CrowdStrike's $1.1 Billion Quarter Leads Cybersecurity Market Despite Stock Drop

On June 4, 2025, CrowdStrike Holdings, Inc. (CRWD) experienced a significant drop in its stock price, falling by 5.77%. This decline came after the company reported mixed results for its first quarter of fiscal year 2026. Despite the drop, CrowdStrike's performance showed resilience in a challenging market environment, with notable achievements in customer retention and platform adoption.

CrowdStrike reported a net new Annual Recurring Revenue (ARR) of $194 million, exceeding management's expectations. The company's ending ARR reached $4.44 billion, marking a 22% year-over-year increase. This growth underscores CrowdStrike's leadership in pure-play cybersecurity software. The company's subscription gross margin remained strong at 80%, reflecting the efficiency of its AI-driven platform. Additionally, the gross retention rate stood at 97%, indicating high customer loyalty to the Falcon platform.

CrowdStrike's free cash flow for the quarter was $279.4 million, representing 25% of revenue. The company's total revenue for the quarter was $1.1 billion, up 20% year-over-year. Subscription revenue accounted for $1.05 billion, also up 20%, while professional service revenue hit a record $52.7 million. The company's total gross margin was 78%, with non-GAAP operating expenses at $656 million or 59% of revenue. CrowdStrike's non-GAAP operating income was $201.1 million, with an operating margin of 18%, exceeding company guidance. The company's non-GAAP net income was $184.7 million or $0.73 per diluted share, both exceeding guidance.

CrowdStrike's cash and cash equivalents grew to a record $4.61 billion. The company's strategic realignment plan is expected to enhance its non-GAAP operating margin to at least 24% for fiscal year 2027 and drive an improved free cash flow margin above 30%. The company's guidance for the second quarter of fiscal year 2026 includes total revenue between $1,144.7 million and $1,151.6 million, non-GAAP operating income between $226.9 million and $233.1 million, and non-GAAP diluted EPS between $0.82 and $0.84. For the full fiscal year 2026, CrowdStrike expects total revenue between $4,743.5 million and $4,805.5 million, non-GAAP net income between $878.7 million and $909.7 million, and non-GAAP diluted EPS between $3.44 and $3.56.