CrowdStrike Holdings Inc
For the period ended Jul 31, 2024. Filed Aug 29, 2024.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jul 31, 2024 · Filed Aug 29, 2024
CRWD$216.90-0.1%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-04-30; filed 2024-06-05.
0001535527-24-000013
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-07-31; filed 2024-08-29.
0001535527-24-000020
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 119 previous paragraphs and 148 current paragraphs.
85 unchanged; 32 reworded; 21 added; 2 removed; 0 previous and 10 current paragraphs rearranged.
Tables are not compared: 15 previous and 24 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (21)
Current report
Channel File 291 Incident. On July 19, 2024, we released a content configuration update for our Falcon sensor that resulted in system crashes for certain Windows systems (the “Channel File 291 Incident”). As a result of the Channel File 291 Incident, we are subject to lawsuits, claims and inquiries as described in Note 8, “Commitments and Contingencies,” to our condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q. We expect to incur significant legal and professional services and other general and administrative expenses associated with the Channel File 291 Incident in future periods. It is not reasonably possible to quantify the precise impact of the Channel File 291 Incident, but the incident has adversely affected our results of operations, and we currently expect a number of factors relating to the incident to adversely affect our key metrics and results of operations in future periods. While we have not experienced high levels of customer churn following the incident, we have experienced delays in creating sales opportunities and longer sales cycles, including delays in customer purchasing decisions. We expect sales cycles to continue to be elongated in future periods. In addition, because our customers typically sign contracts with terms of twelve months or longer, customer churn and any corresponding impact to our key metrics and revenue may occur in future periods. Customer commitment packages introduced following the Channel File 291 Incident may include discounting, additional modules, professional services, flexible payment terms or subscription period extensions. We expect our customer commitment packages to result in increased contraction, due to elongated subscription terms, and decreased upsell dollar values.
Current report
Interest Expense, Interest Income, and Other Expense, Net
Current report
The decrease in other expense, net for the three months ended July 31, 2024 compared to the three months ended July 31, 2023 was primarily due to a decrease in net foreign currency transaction losses of $1.0 million.
Current report
Comparison of the Six Months Ended July 31, 2024 and 2023
Current report
Revenue
Current report
Professional services revenue increased by $11.4 million, or 14%, for the six months ended July 31, 2024, compared to the six months ended July 31, 2023, which was primarily attributable to an increase in the number of professional service hours performed.
Current report
Total cost of revenue increased by $110.3 million, or 31%, for the six months ended July 31, 2024 compared to the six months ended July 31, 2023. Subscription cost of revenue increased by $94.2 million, or 32%, for the six months ended July 31, 2024, compared to the six months ended July 31, 2023. The increase in subscription cost of revenue was primarily due to an increase in employee-related expenses of $29.2 million driven by a 30% increase in average headcount, an increase in depreciation of data center equipment of $18.6 million, an increase in stock-based compensation expense of $11.5 million, an increase in amortization of internal-use software of $10.9 million, an increase in allocated overhead costs of $9.0 million, an increase in cloud hosting and related services cost of $8.0 million, an increase in hardware maintenance costs of $3.3 million, and an increase in employee health benefits of $1.2 million.
Current report
Professional services cost of revenue increased by $16.1 million, or 28%, for the six months ended July 31, 2024, compared to the six months ended July 31, 2023. The increase in professional services cost of revenue was primarily due to an increase in employee-related expenses of $6.3 million driven by a 16% increase in average headcount, an increase in consulting expense of $4.2 million, an increase in stock-based compensation expense of $3.2 million, and an increase in allocated overhead costs of $2.0 million.
Current report
Subscription gross margin was flat for the six months ended July 31, 2024, compared to the six months ended July 31, 2023.
Current report
Sales and Marketing
Current report
The following shows sales and marketing expenses for the six months ended July 31, 2024 as compared to the six months ended July 31, 2023 (in thousands, except percentages):
Current report
Sales and marketing expenses increased by $141.6 million, or 25%, for the six months ended July 31, 2024 compared to the six months ended July 31, 2023. The increase in sales and marketing expenses was primarily due to an increase in employee-related expenses of $61.5 million driven by a 11% increase in sales and marketing average headcount, an increase in stock-based compensation expense of $22.5 million, an increase in marketing programs of $20.4 million, an increase in allocated overhead costs of $10.7 million, an increase in travel expenses of $5.6 million, an increase in company events expenses of $4.7 million, $3.1 million of expenses relating to the Channel File 291 Incident, an increase in term-based software licenses of $2.6 million, an increase in cloud hosting and related costs of $1.9 million, an increase in other labor expenses of $1.3 million, an increase in employee health benefits of $1.3 million, and an increase in consulting expense of $1.0 million, partially offset by a decrease in taxes and licenses of $1.4 million.
Current report
Research and Development
Current report
The following shows research and development expenses for the six months ended July 31, 2024 as compared to the six months ended July 31, 2023 (in thousands, except percentages):
Current report
Research and development expenses increased by $127.7 million, or 36%, for the six months ended July 31, 2024 compared to the six months ended July 31, 2023. This increase was primarily due an increase in stock-based compensation expense of $51.2 million, an increase in employee-related expenses of $46.5 million driven by a 13% increase in research and development average headcount, an increase in allocated overhead costs of $10.3 million, an increase in cloud hosting and related costs of $10.3 million, an increase in travel expenses of $1.7 million, an increase in term-based software licenses of $1.6 million, an increase in employee related benefits of $1.5 million, an increase in consulting expense of $1.0 million, and $1.0 million of expenses relating to the Channel File 291 Incident.
Current report
General and Administrative
Current report
The following shows general and administrative expenses for the six months ended July 31, 2024 as compared to the six months ended July 31, 2023 (in thousands, except percentages):
Current report
General and administrative expenses increased by $25.7 million, or 14%, for the six months ended July 31, 2024 compared to the six months ended July 31, 2023. The increase in general and administrative expenses was primarily due to an increase in employee-related expenses of $14.4 million driven by an 14% increase in general and administrative average headcount, an increase in consulting expense of $4.5 million, an increase in allocated overhead costs of $2.3 million, an increase in company events expense of $1.6 million, an increase in leased airfare costs of $1.6 million, an increase in tax and licenses of $1.0 million, and $1.0 million of expenses relating to the Channel File 291 Incident, partially offset by a decrease in legal expense of $2.5 million unrelated to the Channel File 291 Incident.
Current report
The following shows interest expense, interest income, and other income (expense), net for the six months ended July 31, 2024 as compared to the six months ended July 31, 2023 (in thousands, except percentages):
Current report
Provision for Income Taxes
Current report
The increase in provision for income taxes of $9.6 million during the six months ended July 31, 2024 compared to the six months ended July 31, 2023 was primarily attributable to an increase in profitability and withholding taxes related to customer payments in certain foreign jurisdictions in which the Company conducts business.
Removed paragraphs (2)
Previous report
Operating Expenses
Previous report
Operating Expenses
Reworded paragraphs (32)
Previous wording
ARR grew to $3.6 billion as of April 30, 2024, of which $211.7 million was net new ARR added for the three months ended April 30, 2024. ARR grew to $2.7 billion as of April 30, 2023, of which $174.2 million was net new ARR added for the three months ended April 30, 2023.
Current wording
ARR grew to $3.9 billion as of July 31, 2024, of which $217.6 million and $429.3 million was net new ARR added for the three and six months ended July 31, 2024, respectively. ARR grew to $2.9 billion as of July 31, 2023, of which $196.2 million and $370.4 million was net new ARR added for the three and six months ended July 31, 2023, respectively.
Previous wording
Other Income, Net. Other income, net consists primarily of gains and losses on strategic investments and foreign currency transaction gains and losses.
Current wording
Other Income (Expense), Net. Other income (expense), net consists primarily of gains and losses on strategic investments and foreign currency transaction gains and losses.
Previous wording
Provision for Income Taxes. Provision for income taxes consists of state income taxes in the United States, foreign income taxes, and withholding taxes related to customer payments in certain foreign jurisdictions in which we conduct business. We maintain a full valuation allowance on our U.S. federal and state and certain foreign deferred tax assets, including net operating loss carryforwards and tax credits, which we have determined are not realizable on a more-likely-than-not basis. We regularly evaluate the need for a valuation allowance. Due to recent profitability, a material reversal of our valuation allowance in U.S. jurisdictions in the foreseeable future is reasonably possible.
Current wording
Provision for Income Taxes. Provision for income taxes consists of state income taxes in the United States, foreign income taxes, and withholding taxes related to customer payments in certain foreign jurisdictions in which we conduct business. We maintain a full valuation allowance on our U.S. federal and state and certain foreign deferred tax assets, including net operating loss carryforwards and tax credits, which we have determined are not realizable on a more-likely-than-not basis. We regularly evaluate the need for a valuation allowance. For the three and six months ended July 31, 2024, we computed our U.S. tax provision on a discrete basis.
Previous wording
Net Income Attributable to Non-controlling Interest. Net income attributable to non-controlling interest consists of the Falcon Funds’ non-controlling interest share of gains and losses and interest income from our strategic investments.
Current wording
Net Income (Loss) Attributable to Non-controlling Interest. Net income (loss) attributable to non-controlling interest consists of the Falcon Funds’ non-controlling interest share of gains and losses and interest income from our strategic investments.
Previous wording
Total revenue increased by $228.5 million, or 33%, for the three months ended April 30, 2024 compared to the three months ended April 30, 2023. Subscription revenue accounted for 95% and 94% of our total revenue for the three months ended April 30, 2024 and April 30, 2023, respectively. Professional services revenue accounted for 5% and 6% of our total revenue for the three months ended April 30, 2024 and April 30, 2023, respectively.
Current wording
Total revenue increased by $232.2 million, or 32%, for the three months ended July 31, 2024 compared to the three months ended July 31, 2023. Subscription revenue accounted for 95% and 94% of our total revenue for the three months ended July 31, 2024 and July 31, 2023, respectively. Professional services revenue accounted for 5% and 6% of our total revenue for the three months ended July 31, 2024 and July 31, 2023, respectively.
Previous wording
Subscription revenue increased by $221.0 million, or 34%, for the three months ended April 30, 2024 compared to the three months ended April 30, 2023, which was primarily driven by a combination of the addition of new customers and the sale of additional sensors and modules to existing customers.
Current wording
Subscription revenue increased by $228.3 million, or 33%, for the three months ended July 31, 2024 compared to the three months ended July 31, 2023, which was primarily driven by a combination of the addition of new customers and the sale of additional sensors and modules to existing customers.
Previous wording
Professional services revenue increased by $7.5 million, or 18%, for the three months ended April 30, 2024, compared to the three months ended April 30, 2023, which was primarily attributable to an increase in the number of professional service hours performed.
Current wording
Professional services revenue increased by $4.0 million, or 10%, for the three months ended July 31, 2024, compared to the three months ended July 31, 2023, which was primarily attributable to an increase in the number of professional service hours performed.
Previous wording
Total cost of revenue increased by $55.8 million, or 33%, for the three months ended April 30, 2024 compared to the three months ended April 30, 2023. Subscription cost of revenue increased by $47.6 million, or 33%, for the three months ended April 30, 2024, compared to the three months ended April 30, 2023. The increase in subscription cost of revenue was primarily due to an increase in employee-related expenses of $14.5 million driven by a 28% increase in average headcount, an increase in depreciation of data center equipment of $8.1 million, an increase in cloud hosting and related services cost of $6.4 million, an increase in amortization of internal-use software of $5.4 million, an increase in stock-based compensation expense of $4.9 million, an increase in allocated overhead costs of $4.5 million, an increase in hardware maintenance costs of $1.9 million, and an increase in employee health benefits of $1.4 million.
Current wording
Total cost of revenue increased by $54.5 million, or 30%, for the three months ended July 31, 2024 compared to the three months ended July 31, 2023. Subscription cost of revenue increased by $46.6 million, or 30%, for the three months ended July 31, 2024, compared to the three months ended July 31, 2023. The increase in subscription cost of revenue was primarily due to an increase in employee-related expenses of $14.7 million driven by a 31% increase in average headcount, an increase in depreciation of data center equipment of $10.5 million, an increase in stock-based compensation expense of $6.6 million, an increase in amortization of internal-use software of $5.5 million, an increase in allocated overhead costs of $4.5 million, an increase in cloud hosting and related services cost of $1.6 million, and an increase in hardware maintenance costs of $1.4 million.
Previous wording
Professional services cost of revenue increased by $8.2 million, or 30%, for the three months ended April 30, 2024, compared to the three months ended April 30, 2023. The increase in professional services cost of revenue was primarily due to an increase in employee-related expenses of $3.4 million driven by a 14% increase in average headcount, an increase in consulting expense of $1.8 million, an increase in stock-based compensation expense of $1.6 million, and an increase in allocated overhead costs of $1.0 million.
Current wording
Professional services cost of revenue increased by $7.9 million, or 27%, for the three months ended July 31, 2024, compared to the three months ended July 31, 2023. The increase in professional services cost of revenue was primarily due to an increase in employee-related expenses of $2.9 million driven by an 18% increase in average headcount, an increase in consulting expense of $2.4 million, an increase in stock-based compensation expense of $1.6 million, and an increase in allocated overhead costs of $1.0 million.
Previous wording
Subscription gross margin was relatively flat for the three months ended April 30, 2024, compared to the three months ended April 30, 2023.
Current wording
Subscription gross margin was flat for the three months ended July 31, 2024, compared to the three months ended July 31, 2023.
Previous wording
Professional services gross margin decreased by 6% for the three months ended April 30, 2024 compared to the three months ended April 30, 2023. The decrease in professional services gross margin was primarily due to decreased utilization during the three months ended April 30, 2024.
Current wording
Professional services gross margin decreased by 11% for the three months ended July 31, 2024, compared to the three months ended July 31, 2023. The decrease in professional services gross margin was primarily due to an increase in consulting expense and decreased utilization during the three months ended July 31, 2024.
Previous wording
Sales and marketing expenses increased by $69.0 million, or 25%, for the three months ended April 30, 2024 compared to the three months ended April 30, 2023. The increase in sales and marketing expenses was primarily due to an increase in employee-related expenses of $26.8 million driven by a 6% increase in sales and marketing average headcount, an increase in stock-based compensation of $16.5 million, an increase in marketing programs of $9.4 million, an increase in allocated overhead costs of $4.8 million, an increase in company events expenses of $3.3 million, an increase in travel expenses of $2.5 million, an increase in employee health benefits of $1.3 million, and an increase in term-based software licenses of $1.0 million, partially offset by a decrease in taxes and licenses of $1.4 million.
Current wording
Sales and marketing expenses increased by $72.6 million, or 26%, for the three months ended July 31, 2024 compared to the three months ended July 31, 2023. The increase in sales and marketing expenses was primarily due to an increase in employee-related expenses of $34.6 million driven by a 14% increase in sales and marketing average headcount, an increase in marketing programs of $11.1 million, an increase in stock-based compensation expense of $6.0 million, an increase in allocated overhead costs of $5.9 million, an increase in travel expenses of $3.1 million, $3.1 million of expenses relating to the Channel File 291 Incident, an increase in term-based software licenses of $1.6 million, an increase in company events expenses of $1.4 million, and an increase in cloud hosting and related costs of $1.2 million.
Previous wording
Research and development expenses increased by $56.2 million, or 31%, for the three months ended April 30, 2024 compared to the three months ended April 30, 2023. This increase was primarily due an increase in stock-based compensation of $22.4 million, an increase in employee-related expenses of $21.4 million driven by a 10% increase in research and development average headcount, an increase in allocated overhead costs of $4.8 million, an increase in cloud hosting and related costs of $4.4 million, and an increase in depreciation of data center equipment of $0.9 million.
Current wording
Research and development expenses increased by $71.5 million, or 40%, for the three months ended July 31, 2024 compared to the three months ended July 31, 2023. This increase was primarily due to an increase in stock-based compensation expense of $28.9 million, an increase in employee-related expenses of $25.5 million driven by a 17% increase in research and development average headcount, an increase in cloud hosting and related costs of $5.9 million, an increase in allocated overhead costs of $5.6 million, an increase in other labor expenses of $1.1 million, an increase in employee benefits of $1.1 million, an increase in term-based software licenses of $1.1 million, an increase in travel expenses of $1.0 million, and $1.0 million of expenses relating to the Channel File 291 Incident.
Previous wording
General and administrative expenses increased by $21.1 million, or 26%, for the three months ended April 30, 2024 compared to the three months ended April 30, 2023. The increase in general and administrative expenses was primarily due to an increase in stock-based compensation expense of $6.8 million, an increase in employee-related expenses of $6.3 million driven by an 11% increase in general and administrative average headcount, an increase in consulting expense of $3.4 million, an increase in allocated overhead costs of $1.0 million, an increase in legal expense of $0.8 million, an increase in company events expense of $0.6 million, and an increase in travel expense of $0.4 million.
Current wording
General and administrative expenses increased by $4.6 million, or 5%, for the three months ended July 31, 2024 compared to the three months ended July 31, 2023. The increase in general and administrative expenses was primarily due to an increase in employee-related expenses of $8.1 million driven by a 16% increase in general and administrative average headcount, an increase in leased airfare costs of $1.6 million, an increase in allocated overhead costs of $1.3 million, an increase in consulting expense of $1.1 million, an increase in company events expense of $1.0 million, and $1.0 million of expenses relating to the Channel File 291 Incident, partially offset by a decrease in stock-based compensation expense of $6.9 million and a decrease in legal expense of $3.3 million unrelated to the Channel File 291 Incident.
Previous wording
The following shows interest expense, interest income, and other income, net for the three months ended April 30, 2024 as compared to the three months ended April 30, 2023 (in thousands, except percentages):
Current wording
The following shows interest expense, interest income, and other expense, net for the three months ended July 31, 2024 as compared to the three months ended July 31, 2023 (in thousands, except percentages):
Previous wording
The increase in provision for income taxes of $3.3 million during the three months ended April 30, 2024 compared to the three months ended April 30, 2023 was primarily attributable to an increase in withholding taxes related to customer payments in certain foreign jurisdictions in which the Company conducts business.
Current wording
The increase in provision for income taxes of $6.3 million during the three months ended July 31, 2024 compared to the three months ended July 31, 2023 was primarily attributable to an increase in profitability and withholding taxes related to customer payments in certain foreign jurisdictions in which the Company conducts business.
Previous wording
Interest Expense, Interest Income, and Other Income, Net
Current wording
Interest Expense, Interest Income, and Other Income (Expense), Net
Previous wording
The increase in other income, net for the three months ended April 30, 2024 compared to the three months ended April 30, 2023 was primarily due to an increase in gains on sales of our strategic investments of $6.9 million.
Current wording
The increase in other income (expense), net for the six months ended July 31, 2024 compared to the six months ended July 31, 2023 was primarily due to an increase in gains on sales of our strategic investments of $6.2 million and an increase in net foreign currency transaction gains of $1.4 million.
Previous wording
Our primary sources of liquidity as of April 30, 2024, consisted of: (i) $3.7 billion in cash and cash equivalents, which mainly consists of cash on hand and highly liquid investments in money market funds and U.S. Treasury bills, (ii) cash we expect to generate from operations, and (iii) available capacity under our $750.0 million senior secured revolving credit facility (the “A&R Credit Agreement”). We expect that the combination of our existing cash and cash equivalents, cash flows from operations, and the A&R Credit Agreement will be sufficient to meet our anticipated cash needs for working capital and capital expenditures for at least the next 12 months.
Current wording
Our primary sources of liquidity as of July 31, 2024, consisted of: (i) $4.0 billion in cash and cash equivalents, which mainly consists of cash on hand and highly liquid investments in money market funds and U.S. Treasury bills, (ii) cash we expect to generate from operations, and (iii) available capacity under our $750.0 million senior secured revolving credit facility (the “A&R Credit Agreement”). It is not currently possible to reasonably estimate the amount of loss or range of possible loss that might result from adverse judgments, settlements, penalties, or other resolution of proceedings resulting from the Channel File 291 Incident. However, despite such uncertainties, we expect that the combination of our existing cash and cash equivalents, cash flows from operations, and the A&R Credit Agreement will be sufficient to meet our anticipated cash needs for working capital and capital expenditures for at least the next 12 months.
Previous wording
Net cash provided by operating activities during the three months ended April 30, 2024 was $383.2 million, which resulted from net income of $46.3 million, adjusted for non-cash charges of $305.3 million and net cash inflow of $31.6 million from changes in operating assets and liabilities. Non-cash charges primarily consisted of $183.1 million in stock-based compensation expense, $74.1 million of amortization of deferred contract acquisition costs, $42.7 million of depreciation and amortization, $6.0 million of amortization of intangibles assets, $3.4 million of non-cash operating lease costs, $2.3 million of accretion of short-term investments purchased at a discount, and $0.9 million of non-cash interest expense, partially offset by $6.9 million of realized gains on strategic investments. The net cash inflow from changes in operating assets and liabilities was primarily due to a $150.2 million decrease in accounts receivable and a $15.0 million increase in deferred revenue, partially offset by a $66.5 million increase in deferred contract acquisition costs, a $28.6 million increase in prepaid expenses and other assets, a $17.7 million decrease in accrued payroll and benefits, a $16.6 million decrease in accrued expenses and other liabilities, and a $4.5 million decrease in operating lease liabilities.
Current wording
Net cash provided by operating activities during the six months ended July 31, 2024 was $709.9 million, which resulted from net income of $93.0 million, adjusted for non-cash charges of $636.2 million and net cash outflow of $19.3 million from changes in operating assets and liabilities. Non-cash charges primarily consisted of $384.0 million in stock-based compensation expense, $147.9 million of amortization of deferred contract acquisition costs, $88.9 million of depreciation and amortization, $12.3 million of amortization of intangibles assets, $7.2 million of non-cash operating lease costs, $2.3 million of accretion of short-term investments purchased at a discount, and $1.8 million of non-cash interest expense, partially offset by $6.2 million realized gains on strategic investments and $1.9 million of deferred income taxes. The net cash outflow from changes in operating assets and liabilities was primarily due to a $158.3 million increase in deferred contract acquisition costs, a $63.2 million increase in prepaid expenses and other assets, a $29.4 million decrease in accrued payroll and benefits, and a $7.1 million decrease in operating lease liabilities, partially offset by a $192.1 million decrease in accounts receivable, a $38.9 million increase in deferred revenue, and an $8.0 million increase in accrued expenses and other liabilities.
Previous wording
Net cash used in investing activities of $51.1 million during the three months ended April 30, 2024 was primarily due to business acquisitions, net of cash acquired, of $96.4 million, which was related to the Flow Security acquisition, purchases of property and equipment of $49.7 million, capitalized internal-use software and website development costs of $10.5 million, purchases of strategic investments of $1.7 million, and purchases of deferred compensation investments of $0.6 million, partially offset by proceeds from maturities of short-term investments of $97.3 million, and proceeds from sales of strategic investments of $10.4 million.
Current wording
Net cash used in investing activities of $106.0 million during the six months ended July 31, 2024 was primarily due to business acquisitions, net of cash acquired, of $96.4 million, which was related to the Flow Security acquisition, purchases of property and equipment of $88.9 million, capitalized internal-use software and website development costs of $25.0 million, purchases of strategic investments of $2.7 million, and purchases of deferred compensation investments of $1.2 million, partially offset by proceeds from maturities of short-term investments of $97.3 million and proceeds from sales of strategic investments of $10.9 million.
Previous wording
Net cash used in financing activities of $2.5 million during the three months ended April 30, 2024 was primarily due to distributions to non-controlling interest holders of $3.8 million, partially offset by proceeds from the exercise of stock options of $0.8 million, and capital contributions from non-controlling interest holders of $0.5 million.
Current wording
Net cash provided by financing activities of $60.0 million during the six months ended July 31, 2024 was primarily due to proceeds from our employee stock purchase plan of $56.1 million, capital contributions from non-controlling interests of $5.5 million, and proceeds from the exercise of stock options of $2.5 million, partially offset by distributions to non-controlling interest holders of $4.1 million.
Previous wording
Our Senior Notes are guaranteed on a senior, unsecured basis by CrowdStrike, Inc., a wholly owned subsidiary of CrowdStrike Holdings, Inc. (the “subsidiary guarantor,” and together with CrowdStrike Holdings, Inc., the “Obligor Group”). The guarantee is full and unconditional and is subject to certain conditions for release. See Note 4, “Debt”, in our Notes to Condensed Consolidated Financial Statements in Part I, Item 1 of this Quarterly Report on Form 10-Q, for a brief description of the Senior Notes.
Current wording
Our Senior Notes are guaranteed on a senior, unsecured basis by CrowdStrike, Inc., a wholly owned subsidiary of CrowdStrike Holdings, Inc. (the “subsidiary guarantor,” and together with CrowdStrike Holdings, Inc., the “Obligor Group”). The guarantee is full and unconditional and is subject to certain conditions for release. See Note 4, “Debt,” to our condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q, for a brief description of the Senior Notes.
Previous wording
Summarized financial information is presented below for the Obligor Group on a combined basis after elimination of intercompany transactions and balances within the Obligor Group and equity in the earnings from and investments in any non-guarantor subsidiary. The revenue amounts presented in the summarized financial information include all of our condensed consolidated revenue, and there is no intercompany revenue from the non-guarantor subsidiaries. This summarized financial information has been prepared and presented pursuant to Regulation S-X Rule 13-01, “Financial Disclosures about Guarantors and Issuers of Guaranteed Securities” and is not intended to present the financial position or results of operations of the Obligor Group in accordance with U.S. GAAP.
Current wording
Summarized financial information is presented below for the Obligor Group on a combined basis after elimination of intercompany transactions and balances within the Obligor Group and equity in the earnings from and investments in any non-guarantor subsidiary. The revenue amounts presented in the summarized financial information include substantially all of our condensed consolidated revenue, and there is no intercompany revenue from the non-guarantor subsidiaries. This summarized financial information has been prepared and presented pursuant to Regulation S-X Rule 13-01, “Financial Disclosures about Guarantors and Issuers of Guaranteed Securities” and is not intended to present the financial position or results of operations of the Obligor Group in accordance with U.S. GAAP.
Previous wording
During the three months ended April 30, 2024, there were no significant changes to our debt obligations related to the Senior Notes or our contractual obligations under our non-cancelable real estate arrangements, as presented in Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the fiscal year ended January 31, 2024.
Current wording
During the six months ended July 31, 2024, there were no significant changes to our debt obligations related to the Senior Notes or our contractual obligations under our non-cancelable real estate arrangements, as presented in Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the fiscal year ended January 31, 2024.
Previous wording
We have non-cancellable purchase commitments with various parties to purchase products and services entered in the normal course of business totaling $2.6 billion as of April 30, 2024, with remaining terms in excess of 12 months. We expect to fund these obligations with cash flows from operations and cash and cash equivalents on our balance sheet.
Current wording
We have non-cancellable purchase commitments with various parties to purchase products and services entered in the normal course of business totaling $2.7 billion as of July 31, 2024, with remaining terms in excess of 12 months. We expect to fund these obligations with cash flows from operations and cash and cash equivalents on our balance sheet.
Previous wording
As of April 30, 2024, our unrecognized tax benefits included $13.5 million, which were classified as long-term liabilities due to the inherent uncertainty with respect to the timing of future cash outflows associated with our unrecognized tax benefits.
Current wording
As of July 31, 2024, our unrecognized tax benefits included $14.4 million, which were classified as long-term liabilities due to the inherent uncertainty with respect to the timing of future cash outflows associated with our unrecognized tax benefits.
Previous wording
There have been no significant changes in our critical accounting policies and estimates during the three months ended April 30, 2024, as compared to the critical accounting policies and estimates disclosed in Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the year ended January 31, 2024, filed with the SEC on March 6, 2024.
Current wording
There have been no significant changes in our critical accounting policies and estimates during the six months ended July 31, 2024, as compared to the critical accounting policies and estimates disclosed in Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the year ended January 31, 2024, filed with the SEC on March 6, 2024.
Previous wording
We enter into both single and multi-year subscription contracts for our solutions. We generally invoice our customers at contract signing prior to commencement of subscription period. Until such time as these amounts are invoiced, they are not recorded in deferred revenue or elsewhere in our condensed consolidated financial statements, and are considered by us to be backlog. As of April 30, 2024, we had backlog of approximately $1.7 billion. We expect backlog will change from period to period for several reasons, including the timing and duration of customer agreements, varying billing cycles of subscription agreements, and the timing and duration of customer renewals. Because revenue for any period is a function of revenue recognized from deferred revenue under contracts in existence at the beginning of the period, as well as contract renewals and new customer contracts during the period, backlog at the beginning of any period is not necessarily indicative of future revenue performance. We do not utilize backlog as a key management metric internally.
Current wording
We enter into both single and multi-year subscription contracts for our solutions. We generally invoice our customers at contract signing prior to commencement of subscription period. Until such time as these amounts are invoiced, they are not recorded in deferred revenue or elsewhere in our condensed consolidated financial statements, and are considered by us to be backlog. As of July 31, 2024, we had backlog of approximately $1.8 billion. We expect backlog will change from period to period for several reasons, including the timing and duration of customer agreements, varying billing cycles of subscription agreements, and the timing and duration of customer renewals. Because revenue for any period is a function of revenue recognized from deferred revenue under contracts in existence at the beginning of the period, as well as contract renewals and new customer contracts during the period, backlog at the beginning of any period is not necessarily indicative of future revenue performance. We do not utilize backlog as a key management metric internally.
Previous wording
As of April 30, 2024, we had 8,429 full-time employees. We also engage temporary employees and consultants as needed to support our operations. None of our employees in the United States are represented by a labor union or subject to a collective bargaining agreement. In certain countries in which we operate, we are subject to local labor law requirements which may automatically make our employees subject to industry-wide collective bargaining agreements. We have not experienced any work stoppages, and we consider our relations with our employees to be good.
Current wording
As of July 31, 2024, we had 9,219 full-time employees. We also engage temporary employees and consultants as needed to support our operations. None of our employees in the United States are represented by a labor union or subject to a collective bargaining agreement. In certain countries in which we operate, we are subject to local labor law requirements which may automatically make our employees subject to industry-wide collective bargaining agreements. We have not experienced any work stoppages, and we consider our relations with our employees to be good.
Previous wording
Our principal executive offices are located at 206 E. 9 th Street, Suite 1400, Austin, Texas 78701 and our telephone number is (888) 512-8906. We are a holding company and all of our business operations are conducted through our subsidiaries, including CrowdStrike, Inc. Our website address is www.crowdstrike.com. Information contained on, or that can be accessed through, our website does not constitute part of this Quarterly Report on Form 10-Q.
Current wording
Our principal executive offices are located at 206 E. 9th Street, Suite 1400, Austin, Texas 78701 and our telephone number is (888) 512-8906. We are a holding company and all of our business operations are conducted through our subsidiaries, including CrowdStrike, Inc. Our website address is www.crowdstrike.com. Information contained on, or that can be accessed through, our website does not constitute part of this Quarterly Report on Form 10-Q.
Previous wording
See Note 1, “Description of Business and Significant Accounting Policies”, of our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q, for more information about the impact of certain recent accounting pronouncements on our condensed consolidated financial statements.
Current wording
See Note 1, “Description of Business and Significant Accounting Policies,” to our condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q, for more information about the impact of certain recent accounting pronouncements on our condensed consolidated financial statements.
Rearranged current paragraphs (10)
Current report — wording carried from elsewhere
The following shows total revenue from subscriptions and professional services for the six months ended July 31, 2024 as compared to the six months ended July 31, 2023 (in thousands, except percentages):
Current report — wording carried from elsewhere
Total revenue increased by $460.7 million, or 32%, for the six months ended July 31, 2024 compared to the six months ended July 31, 2023. Subscription revenue accounted for 95% and 94% of our total revenue for the six months ended July 31, 2024 and July 31, 2023, respectively. Professional services revenue accounted for 5% and 6% of our total revenue for the six months ended July 31, 2024 and July 31, 2023, respectively.
Current report — wording carried from elsewhere
Subscription revenue increased by $449.3 million, or 33%, for the six months ended July 31, 2024 compared to the six months ended July 31, 2023, which was primarily driven by a combination of the addition of new customers and the sale of additional sensors and modules to existing customers.
Current report — wording carried from elsewhere
Cost of Revenue, Gross Profit, and Gross Margin
Current report — wording carried from elsewhere
The following shows cost of revenue related to subscriptions and professional services for the six months ended July 31, 2024 as compared to the six months ended July 31, 2023 (in thousands, except percentages):
Current report — wording carried from elsewhere
The following shows gross profit and gross margin for subscriptions and professional services for the six months ended July 31, 2024 as compared to the six months ended July 31, 2023 (in thousands, except percentages):
Current report — wording carried from elsewhere
Professional services gross margin decreased by 9% for the six months ended July 31, 2024 compared to the six months ended July 31, 2023. The decrease in professional services gross margin was primarily due to an increase in consulting expenses and decreased utilization during the six months ended July 31, 2024.
Current report — wording carried from elsewhere
Interest expense consists primarily of amortization of debt issuance costs, contractual interest expense, accretion of debt discount for our Senior Notes issued in January 2021, and amortization of debt issuance costs on our secured revolving credit facility.
Current report — wording carried from elsewhere
The increase in interest income for the six months ended July 31, 2024 compared to the six months ended July 31, 2023 was driven by increases in market interest rates and an increase in our cash and cash equivalents.
Current report — wording carried from elsewhere
The following shows the provision for income taxes for the six months ended July 31, 2024 as compared to the six months ended July 31, 2023 (in thousands, except percentage):