CrowdStrike Earnings Review

6 min read

A. Demand

On results:

CrowdStrike guided to a revenue range of $358-$365.3 million for this quarter. Analysts were expecting $364.2 million in sales for the period. The company posted $380.1 million beating its own midpoint by 5.1% and analyst estimates by 4.4%.

Subscribe now

QoQ growth acceleration (last quarter vs. this quarter):

  1. Sequential revenue growth accelerated from 11.5% to 12.6%..
  2. Sequential demand backlog growth accelerated from 14.1% to 27.7%.
  3. Sequential remaining performance obligation (RPO) growth accelerated from 13.6% to 16.2%.

Lofty RPO and demand backlog growth both hint at more rapid expansion to come. These are both purely forward-looking demand metrics.

Note that year over year comparisons are measuring current times vs. a period in which work-from-home greatly accelerated endpoint security needs (CrowdStrike’s main niche). CrowdStrike’s strong results are despite this comparison headwind.

Module adoption costs CrowdStrike virtually nothing in added operating costs after the first module has been on-boarded. This means the trend of strong module adoption depicted below is a clear sign of more margin expansion to come. CFO Burt Podbere has told us numerous times in the past that CrowdStrike will continue to debut 1-2 new modules every year.

Share

For some reason CrowdStrike did not disclose its % of clients with 4+ modules in Q4 2020 then began doing so again the following quarter.

Last quarter, Burt Podbere told us that CrowdStrike would soon begin disclosing users with 7+ modules which offers more evidence of strong continued adoption. The company didn’t even disclose users with 6+ modules until fiscal Q3 2021 because the number wasn’t material enough to report.

B. Margins

CrowdStrike was expected to earn $0.11 per share for the quarter. It earned $0.17 per share beating expectations by $0.06.

CrowdStrike also guided to the following:

  1. $29.4 - $34.7 million in non-GAAP operating income. It posted $50.7 million beating the highpoint of its guidance by 46.1%.
  2. $19.7 - $25.0 million in non-GAAP net income. It posted $41.1 million beating the highpoint of its guidance by 64.4%.

Q3 is a seasonally stronger period for cash flow generation vs. Q2. This is due to performance obligations and accounts receivable translating more commonly into free cash in the period vs. Q2.

As a reminder, CrowdStrike’s target subscription GPM range is 77%-82% — a range that it has now been in for nearly 2 years:

C. 2021 Guidance Updates

Analysts were looking for roughly $400 million for next quarter’s revenue guide. CrowdStrike guided to $406.5-$412.4 million representing a beat at the midpoint of 2.4%.