,319) (112,085) (55,684) acquisition-related expenses (1,886) (971) (2,187) (5,912) amortization of acquired intangible assets (22) (13) (65) (13) legal reserve and settlement charges — — — (2,500) non-gaap general and administrative operating expenses $ 42,491 $ 29,758 $ 118,028 $ 84,671 gaap general and administrative operating expenses as a percentage of revenue 14 % 15 % 14 % 15 % non-gaap general and administrative operating expenses as a percentage of revenue 7 % 8 % 7 % 8 % crowdstrike holdings, inc. gaap to non-gaap reconciliations (continued) (in thousands, except per share amounts) (unaudited) three months ended october 31, nine months ended october 31, 2022 2021 2022 2021 gaap loss from operations $ (56,422) $ (40,264) $ (128,612) $ (119,014) stock based compensation expense 140,113 86,666 374,157 217,315 amortization of acquired intangible assets 4,147 3,337 12,339 9,072 acquisition-related expenses 1,886 971 2,187 5,912 legal reserve and settlement charges — — — 2,500 non-gaap income from operations $ 89,724 $ 50,710 $ 260,071 $ 115,785 gaap operating margin (10) % (11) % (8) % (12) % non-gaap operating margin 15 % 13 % 16 % 11 % gaap net loss attributable to crowdstrike $ (54,956) $ (50,455) $ (135,764) $ (192,822) stock based compensation expense 140,113 86,666 374,157 217,315 amortization of acquired intangible assets 4,147 3,337 12,339 9,072 acquisition-related expenses 1,886 971 2,187 5,912 amortization of debt issuance costs and discount 546 546 1,639 1,639 legal reserve and settlement charges — — — 2,500 provision for income taxes(1) 4,658 — 4,658 48,824 gains and other income from strategic investments attributable to crowdstrike (325) (5) (2,411) (2,183) non-gaap net income attributable to crowdstrike $ 96,069 $ 41,060 $ 256,805 $ 90,257 weighted-average shares used in computing basic net loss per share attributable to crowdstrike common stockholders (gaap) 233,785 228,293 232,502 226,292 gaap basic net loss per share attributable to crowdstrike common stockholders $ (0.24) $ (0.22) $ (0.58) $ (0.85) gaap diluted net loss per share attributable to crowdstrike common stockholders $ (0.24) $ (0.22) $ (0.58) $ (0.85) stock-based compensation 0.59 0.36 1.57 0.91 amortization of acquired intangible assets 0.02 0.01 0.05 0.04 acquisition-related expenses 0.01 — 0.01 0.02 amortization of debt issuance costs and discount — — 0.01 0.01 legal reserve and settlement charges — — — 0.01 provision for income taxes (1) 0.02 — 0.02 0.20 adjustment to fully diluted earnings per share (2) — 0.02 — 0.05 gains and other income from strategic investments attributable to crowdstrike — — (0.01) (0.01) non-gaap diluted net income per share attributable to crowdstrike common stockholders $ 0.40 $ 0.17 $ 1.07 $ 0.38 weighted-average shares used in diluted net income (loss) per share attributable to crowdstrike common stockholders calculation: gaap 233,785 228,293 232,502 226,292 non-gaap 239,502 238,563 238,957 238,194 ____________________________ (1) crowdstrike uses its gaap provision for income taxes for the purpose of determining its non-gaap income tax expense. the tax costs for intellectual property integration relating to acquisitions are included in the gaap provision for income taxes. the income tax benefits related to stock-based compensation, amortization of acquired intangibles assets, including purchased patents, acquisition related expenses, amortization of debt issuance costs and discount, gains and other income from strategic investments attributable to crowdstrike and legal reserve and settlement charges or benefits included in the gaap provision for income taxes were not material for all periods presented. (2) for periods in which crowdstrike had diluted non-gaap net income per share attributable to crowdstrike common stockholders, the sum of the impact of individual reconciling items may not total to diluted non-gaap net income per share attributable to crowdstrike common stockholders because the basic share counts used to calculate gaap net loss per share attributable to crowdstrike common stockholders differ from the diluted share counts used to calculate non-gaap net income per share attributable to crowdstrike common stockholders and because of rounding differences. the gaap net loss per share attributable to crowdstrike common stockholders calculation uses a lower share count as it excludes dilutive shares which are included in calculating the non-gaap net income per share attributable to crowdstrike common stockholders. crowdstrike holdings, inc. gaap to non-gaap reconciliations (continued) (in thousands, except percentages) (unaudited) three months ended october 31, nine months ended october 31, 2022 2021 2022 2021 gaap net cash provided by operating activities $ 242,851 $ 159,058 $ 667,714 $ 415,066 purchases of property and equipment (61,270) (29,627) (179,609) (85,420) capitalized internal-use software and website development costs (7,504) (5,928) (20,739) (15,201) free cash flow $ 174,077 $ 123,503 $ 467,366 $ 314,445 gaap net cash used in investing activities $ (97,419) $ (44,735) $ (237,518) $ (470,856) gaap net cash provided by financing activities $ 4,976 $ 7,554 $ 48,303 $ 46,353 gaap net cash provided by operating activities as a percentage of revenue 42 % 42 % 42 % 41 % purchases of property and equipment as a percentage of revenue (11) % (8) % (11) % (8) % capitalized internal-use software and website development costs as a percentage of revenue (1) % (2) % (1) % (1) % free cash flow margin 30 % 32 % 29 % 31 % explanation of non-gaap financial measures in addition to determining results in accordance with u.s. generally accepted accounting principles (“gaap”), crowdstrike believes the following non-gaap measures are useful in evaluating our operating performance. crowdstrike uses the following non-gaap financial information to evaluate its ongoing operations and for internal planning and forecasting purposes. crowdstrike believes that non-gaap financial information, when taken collectively, may be helpful to investors because it provides consistency and comparability with past financial performance and facilitates period-to-period comparisons of operations, as these measures eliminate the effects of certain variables unrelated to crowdstrike’s overall operating performance. however, non-gaap financial information is presented for supplemental informational purposes only, has limitations as an analytical tool, and should not be considered in isolation or as a substitute for financial information presented in accordance with gaap. other companies, including companies in crowdstrike’s industry, may calculate similarly titled non-gaap measures differently or may use other measures to evaluate their performance, all of which could reduce the usefulness of crowdstrike’s non-gaap financial measures as tools for comparison. in addition, the utility of free cash flow as a measure of the company’s financial performance and liquidity is limited as it does not represent the total increase or decrease in our cash balance for a given period. investors are encouraged to review the related gaap financial measures and the reconciliation of these non-gaap financial measures to their most directly comparable gaap financial measures and not rely on any single financial measure to evaluate crowdstrike’s business. non-gaap subscription gross profit and non-gaap subscription gross margin crowdstrike defines non-gaap subscription gross profit and non-gaap subscription gross margin as gaap subscription gross profit and gaap subscription gross margin, respectively, excluding stock-based compensation expense and amortization of acquired intangible assets. non-gaap income from operations crowdstrike defines non-gaap income from operations as gaap loss from operations excluding stock-based compensation expense, amortization of acquired intangible assets, including purchased patents, acquisition-related expenses and legal reserve and settlement charges or benefits. non-gaap net income attributable to crowdstrike the company defines non-gaap net income attributable to crowdstrike as gaap net loss attributable to crowdstrike excluding stock-based compensation expense, amortization of acquired intangible assets, including purchased patents, acquisition-related expenses, amortization of debt issuance costs and discount, gains and other income from strategic investments, legal reserve and settlement charges or benefits and the tax costs for intellectual property integration relating to acquisitions. non-gaap net income per share attributable to crowdstrike common stockholders, diluted crowdstrike defines non-gaap net income per share attributable to crowdstrike common stockholders, as non-gaap net income attributable to crowdstrike divided by the weighted-average shares outstanding, which includes the dilutive effect of potentially diluted common stock equivalents outstanding during the period. crowdstrike may periodically incur charges or receive payments in connection with litigation settlements. the company excludes these charges and payments received from non-gaap net income attributable to crowdstrike when associated with a significant settlement because crowdstrike does not believe they are reflective of ongoing business and operating results. free cash flow free cash flow is a non-gaap financial measure that crowdstrike defines as net cash provided by operating activities less purchases of property and equipment and capitalized internal-use software and website development costs. crowdstrike monitors free cash flow as one measure of its overall business performance, which enables crowdstrike to analyze its future performance without the effects of non-cash items and allow crowdstrike to better understand the cash needs of its business. while crowdstrike believes that free cash flow is useful in evaluating its business, free cash flow is a non-gaap financial measure that has limitations as an analytical tool, and free cash flow should not be considered as an alternative to, or substitute for, net cash provided by operating activities in accordance with gaap. the utility of free cash flow as a measure of crowdstrike’s liquidity is further limited as it does not represent the total increase or decrease in crowdstrike’s cash balance for any given period. in addition, other companies, including companies in our industry, may calculate free cash flow differently or not at all, which reduces the usefulness of free cash flow as a tool for comparison. explanation of operational measures annual recurring revenue arr is calculated as the annualized value of crowdstrike’s customer subscription contracts as of the measurement date, assuming any contract that expires during the next 12 months is renewed on its existing terms. to the extent that crowdstrike is negotiating a renewal with a customer after the expiration of the subscription, crowdstrike continues to include that revenue in arr if crowdstrike is actively in discussion with such an organization for a new subscription or renewal, or until such organization notifies crowdstrike that it is not renewing its subscription. magic number magic number is calculated by performing the following calculation for the most recent four quarters and taking the average: annualizing the difference between a quarter’s subscription revenue and the prior quarter’s subscription revenue, and then dividing the resulting number by the previous quarter’s non-gaap sales & marketing expense. magic number = average of previous four quarters: ((quarter subscription revenue – prior quarter subscription revenue) x 4) / prior quarter non-gaap sales & marketing expense.
