TenQ

The CrowdStrike story

CrowdStrike provides cybersecurity subscriptions through Falcon, with the central question of whether customers consolidating security tools on its platform can turn broader adoption into sustained operating profits.

Written from CrowdStrike's own filings with the SEC, and rewritten when it publishes a new earnings release. Updated 2026-09-30.

  • $259.25share price, last close
  • $265.5Bmarket value
  • 20/36TenQ Score checks passed
  • 60.6%growth a year the price assumes

The story in brief

  • Recurring demand accelerated. In the quarter to July 2026, net new annual recurring revenue reached a record $333 million, growing 51% year over year.
  • Cash outpaced operating profits. CrowdStrike generated $377.4 million of free cash flow in the quarter to July 2026 but recorded a GAAP operating loss of $33.2 million.
  • Substantial growth is assumed. The reverse DCF implies free cash flow after stock pay growing 60.6% annually for ten years, below the TenQ check's 64.0% bar.

What drives the business

  • CrowdStrike's strategy centers on replacing separate security tools with Falcon, a subscription platform offering 33 cloud modules across endpoint protection, cloud security, identity, data protection and other security functions.
  • Its shared sensor and cloud infrastructure let customers add modules without installing additional sensors, supporting expansion within existing accounts.
  • Subscription revenue was $1.40 billion of total revenue of $1.47 billion in the quarter to July 2026, while annual recurring revenue reached $5.84 billion as of July 31, 2026.
  • Annual recurring revenue from accounts adopting Falcon Flex exceeded $2.29 billion, growing 101% year over year, and 51% of subscription customers used six or more modules as of July 31, 2026.
  • CrowdStrike expanded its collaboration with Amazon Web Services on AI and cloud security and its partnership with Schwarz Digits to bring Falcon to European enterprises, alongside an agreement to acquire XM Cyber's technology assets.

What the price assumes

At $259.25 per share, the reverse DCF assumes free cash flow after stock pay grows 60.6% a year for ten years, using a 10.2% discount rate.

CrowdStrike delivered 123.9% annual growth on that measure over the last 5 years, and the implied rate falls below the TenQ check's 64.0% bar, which slows that record halfway toward 4%.

That growth check passes, but the free cash flow yield of 0.6% falls below its historical comparison of 4.8% and the check's 3.0% threshold.

Value CRWD on your own assumptions

What could change the story

  • The July 19, 2024 Falcon sensor update caused crashes on certain Windows systems, leaving incident-related risks alongside the continuing possibility of product defects or vulnerabilities.
  • Competition, unpredictable sales cycles and acquisition integration could complicate customer retention and expansion across Falcon.
  • Revenue growth over the last twelve months was 24.3%, slower than the three-year annual pace of 29.0%, despite the acceleration in net new recurring revenue in the quarter to July 2026.
  • Stock-based pay totaled $1.2 billion against $1.6 billion of free cash flow over the last twelve months, while the share count rose 7.5% over 3 years.
  • The operating margin of -2.5% and failing interest coverage check show weak operating earnings, although $5.0 billion of cash and short-term investments exceeded total debt of $746 million.

What to watch next

  • For the quarter to October 2026, CrowdStrike expects annual recurring revenue between $6,184.4 million and $6,188.4 million and total revenue between $1,523.2 million and $1,529.2 million.
  • For fiscal 2027, management raised its net new annual recurring revenue growth outlook to 34% at the midpoint and expects total revenue between $5,991.1 million and $6,011.1 million.
  • Falcon Flex recurring revenue, module adoption, GAAP operating results and stock-based pay will show whether broader platform use is translating into growth with stronger underlying profitability.

Sources

Back to the CRWD report