CRWD
$47.04
Crowdstrike Holdings
($3.40)
(6.74%)
Earnings Details
2nd Quarter July 2019
Thursday, September 05, 2019 4:05:00 PM
Tweet Share Watch
Summary

Crowdstrike Holdings Beats

Crowdstrike Holdings (CRWD) reported a 2nd Quarter July 2019 loss of $0.22 per share on revenue of $108.1 million. The consensus estimate was a loss of $0.24 per share on revenue of $103.6 million. The Earnings Whisper number was for a loss of $0.23 per share.

The company said it expects a third quarter non-GAAP loss of $0.12 to $0.11 per share on revenue of $117.1 million to $119.5 million. The current consensus estimate is a loss of $0.13 per share on revenue of $110.3 million for the quarter ending October 31, 2019. The company also said it expects a fiscal year loss of $0.65 to $0.62 per share on revenue of $445.4 million to $451.8 million. The company's previous guidance was loss of $0.72 to $0.70 per share on revenue of $430.2 million to $436.4 million and the current consensus estimate is a loss of $0.73 per share on revenue of $433.9 million for the year ending January 31, 2020.

Results
Reported Earnings
($0.22)
Earnings Whisper
($0.23)
Consensus Estimate
($0.24)
Reported Revenue
$108.1 Mil
Revenue Estimate
$103.6 Mil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

CrowdStrike Reports Fiscal Second Quarter 2020 Financial Results

  • Total revenue of $108.1 million, grew 94% year-over-year
  • Subscription revenue of $97.6 million, grew 98% year-over-year
  • ARR of $423.8 million, grew 104% year-over-year

SUNNYVALE, Calif., Sept. 05, 2019 (GLOBE NEWSWIRE) --  CrowdStrike Holdings, Inc., (Nasdaq: CRWD), a leader in cloud-delivered endpoint protection, today announced financial results for the second quarter of its fiscal 2020, ended July 31, 2019.

“We delivered a strong second quarter with rapid subscription revenue growth and record net new ARR generated in the quarter,” said George Kurtz, CrowdStrike’s co-founder and chief executive officer. “Customer growth accelerated as an increasing number of organizations recognize the power of CrowdStrike’s cloud-native Falcon platform to effectively stop breaches and simplify their security stack with our single-agent architecture. We secured a record number of net new subscription customers in the quarter. In addition, as of July 31, 2019, 50% of our subscription customers had adopted four or more cloud modules, underscoring the continued success of our platform strategy.”

Second Quarter Fiscal 2020 Financial Highlights

  • Revenue: Total revenue was $108.1 million, a 94% increase, compared to $55.7 million in the second quarter of fiscal 2019. Subscription revenue was $97.6 million, a 98% increase, compared to $49.2 million in the second quarter of fiscal 2019. 
     
  • Annual Recurring Revenue (ARR) increased 104% year-over-year and grew to $423.8 million as of July 31, 2019, of which $59.2 million was net new ARR added in the quarter.
     
  • Subscription Gross Margin: GAAP subscription gross margin was 74%, compared to 70% in the second quarter of fiscal 2019. Non-GAAP subscription gross margin was 76%, compared to 71% in the second quarter of fiscal 2019.
     
  • Loss from Operations: GAAP loss from operations was $50.6 million, compared to $30.4 million in the second quarter of fiscal 2019. Non-GAAP loss from operations was $20.6 million, compared to $28.0 million in the second quarter of fiscal 2019.
     
  • Net Loss: GAAP net loss was $51.9 million, compared to $32.9 million in the second quarter of fiscal 2019. GAAP net loss per share was $0.40, compared to $0.75 in the second quarter of fiscal 2019. Non-GAAP net loss was $23.1 million, compared to $30.4 million in the second quarter of fiscal 2019. Non-GAAP net loss per share was $0.18, compared to $0.69 in the second quarter of fiscal 2019.
     
  • Cash Flow: Net cash used in operations was $6.2 million, compared to a use of $28.7 million in the second quarter of fiscal 2019. Free cash flow was negative $29.2 million, compared to negative $35.7 million in the second quarter of fiscal 2019.
     
  • Cash, cash equivalents and marketable securities were $826.8 million as of July 31, 2019.            

Recent Highlights

  • Added a record 730 net new subscription customers in the quarter for a total of 3,789 subscription customers as of July 31, 2019.
     
  • 50% of CrowdStrike’s subscription customers have adopted four or more cloud modules as of July 31, 2019.
     
  • CrowdStrike positioned as a Leader in the Magic Quadrant for Endpoint Protection Platforms by Gartner, Inc.
     
  • Launched Falcon Fund, an early stage investment fund started by CrowdStrike in partnership with Accel.
     
  • Introduced CrowdScore, which leverages cloud-based analytics and AI to enable executives to instantly see the real-time threat level their organizations are facing, allowing customers to quickly mobilize resources to respond.

Financial Outlook

CrowdStrike is providing the following guidance for the third quarter of fiscal 2020 (ending October 31, 2019) and is raising its guidance for fiscal year 2020 (ending January 31, 2020):

 Q3 FY20
Guidance
Full Year FY20
Guidance
 

Total revenue
 

$117.1$119.5 million
 

$445.4$451.8 million
Non-GAAP loss from operations$(27.7)$(26.1) million$(97.9)$(93.5) million
Non-GAAP net loss$(24.8)$(23.2) million$(95.3)$(90.8) million
Non-GAAP net loss per share, basic and diluted$(0.12)$(0.11)$(0.65)$(0.62)
Weighted average shares used in computing Non-
GAAP net loss per share attributable to common
stockholders, basic and diluted
204.1 million147.3 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 our actual results to differ materially from these forward-looking statements.

Guidance for non-GAAP financial measures excludes stock-based compensation expense and amortization expense of acquired intangible assets. We have not provided the most directly comparable GAAP measures because certain items are out of our control or cannot be reasonably predicted. Accordingly, a reconciliation for non-GAAP loss from operations, non-GAAP net loss, and non-GAAP net loss per share 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 second quarter of fiscal 2020 and outlook for its fiscal third quarter and year 2020 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:Thursday, September 5, 2019
Time:2:00 p.m. Pacific time / 5:00 p.m. Eastern time
Dial-in number:800-525-5356 or 409-937-8967, conference ID: 7382028
Webcast:ir.crowdstrike.com


Forward-Looking Statements

This press release contains forward-looking statements that involve risks and uncertainties, including statements regarding our future financial and operating performance, including our financial outlook for the fiscal third quarter and year 2020. There are a significant number of factors that could cause actual results to differ materially from statements made in this press release, including: our limited operating history; our ability to identify and effectively implement the necessary changes to address execution challenges; risks associated with managing our rapid growth; our 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; our ability to attract new and retain existing customers; the failure to timely develop and achieve market acceptance of new products and subscriptions as well as existing products and subscriptions and support; rapidly evolving technological developments in the market for security products and subscription and support offerings; length of sales cycles; and general market, political, economic, and business conditions.

Additional risks and uncertainties that could affect our financial results are included under the captions “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” set forth from time to time in our filings and reports with the Securities and Exchange Commission (“SEC”), including our prospectus filed with the SEC pursuant to Rule 424(b), dated June 11, 2019, copies of which are available on our website at ir.crowdstrike.com and on the SEC’s website at www.sec.gov

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 us as of the date hereof, and we do 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

We believe that the presentation of non-GAAP financial information provides important supplemental information to management and investors regarding financial and business trends relating to our 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.

About CrowdStrike Holdings

CrowdStrike provides cloud-delivered endpoint protection. Leveraging artificial intelligence (AI), the CrowdStrike Falcon platform protects customers against cyberattacks on endpoints on or off the network by offering visibility and protection across the enterprise.

2019 CrowdStrike, Inc. All rights reserved. CrowdStrike® and CrowdStrike Falcon are among the trademarks of CrowdStrike, Inc.

Investor Relations Contact
CrowdStrike Holdings, Inc.
Maria Riley, Senior Director of Investor Relations
investors@crowdstrike.com
669-721-0742

Press Contact
CrowdStrike Holdings, Inc.
Ilina Cashiola, Director of Public Relations
ilina.cashiola@crowdstrike.com
202-340-0517

CROWDSTRIKE HOLDINGS, INC. 
              
Condensed Consolidated Statements of Operations 
(in thousands, except per share amounts) 
(unaudited) 
              
              
  Three Months Ended July 31 Six Months Ended July 31 
  2019  2018  2019  2018  
Revenue                 
Subscription $  97,575  $  49,161  $  183,566  $  88,919  
Professional services    10,533     6,540     20,619     14,071  
Total revenue    108,108     55,701     204,185     102,990  
              
Cost of revenue             
Subscription (1)    24,946     14,604     48,637     29,775  
Professional services (1)    6,636     3,971     12,219     8,194  
Total cost of revenue    31,582     18,575     60,856     37,969  
              
Gross profit    76,526     37,126     143,329     65,021  
              
Operating expenses             
Sales and marketing (1)    65,274     40,113     122,117     76,730  
Research and development (1)    31,630     18,963     55,505     36,578  
General and administrative (1)    30,261     8,477     42,122     15,254  
Total operating expenses    127,165     67,553     219,744     128,562  
              
Loss from operations    (50,639)    (30,427)    (76,415)    (63,541) 
Interest expense    (164)    (236)    (165)    (428) 
Other expense, net    (451)    (1,852)    (56)    (2,042) 
              
Loss before provision for income taxes    (51,254)    (32,515)    (76,636)    (66,011) 
              
Provision for income taxes    (635)    (362)    (1,230)    (483) 
              
Net loss $  (51,889) $  (32,877) $  (77,866) $  (66,494) 
              
Net loss per share attributable to Class A and Class B common stockholders, basic and diluted $  (0.40) $  (0.75) $  (0.87) $  (1.52) 
              
Weighted-average shares used in computing net loss per share attributable to Class A and Class B common stockholders, basic and diluted    130,091     44,105     89,335     43,864  
              
              
(1) Includes stock-based compensation expense as follows:             
              
  Three Months Ended July 31 Six Months Ended July 31 
  2019  2018  2019  2018  
  (in thousands) (in thousands) 
              
Subscription cost of revenue $  1,233  $  88  $  1,498  $  151  
Professional services cost of revenue    644     57     747     103  
Sales and marketing    6,638     1,031     8,156     1,804  
Research and development    4,976     539     5,657     987  
General and administrative    16,368     509     17,553     898  
Total stock-based compensation expense $  29,859  $  2,224  $  33,611  $  3,943  
              

 

CROWDSTRIKE HOLDINGS, INC. 
        
Condensed Consolidated Balance Sheets 
(in thousands) 
(unaudited) 
        
        
   July 31   January 31  
  2019  2019  
Assets           
Current assets:           
Cash and cash equivalents $  732,808  $  88,408  
Marketable securities    94,003     103,247  
Accounts receivable, net    115,256     92,476  
Deferred contract acquisition costs, current    34,017     28,847  
Prepaid expenses and other current assets    29,348     18,410  
Total current assets    1,005,432     331,388  
Property and equipment, net    107,989     73,735  
Deferred contract acquisition costs, noncurrent    41,766     9,918  
Goodwill    7,780     7,947  
Intangible assets, net    738     1,048  
Other assets    7,881     9,183  
Total assets $  1,171,586  $  433,219  
Liabilities, Redeemable Convertible Preferred Stock, and Stockholders’ Equity
(Deficit)
       
Current liabilities:       
Accounts payable $  1,126  $  6,855  
Accrued expenses    32,568     32,541  
Accrued payroll and benefits    20,057     19,284  
Deferred revenue    279,951     218,700  
Other current liabilities    8,079     4,040  
Total current liabilities    341,781     281,420  
Deferred revenue, noncurrent    89,811     71,367  
Other liabilities, noncurrent    11,897     10,313  
Total liabilities    443,489     363,100  
Commitments and contingencies        
Redeemable Convertible Preferred Stock       
Redeemable convertible preferred stock    —     557,912  
Stockholders’ Equity (Deficit)       
Preferred stock    —     —  
Common stock     —     24  
Common stock, Class A and Class B    103     —  
Additional paid-in capital    1,302,098     31,211  
Accumulated deficit    (573,574)    (519,126) 
Accumulated other comprehensive income (loss)    (530)    98  
Total stockholders’ equity (deficit)    728,097     (487,793) 
Total liabilities, redeemable convertible preferred stock, and stockholders’ equity (deficit) $  1,171,586  $  433,219  
        

 

CROWDSTRIKE HOLDINGS, INC. 
        
Condensed Consolidated Statements of Cash Flows 
(in thousands) 
(unaudited) 
        
        
        
  Six Months Ended July 31 
  2019  2018  
Operating activities           
Net loss $  (77,866) $  (66,494) 
Adjustments to reconcile net loss to net cash used in operating activities:       
Depreciation and amortization    10,193     6,424  
Amortization of intangible assets    285     373  
Amortization of deferred contract acquisition costs    15,076     11,991  
Change in fair value of redeemable convertible preferred stock warrant liability    6,022     2,055  
Allowance for doubtful accounts    22     203  
Stock-based compensation expense    33,611     3,943  
Accretion of marketable securities purchased at a discount    (960)    (169) 
Non-cash interest expense
    163     187  
Changes in operating assets and liabilities       
Accounts receivable    (22,802)    2,116  
Deferred contract acquisition costs    (27,788)    (14,298) 
Prepaid expenses and other assets    (12,505)    (91) 
Accounts payable    (5,897)    (7,703) 
Accrued expenses and other current liabilities    (2,095)    (9,058) 
Accrued payroll and benefits    773     (1,647) 
Deferred revenue    79,362     37,246  
Other liabilities, noncurrent    (393)    (215) 
Net cash used in operating activities    (4,799)    (35,137) 
Investing activities       
Purchases of property and equipment    (37,159)    (14,068) 
Capitalized internal-use software    (3,310)    (3,201) 
Purchases of marketable securities    (117,572)    (80,204) 
Proceeds from sales of marketable securities    4,473     —  
Maturities of marketable securities    123,314     2,600  
Net cash used in investing activities    (30,254)    (94,873) 
Financing activities       
Proceeds from the issuance of common stock upon initial public offering, net of underwriting discounts    665,092     —  
Proceeds from the issuance of redeemable convertible preferred stock, net of issuance costs    —     199,896  
Repayment of loan payable    —     (6,158) 
Proceeds from revolving line of credit    —     10,000  
Repayment of revolving line of credit    —     (20,000) 
Repayment of notes receivable from related parties    —     198  
Payments of indemnity holdback    —     (500) 
Repurchase of stock options    —     (2,330) 
Payments of deferred offering costs    (4,080)    —  
Proceeds from issuance of common stock upon exercise of stock options    8,526     1,514  
Proceeds from the issuance of common stock upon exercise of early exercisable stock options    10,264     —  
Net cash provided by financing activities    679,802     182,620  
        
Effect of foreign exchange rates on cash and cash equivalents    (349)    (255) 
        
Net increase in cash and cash equivalents    644,400     52,355  
        
Cash and cash equivalents, beginning of period    88,408     63,179  
Cash and cash equivalents, end of period $  732,808  $  115,534  
        

 

CROWDSTRIKE HOLDINGS, INC. 
               
Non-GAAP Financial Measures with Reconciliation to GAAP 
(in thousands) 
(unaudited) 
               
               
               
  Three Months Ended July 31 Six Months Ended July 31  
  2019  2018  2019  2018   
  (in thousands) (in thousands)  
               
GAAP subscription revenue $  97,575  $  49,161  $  183,566  $  88,919   
               
GAAP subscription gross profit $  72,629  $  34,557  $  134,929  $  59,144   
Add: Stock-based compensation expense    1,233     88     1,498     151   
Add: Amortization of acquired intangible assets    97     106     201     202   
Non-GAAP subscription gross profit $  73,959  $  34,751  $  136,628  $  59,497   
               
GAAP subscription gross margin    74   70 %   74   67 %
               
Non-GAAP subscription gross margin    76   71 %   74   67 %
               
               
               
  Three Months Ended July 31 Six Months Ended July 31  
  2019  2018  2019  2018   
  (in thousands) (in thousands)  
               
GAAP total revenue $  108,108  $  55,701  $  204,185  $  102,990   
               
GAAP loss from operations $  (50,639) $  (30,427) $  (76,415) $  (63,541)  
Add: Stock-based compensation expense    29,859     2,224     33,611     3,943   
Add: Amortization of acquired intangible assets    139     207     285     373   
Non-GAAP loss from operations $  (20,641) $  (27,996) $  (42,519) $  (59,225)  
               
GAAP operating margin    (47)  (55)%   (37)  (62)%
               
Non-GAAP operating margin    (19)  (50)%   (21)  (58)%
               
               
               
  Three Months Ended July 31 Six Months Ended July 31  
  2019  2018  2019  2018   
   (in thousands)   (in thousands)   
               
GAAP net loss $  (51,889) $  (32,877) $  (77,866) $  (66,494)  
Add: Stock-based compensation expense    29,859     2,224     33,611     3,943   
Add: Amortization of acquired intangible assets    139     207     285     373   
Less: Gain on settlement of lawsuit    (1,250)    —     (1,250)    —   
Non-GAAP net loss $  (23,141) $  (30,446) $  (45,220) $  (62,178)  
               
Weighted-average shares used in computing net loss per share attributable to common
stockholders, basic and diluted
    130,091     44,105     89,335     43,864   
               
GAAP net loss per share attributable to common stockholders, basic and diluted $  (0.40) $  (0.75) $  (0.87) $  (1.52)  
               
Non- GAAP net loss per share attributable to common stockholders, basic and diluted $  (0.18) $  (0.69) $  (0.51) $  (1.42)  
               
               
               
  Three Months Ended July 31 Six Months Ended July 31  
  2019  2018  2019  2018   
   (in thousands)   (in thousands)   
               
GAAP total revenue $  108,108  $  55,701  $  204,185  $  102,990   
               
GAAP net cash used in operating activities    (6,214)    (28,744)    (4,799)    (35,137)  
Less: Purchases of property and equipment    (21,618)    (5,419)    (37,159)    (14,068)  
Less: Capitalized internal-use software    (1,326)    (1,494)    (3,310)    (3,201)  
Free cash flow $  (29,158) $  (35,657) $  (45,268) $  (52,406)  
               
GAAP net cash used in investing activities $  (34,392) $  (87,117) $  (30,254) $  (94,873)  
GAAP net cash provided by financing activities $  680,684  $  182,171  $  679,802  $  182,620   
               
GAAP net cash used in operating activities as a percentage of revenue    (6)   (52)   (2)   (34)%
Less: Purchases of property and equipment as a percentage of revenue    (20)   (10)   (18)   (14)%
Less: Capitalized internal-use software as a percentage of revenue    (1)   (3)   (2)   (3)%
Free cash flow margin    (27)   (64)   (22)   (51)%
               

 

CROWDSTRIKE HOLDINGS, INC.
             
Statements of Operations: GAAP to Non-GAAP Reconciliation
(in thousands)
(unaudited)
             
             
             
  Three Months Ended July 31 Six Months Ended July 31
  2019  2018  2019  2018 
   (in thousands)   (in thousands) 
             
GAAP cost of revenue $  31,582  $  18,575  $  60,856  $  37,969 
Less:            
Stock based compensation expense    1,877     145     2,245     254 
Amortization of acquired intangible assets    97     106     201     202 
Non-GAAP cost of revenue $  29,608  $  18,324  $  58,410  $  37,513 
             
GAAP subscription gross profit $  72,629  $  34,557  $  134,929  $  59,144 
Add:            
Stock based compensation expense    1,233     88     1,498     151 
Amortization of acquired intangible assets    97     106     201     202 
Non-GAAP subscription gross profit $  73,959  $  34,751  $  136,628  $  59,497 
             
GAAP professional services gross profit $  3,897  $  2,569  $  8,400  $  5,877 
Add:            
Stock based compensation expense    644     57     747     103 
Non-GAAP professional services gross profit $  4,541  $  2,626  $  9,147  $  5,980 
             
GAAP Sales and marketing operating expenses $  65,274  $  40,113  $  122,117  $  76,730 
Less:            
Stock based compensation expense    6,638     1,031     8,156     1,804 
Amortization of acquired intangible assets    32     62     63     79 
Non-GAAP sales and marketing operating expenses $  58,604  $  39,020  $  113,898  $  74,847 
             
GAAP research and development operating expenses $  31,630  $  18,963  $  55,505  $  36,578 
Less:            
Stock based compensation expense    4,976     539     5,657     987 
Amortization of acquired intangible assets    10     39     21     92 
Non-GAAP research and development operating expenses $  26,644  $  18,385  $  49,827  $  35,499 
             
GAAP general and administrative operating expenses $  30,261  $  8,477  $  42,122  $  15,254 
Less:            
Stock based compensation expense    16,368     509     17,553     898 
Non-GAAP general and administrative operating expenses $  13,893  $  7,968  $  24,569  $  14,356 
             
GAAP loss from operations $  (50,639) $  (30,427) $  (76,415) $  (63,541)
Add:            
Stock based compensation expense    29,859     2,224     33,611     3,943 
Amortization of acquired intangible assets    139     207     285     373 
Non-GAAP loss from operations $  (20,641) $  (27,996) $  (42,519) $  (59,225)
             
GAAP net loss $  (51,889) $  (32,877) $  (77,866) $  (66,494)
Add:            
Stock based compensation expense    29,859     2,224     33,611     3,943 
Amortization of acquired intangible assets    139     207     285     373 
Less:            
Gain on settlement of lawsuit    1,250     —     1,250     — 
Non-GAAP net loss $  (23,141) $  (30,446) $  (45,220) $  (62,178)
             


Explanation of Non-GAAP Financial Measures

In addition to our results determined in accordance with U.S. generally accepted accounting principles (“GAAP”), we believe the following non-GAAP measures are useful in evaluating our operating performance. We use the following non-GAAP financial information to evaluate our ongoing operations and for internal planning and forecasting purposes. We believe that non-GAAP financial information, when taken collectively, may be helpful to investors because it provides consistency and comparability with past financial 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 our 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 our non-GAAP financial measures as tools for comparison.  In addition, the utility of free cash flow as a measure of our 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 our business.

Non-GAAP Subscription Gross Profit and Non-GAAP Subscription Gross Margin

We define 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. We believe non-GAAP subscription gross profit and non-GAAP subscription gross margin provide our management and investors consistency and comparability with our past financial performance and facilitate period-to-period comparisons of operations, as these measures eliminate the effects of certain variables unrelated to our overall operating performance.

Non-GAAP Loss from Operations

We define non-GAAP loss from operations as GAAP loss from operations excluding stock-based compensation expense, amortization of acquired intangible assets, and acquisition-related expenses. We believe non-GAAP loss from operations provides our management and investors consistency and comparability with our past financial performance and facilitate period-to-period comparisons of operations, as this metric generally eliminates the effects of certain variables unrelated to our overall operating performance.

Non-GAAP Net Loss per Share Attributable to Common Stockholders, Basic and Diluted

We define non-GAAP net loss per share attributable to common stockholders, as non-GAAP net loss divided by the weighted-average shares outstanding, which includes the dilutive effect of potentially diluted common stock equivalents outstanding during the period. We may periodically incur charges or receive payments in connection with litigation settlements. We exclude these charges and payments received from non-GAAP net loss when associated with a significant settlement because we do not believe they are reflective of ongoing business and operating results.

Free Cash Flow

Free cash flow is a non-GAAP financial measure that we define as net cash used in operating activities less purchases of property and equipment, capitalized internal-use software, acquisition of intangible assets, and cash used for business combinations.  We monitor free cash flow as one measure of our overall business performance, which enables us to analyze our future performance without the effects of non-cash items and allow us to better understand the cash needs of our business. While we believe that free cash flow is useful in evaluating our 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 used in operating activities in accordance with GAAP. The utility of free cash flow as a measure of our liquidity is further limited as it does not represent the total increase or decrease in our 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 our 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 we are negotiating a renewal with a customer after the expiration of the subscription, we continue to include that revenue in ARR if we are actively in discussion with such an organization for a new subscription or renewal, or until such organization notifies us 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.

Press Release Logo.jpg

Source: CrowdStrike, Inc.