CrowdStrike Holdings, Inc. Q1 FY2026 earnings call

• Q1 highlights: Net new ARR $194 million, ending ARR > $4.4 billion, subscription gross margin 80%, 97% gross retention, free cash flow $279 million, $774 million added to FalconFlex account value. • FalconFlex trends: Customers spend more (avg deal size > $1M in ending ARR), commit to longer durations (avg 31 months), adopt faster (>75% deployed). • AI and product innovations: Charlotte AI transforms SOC, cloud business had strong start with ARR growth, exposure management evolved with AI-powered network vulnerability assessment, next-gen SIEM had triple-digit ending ARR growth, identity business expanded coverage/functionality. • Partner success: 60% of Q1 annual deal value sourced by partners, GuidePoint joins $1B partner ranks, MSSP business grew to >15% of Q1 deal value, partnership with NVIDIA and Microsoft announced. • Strategic realignment: Focus on platform growth areas, AI for internal efficiency, and go-to-market/customer success, expected to add at least 1% to non-GAAP operating margin in FY2027 and improve free cash flow margin to >30% in FY2027.

In Q1 FY2026, CrowdStrike achieved net new ARR of $194 million. Ending ARR surpassed $4.4 billion. Subscription gross margin was 80%. Gross retention was sustained at 97%. Free cash flow was $279 million, which is 25% of revenue. Added $774 million of total FalconFlex account value, bringing total deal value of adopted accounts to $3.2 billion. Revenue contribution: Net new ARR was $194 million, ending ARR over $4.4 billion, subscription gross margin 80% of revenue, free cash flow 25% of revenue, FalconFlex account value $774 million with total deal value $3.2 billion.

• Q2 total revenue expected to be in range of $1,144.7 - $1,151.6 million, y-o-y growth 19%. • Non-GAAP income from operations for Q2 in range of $226.9 - $233.1 million, non-GAAP net income in range of $209.1 - $213.8 million. • FY2026 total revenue expected in range of $4,743.5 - $4,805.5 million, growth 20%-22% y-o-y. • Non-GAAP income from operations expected between $970.8 - $1,010.8 million, non-GAAP net income between $878.7 - $909.7 million. • Anticipate sequential net new ARR growth next quarter and acceleration of back half net new ARR. • Impact of CCP programs on revenue recognition expected to subside in Q4 FY2026.

• The company received a request for information from the DOJ and SEC relating to revenue recognition and reporting of ARR for certain transactions, the July 19 outage, and related matters.

Q: Saket Kalia asked about Falcon Flex, which products are benefiting and sales motion change.

A: George Kurtz said next-gen SIEM, cloud, and identity are benefiting, and Flex changes the selling motion to demand planning for outcomes.

Q: Tal Liani asked about divergence between revenue and ARR growth and why ARR will accelerate in back half.

A: Burt Podbere explained impact of CCP programs on revenue recognition and mentioned momentum in products, Flex, and larger deals driving back half ARR acceleration.

Q: Gabriela Borges asked about budget conversation for reflex deals.

A: George Kurtz said it's through demand planning and business value assessment, focusing on replacing point products and providing better outcomes with Flex.

Q: Brian Essex asked about sales go-to-market effort change and compensation.

A: George Kurtz said response from Salesforce and customers has been great, focus on innovation and customers wanting more, with ongoing education for partners and sales on demand planning.

Q: Andy Nowinski asked about impact of Falcon Flex on revenue and ARR with reflexes.

A: Burt Podbere said reflexes show up in net new ARR when customers come back to reflex and want more of the Falcon platform.

Q: Keith Weiss asked about generative AI demand and current drivers.

A: George Kurtz said current drivers include Charlotte AI for workflow automation and security outcomes, with future demand from protecting autonomous AI agents.

Q: Matt Hedberg asked about US Fed trend and Bloomberg article.

A: Burt Podbere mentioned the company received a request for information from the DOJ and SEC relating to revenue recognition, reporting of ARR, the July 19 outage, and related matters.

Q: Joe Gallo asked about free cash flow margin guardrails and confidence in 30%+ margin next year.

A: Burt Podbere said confidence comes from Flex, larger deals, and faster burn through of Flex leading to more dollars and improved free cash flow margin.

Q: Mike Sikos asked about macro movement in April and May.

A: George Kurtz said the team powered through challenges with the right platform and solving customer problems, delivering strong results.

Q: Shaul Eyal asked about legacy incumbents displaced by next-gen SIEM.

A: George Kurtz said Splunk and QRadar are big legacy incumbents being displaced, with customers valuing better, faster, and more value.

Q: Roger Boyd asked about MSSP momentum.

A: George Kurtz said they've invested in working with MSSP partners, meeting demand, winning deals, and having a partner-first mentality.

Q: Peter Levine asked about vision in identity management space.

A: George Kurtz said they're deepening identity management with privileged access management, leveraging existing expertise and customer demand for consolidation and cost savings.

Q: Keith Backman asked about CCP and back half ARR.

A: Burt Podbere explained impact of CCP on revenue, module retention rates, and how flex and re-ups contribute to back half ARR and margin expansion.