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1. Demand
- Beat its revenue guide by 1.5% and estimates by 1%
- Missed customer estimates by 0.8%.
- Met Annual Recurring Revenue (ARR) estimates.
- ARR missed CrowdStrike’s internal expectations (which weren’t publicly shared) -- more on this later.
More Demand Context:
- CrowdStrike stopped disclosing customers with 4+, 5+ & 6+ modules after Q4 2022 and began disclosing 5+, 6+ & 7+ module customers instead. Module adoption remains brisk.
- More module adoption is not only a revenue driver, but a margin expander as well. Why? Because there are virtually no added operating expenses for CrowdStrike selling every module after the first.
- Partner-sourced ARR grew 55% YoY.
- Clients contributing over $1 million in net new ARR rose 67% YoY.
- Gross retention remains at record highs over 98%.
- Net retention was at its highest level in 7 quarters. This implies a reading over 125%.
2. Profitability
- Beat its EBIT guide by 19.2% & beat estimates by 16.6%.
- Beat its net income guide & beat estimates by 29%.
- Beat free cash flow (FCF) estimates by 7%.
More Margin Context:
Magic number refers to net new subscription revenue multiplied by 4 and then divided by the company’s sales and marketing expense. Anything above 1.0 is a sign to Podbere to lean even more heavily into growth spend. Still, this is CrowdStrike’s lowest magic number since going public.
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