CrowdStrike Holdings Inc

Previous wording

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 wording

July 19 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 “July 19 Incident”). As a result of the July 19 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 have incurred, and expect to continue to incur, significant legal and professional services and other general and administrative expenses associated with the July 19 Incident in future periods. It is not reasonably possible to quantify the precise impact of the July 19 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 July 19 Incident may include discounting, additional modules, professional services, flexible payment terms or subscription period extensions. Our customer commitment packages have resulted, and are expected to continue to result, in increased contraction, due to elongated subscription terms, and decreased upsell dollar values.

Previous 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.

Current wording

ARR grew to $4.0 billion as of October 31, 2024, of which $153.0 million and $582.3 million was net new ARR added for the three and nine months ended October 31, 2024, respectively. ARR grew to $3.2 billion as of October 31, 2023, of which $223.1 million and $593.5 million was net new ARR added for the three and nine months ended October 31, 2023, respectively.

Previous wording

Our dollar-based net retention rate was consistent with our expectations as of July 31, 2024. Our dollar-based net retention rate can fluctuate from period to period due to large customer contracts in a given period, which may reduce our dollar-based net retention rate in subsequent periods if the customer makes a larger upfront purchase and does not continue to increase the size of their purchases.

Current wording

Our dollar-based net retention rate was 115% as of October 31, 2024. Our dollar-based net retention rate can fluctuate from period to period due to large customer contracts in a given period and ongoing increased contraction associated with our customer commitment packages, which may reduce our dollar-based net retention rate in subsequent periods.

Previous wording

Professional Services Cost of Revenue. Professional services cost of revenue consists primarily of employee-related costs, such as salaries and bonuses, stock-based compensation expense, technology, property and equipment depreciation, and an allocated portion of facilities and administrative costs.

Current wording

Professional Services Cost of Revenue. Professional services cost of revenue consists primarily of employee-related costs, such as salaries and bonuses, stock-based compensation expense, consulting expense, and an allocated portion of facilities and administrative costs.

Previous wording

Gross profit and gross margin have been and will continue to be affected by various factors, including the timing of our acquisition of new subscription customers, renewals from existing subscription customers, sales of additional modules to existing subscription customers, the data center and bandwidth costs associated with operating our cloud platform, the extent to which we expand our customer support and cloud operations organizations, and the extent to which we can increase the efficiency of our technology, infrastructure, and data centers through technological improvements. We expect our gross profit to increase in dollar amount and our gross margin to increase modestly over the long term, although our gross margin could fluctuate from period to period depending on the interplay of these factors. Demand for our incident response services is driven by the number of breaches experienced by non-customers. Also, we view our professional services solutions in the context of our larger business and as a significant lead generator for new subscriptions. Because of these factors, our services revenue and gross margin may fluctuate over time.

Current wording

Gross profit and gross margin have been and will continue to be affected by various factors, including the timing of our acquisition of new subscription customers, renewals from existing subscription customers, sales of additional modules to existing subscription customers, the data center and bandwidth costs associated with operating our cloud platform, the extent to which we expand our customer support and cloud operations organizations, and the extent to which we can increase the efficiency of our technology, infrastructure, and data centers through technological improvements. We expect our gross profit to increase in dollar amount and our gross margin to increase modestly over the long term as we grow our business, although our gross margin could fluctuate from period to period depending on the interplay of these factors. Demand for our incident response services is driven by the number of breaches experienced by non-customers. Also, we view our professional services solutions in the context of our larger business and as a significant lead generator for new subscriptions. Because of these factors, our services revenue and gross margin may fluctuate over time.

Previous wording

Sales and Marketing. Sales and marketing expenses primarily consist of employee-related expenses such as salaries, commissions, and bonuses. Sales and marketing expenses also include stock-based compensation; expenses related to our Fal.Con customer conference and other marketing events; an allocated portion of facilities and administrative expenses; amortization of acquired intangibles, and cloud hosting and related services costs related to proof of value efforts. Sales and marketing expenses also include sales commissions and any other incremental payments made upon the initial acquisition of a subscription or upsells to existing customers, which are capitalized and amortized over the estimated customer life. We also capitalize and amortize any such expenses paid for the renewal of a subscription over the term of the renewal.

Current wording

Sales and Marketing. Sales and marketing expenses primarily consist of employee-related expenses such as salaries, commissions, and bonuses. Sales and marketing expenses also include stock-based compensation; expenses related to our marketing programs; an allocated portion of facilities and administrative expenses; amortization of acquired intangibles; and cloud hosting and related services costs related to proof of value efforts. Sales and marketing expenses also include sales commissions and any other incremental payments made upon the initial acquisition of a subscription or upsells to existing customers, which are capitalized and amortized over the estimated customer life. We also capitalize and amortize any such expenses paid for the renewal of a subscription over the term of the renewal.

Previous wording

We expect sales and marketing expenses to increase in dollar amount as we continue to make significant investments in our sales and marketing organization to drive additional revenue, further penetrate the market, and expand our global customer base. However, we anticipate sales and marketing expenses to decrease as a percentage of our total revenue over time, although our sales and marketing expenses may fluctuate as a percentage of our total revenue from period to period depending on the timing of these expenses.

Current wording

We expect sales and marketing expenses to increase in dollar amount as we continue to make significant investments in our sales and marketing organization to drive additional revenue, further penetrate the market, and expand our global customer base. However, we anticipate sales and marketing expenses to decrease as a percentage of our total revenue over time as we grow our business, although our sales and marketing expenses may fluctuate as a percentage of our total revenue from period to period depending on the timing of these expenses.

Previous wording

We expect research and development expenses to increase in dollar amount as we continue to increase investments in our technology architecture and software platform. However, we anticipate research and development expenses to decrease as a percentage of our total revenue over time, although our research and development expenses may fluctuate as a percentage of our total revenue from period to period depending on the timing of these expenses.

Current wording

We expect research and development expenses to increase in dollar amount as we continue to increase investments in our technology architecture and software platform. However, we anticipate research and development expenses to decrease as a percentage of our total revenue over time as we grow our business, although our research and development expenses may fluctuate as a percentage of our total revenue from period to period depending on the timing of these expenses.

Previous wording

We expect general and administrative expenses to increase in dollar amount over time. However, we anticipate general and administrative expenses to decrease as a percentage of our total revenue over time although our general and administrative expenses may fluctuate as a percentage of our total revenue from period to period depending on the timing of these expenses.

Current wording

We expect general and administrative expenses to increase in dollar amount over time. General and administrative expenses may fluctuate as a percentage of our total revenue from period to period depending on the timing of these expenses.

Previous wording

Interest Expense. Interest expense consists primarily of amortization of debt issuance costs, contractual interest expense for our Senior Notes issued in January 2021, and amortization of debt issuance costs on our secured revolving credit facility.

Current wording

Interest Expense. Interest expense consists primarily of amortization of debt issuance costs, contractual interest expense for our Senior Notes issued in January 2021, and amortization of debt issuance costs on our Revolving Facility.

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. For the three and six months ended July 31, 2024, we computed our U.S. tax provision on a discrete basis.

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 nine months ended October 31, 2024, we computed our U.S. tax provision on a discrete basis.

Previous 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.

Current 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.

Previous 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.

Current wording

Total revenue increased by $224.2 million, or 29%, for the three months ended October 31, 2024 compared to the three months ended October 31, 2023. Subscription revenue accounted for 95% and 93% of our total revenue for the three months ended October 31, 2024 and October 31, 2023, respectively. Professional services revenue accounted for 5% and 7% of our total revenue for the three months ended October 31, 2024 and October 31, 2023, respectively.

Previous 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.

Current wording

Subscription revenue increased by $229.3 million, or 31%, for the three months ended October 31, 2024 compared to the three months ended October 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

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.

Current wording

Total cost of revenue increased by $60.1 million, or 31%, for the three months ended October 31, 2024 compared to the three months ended October 31, 2023. Subscription cost of revenue increased by $56.5 million, or 35%, for the three months ended October 31, 2024, compared to the three months ended October 31, 2023. The increase in subscription cost of revenue was primarily due to an increase in employee-related expenses of $13.9 million driven by a 30% increase in average headcount, an increase in cloud hosting and related services cost of $10.5 million, an increase in depreciation of data center equipment of $9.4 million, an increase in stock-based compensation expense of $7.1 million, an increase in allocated overhead costs of $5.5 million, an increase in amortization of internal-use software of $5.4 million, an increase in hardware maintenance costs of $1.4 million, and an increase in employee benefits of $1.2 million.

Previous 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.

Current wording

Professional services gross margin decreased by 15% for the three months ended October 31, 2024, compared to the three months ended October 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 October 31, 2024.

Previous 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.

Current wording

General and administrative expenses increased by $21.4 million, or 20%, for the three months ended October 31, 2024 compared to the three months ended October 31, 2023. The increase in general and administrative expenses was primarily due to $15.3 million of expenses relating to the July 19 Incident, an increase in employee-related expenses of $6.6 million driven by a 19% increase in average headcount, an increase in corporate insurance of $3.6 million, an increase in allocated overhead costs of $2.0 million, an increase in term-based software licenses of $1.0 million, and an increase in leased airfare costs of $1.0 million, partially offset by a decrease in stock-based compensation expense of $2.9 million, a decrease in legal expense of $4.9 million unrelated to the July 19 Incident, and a decrease in consulting expense of $1.8 million.

Previous wording

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 wording

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 Revolving Facility.

Previous wording

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 wording

The increase in interest income for the three months ended October 31, 2024 compared to the three months ended October 31, 2023 was driven by an increase in our cash and cash equivalents.

Previous wording

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 wording

The decrease in other expense, net for the three months ended October 31, 2024 compared to the three months ended October 31, 2023 was primarily due to gains on deferred compensation assets and fluctuations in foreign currency transaction gains and losses.

Previous wording

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.

Current wording

The decrease in provision for income taxes of $3.3 million during the three months ended October 31, 2024 compared to the three months ended October 31, 2023 was primarily attributable to the tax benefit of effective settlement, offset by income taxes from pre-tax earnings and withholding taxes related to customer payments in certain foreign jurisdictions in which the Company conducts business.

Previous wording

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 wording

The following shows total revenue from subscriptions and professional services for the nine months ended October 31, 2024 as compared to the nine months ended October 31, 2023 (in thousands, except percentages):

Previous wording

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 wording

Total revenue increased by $684.9 million, or 31%, for the nine months ended October 31, 2024 compared to the nine months ended October 31, 2023. Subscription revenue accounted for 95% and 94% of our total revenue for the nine months ended October 31, 2024 and October 31, 2023, respectively. Professional services revenue accounted for 5% and 6% of our total revenue for the nine months ended October 31, 2024 and October 31, 2023, respectively.

Previous wording

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 wording

Subscription revenue increased by $678.6 million, or 33%, for the nine months ended October 31, 2024 compared to the nine months ended October 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 $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.

Current wording

Professional services revenue increased by $6.3 million, or 5%, for the nine months ended October 31, 2024, compared to the nine months ended October 31, 2023, which was primarily attributable to an increase in the number of professional service hours performed.

Previous wording

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 wording

The following shows cost of revenue related to subscriptions and professional services for the nine months ended October 31, 2024 as compared to the nine months ended October 31, 2023 (in thousands, except percentages):

Previous wording

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 wording

Total cost of revenue increased by $170.3 million, or 31%, for the nine months ended October 31, 2024 compared to the nine months ended October 31, 2023. Subscription cost of revenue increased by $150.6 million, or 33%, for the nine months ended October 31, 2024, compared to the nine months ended October 31, 2023. The increase in subscription cost of revenue was primarily due to an increase in employee-related expenses of $43.0 million driven by a 29% increase in average headcount, an increase in depreciation of data center equipment of $28.0 million, an increase in stock-based compensation expense of $18.7 million, an increase in cloud hosting and related services cost of $18.5 million, an increase in amortization of internal-use software of $16.3 million, an increase in allocated overhead costs of $14.4 million, an increase in hardware maintenance costs of $4.7 million, and an increase in employee health benefits of $2.4 million.

Previous wording

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 wording

The following shows gross profit and gross margin for subscriptions and professional services for the nine months ended October 31, 2024 as compared to the nine months ended October 31, 2023 (in thousands, except percentages):

Previous wording

Subscription gross margin was flat for the six months ended July 31, 2024, compared to the six months ended July 31, 2023.

Current wording

Subscription gross margin was flat for the nine months ended October 31, 2024, compared to the nine months ended October 31, 2023.

Previous wording

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 wording

Professional services gross margin decreased by 11% for the nine months ended October 31, 2024 compared to the nine months ended October 31, 2023. The decrease in professional services gross margin was primarily due to an increase in consulting expenses and decreased utilization during the nine months ended October 31, 2024.

Previous wording

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 wording

The following shows sales and marketing expenses for the nine months ended October 31, 2024 as compared to the nine months ended October 31, 2023 (in thousands, except percentages):

Previous wording

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 wording

Sales and marketing expenses increased by $263.6 million, or 31%, for the nine months ended October 31, 2024 compared to the nine months ended October 31, 2023. The increase in sales and marketing expenses was primarily due to an increase in employee-related expenses of $108.3 million driven by a 13% increase in average headcount, an increase in marketing programs of $43.4 million, an increase in stock-based compensation expense of $36.2 million, an increase in allocated overhead costs of $19.5 million, $18.2 million of expenses relating to the July 19 Incident, an increase in travel expenses of $9.3 million, an increase in company events expenses of $5.4 million, an increase in term-based software licenses of $3.8 million, an increase in cloud hosting and related costs of $3.4 million, an increase in employee health benefits of $2.8 million, an increase in other labor expenses of $2.5 million, and an increase in consulting expense of $1.5 million, partially offset by a decrease in taxes and licenses of $1.3 million.

Previous wording

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 wording

The following shows research and development expenses for the nine months ended October 31, 2024 as compared to the nine months ended October 31, 2023 (in thousands, except percentages):

Previous wording

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 wording

Research and development expenses increased by $207.3 million, or 37%, for the nine months ended October 31, 2024 compared to the nine months ended October 31, 2023. This increase was primarily due an increase in stock-based compensation expense of $80.7 million, an increase in employee-related expenses of $69.3 million driven by a 15% increase in average headcount, an increase in cloud hosting and related costs of $21.9 million, an increase in allocated overhead costs of $17.7 million, $4.6 million of expenses relating to the July 19 Incident, an increase in term-based software licenses of $3.0 million, an increase in employee related benefits of $2.5 million, an increase in travel expenses of $2.4 million, and an increase in consulting expense of $1.1 million.

Previous wording

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 wording

The following shows general and administrative expenses for the nine months ended October 31, 2024 as compared to the nine months ended October 31, 2023 (in thousands, except percentages):

Previous wording

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 wording

General and administrative expenses increased by $47.1 million, or 16%, for the nine months ended October 31, 2024 compared to the nine months ended October 31, 2023. The increase in general and administrative expenses was primarily due to an increase in employee-related expenses of $21.0 million driven by an 17% increase in average headcount, $16.3 million of expenses relating to the July 19 Incident, an increase in allocated overhead costs of $4.4 million, an increase in consulting expense of $2.8 million, an increase in leased airfare costs of $2.6 million, an increase in tax and licenses of $1.6 million, and an increase in company events expenses of $1.0 million, partially offset by a decrease in legal expense of $7.5 million unrelated to the July 19 Incident.

Previous wording

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 wording

The following shows interest expense, interest income, and other income (expense), net for the nine months ended October 31, 2024 as compared to the nine months ended October 31, 2023 (in thousands, except percentages):

Previous wording

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 wording

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 Revolving Facility.

Previous wording

The increase in interest income for the three months ended July 31, 2024 compared to the three months ended July 31, 2023 was driven by increases in market interest rates and an increase in our cash and cash equivalents.

Current wording

The increase in interest income for the nine months ended October 31, 2024 compared to the nine months ended October 31, 2023 was driven by increases in market interest rates and an increase in our cash and cash equivalents.

Previous 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.

Current wording

The increase in other income (expense), net for the nine months ended October 31, 2024 compared to the nine months ended October 31, 2023 was primarily due to gains on sales of our strategic investments of $6.2 million and an increase in net foreign currency transaction gains of $1.1 million.