# How CrowdStrike makes money

CXProWealth Business Lens · CrowdStrike (CRWD) · FY2026

Read from the 10-K for the period 2025-02-01 to 2026-01-31, filed 2026-03-05 with the SEC (accession 0001535527-26-000010): https://www.sec.gov/Archives/edgar/data/1535527/000153552726000010/

Business Lens explains how a company earns, spends and keeps its money, from its own filings. It is insight and context, never a view on the shares, a target, or advice. Figures are raw units as filed; percentages are percentage points.

## Headline figures

- Revenue: $4.8B (+21.7% on the year)
- Operating income: -$293.3M (operating margin -6.1%)
- Net income: -$162.5M (net margin -3.4%)
- Gross margin: 74.7%
- Free cash flow: $1.3B (27.2% of revenue)
- Cash conversion (operating cash flow / net income): -9.92x
- Capital expenditure: 6.3% of revenue

## Where the money goes (FY2026)

- Subscription → Total revenue: $4.6B
- Professional services → Total revenue: $247.3M
- Total revenue → Total cost of revenue: $1.2B
- Total revenue → Gross profit: $3.6B
- Gross profit → Total operating expenses: $3.6B
- Total operating expenses → General and administrative: $670.3M
- Total operating expenses → Sales and marketing: $1.8B
- Total operating expenses → Research and development: $1.4B
- Net loss → Total operating expenses: $127.0M
- Interest income → Interest expense: $28.0M
- Interest income → Other income (expense), net: $645.0K
- Interest income → Total operating expenses: $166.3M
- Net loss → Provision for income taxes: $34.2M
- Net loss → Net income attributable to non-controlling interest: $1.3M

## Where the revenue comes from

### Products and services (Consolidated Statements of Operations)

| Member | Value | Share |
|---|---:|---:|
| Subscription | $4.6B | 94.9% |
| Professional services | $247.3M | 5.1% |

The members sum to total revenue.

### Regions (Revenue, Deferred Revenue and Remaining Performance Obligations - Schedule of Revenue from Contracts by Type and Region (Details))

| Member | Value | Share |
|---|---:|---:|
| Europe, Middle East, and Africa | $782.7M | 16.3% |
| Asia Pacific | $495.7M | 10.3% |
| Other | $317.0M | 6.6% |

The members do not sum to total revenue.

## Income statement, as filed

| Line | FY2026 | Of revenue |
|---|---:|---:|
| Total revenue | $4.8B | 100% |
|   Subscription | $4.6B | 94.9% |
|   Professional services | $247.3M | 5.1% |
| Total cost of revenue | $1.2B | 25.3% |
|   Subscription | $1.0B | 21.1% |
|   Professional services | $203.0M | 4.2% |
| **Gross profit** | $3.6B | 74.7% |
| Sales and marketing | $1.8B | 38.1% |
| Research and development | $1.4B | 28.8% |
| General and administrative | $670.3M | 13.9% |
| **Total operating expenses** | $3.9B | 80.8% |
| **Loss from operations** | -$293.3M | 6.1% |
| Interest expense | ($28.0M) | 0.6% |
| Interest income | $195.0M | 4.1% |
| Other income (expense), net | -$645.0K | 0.0% |
| **Income (loss) before provision for income taxes** | -$127.0M | 2.6% |
| Provision for income taxes | $34.2M | 0.7% |
| **Net income (loss)** | -$161.2M | 3.3% |
| Net income attributable to non-controlling interest | $1.3M | 0.0% |
| **Net income (loss) attributable to CrowdStrike** | -$162.5M | 3.4% |
| Basic (in dollars per share) | -$1 | 0.0% |
| Diluted (in dollars per share) | -$1 | 0.0% |
| Basic (in shares) | 250,576,000 |  |
| Diluted (in shares) | 250,576,000 |  |

## History

| Period | Revenue | Operating income | Net income | Operating cash flow | Capital expenditure | Free cash flow |
|---|---:|---:|---:|---:|---:|---:|
| FY2018 | $118.8M | -$131.4M | -$135.5M | -$58.8M | $22.9M | -$81.7M |
| FY2019 | $249.8M | -$136.9M | -$140.1M | -$23.0M | $35.9M | -$58.8M |
| FY2020 | $481.4M | -$146.1M | -$141.8M | $99.9M | $80.2M | $19.7M |
| FY2021 | $874.4M | -$92.5M | -$92.6M | $356.6M | $52.8M | $303.8M |
| FY2022 | $1.5B | -$142.5M | -$234.8M | $574.8M | $112.1M | $462.6M |
| FY2023 | $2.2B | -$190.1M | -$183.2M | $941.0M | $235.0M | $706.0M |
| FY2024 | $3.1B | -$19.1M | $72.2M | $1.2B | $176.5M | $989.7M |
| FY2025 | $4.0B | -$116.4M | -$15.2M | $1.4B | $254.9M | $1.1B |
| FY2026 | $4.8B | -$293.3M | -$162.5M | $1.6B | $302.1M | $1.3B |

Latest trend (the newest full year against the year before; a reading, not a forecast):

- Revenue: +21.7% (year before +29.4%): slowing
- Operating income: — (year before —): too short a history to read
- Net income: — (year before -121.1%): too short a history to read
- Free cash flow: +16.3% (year before +13.9%): accelerating

## Key insights

### A $162.5M net loss sat beside $1.31B of free cash flow

Customers pay at the start of their subscriptions, so CrowdStrike generated free cash flow equal to 27.2% of revenue while reporting an operating loss of $293.3M.

Operating cash flow was $1.61B, 33.5% of revenue, and free cash flow was $1.31B, 27.2% of revenue, after capital spending of $302.1M. Free cash flow rose from $1.13B a year earlier, while the net loss attributable to CrowdStrike widened to $162.5M from $15.2M. The filing names stock-based compensation, the amortization of deferred contract acquisition costs and the increase in deferred revenue as the main items between the loss and the cash. _(from the filing)_
The pattern is not new. Operating income was negative in every year from FY2019 to FY2026, while free cash flow turned positive in FY2020, at $19.7M, and reached $1.13B in FY2025 and $1.31B in FY2026. The filing says customers are generally invoiced at the start of the subscription term, and revenue is then recognized evenly over that term. _(from the filing)_
Analysis: the cash figure leaves out one cost. Stock-based compensation is paid in shares, not cash, so it lowers reported profit but not cash flow; its cost shows up in the share count instead, and the weighted average basic share count rose to 250.6M from 244.8M. Upfront billing also means the cash figure depends on renewals continuing on similar terms. _(analysis)_

### Overhead, not selling, drove most of the wider operating loss

General and administrative costs rose 39.3%, against revenue growth of 21.7%, and supplied 1.76 of the 2.86-point rise in operating expenses as a share of revenue.

Total operating expenses rose 26.2% to $3.89B, or 80.8% of revenue, up 2.86 points, while revenue rose 21.7%. General and administrative expense, up 39.3% to $670.3M, added 1.76 points, or 61.5% of that rise. Research and development added 1.57 points, and sales and marketing fell 0.47 points to 38.1% of revenue. The operating margin moved to -6.1% from -2.9% a year earlier. _(from the filing)_
The filing names expenses tied to the sensor outage and related matters as the largest single driver of the general and administrative increase, followed by stock-based compensation, consulting, and charges under a restructuring it calls the Strategic Plan. It expects legal, professional and other expenses associated with the outage to continue in future periods. _(from the filing)_
Analysis: the selling engine itself grew more efficient, since sales and marketing rose 20.2%, slower than revenue. The wider loss came mainly from overhead tied to one event and from engineering spend, so how far the loss narrows depends on whether outage costs fade and whether research spending grows slower than revenue. _(analysis)_

### Interest on cash offset two-thirds of the operating loss

Interest income of $195.0M, 4.05% of revenue, covered 66.5% of the $293.3M operating loss, leaving a pretax loss of $127.0M.

Interest income was $195.0M against $196.2M a year earlier, down 0.61%, which the filing attributes to lower market rates partly offset by higher cash balances. Interest expense was $28.0M. After these items the pretax result was a $127.0M loss, against $58.6M of income a year earlier, when interest income was larger than the operating loss of $116.4M. _(from the filing)_
Taxes widened the loss further. The provision for income taxes was $34.2M on a pretax loss, adding 26.9% to it; the filing says it keeps a full valuation allowance on its U.S. deferred tax assets and pays foreign income and withholding taxes. A year earlier the $71.1M provision was 121.4% of pretax income, which turned a pretax profit into a net loss. _(from the filing)_
Analysis: two-thirds of the operating loss is offset by a return on cash rather than by the business itself. That cushion moves with interest rates, which the company does not control, and with the size of the cash balance, which acquisitions paid in cash draw down. _(analysis)_

### Competitive edge

- **One installed sensor carries every module sold after it** Each added module reads data the installed sensor already collects, and serving all subscriptions cost 22.3% of subscription revenue.
- **Every customer's data trains the detection all customers use** Events streamed from customer devices feed shared AI models, so detection improves as more customers and endpoints join, according to the filing.
- **Breach response work feeds the subscription business** Professional services cost 82.1% of the revenue they bring in, but the filing calls incident response a lead generation engine for subscriptions.

### What to watch

- **The sensor outage still weighs on costs and renewals** The filing names the outage as its first risk: it drove the largest rise in overhead, and concessions granted since have meant contraction and smaller upsells.
- **Larger rivals can bundle security into products customers own** The filing warns that competitors with greater resources may cut prices or bundle features, which would show first in a gross margin of 74.7%.
- **A security vendor's own failures cost more than most** The filing says CrowdStrike is a target of sophisticated attackers and runs on AWS and its own data centers, for customers with a low tolerance for interruptions.

## Investor view

**CrowdStrike's upfront-billed subscriptions produced $1.31B of free cash flow in a year its operating loss widened**

### How it makes money

CrowdStrike sells subscriptions to its Falcon security platform. Subscription revenue was $4.56B in FY2026, 94.9% of total revenue of $4.81B. The filing says subscriptions are "generally priced on a per-endpoint and per-module basis" and recognized evenly over terms that are generally one to three years, so most of each period's revenue comes from contracts signed earlier. _(from the filing)_
Revenue grows on three levers the filing names: "the number of subscription customers, the number of endpoints per customer, and the number of cloud modules included in the subscription." Serving those subscriptions cost $1.02B in subscription cost of revenue, 22.3% of subscription revenue, mostly cloud hosting, data center equipment, internal software and support staff. _(from the filing)_
Professional services, mainly breach response and consulting billed by the hour, brought in $247.3M, 5.1% of revenue, at a cost of $203.0M, or 82.1% of that revenue. The company says it views this business "primarily as an opportunity to cross-sell subscriptions to our Falcon platform and cloud modules." _(from the filing)_
Customers are generally invoiced at the start of the subscription term, so cash arrives before revenue is recognized. Operating cash flow was $1.61B and free cash flow $1.31B, 27.2% of revenue, against a net loss attributable to CrowdStrike of $162.5M. The cash balances also earned $195.0M of interest income. _(from the filing)_

### What shifted

Revenue rose 21.7% to $4.81B, but total operating expenses rose 26.2% to $3.89B, or 80.8% of revenue, up 2.86 points. With gross margin at 74.7%, the operating loss widened to $293.3M from $116.4M, an operating margin of -6.1%. Operating expenses were 108.2% of gross profit, against 103.9% a year earlier. _(from the filing)_
General and administrative expense grew fastest, up 39.3% to $670.3M from $481.3M, taking 13.9% of revenue, up 1.76 points. The filing names expenses tied to the outage caused by a faulty Falcon sensor update "and related matters" as the largest driver, followed by stock-based compensation, consulting, and charges under a restructuring it calls the Strategic Plan. _(from the filing)_
Research and development rose 28.8% to $1.38B, also 28.8% of revenue, up 1.57 points, which the filing attributes to more engineers, stock-based compensation and cloud hosting. Sales and marketing grew slower than revenue, up 20.2% to $1.83B, and fell 0.47 points to 38.1% of revenue. _(from the filing)_
Below the operating line, interest income held at $195.0M against $196.2M, which the filing attributes to lower rates offset by higher cash balances; it covered 66.5% of the operating loss. Pretax results swung to a $127.0M loss from $58.6M of income, and the tax provision fell 51.9% to $34.2M. Net loss attributable to CrowdStrike was $162.5M, or $0.65 per share, against $15.2M, or $0.06. _(from the filing)_
Professional services grew 28.7%, faster than subscriptions at 21.4%, which moved 0.28 points of the revenue mix toward the lower-margin services line. Gross margin slipped 0.29 points to 74.7%. _(from the filing)_

### Risks in the filing

The company names the outage caused by a faulty Falcon sensor update, which crashed certain Windows systems, as its first risk. It says some customers deferred or decided against purchases or chose not to renew, competitors used the event to approach its customers, and it faces securities, derivative and consumer lawsuits and government inquiries. It expects insurance not to cover all costs and says it cannot yet estimate the possible loss. _(from the filing)_
Competition: rivals with greater resources may build competing features into products customers already own, offer lower prices, or move faster with AI. The filing warns that competitive pricing pressure could reduce its gross profits. _(from the filing)_
Reliability and exposure: as a security vendor it is a target of sophisticated attackers, including nation-state groups, and its platform runs on Amazon Web Services and its own colocation data centers. The filing says its customers have "a low tolerance for interruptions of any duration." _(from the filing)_
Timing: because subscription revenue is recognized over terms of generally one to three years, a slowdown in new sales or renewals shows up in reported revenue only later. The filing adds that commitment packages extending subscription periods lengthen the term over which revenue is recognized, which has weighed on results. _(from the filing)_
Of these, the outage is the risk the numbers already show, through the jump in general and administrative expense and the filing's own account of contraction and smaller upsells. Pricing pressure is not yet visible at the gross margin line, which held nearly flat; it would first appear there or as slower subscription growth. _(analysis)_

## Founder view: mechanisms

### One sensor, many modules

CrowdStrike installs one lightweight sensor per device and sells everything else as cloud modules that read the data that sensor already collects. The first sale carries the cost of winning the customer and deploying the agent. Each module after that is mostly a contract change: no new install, no new data pipeline, and a buyer who has already trusted the vendor with the most sensitive layer of the machine. _(analysis)_

### Billed upfront, cash before profit

Customers pay at the start of a multi-year subscription and the revenue is recognized month by month. Cash arrives before revenue, and a large share of pay is stock-based compensation, settled in shares. The result is a business that reports operating losses while generating cash it can spend on hiring, data centers and acquisitions without borrowing. _(analysis)_

### Incident response as a sales funnel

When a company is breached, CrowdStrike's response team arrives and, as an early step, deploys the Falcon sensor to see what the attacker touched. The service earns little, but the customer has just watched the platform work in the worst week of its year. The service is priced as labor; its economic value is the subscription that can follow. _(analysis)_

### A trust failure is paid for over years

CrowdStrike sells protection, so reliability is the product. A single faulty sensor update turned into costs spread over years: lawyers and claims, concessions to keep customers, and longer sales cycles. Because subscription revenue is recognized over the contract, discounts and extended terms granted in one year weigh on growth for the life of those contracts. _(analysis)_

## Member research

Signed-in members read, on the page: what CrowdStrike's numbers depend on from here, and the playbook behind each mechanism (what needs scale, what transfers, how to test it, the metric that would show it).

## Sources

- CrowdStrike 10-K for the period to 2026-01-31: https://www.sec.gov/Archives/edgar/data/1535527/000153552726000010/ (2026-03-05)

Methodology business-lens-1.0 · schema 1.2.0 · run business-lens-2026-11-02 · as of 2026-11-02