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目次

アメリカ合衆国
証券取引委員会
ワシントンDC20549
___________________________________________________________________________________________________
フォーム10-Q
___________________________________________________________________________________________________
(表1)
証券取引法第13条または15条(d)に基づく四半期報告書
当四半期終了時点2024年10月31日
OR
証券取引法第13条または15(d)条に基づく移行報告書
移行期間はから
EDINETコード: 001-35551001-38933
___________________________________________________________________________________________________
CROWDSTRIKE HOLDINGS、INC。
(規約で指定された正確な登録者名)
___________________________________________________________________________________________________
デラウェア45-3788918
(州または組織の他の管轄区域)
(I.R.S.雇用者識別番号)
(I.R.S. 雇用者識別番号)
レキシントン、マサチューセッツ州02421
206 E. 9th Street, Suite 1400, Austin, テキサス 78701
(本社の所在地)
__________________________________________________________________________________________________
登録者の電話番号(地域コードを含む): (888512-8906
法第12条(b)に基づく登録証券
各クラスのタイトル取引シンボル 登録されている各取引所の名称
クラスA普通株式、株式1株$0.0005の割当額CRWDThe Nasdaq Stock Market LLC
(ナスダックグローバルセレクト市場)

エミッター(1)が、過去12か月間(または報告を提出する必要があった期間の短い期間に)証券取引法第13条または15(d)条によって提出が必要なすべての報告書を提出したかどうか、および(2)過去90日間、そのような提出要件の対象となっていたかどうかを示す。Yes    いいえ   
登録者が、過去12か月間(または登録者がそのようなファイルを提出して投稿する必要があったほど短い期間)に、規則S-Tの規則405(この章の§232.405)に従って提出する必要のあるすべてのインタラクティブデータファイルを電子的に提出したかどうかをチェックマークで示してくださいはい    いいえ
取引所法の規定12b-2に示されているように、登録者が大型の加速度制度対象報告者、加速度制度対象報告者、非加速度対象報告者、小規模報告会社、または新興成長企業であるかどうかをチェックマークで示してください。 大型の加速度制度対象報告者 加速度制度対象報告者 小規模報告会社 および 新興成長企業 取引所法120億2条による。
大規模加速ファイラーアクセラレーテッド・ファイラー
非加速ファイラー
レポート義務のある中小企業
新興成長企業
新しいまたは改定された会計基準の対応に必要な拡大移行期間を使用しないことを選択した場合、新興成長企業である場合、Exchange Act の 13(a) 条に基づいて提供される任意の新しいまたは改定された財務会計基準の対応に適用される拡大移行期間を使用しない旨をチェックマークで示してください。
登録者が取引所法第120-2条の定義に該当するシェル企業であるかどうかをチェックマークで示してください。はいいいえ
2024年11月15日現在、発行者の普通株式クラスAの発行済み株式数は233,851,230、登録者のクラスB普通株式の発行済み株式数は、12,460,182.



目次
クラウドストライクホールディングス株式会社
目次
ページ番号

2

目次
フォワード・ルッキング・ステートメントに関する特記事項
この第10-Qフォームの四半期報告書には、訂正された証券法(以下「証券法」という)、訂正された証券取引法(以下「取引法」という)および1995年の民事訴訟改革法に基づく将来を見据えた声明が含まれています。当四半期報告書に含まれる、歴史的事実以外のすべての記述、つまり、将来の業績や財務状況、ビジネス戦略と計画、また将来の作業目的などに関する記述は将来を見据えた声明の一部です。不確実な未来の事象や結果を伝える「信じる」「可能性がある」「見積もる」「続ける」「予想する」などの表現は、将来を見据えた声明の識別に使用することを意図しています。
これらの将来を見据えた発言には、次のような記述が含まれます:
将来の財務パフォーマンスには、売上高、売上原価、粗利益や粗利率、営業費用(営業とマーケティング、研究開発、一般管理費の変化を含む)、そして将来の収益性を達成し維持する能力に関する私たちの期待が含まれます。
私たちのクラウドプラットフォームの市場受け入れ度;
私たちの市場での競争の増加の影響と効果的な競争力の維持能力に関して
私たちのクラウドプラットフォームのセキュリティと利用可能性を維持する能力;
顧客基盤を維持および拡大する能力、新規顧客の獲得を含む;
私たちが新しい解決策や既存の解決策の改良を開発し、適時に市場に提供できる能力;
私たちのビジネスおよび私たちが運営する市場での予測されるトレンド、成長率、および課題;
私たちのビジネス計画と成長と関連する投資を効果的に管理する能力。
将来の運営の信念と目標;
私たちの第三者との関係、チャネルパートナーやテクノロジーアライアンスパートナーとの関係;
私たちの知的財産権を維持、保護、そして向上させる能力;
私たちが対処できるように、私たちに対して起こされた訴訟を成功裏に防御し、政府の調査や問い合わせに対応する能力。
既存市場および新規市場での拡大に成功する能力;
現金及び現金同等物が少なくとも次の12か月間の現金需要を満たす十分さ。
当社の繰延税金資産に関連する評価引当金に関する予想される動向;
私たちの国際的な拡大能力
私たちのビジネスに現在適用されているまたは今後適用される米国および国際的な法律や規制を遵守する能力
財務報告に関する内部統制を開発し、維持し、改善する能力;
マクロ経済要因、インフレーションやグローバルな信用および金融市場の不安定性を含んでいます;
買収を成功裏に完了し、統合して成長目標に貢献する能力
適格な従業員や主要な人材の引き付けと定着; そして
3

目次
2023年10月までのデータで訓練されています。 7月19日の事件(以下に定義)に関する、潜在的または予想される展開、事件に関連する当社の修復およびその他の努力、事件に関連する訴訟、請求、調査の結果、当社の顧客およびパートナー関係、ビジネス、営業成績、ならびに財務種類に与える影響を含みます。
これらの声明は、現在利用可能な情報を考慮した上での私たちの現在の計画、見積もり、予測に基づいています。これらの将来予測に関する声明は、「リスク要因」の下にあるように、この四半期報告書(Form 10-Q)の他の場所で議論されているリスク、不確実性、およびその他の要因の影響を受ける可能性があります。さらに、新たなリスクや不確実性は時折現れ、すべてのリスクや不確実性、またそれらがどのように影響するかを予測することは不可能です。これらのリスクや不確実性のいずれかが現実のものとなった場合、私たちのビジネス、売上高、および財務結果が損なわれる可能性があり、私たちのクラスA普通株式の取引価格が下落する可能性があります。この四半期報告書(Form 10-Q)で行われた将来予測に関する声明は、これらの声明が行われた日付にのみ有効であり、新しい情報や将来の出来事に照らしてそれらを更新する義務は負いません。ただし、法律で要求される場合を除きます。
当社は、材料情報をクラウドストライクの投資家向けウェブサイトir.crowdstrike.com、SECファイリング、プレスリリース、公開会議通話、公開ウェブキャストを通じて一般に公表する意向です。当社は、投資家、顧客、および一般の方々と当社の企業、提供物、その他の問題についてコミュニケーションを取るために、これらのチャンネルだけでなく、ソーシャルメディアや当社のブログも使用しています。当社がソーシャルメディアや当社のブログに投稿する情報が材料情報と見なされる可能性があります。そのため、投資家、メディア、およびその他の方々に、当社の投資家向けウェブサイトにリストされたソーシャルメディアチャンネルを含む上記のチャンネルをフォローし、そのようなチャンネルを通じて開示される情報を確認するようお勧めしています。情報を発表する開示チャンネルのリストが更新された場合は、当社のウェブサイトの投資家向けページに掲載されます。
リスクファクターの概要
私たちのビジネスは多くのリスクと不確実性の影響を受ける可能性があり、そのいずれかが私たちのビジネス、業績、財務状態、成長見通しに重大な悪影響を及ぼす可能性があります。以下は、これらのリスクのいくつかの概要です。この概要は完全ではなく、「リスク要因」と題された本四半期報告書の全セクションと、その他の情報を合わせて読むべきです。
7月19日の事件は、当社のビジネス、売上、顧客およびパートナー関係、評判、業績、財務状態に負の影響を及ぼしており、今後も続くことが予測されています。
最近の期間に急速な成長を経験しており、将来の成長をうまく管理しない場合、ビジネスと業績に悪影響を及ぼす可能性があります。
私たちは損失の歴史があり、2024会計年度を含む特定の期間で利益を上げたことはありますが、今後利益を上げたり維持したりできない可能性があります。
組織がクラウドベースのsaas提供のエンドポイントセキュリティソリューションを採用しない場合、ビジネスの成長や業務の結果に悪影響を及ぼす可能性があります。
もし、既存の製品やサービスを成功裏に向上させ、新しい製品やサービスを迅速な技術の変化や市場の動向、さらには進化するセキュリティの脅威に応じて導入できない場合、私たちの競争力や展望は損なわれることになります。
新しい顧客を引き付けることができない場合、将来の業績に影響が出る可能性があります。
もし私たちの顧客が製品のサブスクリプションを更新せず、サブスクリプションに追加のクラウドモジュールを加えない場合、私たちの今後の業績は損なわれる可能性があります。
当社の販売サイクルは新規買が長く、予測できないことがあり、販売活動には相当な時間と費用が必要です。
競争は激しく、競合他社に市場シェアを失う可能性があり、これがビジネス、財務状況、および業績に不利な影響を及ぼす可能性があります。
私たちのソリューションが失敗した場合、またはインシデントを検出または防止できないと見なされた場合、あるいは欠陥、エラー、または脆弱性があると見なされた場合、私たちのブランドや評判が損なわれ、それが私たちのビジネスや業務の結果に悪影響を及ぼすことになります。
4

目次
サイバーセキュリティのプロバイダーとして、私たちはこれまでサイバー攻撃の標的となり、今後もその可能性があります。もし弊社またはサービス提供業者の内部ネットワーク、システム、またはデータが侵害されたものと認識された場合、弊社の評判が損なわれ、財務業績に悪影響を及ぼす可能性があります。
私たちは、アマゾンドットコムのWebサービスなど、サードパーティのデータセンターや、独自の共有データセンターを利用してFalconプラットフォームをホストおよび運用しており、これらの施設の利用に関する混乱や干渉が発生すると、Falconプラットフォームのパフォーマンスや信頼性を維持する能力に悪影響を与え、当社のビジネスに損害をもたらす可能性があります。
ビジネスを成長させるためには、主要な技術、営業、管理の人材に頼っており、1人以上の主要従業員の喪失はビジネスに害を及ぼす可能性があります。
資格を持った人材を引きつけたり定着させたりできない場合、ビジネスに損害が及ぶ可能性があります。
私たちの業績結果は大きく変動する可能性があり、それにより将来の結果を予測しにくくし、業績結果が期待を下回る可能性があります。
もし私たちがクラウドストライクとファルコンのブランドと高効果のセキュリティソリューションのプロバイダーとしての評判を維持し向上させることができない場合、ビジネスと業績が悪影響を受ける可能性があります。
他者からの主張によって、我々が彼らの専有テクノロジーやその他の知的財産権を侵害しているとされると、重大な費用が発生し、ビジネス、財務の種類、業績結果、および見通しに大きな損害を与える可能性があります。
私たちは、データプライバシーとセキュリティに関する多くの法域の厳格で複雑、そして進化する法律、規則、規制、基準、および契約上の義務を遵守する必要があります。これらの要件を遵守できない場合、実際にまたは認識上の失敗が私たちのビジネスに重大な悪影響を及ぼす可能性があります。
私たちのビジネスに適用される法律や規制に従わない場合、罰金や制裁を受ける可能性があり、また顧客を失ったり、顧客との契約能力に悪影響を与える可能性があります。これには公共セクターの顧客も含まれます。
現在、または将来、私達は影響を受ける可能性のある訴訟に関与しています。
過去には、保証請求や製品返品、製品責任や製品欠陥に関連する請求を経験したことがあり、将来的にも経験する可能性があります。当社のソリューションにおける実際または認識された欠陥、または顧客や第三者による誤用に起因するものです。また、さまざまな契約における賠償条項は、知的財産の侵害やその他の損失に対して当社を substantial liability にさらす可能性があります。
将来の買収や戦略的投資、提携、または連携を特定して統合することが困難であり、主要な経営幹部の注意を逸らし、当社のビジネスを混乱させ、株主価値を希釈し、当社のビジネス、財務状況、および業績に悪影響を及ぼす可能性があります。
5

目次
第I部。財務情報
項目1.財務諸表
クラウドストライクホールディングス、インク。
縮小された連結貸借対照表
(千単位、1株当たりデータを除く)
(未監査)
10月31日、2024年1月31日
20242024
資産
流動資産:
現金及び現金同等物$4,260,324 $3,375,069 
短期投資 99,591 
信用損失引当金を差し引いた売掛金 $1.8 百万ドル及び$2.2 それぞれ2024年10月31日および2024年1月31日の時点で百万
813,922 853,105 
繰延契約取得コスト、現在294,229 246,370 
前払費用及びその他の流動資産203,852 183,172 
流動資産合計5,572,327 4,757,307 
戦略的投資68,246 56,244 
有形固定資産746,567 620,172 
運用リース契約に基づく資産46,289 48,211 
繰延契約獲得費用(非流動性)421,773 335,933 
のれん722,016 638,041 
無形資産、純109,354 114,518 
その他の新規買資産96,386 76,094 
総資産$7,782,958 $6,646,520 
負債および株主資本
流動負債:
支払い予定の勘定$79,214 $28,180 
未払費用176,598 125,896 
支払われた給与および福利厚生324,889 234,624 
オペレーティングリース債務、流動15,658 14,150 
遅延収益2,363,258 2,270,757 
その他の流動負債40,763 23,672 
合計流動負債3,000,380 2,697,279 
新規買期日超過債務743,610 742,494 
繰延収益(長期)833,260 783,342 
運転リース債務(非流動)32,683 36,230 
その他の負債(長期)77,414 50,086 
総負債4,687,347 4,309,431 
コミットメントおよび偶発事象 (注8)
株主資本
优先股,每股面值为0.001美元;授权5,000,000股;未发行或未流通股份0.0005 額面値; 100,000 2024年10月31日および2024年1月31日時点で認可された株式; no 2024年10月31日及び2024年1月31日時点の発行済みおよび流通株式。
  
普通株式Aクラス,$1の名義額を持つ0.0005 額面値; 2,000,000 2024年10月31日及び2024年1月31日時点の承認済み株式。 233,849 株式および 229,380 それぞれ2024年10月31日及び2024年1月31日時点の発行済みおよび流通株式。クラスB普通株式、$0.0005 額面値; 300,000 2024年10月31日および2024年1月31日現在の承認株式数; 12,460 株式および 12,485 2024年10月31日および2024年1月31日現在の発行済株式数。
124 121 
追加出資資本4,045,660 3,364,328 
累積欠損(985,825)(1,058,836)
その他の総合損失(2,026)(1,663)
クラウドストライクホールディングス株式会社の総株主持分 3,057,933 2,303,950 
非支配持分37,678 33,139 
株主資本合計3,095,611 2,337,089 
負債及び株主資本合計$7,782,958 $6,646,520 
付随する注記は、これらの簡潔な連結財務諸表の不可欠な部分です。
6

目次
クラウドストライクホールディングス、インク。
損益計算書
(千単位、1株当たりデータを除く)
(未監査)
2023年10月31日に終了した3ヶ月2024年10月31日に終了した9ヶ月間
2024202320242023
収益
Subscription$962,735 $733,463 $2,753,164 $2,074,610 
プロフェッショナルサービス47,443 52,551 141,922 135,610 
総収益1,010,178 786,014 2,895,086 2,210,220 
収益原価
Subscription216,301 159,830 605,868 455,236 
プロフェッショナルサービス38,786 35,174 111,623 91,915 
原価費用合計255,087 195,004 717,491 547,151 
粗利益755,091 591,010 2,177,595 1,663,069 
営業費用
販売とマーケティング408,267 286,186 1,113,852 850,209 
研究開発275,602 196,072 761,759 554,499 
一般管理費126,945 105,589 337,113 290,027 
総営業費用810,814 587,847 2,212,724 1,694,735 
事業利益の収益(損失)(55,723)3,163 (35,129)(31,666)
利子費用(6,587)(6,503)(19,647)(19,334)
利子収入(費用)、純額52,201 40,086 149,577 107,245 
その他の収益(費用)、純額(429)(474)6,196 (1,978)
法人税負担前当期純利益(損失)(10,538)36,272 100,997 54,267 
法人税務措置6,281 9,603 24,862 18,623 
当期純利益(損失)(16,819)26,669 76,135 35,644 
非支配持分に帰属する当期純利益3 4 3,124 16 
クラウドストライクに帰属する当期純利益(損失) $(16,822)$26,665 $73,011 $35,628 
クラウドストライクの普通株主に帰属する1株当たりの当期純利益(損失):
基本 $(0.07)$0.11 $0.30 $0.15 
希薄化後$(0.07)$0.11 $0.29 $0.15 
クラウドストライクの普通株主に帰属する1株当たりの当期純利益(損失)を計算するために使用される加重平均株式数:
基本 245,536 239,297 244,017 237,890 
希薄化後245,536 243,799 250,747 242,196 
添付の注記は、これらの簡約連結財務諸表の重要な一部です。
7

目次
クラウドストライクホールディングス、インク。
連結総合損益計算書(損益計算書)
(千単位)
(未監査)
2023年10月31日に終了した3ヶ月2024年10月31日に終了した9ヶ月間
2024202320242023
当期純利益(損失)$(16,819)$26,669 $76,135 $35,644 
その他包括利益(損失):
外国為替換算調整700 (6,193)(754)(4,261)
税引後の現金等価物および新規売に対する未実現利益376  391  
その他の包括的収入(損失)1,076 (6,193)(363)(4,261)
控股所有者以外の者に帰属する包括利益を減算3 4 3,124 16 
クラウドストライクに帰属する総合的な利益(損失)$(15,746)$20,472 $72,648 $31,367 
付随する注記は、これらの簡潔な連結財務諸表の不可欠な部分です。
8

目次

クラウドストライクホールディングス、インク。
株主資本状況の簡約合併財務諸表
2024年10月31日までの3か月間と2023年
(千単位)
(未監査)
普通株式追加払込資本繰越欠損金その他包括利益(損失)の累積額株主資本の合計株主資本の合計
株式金額
(8,175)245,122 $123 $3,824,897 $(969,003)$(3,102)$37,675 $2,890,590 
オプション行使に基づく普通株式発行116 — 844 — — — 844 
RSUおよびPSUのリリースに基づく普通株式の発行1,068 1 (1)— — —  
買収に関連する創業者の保持分に対する普通株式の発行3 — 889 — — — 889 
取締役報酬の支払いに対する普通株式の発行— — 86 — — — 86 
$— — 206,489 — — — 206,489 
調整されたストックベースの報酬費用— — 12,456 — — — 12,456 
当期純利益(損失)— — — (16,822)— 3 (16,819)
その他包括利益— — — — 1,076 — 1,076 
2024年10月31日の残高246,309 $124 $4,045,660 $(985,825)$(2,026)$37,678 $3,095,611 
普通株式追加払込資本繰越欠損金その他包括利益(損失)の累積額株主資本の合計株主資本の合計
株式金額
41 238,775 $119 $2,976,375 $(1,139,200)$913 $31,893 $1,870,100 
オプション行使に基づく普通株式発行261 1 2,050 — — — 2,051 
株式報酬計画(RSUおよびPSU)の発行955 — — — — — — 
制限株式報酬のための普通株式の発行125 — — — — — — 
買収に関連する創業者の還元金のための普通株式の発行5 — 888 — — — 888 
取締役会報酬の支払いに普通株式の発行1 — 88 — — — 88 
$— — 158,649 — — — 158,649 
調整されたストックベースの報酬費用— — 7,943 — — — 7,943 
買収前に提供されたサービスに起因する置き換え株式報酬の公正価値— — 652 — — — 652 
当期純利益— — — 26,665 — 4 26,669 
その他包括損失— — — — (6,193)— (6,193)
2023年10月31日の残高240,122 $120 $3,146,645 $(1,112,535)$(5,280)$31,897 $2,060,847 
添付の注記は、これらの要約連結財務諸表の不可欠な部分です。
9

目次
クラウドストライクホールディングス、インク。
株主資本状況の簡約合併財務諸表
2024年および2023年10月31日までの9か月間が終了しました
(千単位)
(未監査)
普通株式追加払込資本繰越欠損金その他包括利益累積損失株主資本の合計株主資本の合計
株式金額
2024年1月31日の残高241,865 $121 $3,364,328 $(1,058,836)$(1,663)$33,139 $2,337,089 
オプション行使に基づく普通株式発行416 — 3,308 — — — 3,308 
RSUおよびPSUのリリースに基づく普通株式の発行3,502 3 (3)— — —  
従業員株式購入計画の下での普通株式の発行518 — 56,099 — — — 56,099 
買収に関連する創業者の保留分に対する普通株式の発行8 — 2,667 — — — 2,667 
取締役報酬の支払いのための普通株式の発行— — 261 — — — 261 
$— — 586,598 — — — 586,598 
調整されたストックベースの報酬費用— — 31,934 — — — 31,934 
取得前のサービスに起因する新たな株式報酬の公正価値— — 468 — — — 468 
当期純利益— — — 73,011 — 3,124 76,135 
非支配持分— — — — — 1,415 1,415 
その他包括損失— — — — (363)— (363)
2024年10月31日時点の残高246,309 $124 $4,045,660 $(985,825)$(2,026)$37,678 $3,095,611 
普通株式追加払込資本繰越欠損金その他包括利益累積損失株主資本の合計株主資本の合計
株式金額
2023年1月31日の残高235,777 $118 $2,612,705 $(1,148,163)$(1,019)$23,793 $1,487,434 
オプション行使に基づく普通株式発行846 1 6,175 — — — 6,176 
RSUおよびPSUのリリースに基づく普通株式の発行2,899 — — — — — — 
従業員株式購入計画の下での普通株式の発行450 1 45,431 — — — 45,432 
普通株式の発行による制限付き株式報酬125 — — — — — — 
買収に関連する創業者の保持分に対する普通株式の発行23 — 3,426 — — — 3,426 
取締役報酬の支払いに対する普通株式の発行2 — 255 — — — 255 
$— — 451,590 — — — 451,590 
調整されたストックベースの報酬費用— — 26,411 — — — 26,411 
買収前の役務に起因する置き換え株式報酬の公平な価値— — 652 — — — 652 
当期純利益— — — 35,628 — 16 35,644 
非支配持分— — — — — 8,088 8,088 
その他包括損失— — — — (4,261)— (4,261)
2023年10月31日の残高240,122 $120 $3,146,645 $(1,112,535)$(5,280)$31,897 $2,060,847 
付随する注記は、これらの簡潔な連結財務諸表の不可欠な部分です。
10

目次
クラウドストライクホールディングス、インク。
簡易連結キャッシュフロー計算書
(単位: 千)(未監査)
2024年10月31日に終了した9ヶ月間
20242023
営業活動
当期純利益$76,135 $35,644 
当期純利益に調整するための項目:
減価償却および償却137,851 89,972 
無形資産の償却18,665 12,913 
契約獲得原価の償却227,713 173,158 
非現金営業リースコスト11,100 9,725 
株式報酬費用592,890 455,247 
繰延所得税(2,122)(2,355)
戦略的投資における実現利益(6,227) 
無形利息費用2,748 2,337 
割引価格で購入した短期投資の加算2,285 (1,934)
営業資産および負債の変動、買収の影響を考慮した純額
売掛金(純額)39,184 65,858 
契約獲得コストの繰延(361,412)(206,678)
前払費用およびその他の資産(42,832)(21,972)
支払い予定の勘定34,096 2,361 
未払費用およびその他の負債85,667 33,597 
支払われた給与および福利厚生89,896 1,810 
オペレーティングリース負債(11,812)(16,147)
遅延収益142,180 185,655 
営業活動による当期現金の提供1,036,005 819,191 
投資活動
設備資産の購入(167,641)(123,945)
資本化された内部利用ソフトウェア及びウェブサイト開発費用(41,266)(38,605)
戦略投資の購入(12,702)(12,177)
戦略的投資の売却益10,895  
事業の買収、正味の現金(96,381)(238,749)
無形資産の取得 (526)
短期投資の取得 (195,581)
短期投資の償還と売却による収益97,300 250,000 
繰延報酬投資の購入(1,815)(1,462)
繰延報酬投資の売却による収入41  
投資活動における純現金使用額(211,569)(361,045)
財務活動
オプションの発行による普通株式の行使に伴う収益3,308 6,178 
23,10956,099 45,432 
非支配持分保有者への分配(4,085) 
非支配株主からの資本拠出5,500 8,088 
財務活動による純現金流入額60,822 59,698 
現金、現金同等物および制限付き現金に対する外国為替の影響(641)(3,411)
現金及び現金同等物、および制限付き現金の純増加884,617 514,433 
期首の現金、現金同等物および拘束された現金3,377,597 2,456,924 
期末現金、現金同等物及び制限付き現金$4,262,214 $2,971,357 
•私たちがデータ容量の要件を満たすためにクラウドインフラを維持し更新できない場合
現金及び現金同等物$4,260,324 $2,968,872 
•顧客の予算のサイクル、季節的な購買パターン、および購買慣行;1,890 2,485 
短縮連結キャッシュフロー計算書に掲載されている現金、現金同等物および制限付き現金の合計$4,262,214 $2,971,357 
キャッシュフロー情報の補足開示:
支払利息$22,500 $22,500 
所得税支払額(還付金を差し引いた額)14,195 17,911 
非現金による投資及び財務活動の補足開示:
支払予定および未払費用に含まれる資産および設備の純増(減少)22,811 (5,866)
Table of Contents468 652 
•米国外で稼いだ現金の送金を阻害する外国為替規制または税制規制。7,009 21,883 
As we continue to develop and grow our business globally, our success will depend in large part on our ability to anticipate and effectively manage these risks. The expansion of our existing international operations and entry into additional international markets will require significant management attention and financial resources. Our failure to successfully manage our international operations and the associated risks could limit the future growth of our business.4,808  
Sales to such government entities include, but are not limited to, the following risks:31,934 23,944 
・公共部門の予算サイクルや資金認可によって、当社のFalconプラットフォームへの政府の需要と支払いが影響を受けることがあります。予算削減や政府の予算配分や調達プロセスの遅れは、戦争やテロ事件、自然災害、公衆衛生上の懸念や流行病などの急激な出来事によって、公共部門のFalconプラットフォームへの需要に悪影響を与える可能性があります。3,319  
・政府は定期的に政府契約業者の管理プロセスを調査し監査を行います。不利な監査の結果、政府が当社のFalconプラットフォームの購入を中止する可能性があり、これは当社の収益と業績に悪影響を与えるか、監査が不適切または違法な活動を明らかにした場合には罰金や刑事および民事責任を負う可能性があります。3,319  
付属の注釈は、これらの簡素化された連結財務諸表の重要な一部です。.
11

目次
クラウドストライクホールディングス、インク。
未監査の連結財務諸表の注記
1. ビジネスの説明と重要な会計方針
ビジネス
クラウドストライクホールディングス株式会社(その子会社を含む、該当する場合は「会社」)は、2011年11月7日に設立されました。会社は、侵害を防ぐために特別に作られたXDR時代のサイバーセキュリティの人工知能ネイティブプラットフォームを提供するグローバルなサイバーセキュリティのリーダーです。会社の統合プラットフォームは、エンドポイント、クラウドワークロード、アイデンティティ、およびデータのクラウド配信保護を、企業のエンドポイントセキュリティ、セキュリティとITオペレーション、マネージドセキュリティサービス、次世代SIEm、クラウドセキュリティ、アイデンティティ保護、脅威インテリジェンス、データ保護、露出管理、サイバーセキュリティ生成AIなど、複数の大規模なセキュリティ市場を横断するソフトウェアサービス(「saas」)サブスクリプションベースのモデルを通じて提供しています。会社は、アメリカ合衆国、および豪州、ドイツ、インド、イスラエル、日本、ルーマニア、イギリスなどの国際的な場所でもビジネスを展開しています。
「Performance-Based Awards(成果に基づく受賞)」は、第7.7条に基づき、委員会によって設定されたパフォーマンス目標や他の事業目標の達成に依存して現金、株式またはその他の受賞を受け取るための受賞です。
添付の要約連結財務諸表は、米国一般に受け入れられる会計原則(米国GAAP)および証券取引委員会(SEC)の中間財務報告に関する適用可能な規則と規制に従って作成されています。これらの規則で許可されているように、一部の注釈や米国GAAPで通常必要とされるその他の財務情報は、簡略化されたり省略されたりしており、その結果、2024年1月31日時点の貸借対照表および関連開示は、その日付の監査済み連結財務諸表から導出されていますが、完全な連結財務諸表に必要なすべての情報が含まれているわけではありません。これらの未監査の要約連結財務諸表は、会社の年次連結財務諸表と同じ基準で作成されており、経営陣の意見では、会社の要約連結財務情報を公正に陳述するために必要なすべての通常発生の調整が反映されています。2024年10月31日および2024年1月31日終了3カ月および9カ月の業績は、2025年1月31日または他の中間期間または他の将来年の期待される結果を必ずしも示すものではありません。
添付の中間未監査要約連結財務諸表および関連する財務情報は、2024年1月31日に終了した会計年度について、SECに提出された同社の年次報告書の項目8、「財務諸表および補足データ」と併せて読むべきです。この報告書は、2024年3月6日にSECに提出されました。
連結財務諸表の原則
簡約化された連結財務諸表には、会社及び完全子会社の口座が含まれています。全ての子会社間の残高及び取引は、連結において除去されています。
見積もりの使用
米国一般会計原則に従った財務諸表の作成には、経営陣が会社の凝縮された統合財務諸表およびそれに付随する注記に報告された金額に影響を与える推定および仮定を行う必要があります。これらの推定は、凝縮された統合財務諸表の日付時点で利用可能な情報に基づいています。定期的に、経営陣はこれらの推定および仮定を評価します。実際の結果はこれらの推定と異なる可能性があり、そのような違いは会社の凝縮された統合財務諸表に重要な影響を与える可能性があります。
経営陣が使用する見積もりと仮定には、売上高認識、貸倒引当金、長期資産の耐用年数、戦略的投資の公正価値、繰延契約取得コストの利益期間、運用リースに使用される割引率、偶発債務の認識と開示、法人税、株式ベースの報酬、及びビジネスの組み合わせにおいて取得した資産の公正価値と引き受けた負債が含まれますが、これに限りません。
信用リスクの集中度と地理情報
当社は、クラウドプラットフォームへのアクセスとプロフェッショナルサービスの販売から売上高を得ています。 当社の営業チームは、システムインテグレーターと付加価値再販業者からなるチャネルパートナーのネットワークとともに、全セクターの組織に対して当社のサービスを世界中で販売しています。
12

目次
会社が信用リスクの集中に苦しむ可能性のある金融機関は、現金、現金同等物、短期投資、売掛金、戦略的投資です。 会社の現金は、高信用クオリティの金融機関や発行者に預託されており、時折、連邦保険制限を超えることがあります。 現在まで、会社は現金、現金同等物、短期投資、戦略的投資に関連する信用損失を経験したことがありません。 会社は定期的に顧客の信用評価を行い、一般的に担保を要求しません。
2024年10月31日および2024年1月31日現在、会社の売掛金の10%以上を占めるチャネルパートナーや直接顧客は存在しませんでした。
2024年10月31日または2023年10月末日を終了する各三ヵ月または九ヵ月にわたり、企業の総売上高の10%以上を代表するチャネルパートナーまたは直接の顧客は存在しませんでした。
重要な会計方針
会社の重要な会計方針は、2024年1月31日終了の会社の年次報告書(Form 10-K)に記載されています。これらの方針に重大な変更はなく、2024年10月31日終了の会社の簡約連結財務諸表および関連する注記に重大な影響を与えたものはありません。
最近発行された会計原則
2024年11月、FASBはASU 2024-03「損益計算書—包括的利益の報告—費用分解の開示」を発行しました。この基準は、営業報告書に提示される費用項目に含まれる特定の費用カテゴリーに関する追加の開示を要求します。この新しい基準は、将来に向けて、または遡及的に適用できます。また、2026年12月15日以降に始まる年間期間および2027年12月15日以降に始まる中間報告期間に対して有効です。早期適用が許可されています。会社は現在、この新しいガイダンスが連結財務諸表内の開示に与える影響を評価しています。
2023年12月に、FASBはASU 2023-09「所得税開示の改善」を発行しました。これは、所得税開示の改善に関する最終基準です。この基準は、報告主体の実効税率調整に関する詳細情報および支払った所得税に関する情報を提供することを求めています。この基準は、資本配分の決定に役立つ詳細な所得税開示を提供することにより、投資家に利益をもたらすことを意図しています。また、所得税の対象となる全ての主体に適用されます。この新しい基準は、2024年12月15日以降に始まる年次期間に対して有効です。会社は、この新しいガイダンスの採用が、連結財務諸表内の開示に対して重要な影響を与えないと予想しています。
2023年11月、FASBはASU 2023-07「セグメント報告(トピック280):報告対象セグメントの開示の改善」を発行しました。この基準は、セグメントの利益または損失に関する報告された各指標に含まれる、最高経営責任者("CODM")に定期的に提供される重要なセグメント費用の開示を要求しています。また、セグメントの売上高とセグメント費用の違いをセグメントの利益または損失に調整するために必要なその他のセグメント項目の金額とその構成の説明、及び企業のCODMの肩書きと地位の開示も求めています。今回の更新により、四半期ごとのセグメント開示要件も拡大されます。この新しい基準は、2023年12月15日以降に開始する年次期間および2024年12月15日以降に開始する会計年度の中間期間に有効となり、早期適用が許可されており、凝縮された財務諸表に提示されたすべての過去の期間に遡って適用されます。会社は現在、この新しいガイダンスが連結財務諸表内の開示に与える影響を評価中です。
2. 投資と公正価値測定
会社はASC 820に従います、公正価値測定、現金同等物に関して, 新規売、短期投資、および償還債務投資は、定期的に公正価値で計測されます。基準に従うと、公正価値は、売却時価、または測定日における市場参加者間の取引に基づいて資産または債務を売却する際に得られる金額と定義されています。基準はまた、公正価値の測定に使用される入力についての階層を確立し、観測可能な入力の使用を最大化し、会社独自の信念に基づく未観測の入力の使用を最小限に抑えます。観測可能な入力は、市場参加者が会社独自の情報源から得た市場データに基づいて資産または負債の評価に使用する入力です。未観測の入力は、市場参加者が資産または負債の評価に使用する要因についての会社の仮定を反映しており、その状況下で入手可能な最良の情報に基づいています。
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階層は以下の三つのレベルに分かれています:
レベル1    活発な市場での同一資産及び負債の調整されていない市場価格に基づく価値を持つ資産及び負債
レベル2    資産や負債は、市場で引用される価格に基づいており、市場が活発でないかつ資産や負債の全期間にわたって観測可能な入力に基づいています
レベル3  資産及び負債は、その価値が観測不可能であり、全体的な公正価値測定にとって重要な入力を必要とする価格または評価技術に基づいています
評価階層内のカテゴライズは、公正価値測定にとって重要な最低レベルの入力に基づいています。
会社の金融資産と負債に対する公正価値序列は、定期的に公正価値で測定されるものについて、以下の通りです(千単位で)。
2024年10月31日です2024年1月31日
レベル 1レベル 2レベル 3合計レベル 1レベル 2レベル 3合計
資産
現金同等物
マネーマーケットファンド$1,460,037 $ $ $1,460,037 $2,360,173 $ $ $2,360,173 
米国財務省証券 2,488,351  2,488,351  693,599  693,599 
短期投資
米国財務省証券     99,591  99,591 
その他の資産
繰延報酬投資4,459   4,459 2,271   2,271 
総資産$1,464,496 $2,488,351 $ $3,952,847 $2,362,444 $793,190 $ $3,155,634 
提示期間中、公正価値階層間の移行はありませんでした。
2024年10月31日および2024年1月31日現在、会社の米国財務省証券は公正価値で計上され、個別にも総合的にも実現または未実現の重要な損益はありませんでした。
戦略的投資
2024年10月31日時点での当社の非上場証券への投資は、以下の通りです(千単位で)。
非公開株式非公開債務およびその他の証券 合計
初期総コスト$62,842 $1,000 $63,842 
累積純利益4,404  4,404 
期末の帳簿価額$67,246 $1,000 $68,246 
2024年1月31日時点の非公開証券に対する当社の投資額は、次の通りです(千万ドル単位):
非公開株式証券非公開債務およびその他の証券 合計
初期総額$50,373 $1,000 $51,373 
累積純利益4,871  4,871 
期末帳簿価額$55,244 $1,000 $56,244 
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2024年10月31日時点で、累積純利益は$4.4百万ドルで構成され、上方調整が$8.8百万ドル、下方調整および債権減損が$4.42024年1月31日時点で、累積純利益は$4.9百万ドルで構成され、上方調整が$9.3百万ドル、下方調整および債権減損が$4.4百万ドル。
戦略投資による利益
戦略的投資における利益の構成要素は以下の通りでした(千単位):
2023年10月31日に終了した3ヶ月2024年10月31日に終了した9ヶ月間
2024202320242023
非公開株式売却による実現利益$ $ $6,227 $ 
戦略的投資における利益$ $ $6,227 $ 
非上場株式証券の売却により認識される実現利益は、売却代金と期初の保有証券の簿価との差額を反映します。または購入日、もしくはそれ以降の期初の簿価との差額を反映します。
3. 貸借対照表の構成要素
固定資産純額
固定資産は、次のもので構成されます(千円単位):
2024年10月31日2024年1月31日
idc関連とその他のコンピューター機器$694,817 $525,890 
資本化された内部利用ソフトウェア及びウェブサイト開発費用248,397 183,117 
借地改良費42,083 39,168 
購入されたソフトウェア15,355 10,907 
家具および設備10,289 8,524 
建設中プロジェクト210,581 190,832 
1,221,522 958,438 
減価償却費および償却費の累積額を減じた額(474,955)(338,266)
有形固定資産$746,567 $620,172 
進行中の建設は、主にまだ稼働していないidc関連機器の購入を含みます。アクティブ化されていないidc関連機器の購入額は$177.0 百万ドルで、2024年10月31日の時点です。
固定資産および設備の減価償却費は2024年7月31日と2023年7月31日の3か月間でそれぞれ$ミリオンであり、2024年7月31日と2023年7月31日の6か月間でそれぞれ$ミリオンでした。49.0 百万ドル及び$33.8 2024年10月31日および2023年10月31日に終了した3ヶ月間中に、それぞれ百万ドル、$137.9 百万ドル及び$90.0 2024年10月31日および2023年10月31日に終了した9ヶ月間中に、それぞれ百万ドル。
ありましたいいえ2024年10月31日および2023年10月31日に終了した3か月および9か月間の財産および設備の減損。会社の時価総額は$です27.9 百万と $19.8 2024年10月31日および2023年10月31日に終了した3か月間の社内使用ソフトウェアおよびウェブサイト開発費は、それぞれ100万ドル70.4 百万と $60.0 2024年10月31日と2023年10月31日に終了した9か月間で、それぞれ百万です。社内使用ソフトウェアとウェブサイト開発費に関連する償却費は合計$です14.8 百万と $9.5 2024年10月31日と2023年10月31日に終了した3か月間で、それぞれ百万ドル、ドル41.4 百万と $25.4 2024年10月31日と2023年10月31日に終了した9か月間で、それぞれ百万です。内部使用ソフトウェアとウェブサイト開発費を資本化した場合の正味簿価は$でした135.8 百万と $106.9 2024年10月31日および2024年1月31日の時点で、それぞれ百万です。
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無形資産純額
総無形資産(純額)は以下の通りです(千ドル単位):
2024年10月31日加重平均
残り
有用
生命
総持ち額累計償却額純額
(月単位)
開発された技術$144,849 $57,666 $87,183 54
顧客関係17,029 7,635 9,394 62
知的財産およびその他の取得した無形資産15,843 3,066 12,777 115
合計$177,721 $68,367 $109,354 
2024年1月31日加重平均
残り
有用
生命
総持ち額累計償却額純額
(月単位)
開発された技術$131,346 $41,854 $89,492 60
顧客関係17,027 5,825 11,202 68
知的財産およびその他の取得した無形資産15,842 2,018 13,824 123
合計$164,215 $49,697 $114,518 
無形資産の償却費は$6.3 百万ドル及び$4.6 は2024年10月31日と2023年10月31日に終了した3か月間で、$18.7 百万ドル及び$12.9 は2024年10月31日と2023年10月31日に終了した9か月間で、それぞれ$
2024年10月31日現在の無形資産の将来の総減価償却費の見積もりは以下の通りです(千単位):
合計
2025年度(残りの3か月) $6,332 
2026会計年度24,240 
2027会計年度22,065 
2028会計年度21,552 
2029会計年度18,799 
その後16,366 
減価償却費用の合計$109,354 
開発されたテクノロジー、顧客関係、知的財産およびその他の取得した無形資産は、それらの推定耐用年数にわたり、一般的に定額法で償却されます。2 に対して 20年間。
のれん
2024年10月31日に終了した9か月間の間ののれんの変動は、以下の通りです(千単位):
金額
2024年1月31日ののれん
$638,041 
取得したのれん (1)
83,957 
外貨換算18 
2024年10月31日ののれん
$722,016 
(1) フローセキュリティの取得から得られたのれんです。追加情報についてはノート9を参照してください。
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未払費用
未払費用は、次のもので構成されています(千円単位):
2024年10月31日2024年1月31日
ウェブホスティングサービス$50,545 $40,706 
プロフェッショナルサービスの未払い費用28,443 11,867 
積立されたマーケティング27,387 14,623 
未払いの有形固定資産購入費22,192 16,190 
発生したパートナーリベート17,997 4,434 
未払パートナー手数料 16,509 13,584 
その他の未払い費用6,658 9,078 
償却された利息費用4,750 10,375 
未払健康保険給付金と請求2,117 5,039 
未払費用$176,598 $125,896 
給与および福利厚生の未払い
繰延給与および給付は以下の通りでした(単位:千円):
2024年10月31日2024年1月31日
手数料の未払い$191,241 $116,870 
未払いの賃金及び関連費用59,475 58,579 
従業員の株式購入計画37,748 22,315 
应计奖金36,425 36,860 
支払われた給与および福利厚生$324,889 $234,624 
4. 負債
担保付き回転信用枠
2019年4月、会社はシリコンバレー銀行やその他の貸主との与信契約を締結し、最大xx百万ドルの回転信用枠、xx百万ドルの総額を上回る信用状の副施設、およびxx百万ドルの総額を上回るスウィングラインの副施設を提供することになりました。150.0 百万ドルを含む、総額xx百万ドルの信用状副施設10.0 百万ドルの合計金額がxx百万ドルのスウィングライン副施設10.0%債券-%満期日XXX年
2021年1月4日、当社は、借り手であるクラウドストライク株式会社、保証人であるクラウドストライクホールディングス株式会社、およびシリコンバレー銀行とその当事者であるその他の貸し手との間の既存の信用契約(「A&Rクレジット契約」およびそれに基づく「リボルビングファシリティ」)を修正および改訂し、会社に最大$の回転クレジットラインを提供しました。750.0百万、合計金額に信用状のサブファシリティを含めて100.0百万、そしてスイングラインのサブファシリティの総額は $50.0百万。会社には、最大$の追加ファシリティをリクエストするオプションもあります250.0A&Rクレジット契約に基づく1つ以上の貸し手からの100万ドル。A&Rクレジット契約は、当社のすべての重要な国内子会社によって保証されています。A&Rクレジット契約により、2022年4月19日の満期日が2026年1月2日に延長されました。
2022年1月6日、当社は、借り手であるクラウドストライク株式会社、保証人であるクラウドストライクホールディングス株式会社、およびシリコンバレー銀行とその当事者であるその他の貸し手との間のA&Rクレジット契約(「修正A&Rクレジット契約」)を修正しました。借入金額や満期日に変更はありませんでした。修正されたA&Rクレジット契約では、リボルビングローンは代替基本金利(「ABR」)ローンです。未払いのABRローンには、(a)ウォールストリートジャーナルが発行したプライムレート、(b)その日に有効な連邦資金金利を加えた最も高い金額の利息が発生します 0.50%、および (c) その日に有効な1か月の期間におけるターム・セキュア・オーバーナイト・ファイナンス・レート(「ターム・SOFR」)と 1.00%、いずれの場合も、その間のマージン (0.25)% と 0.25%、シニア担保レバレッジ比率によって異なります。会社には約定料がかかります 0.15% から 0.25シニア担保レバレッジ率にもよりますが、コミット済みだが未使用の金額は年間%です。財務規約により、会社は以下を維持することが義務付けられています 連結インタレストカバレッジの最低比率は 3.00:1.00で、最大合計レバレッジ比率は 5.50:1.00にステップダウン 3.50:1.00という時間が経ちました。当社は、2024年10月31日現在、すべての財務規約を遵守していました。
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修正されたA&R与信契約は、会社の現在および将来の連結資産、財産、権利に対して、知的財産、現金、商品、設備、契約権、金融資産、および会社および一部の子会社の無形資産を含む、限定されないが、担保を設定しています。修正されたA&R与信契約には、会社およびその子会社が資産を処分する、経営権が変わる、合併または合併する、取得する、債務を負担する、抵当権を設定する、配当を支払う、株を買い戻す、そして投資をする能力を制限する独自の規約が含まれていますが、一部の例外に従います。
いいえ 2024年10月31日または2024年1月31日時点で改定されたA&R与信契約の未決済金額がありました。
優先債/シニア債
2021年1月20日に、会社は$750.0% 優先転換社債 2026 年 、債務総額 $440.0 百万ドル3.00% 優先債/シニア債が2029年2月に満期になります(「優先債」)。この優先債は、会社の子会社であるクラウドストライク社が保証しており、A&R 与信契約の下で借入人または保証人となる会社の既存および将来の国内子会社によっても保証されます。優先債は額面で発行され、金利は、 3.00% 年率で発生します。利息の支払いは、毎年2月15日と8月15日に半年ごとに支払われ、2021年8月15日から開始されます。会社は、優先債を全てまたは一部任意で償還することができます。1) 2024年2月15日より前の任意の時間に、(a) その元本の 100.00%、加えて「メイクホール」プレミアム、または(b) 株式オファリングから受け取った純現金収入で、その償還価格が 103.00% の元本金額に等しい場合、すべての償還された元本金額の合計が、元の優先債の合計元本金額の 40% を超えない限り。2) 2024年2月15日以降の任意の時間に、前払い価格が 101.50% の元本金額に等しい場合; 3) 2025年2月15日以降の任意の時間に、前払い価格が等しい場合 100.75%の元本の金額; 及び 4) 2026年2月15日以降の任意の時点において、償還価格は 100.00%の元本の金額; 各場合において、未払いの利息がある場合は、それに加え、償還日までの未払い利息を含む。
債務発行からの純収入は$738.0 百万で、引受手数料$9.4 百万ドル及び$2.6 百万の発行費用を差し引いた後の金額です。債務の発行費用は、優先債の期間にわたって実効金利法を使用して利息費用に償却されています。契約利息費用、債務発行費用の償却、および債務割引の累積に関連する利息費用は$6.0 百万で、2024年および2023年の10月31日までの3か月間の期間中に発生しました。また、$18.0 百万は、2024年および2023年の10月31日までの9か月間の期間中に発生しました。
一定の状況において、統制変更事象が発生した場合、会社はそのシリーズの各保有者のノート全体または任意の部分を、保有者の選択に応じて、総元本額の%で、償還日までの利子を含む、償還するための提案をする必要があります。 101元本全額に対する%、さらに、満期日までに発生した未払い利息を除く、その合計利子額、を含む、各保有者のノートの一部または全体を償還するための提案をする必要があります。
優先債(以下「契約」)を規定する契約書には、会社およびその子会社が特定の資産に担保を設定して負債を確保する能力を制限し、特定の負債の子会社保証を提供する際に優先債の保証も提供しなければならないという契約事項が含まれています。また、配当を宣言し、他者に対してすべてまたは実質的にすべての資産を統合、合併、売却またはその他の形で処分することも制限されています。これらの契約にはいくつかの制限と例外があり、契約の一部は、ノートがフィッチ・レーティングス社(「フィッチ」)、ムーディーズ・インベスターズ・サービス社(「ムーディーズ」)、スタンダード&プアーズ・レーティングサービス(「S&P」)によって投資適格と評価されている期間中は適用されません。
2024年10月31日現在、会社はシニア債に関連する譲渡に全セクター違反していません。
優先債の取引価格に基づいて、優先債の公正価値は約$683.6 百万ドル及び$671.2 2024年10月31日および2024年1月31日時点でそれぞれ$百万でした。優先債は原価で記録されていますが、優先債の公正価値は活発ではない市場での価格に基づいて算定されました。したがって、優先債は公正価値測定階層のレベル2に分類されます。
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5. 所得税
中間報告期間中の当社の所得税引当金は通常、個別の項目に合わせて調整された推定年間実効税率を使用して計算されています。信頼できる見積もりができない場合は、実際に適用される税金や優遇措置が、暫定期間に個別の項目として報告されることがあります。2024年10月31日に終了した3か月と9か月間、当社は米国管轄区域の年間実効税率を確実に見積もることができませんでした。これは、予測収益のわずかな変化の結果として税率が敏感になったためです。その結果、当社は米国の税引当金を個別に計算しています。会社は$の所得税費用を認識しました6.3 百万と $9.6 2024年10月31日と2023年10月31日に終了した3か月間はそれぞれ百万ドル、米ドル24.9 百万と $18.6 2024年10月31日と2023年10月31日に終了した9か月間は、それぞれ100万です。2024年10月31日および2023年10月31日に終了した3か月と9か月間の税金支出は、主に、当社が事業を行う特定の外国の法域における顧客の支払いに関連する税引前利益および源泉徴収税による所得税費用が、認識されていない特定の税制上の優遇措置の決済による税制上の優遇措置によって相殺されました。会社の実効税率(59.6)% と 26.52024年10月31日と2023年10月31日にそれぞれ終了した3か月間の%、 24.6% と 34.32024年10月31日と2023年10月31日に終了した9か月間の%はそれぞれ、米国の法定税率とは異なります。これは主に、外国の法域における所得税、当社が事業を行う特定の外国の法域における顧客の支払いに関連する源泉徴収税、および米国および特定の外国の法域における評価手当によるものです。
総額の未認識税額債務は$74.4百万ドルと$58.9発生しており、主に研究開発税額控除に起因しています。2024年10月31日および2024年1月31日現在、未認識税額債務はそれぞれ約$12.3百万ドルと$12.7発生しており、全体の評価資産の債権によって会社の有効税率が影響を受ける可能性があります。会社の方針は、未認識の税額債務に関連する利息および違約金を、連結損益計算書の所得税勘定の一部として分類することです。2024年10月31日および2024年1月31日時点で、未認識税額債務に関連する利息および違約金はそれぞれ$2.3百万ドルと$1.4発生しており、次の12か月間における未認識税額債務の潜在的な変化は重要ではないと予想されています。
所得税における不確実性の会計に関するガイダンスに従って、すべての米国およびその他の税務管轄区において、当社は、追加の税金と利息が発生するかどうか、またその程度に基づいて、予想される税務調査の問題に対する潜在的な負債を認識します。会社は、米国連邦およびさまざまな州の管轄区、さらにさまざまな外国の管轄区で所得税申告書を提出します。2011年以降の税年度は、税務当局による検査の対象となります。もし当社の所得税負債の見積もりが最終的な評価よりも少ない場合、さらに費用を計上する必要があります。もし事象が発生し、これらの金額の支払いが最終的に不要であることが証明される場合、負債の返還は、当社が負債がもはや必要ないと判断した期間に税制上の利益を認識させる結果となります。当社は、未認識の税制上の利益に関連する利息および罰金を、凝縮された連結損益計算書の所得税の引当金に含めます。計上された利息と罰金は、凝縮された連結貸借対照表のその他の負債に含まれます。
会社は、米国連邦および州、および特定の外国の繰延税金資産(喪失金繰越および税額控除を含む)について、より確からしいことが通常よりも不可能であると会社が判断したので、完全な資産価値引当金を維持しています。会社は定期的に評価を行い、資産価値引当金の必要性を評価しています。
6. 株式ベースの報酬
ストック報奨計画
2019年5月、当社の取締役会は、ストックオプション、制限付株式報酬、制限付株式ユニット(「RSU」)、業績ベースの制限付株式ユニット(「PSU」)など、従業員、取締役、役員、コンサルタントに株式ベースの報奨を付与することを目的として、CrowdStrike Holdings、Inc. の2019年株式インセンティブプラン(「2019年プラン」)を採択し、株主が承認しました。合計で8,750,000クラスAの普通株式は、当初、2019年プランに基づいて発行可能でした。会社の報酬委員会が2019年プランを管理します。2019年プランに基づいて発行可能な当社の普通株式の数は、2020年2月1日から始まる各会計年度の初日に、次のうち小さい方に等しく毎年増加する可能性があります。 二つパーセント (2直前の会計年度の最終日現在の会社の資本金の発行済み株式の割合、または(ii)会社の取締役会が決定するその他の金額。
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2011年のプランは2019年6月10日に終了しました。この日は、会社のIPOに関連して使用されるS-1フォームの登録声明の発効前の営業日でした。そして、2011年のプランの下では株式を基にした報酬はもはや付与されません。2011年のプランの下で失効、終了、または放棄、または再購入されるストックオプションの裏にある株式は、自動的に2019年のプランに移されます。
ストックオプション
会社は従業員のストックオプションについて、オプションの付与日当日の推定公正価値に基づいて補償費用を記録します。これはブラック・ショールズ・オプション価格モデルを使用しています。
2024年10月31日および2023年10月31日までの9か月間に与えられたストックオプションは、重要ではありませんでした。
以下の表は、2024年10月31日までの9か月間のストックオプションの活動の概要です。
Number of
株式
加重平均
行使価格
1株あたり
(千単位)
2024年1月31日時点での未行使オプション1,754 $9.37 
付与されました14 $3.25 
行使済み(416)$7.95 
キャンセル済み(18)$12.43 
2024年10月31日時点でのオプション未行使1,334 $9.74 
2024年10月31日時点でのオプション権の確定状況と今後の確定が期待されるもの1,334 $9.74 
2024年10月31日時点での行使可能なオプション1,309 $9.66 
2024年4月30日時点で普通株式63,327,853株が発行済みでした。no2024年10月31日時点で未属人化で行使可能なオプション。
オプションの総内在価値は、償却および行使可能なものであり、2024年10月31日および2024年1月31日現在、それぞれ$です。375.9百万ドルと$451.0 オプションの償却および行使可能なものの加重平均残存契約期間は、2024年10月31日および2024年1月31日現在、それぞれ年です。 3.6 年および年4.2 オプションの償却および行使可能なものの加重平均残存契約期間は、2024年10月31日および2024年1月31日現在、それぞれ年です。
全オプションに付与された加重平均の付与日の公正価値は$325.22株価$ペリン126.00 2024年10月31日および2023年10月31日を終了した9ヶ月間における全オプションの行使時の総内在価値は$32.0 百万ドル及び$43.9 2024年10月31日および2023年10月31日を終了した3ヶ月間において、全オプションの行使による合計内在価値は$135.7 百万ドル及び$118.4 2024年10月31日および2023年10月31日に終了した9ヶ月間中に、それぞれ百万ドル。
2024年10月31日および2024年1月31日時点での未行使のストックオプションの合計内在価値は$383.2 百万ドル及び$496.7 百万であり、これは会社の普通株式の公正価値がオプションの行使価格を上回る部分に、未行使のオプションの数を掛けたものを示しています。未行使のストックオプションの加重平均残存契約期間は、 3.7年と4.3 2024年10月31日および2024年1月31日時点でそれぞれ年です。
未権利確定のオプションに関連する総未認識株式報酬費用は $5.02024年10月31日現在で 百万です。この費用は加重平均権利確定期間にわたって償却される予定です。1.8 年間で費用として認識される見込みです。
制限株付与債権単位
2019年プランに基づいて付与されるRSUには、通常、サービスベースの権利確定条件のみが適用されます。サービスベースの権利確定条件は通常、以下の権利確定スケジュールのいずれかに基づいて満たされます。(i) 権利確定開始日の1周年またはその後の最初の「会社の権利確定日」(3月20日、6月20日、9月20日、または12月20日と定義)にRSUの4分の1が権利確定され、残りのRSUは十二その後、継続的なサービス、(ii)権利確定を条件として、四半期ごとに均等に分割します十六継続的なサービス、または(iii)権利確定を条件として、四半期ごとに均等に分割します 十六 四半期ごとの分割払いと 10初年度の% 152年目には%、 253年目には%と 504年目以降は%、継続サービスの対象となります。これらのRSUの評価は、付与日の会社の株式の公正価値のみに基づいています。
未発行のRSUに関連する未認識の株式報酬費用の合計額は、2024年10月31日時点で$2.2十分な平均付与期間にわたって減価償却される見込みです 2.8 年間で費用として認識される見込みです。
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成果に基づく株式ユニット
2019年の計画の下で付与されたPSUは、通常、サービスベースの付与条件とパフォーマンスベースの付与条件の両方を対象としています。 PSUsは、特定のパフォーマンス目標の達成と、該当する付与日までのサービスの継続に応じて付与されます。 PSUsに関連する株式報酬費用は、パフォーマンス条件が満たされる可能性が高いときに、必要なサービス期間を通じて加速配分法を使用して認識されます。
未認識の株式報酬費用は、2024年10月31日時点で1,000万ドルであり、これは企業がパフォーマンス条件を満たす可能性に関する最新の評価を反映しています。54.8 この費用は、加重平均付与期間を通じて償却されることが予想されています。 1.2 年間で費用として認識される見込みです。
特別PSU賞
2022年度に、当社の取締役会は 655,000 2019年プランに基づく特定の役員へのパフォーマンス・ストック・ユニット(「特別PSUアワード」)。PSU特別賞は、特定の株価のハードルを当社が達成したことに与えられます。ハードルは、ある期間における当社のクラスA普通株式の1株あたりの終値の平均に基づいています。 45 該当する業績期間中の連続取引日期間、およびサービスベースの権利確定条件。特別PSUアワードの各トランシェに適用されるサービス条件は、該当する各権利確定日まで当社での雇用を継続することを条件として、次のように分割払いで満たされます。(i) 50該当するトランシェの基礎となる特別PSUアワードのパーセンテージは、その特別PSUアワードの当該トランシェに適用される権利確定開始日の1周年に授与されます(すなわち、2022年2月1日、2023年2月1日、2024年2月1日、2025年2月1日)および(ii)当該トランシェに関する残りのPSUは、その後サービスを開始します 4つ 四半期ごとの均等分割払い 12.5%.
会社は、特別PSU賞の公正価値を付与日の日にモンテカルロシミュレーション評価モデルを使用して測定しました。使用された無リスク金利は、 0.85% -1.51%であり、これは、付与日における賞の期待期間に基づいて、財務省の定常満期利回り曲線から得られたゼロクーポン無リスク金利に基づいています。期待される変動は、 54.89% - 55.36%のブレンドされた変動率であり、 50%は、付与日からの過去 2.21- 2.58 年間のデイリーストックリターンから算出された会社の歴史的変動性に基づいており、 50%は、付与日現在の会社の暗示された変動性に基づいています。
与未受領部分の特別PSU賞に関連する未認識の株式報酬費用の合計額は2024年10月31日時点で$です15.5 発生時の加重平均付与期間にわたって償却される見込みです 1.0年間。
以下の表は、2024年10月31日に終了した9ヶ月間のRSU、PSU、および特別PSU賞の活動の要約です:
Number of
株式
加重-
平均グラント
公正価値日付
1株あたり
(千単位)
2024年1月31日時点のRSUおよびPSUの未決済残高10,968 $167.84 
付与されました4,719 $302.18 
解除された(3,502)$161.19 
パフォーマンスの調整 (1)
241 $132.83 
喪失(579)$197.03 
2024年10月31日時点の未処分株式と未処分株式ユニット11,847 $221.18 
2024年10月31日時点での処分予定株式ユニットと処分予定株式ユニット (2)
11,057 $220.13 
(1)パフォーマンス調整は、事前に定義された財務パフォーマンス目標に基づいて達成された実績ベースの報奨による発行済株式の調整を表しています。
(2)進行中のPSUや、事前に定義された目標がまだ達成されていない特別PSUは除外されます。
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従業員の株式購入計画
2019年5月、取締役会は、株主が承認したクラウドストライク・ホールディングス株式会社の2019年従業員株式購入プラン(「ESPP」)を採択し、2019年6月10日に施行されました。これは、会社のIPOに関連して使用されるフォームS-1の登録声明の効力が発生する前営業日でした。合計3,500,000ESPPの下で発行のために最初に予約されたクラスA普通株式の株式数は、 1つの パーセント(%12020年2月1日から始まる各会計年度の初日に、会社の発行済株式の株式数のいずれか少ない方に等しいが、(i) 前年度の最終日の会社の資本株式の発行済株式の%または(ii) 取締役会が判断するその他の金額の年間増加が適用されます。2021年5月、会社の報酬委員会はESPPの改正および再制定を採択し、2021年6月に会社の株主によって承認されました。改正および再制定されたESPPは、年間の増加がいかなる年でも 5,000,000 会社のクラスA普通株式の株式数を超えないことを明確にしました。
ESPPは、通常約24 ヶ月の長さの連続する提供期間を提供します。また、それはの長さの約6ヶ月の購入期間で構成されています。提供期間は、毎年6月11日および12月11日の最初の取引日のあるいはそれ以降にスタートする予定です。最初の提供期間は2019年6月11日に開始され、2021年6月10日に終了しました。
ESPPは、資格のある従業員に、支払いの差し引きにより、最大%まで会社のクラスA普通株を購入する機会を提供します。15参加者は、購入期間中に最大 株の普通株を購入できます。2,500参加者が控除および積み立てた金額は、毎回の購入期間の終了時に普通株を購入するために使用されます。 6か月間 株の購入価格は、適用オファリング期間の初めの取引日および関連オファリング期間内の各購入期間の最終取引日のいずれかの時点でのクラスA普通株の公正市場価値の下限の%です。 85従業員は、いつでもオファリング期間中に参加を終了でき、まだ普通株を購入するために使用されていない蓄積した貢献金が支払われます。雇用終了時には、参加が自動的に終了します。 1つの ESPPでは、購入期間ごとに貢献金を最大まで増やすことができます。従業員が貢献金を増やすことを選択した場合、会社はこれを会計上の修正として取り扱います。ESPPはまた、 2年 look-back機能、および新しいオファリング期間のオファリング価格が現行オファリング期間の価格よりも低い場合に、オファリング期間が新しい低価格のオファリングにロールオーバーされるロールオーバー機能を提供します。2024年10月31日に終了した9か月間の貢献修正額は、$だった7.2 百万ドルであり、残りのオファリング期間全体で認識されます。
株主資本に再分類される従業員の給与控除は、購入日に再分類されます。2024年10月31日および2024年1月31日時点で未払いのESPP従業員の給与控除は、それぞれ総括連結貸借対照表の未払い給与および手当に含まれています。37.7 百万ドル及び$22.3 百万ドルであり、これらは総括連結貸借対照表の未払い給与および手当に含まれています。
ブラック-ショールズ・オプション価格モデルで使用される仮定を要約した表は、会社のESPPで付与された従業員株購入権の公正価値を判断するために使用されます。
2024年10月31日に終了した9ヶ月間
20242023
期待される期間(年)
0.52.0
0.52.0
無リスク金利
3.4% – 5.3%
0.2% – 5.2%
期待株価変動率
40.8% – 59.8%
46.3% – 61.2%
配当利回り % %
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目次
株式報酬費用
損益計算書に含まれる株式報酬費用は以下の通りです(千単位で):
2023年10月31日に終了した3ヶ月2024年10月31日に終了した9ヶ月間
2024202320242023
売上高のサブスクリプション費用$18,613 $11,477 $49,261 $30,575 
プロフェッショナルサービスの売上原価7,498 5,645 21,115 16,020 
販売とマーケティング56,251 42,544 165,914 129,725 
研究開発81,874 52,388 224,467 143,754 
一般管理費44,652 47,560 132,133 135,173 
在庫ベースの報酬費用の合計$208,888 $159,614 $592,890 $455,247 
7. 売上高、前受売上高、および残存業績義務
以下の表は、会社のプラットフォームまたはサービスを利用する契約を結んだ顧客の配送先住所に基づく地域別の売上高をまとめたものです(千単位、百分率を除く):
2023年10月31日に終了した3ヶ月2024年10月31日に終了した9ヶ月間
2024202320242023
金額% 売上高金額% 売上高金額% 売上高金額% 売上高
アメリカ合衆国$683,476 68 %$537,880 69 %$1,968,503 68 %$1,513,569 69 %
ヨーロッパ、中東、アフリカ地域160,574 16 %119,158 15 %451,037 16 %335,619 15 %
アジア102,837 10 %81,459 10 %294,573 10 %228,876 10 %
その他63,291 6 %47,517 6 %180,973 6 %132,156 6 %
総収益$1,010,178 100 %$786,014 100 %$2,895,086 100 %$2,210,220 100 %
2024年10月31日および2023年10月31日に終了した3か月および9か月間、米国以外の単一の国が、会社の売上高の合計の10%以上を表していませんでした。
契約残高
契約 passives は売上高増加の形式で契約期間中に売上高として認識された契約の実行前に受領した支払いを含みます。880.5 百万ドル及び$685.9 各々、2024年10月31日と2023年10月31日に終了した3か月として売上高10億ドル、および9か月として売上高10億ドルが認識されました。 これらの金額は、期間初めの対応する契約 passives の残高に含まれていました。1,945.4 百万ドル及び$1,465.5 各々、2024年10月31日と2023年10月31日に終了した9か月として売上高10億ドル、および10億ドルが認識されました。 これらの金額は、期間初めの対応する契約 passives の残高に含まれていました。
会社は契約請求スケジュールに基づいて顧客から支払いを受けます。権利が無条件になるときに売掛金が記録されます。請求額の支払条件は通常、日です。 3060 契約資産には、完成したものや一部が完了した業務に対する考慮の権利に関連する金額が含まれており、請求書に記載されていない可能性があります。
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繰延収益の変動は以下の通りです(千単位で):
2023年10月31日に終了した3ヶ月2024年10月31日に終了した9ヶ月間
2024202320242023
持ち運び金額持ち運び金額
期首残高$3,093,197 $2,507,642 $3,054,099 $2,355,113 
未収収益への追加1,113,499 821,488 3,037,505 2,398,223 
延期収益の認識(1,010,178)(786,014)(2,895,086)(2,210,220)
期末残高$3,196,518 $2,543,116 $3,196,518 $2,543,116 
残りの業務履行義務
会社の顧客とのサブスクリプション契約は典型的な期間を持っています。 1つの3年間ほとんどのサブスクリプション契約はキャンセル不可です。顧客は通常、会社が履行しない場合の理由により契約を解約する権利を持っています。 2024年10月31日現在、残りの履行義務に割り当てられた取引価格の合計は$5.4 十億です。会社は残りの履行義務の約57%を認識することを期待しています。12 月数の後に 2024年10月31日、 および 39残りのパフォーマンス義務の%が 13 に対して 36 月数で、残りはその後に認識されます。
契約を締結するための費用と履行費用
会社は、パートナーへの紹介手数料や、社内の営業担当者、契約者、または営業代理人への支払いや関連する給与税の費用を、チャネルパートナーおよび直接顧客契約の取得に伴う増分として資本化し、顧客契約がなければ発生しなかった費用として処理します。これらのコストは、圧縮された連結貸借対照表の先送り契約取得コスト、現在および先送り契約取得コスト、非流動項目として記録されます。
契約の継続に伴う販売手数料は、それぞれの契約価値に比例して支払われる手数料と実質的な差異があるため、初期契約の取得または追加購入の際に支払われる手数料とは比較になりません。リファーラルパートナーに支払われる紹介手数料を含む手数料は、契約の初回取得またはその後の増額販売で獲得され、見込まれる利益期間中に償却されます。四年契約の継続に伴う販売手数料は、更新契約の契約期間中に償却されます。プロフェッショナルサービス契約に関連する販売手数料は、見込まれる利益期間中に均等に償却され、損益計算書の売上高と販売費用に含まれます。5ヶ月 取得契約の手数料の利益期間を判断する際、企業は期待される契約期間や顧客契約の更新、顧客との関係の歴史的な期間、顧客の維持率データ、および開発されたテクノロジーの寿命を考慮しました。企業は、遅れた契約獲得コストの帳簿価額を定期的に見直し、これらの遅延コストの利益期間に影響を与える可能性がある事象や状況の変化が発生したかどうかを判断しました。企業は、2024年10月31日および2023年10月31日終了時点の3か月および9か月間において、遅延契約獲得コストの重大な減損損失を認識しませんでした。 no2024年10月31日終了時点または2023年10月31日終了時点に、遅延契約獲得コストの重大な減損損失は認識されませんでした。
以下の表は、繰延契約獲得コストの活動を要約しています(千単位で):
2023年10月31日に終了した3ヶ月2024年10月31日に終了した9ヶ月間
2024202320242023
期首残高$592,785 $458,685 $582,303 $447,088 
契約取得費用の資本化203,079 84,671 361,412 209,145 
契約獲得原価の償却(79,862)(60,281)(227,713)(173,158)
期末残高$716,002 $483,075 $716,002 $483,075 
繰延契約取得コスト、現在$294,229 $209,216 $294,229 $209,216 
繰延契約獲得費用(非流動性)421,773 273,859 421,773 273,859 
総繰延契約取得費用$716,002 $483,075 $716,002 $483,075 
24

目次
8. コミットメントとコンティンジェンシー
七月十九日事件
2024年7月19日、当社はFalconセンサーのコンテンツ構成更新をリリースしましたが、これにより特定のWindowsシステムでシステムクラッシュが発生しました(「7月19日の事故」)。当社は、7月19日の事故に関連して複数の法的手続きに直面しています。
2024年7月30日、テキサス州西部地区の連邦裁判所において、会社および会社の特定の役員に対して、連邦証券法違反を主張する仮処分集団訴訟が提起されました。訴訟を提起した者は、被告が虚偽または誤解を招く発言を行ったとしています。原告は、指定された期間中に会社の証券を購入またはその他の方法で取得したすべての者のクラスの認定を求めており、未定の金銭的損害、費用および弁護士費用を求めています。
2024年8月5日、カリフォルニア州西部地区の連邦裁判所で、CrowdStrike, Inc. に対して、カリフォルニア州不公正競争法の過失や違反などを理由に集団訴訟が提起されました。申立人は、特定の期間にフライトが遅延またはキャンセルされ、不特定の金銭的損害、特定の差止命令による救済、費用、弁護士費用を求めている特定のカリフォルニア州、オハイオ州、およびペンシルベニア州の市民の全国クラスの認定を求めています。2024年11月6日、この訴訟は下記の2024年8月19日の訴訟と統合され、暫定集団弁護士が任命されました。統合された苦情は 30 同梱注文の日数。
2024年8月19日、テキサス州西部地区の連邦裁判所において、会社とクラウドストライク社に対して、ファルコンセンサーの設計および試験における過失や特定の航空会社顧客とその航空会社の間の不法干渉などを含む集団訴訟が提起されました。原告は、特定の期間内に特定の航空会社でフライトが遅延またはキャンセルされたアイオワ州の市民(または全国クラス)の認定を求めており、具体的な金銭的損害、費用および弁護士費用を求めています。2024年11月6日、この訴訟は2024年8月5日に提起された前述の訴訟と統合され、管理上閉鎖されました。
2024年9月4日、9月11日、および9月20日、 三つ ある取引所の役員および取締役、および名義上の被告としての会社に対して、デラウェア州法に違反し、連邦証券法に違反すると主張して、テキサス州西部地区の連邦裁判所に派生訴訟が提訴されました。被告らがExchange Actの10(b)条および14(a)条、SECルール100億5および14a-9に違反する虚偽または誤解を招く発言を行ったと主張しています。訴訟の1つは、被告の一部に対して、Exchange Actの10(b)条および21D条に基づいて貢献金の請求も行っています。原告は、会社の代表として金銭および非金銭の救済を求めています。
2024年10月25日、デルタ航空会社(以下「デルタ」)は、その他の事項の中で、コンピュータへの不法侵入、所有物への不法侵入、契約違反、意図的な誤記載/短絡、厳格責任の製品欠陥、重大な過失、欺瞞的かつ不当なビジネス慣行などを主張し、ジョージア州フルトン郡の裁判所において、クラウドストライク社(以下「クラウドストライク」)に対する訴訟を提起しました。デルタは特定されていない金銭的損害賠償、弁護士費用、特定されていない懲罰的損害賠償を求めています。2024年11月22日、クラウドストライク社は、メトロアトランタビジネスケース部門への事件の移転を承諾した申立てを提出しました。
その他、一部の顧客や第三者が会社に対して請求を主張したり公然と訴訟を脅かしたりしています。会社はまた、7月19日の出来事に関連する政府機関や他の第三者からの問い合わせを受けています。会社はこれらの問い合わせに対して協力し、情報提供を行っています。
企業が責任が高い可能性があり、合理的に見積もり可能であると考える場合、請求や法的手続きに対する責任を、その判断を下した期間に記録します。損失が合理的に可能であるが高い可能性がない場合、または高い可能性があるが合理的に見積もりできない場合、引当金は設定されません。企業は、上記の請求、手続き、調査に関連する損失が合理的に発生する可能性があると考えていますが、不利な判決、和解、罰金、またはこれらの請求、手続き、調査の結果から生じる可能性のある損失の金額や範囲を見積もることはできません、その初期段階や重要な事実関係および法的問題の解決不足によるものです。これらの事柄の最終的な結果は確実に予測できないため、好ましくないまたは予期しない展開や結果が企業の業績に重大な影響を及ぼす可能性があります。
25

目次
会社は、7月19日の事件に関連する重大な法的費用、プロフェッショナルサービス、その他の費用が今後発生することを予想しています。これらの費用は、発生した時点で認識されます。特定のコストは、7月19日の事件発生時に有効な会社の保険ポリシーに基づいて回収可能な場合があります。そのようなポリシーに基づいて回収可能な金額は、回収が見込まれる将来の期間に反映されます。

2024年10月31日までの3ヶ月間に発生した、7月19日の事件に関連する保険債権を記録した上での発生額および費用は以下の通りです(単位:千):
金額
2024年7月31日の残高$4,291 
保険金を差し引いた費用が発生しました (1)
33,922 
支払い/現金の受領(16,404)
2024年10月31日の残高$21,809 
2024年10月31日までの9ヶ月間に発生した7月19日の事件に関連する、記録された保険債権を考慮した金額と発生した費用は以下の通りです(千単位で)。
金額
2024年1月31日の残高$ 
保険金を差し引いた費用が発生しました (1)
39,054 
支払い/現金の受領(17,245)
2024年10月31日の残高$21,809 
(1)    これらの費用は、売上およびマーケティング費用、研究開発費用、一般管理費用として、会社の凝縮された連結損益計算書に含まれました。未払費用は、会社の凝縮された連結貸借対照表の未払費用に記録されました。保険債権は、会社の凝縮された連結貸借対照表の前払費用およびその他の流動資産に記録されました。
その他の法的手続き
2022年3月、Webroot, Inc.とオープンテキスト, Inc.(以下、「Webroot」)は、テキサス西部地区連邦裁判所に会社とクラウドストライク, Inc.に対して特定の製品が侵害されていると主張する訴訟を起こしました。 カテゴリー6の6つの記録を破るウォータースライダーや、海から154フィート上空にあるクラウンズエッジ体験など、昼も夜も楽しめる8つの目的地には、それぞれ楽しめるアドレナリンがドクドクわくわくするような初めてのものや次のレベルのお気に入りがあります。そして、1週間のうちの1日用の7つのプールがあり、海上初の吊り下げ式無限プールなど、くつろぎの方法は比類ありません。 所有している特許が侵害されていると主張しました。訴状では、Webrootは未指定の損害賠償、弁護士費用及び永久差止命令を求めていました。2022年5月、クラウドストライク, Inc.は、Webrootの特定の製品が侵害していると主張する反訴を行いました。 所有している特許が侵害されていると主張しました。提訴時、クラウドストライク, Inc.は、未指定の損害賠償、合理的な費用とコスト、永久差止命令を求めました。2022年9月、Webrootは訴状を修正して、追加の特許を主張しました。 カテゴリー6の6つの記録を破るウォータースライダーや、海から154フィート上空にあるクラウンズエッジ体験など、昼も夜も楽しめる8つの目的地には、それぞれ楽しめるアドレナリンがドクドクわくわくするような初めてのものや次のレベルのお気に入りがあります。そして、1週間のうちの1日用の7つのプールがあり、海上初の吊り下げ式無限プールなど、くつろぎの方法は比類ありません。 2023年11月、クラウドストライク, Inc.は、当事者間の主張の和解と却下が行われる合意に入りました。和解金額は重要性がないものでした。
その他、会社はビジネスの通常業務に起因する様々な他の法的訴訟に関与し、クレームに対処しています。会社が責任が生じる可能性が高くかつ合理的に見積もれると考えるクレームについては、その決定を行った期間に責任を記録します。上記の内容以外には、会社が重要な影響を及ぼす可能性があると合理的に判断する保留中または脅迫中の法的手続きはなく、訴訟の結果やクレームは本質的に予測困難です。結果に関わらず、訴訟はディフェンスや和解費用、経営リソースの分散、その他の要因のために会社のビジネスに悪影響を及ぼす可能性があります。また、訴訟費用の額やこれらの費用の期間ごとの見積もりは困難であり、変更される可能性があり、会社の財務諸表に悪影響を及ぼすおそれがあります。
26

目次
購入義務
通常のビジネスの過程において、当社は様々な関係者との間で、idc関連のキャパシティ、広告、テクノロジー、機器、オフィスの改装、企業イベント、コンサルティングサービスなどの製品やサービスを購入するためのキャンセル不可の購買契約を締結します。 2024年10月31日現在の1年以上のキャンセル不可の購買義務の概要および支払予定日は以下の通りです(千ドル単位):
合計
融資承諾
2025会計年度(残り3ヶ月)$121,148 
2026会計年度548,720 
2027会計年度542,639 
2028会計年度544,780 
2029会計年度545,831 
その後493,489 
総購買契約$2,796,607 
未財源確保の融資約束
当社は、特定の適格なエンドユーザーがその製品やサービスを購入するための資金調達の手配を提供します。当社がエンドユーザーとのこれらの資金調達の取り決めを結ぶとき、販売取引のために当社が提供する資金は、取り決めの条件によって署名時にいつも即座に発生するわけではありません。当社は、エンドユーザーに対して信用リスクにさらされる契約上の義務に基づいて、各報告期間ごとにこれらのオフバランスシート信用曝露に対して信用損失の引当金を見積もります。この契約上の義務が当社によって無条件に取り消せない限り、当社はこの義務にさらされます。2024年10月31日時点で、当社は約$の非キャンセル可能な資金未使用約束を持っていました。49.3%債券-%満期日XXX年
保証と補償
同社のクラウドコンピューティングサービスは、通常の使用及び状況下で、一般的な業種基準に合理的に適用され、同社のオンラインヘルプドキュメントに実質的に従って一貫性のある方法で機能することが保証されています。さらに、Falcon Completeの顧客に対して、同社は、サイバーセキュリティ侵害が発生した場合に顧客が負担した特定のコストをカバーするための限定的な保証を特定の条件に従って提供しています。同社は、こうした限定的な保証に起因する潜在的な責任を軽減するために保険契約を締結しています。同社の顧客契約には、同社の製品またはサービスが第三者の知的財産権を侵害した結果として顧客が被った損失に対して顧客を補償するための特定の規定が一般的に含まれています。時折、同社は他の補償および保証にも合意しています。同社は、そのような義務に起因する実質的なコストを負担しておらず、2024年10月31日または2024年1月31日時点の圧縮された連結財務諸表に関連する負債を計上していません。
会社は、取締役および特定の執行役員が、取締役または役員としての地位に起因する理由で、これらの者のいずれかが当事者となる、または当事者にされることが脅迫されている任意の訴訟または手続きにおいて発生した、手数料、費用、判決、罰金および和解金に関連する費用を補償することに同意しています。これには、会社による行動も含まれ、会社の取締役または役員としてのその人のサービスや、その人が会社の要求で他の会社や事業に提供したサービスに起因するものです。会社は、将来支払われる金額の一部を回収できる可能性がある取締役および役員保険のカバレッジを維持しています。会社はまた、特定の状況や特定の法域において、従業員の行動に関して法的に補償義務を負う可能性があります。いいえ 2024年10月31日または2024年1月31日現在、この補償条項に関連する負債が計上されています。
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9. 買収
フローセキュリティ
2024年3月26日、会社はFlow Security Ltd.(「Flow Security」というデータセキュリティソリューションの大手プロバイダー)の株式の%を取得しました。 100データセキュリティソリューションのトッププロバイダーである「Flow Security」の株式権益の%を取得しました。
取得はビジネス組み合わせとして処理されました。譲渡された総額の構成は、取得済みの現金からネットで$96.4百万、取得済みの現金から$0.8百万、および事前取得サービスに帰す置き換え株式報酬の公正価値を表す$ 百万です。これらの置換株式報酬の残りの公正価値は、購入価格から除外されました。購入価格は、開発されたテクノロジーに$0.5百万のうち、有用な寿命が13.5か月の 72 百万、取得された純有形負債で0.6百万、および会社の割り当てられた資産の84.0百万の資産に割り当てられました 1つの 報告単位は、収得した純有形無形資産の公正価値を超える取得価格の超過を表します。善意の精神は、Flow Securityの組み立てられた労働力、新規市場での計画された成長、およびFlow Securityの統合から生じると期待されるシナジーに主に帰属していました。善意の精神は所得税目的で差し引かれません。
Flow Securityとの株式購入契約の条件に従い、Flow Securityの従業員が保有する特定の未成熟の株式オプションはキャンセルされ、2019年プランの下で代替株式オプションに交換されました。さらに、Flow Securityの従業員が保有する特定のFlow Security株は、サービスベースのベスティングおよびその他の種類に基づき、会社のクラスA普通株式を受け取る権利に交換されました。さらに、会社は2019年プランの下で、一部の継続的な従業員に対してRSUおよびPSUを付与することに合意しました。継続的なサービスが条件となるアワードは、必要なサービス期間にわたって株式ベースの報酬コストとして均等に認識されます。継続的なサービスと特定のパフォーマンス目標の両方が条件となるアワードは、パフォーマンス条件が満たされる可能性が高い場合に、必要なサービス期間にわたって認識されます。
2024年10月31日までの9ヶ月間に発生した取得コストは、$3.0百万ドルであり、主に会社の連結損益計算書の一般管理費に計上されています。
買収に関する事業の結果は、買収日から会社の簡約連結財務諸表に含まれています。Flow Securityの買収は、会社の簡約連結財務諸表に対して重大な影響を与えておらず、したがって、過去のデータやプロフォーマ開示は行われていません。
バイオニック
2023年9月28日、会社は株式の%を取得しました 100Bionic Stork, Ltd.(以下「Bionic」という)の株式の%を取得しました。Bionicは、製品アーキテクチャと本番環境で実行される依存関係を分析し、セキュリティ、データプライバシー、および運用リスクを積極的に低減および緩和するために設計されたアプリケーションセキュリティ姿勢管理プラットフォームを提供する非公開企業です。
この取得はビジネスの組み合わせとして認識されています。移転された総対価は$239.0百万の現金、取得した現金$25.7百万を差し引いたもので、$0.7百万は、取得前のサービスに起因する置き換え株式報酬の公正価値を表しています。これらの置き換え賞の残りの公正価値は、組み合わせ後のサービスに起因するものであり、購入価格から除外されました。34.9購入価格は特定された無形資産に配分され、これには開発されたテクノロジーと顧客関係が含まれ、$2.7百万のネットの有形負債、$207.5百万ののれんが含まれ、これが会社に配分されました。 1つの 報告単位であり、取得された有形および無形資産の公正価値を上回る購入価格の超過を表しています。のれんは主に、Bionicのアセンブルされた労働力、新しい市場での計画的な成長、およびBionicの統合から得られると期待されるシナジーに起因しています。のれんは所得税目的で控除できません。
バイオニックとの株式購入契約の条件に従い、バイオニックの従業員が保有している未成熟のストックオプションの一部がキャンセルされ、2019年プランに基づく代替ストックオプションに交換されました。さらに、バイオニックの従業員が保有している一部の普通株式が、サービスベースのベスティングとその他の種類に従って、会社のAクラス普通株式と交換されました。さらに、会社は2019年プランに基づいて、特定の継続的な従業員にRSU(制限付き株式ユニット)およびPSU(成果に基づく株式ユニット)を付与しました。継続的なサービスが条件のアワードは、必要なサービス期間にわたって株式ベースの報酬費用として均等に認識されます。継続的なサービスと指定されたパフォーマンスターゲットの両方が条件となるアワードは、パフォーマンス条件が満たされる可能性が高い場合に、必要なサービス期間にわたって認識されます。
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以下の表は、取得時点における識別可能な無形資産の部品とその推定耐用年数を示しています(単位:千ドル):
公正価値有用な寿命
(月単位)
開発された技術$29,900 72
顧客関係5,000 96
取得された無形資産の合計 $34,900 
2024年10月31日までの9ヶ月間の取得コストは 物質的ではない.
買収に関する業績は、会社の簡約連結の財務諸表に買収日から含まれています。Bionicの買収は会社の簡約連結財務諸表に実質的な影響を与えなかったため、歴史的およびプロフォーマ開示は行われていません。
10. 普通株主に帰属する一株当たり当期純利益(損失)
クラウドストライクの普通株主に帰属する基本および希薄化後の当期純利益(損失)は、参加証券に必要な二クラス法に従って計算されます。クラウドストライクの普通株主に帰属する基本の当期純利益(損失)は、クラウドストライクに帰属する当期純利益(損失)をその期間中に発行されている普通株式の加重平均株数で割ることによって計算されます。クラウドストライクの普通株主に帰属する希薄化後の当期純利益は、当期純利益をその期間中に発行されている普通株式の加重平均株数と希薄化後の普通株式の同等の加重平均株数の組み合わせで割ることによって算出されます。希薄化の潜在的な普通株式は、発行済みのストックオプション、RSU、PSU、特別PSU、ESPPの義務、および創業者の保留株から構成され、財務諸表法を使用して計算されます。発行済みのストックオプション、RSU、PSU、特別PSU、ESPPの義務、および創業者の保留株の影響は、効果が逆希薄化となる期間の希薄化後の当期純利益の計算から除外されます。2024年10月31日に終了した3ヶ月間の間、潜在的に希薄化する項目の影響が逆希薄化であったため、希薄化後の当期純損失は基本の当期純損失と同じです。
普通株式の普通株式と優先株式AとBの株主の権利は、投票権および転換権を除いて同一である。したがって、未配当利益は、各普通株式のクラスの区別なく均等に割り当てられ、クラウドストライクの普通株主に帰属する1株当たりの基本および希薄化後の純利益は、クラスAおよびクラスB普通株式の株式について同じである。
以下の表は、クラウドストライクの普通株主に帰属する基本および希薄化後の当期純利益(損失)をシェア当たりで計算したものを示しています(千単位、ただしシェアデータを除く):
2023年10月31日に終了した3ヶ月2024年10月31日に終了した9ヶ月間
2024202320242023
分子:
クラウドストライクに帰属する当期純利益(損失)$(16,822)$26,665 $73,011 $35,628 
分母:
クラウドストライク普通株主に帰属する1株当たりの当期純利益(損失)を計算する際に使用される加重平均株式245,536 239,297 244,017 237,890 
普通株式相当額の希薄化効果 4,502 6,730 4,306 
クラウドストライク普通株主に帰属する1株当たりの当期純利益(損失)を計算する際に使用される加重平均株式、希薄化後245,536 243,799 250,747 242,196 
クラウドストライク普通株式株主に帰属する1株当たり当期純利益(損失)、基本$(0.07)$0.11 $0.30 $0.15 
クラウドストライク普通株式株主に帰属する1株当たり当期純利益(損失)、希薄化後$(0.07)$0.11 $0.29 $0.15 
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希薄化後の普通株式当期純利益(損失)に対する1株当たりの普通株主に帰属する額の計算から除外された潜在的な普通株式は、次の通りです(千単位で):
2023年10月31日に終了した3ヶ月2024年10月31日に終了した9ヶ月間
2024202320242023
将来の権利確定が条件のRSUとPSU11,057 2,436 773 4,105 
オプションから発行される普通株式1,309   3 
従業員株式購入プランに基づくシェア購入権350 104 80 408 
希薄化後の当期純利益に含まれない潜在的な普通株式12,716 2,540 853 4,516 
上記のテーブルには、ビジネス組み合わせに関連する創業者の保留株式は除外されており、発行されるシェアの数量が変動する場合に、ベスティングを以って固定金額の$で解決されます。19.3百万ドル、社内での継続的な雇用が前提されています。株価は、各ベスティング日の前5営業日間の平均株価または出来高加重平均株価に基づいて決定されます。2024年10月31日までの3か月および9か月間に、それぞれ、株が $で割り当てられました。 3,316 株式および 8,356 パーシェアの加重平均価格で創業者の保留を解消するため、それぞれ$で株を発行しました。268.05株価$ペリン319.12 株それぞれにつき$の加重平均価格で、創業者の保留を解消するために株が発行されました。
上の表には含まれていません 482,605503,669 2024年10月31日に終了した3か月と9か月間に、それぞれ事前定義された目標がまだ達成されていない、進行中のPSUと特別PSUの加重平均シェア。
11. その後の出来事
2024年11月5日、会社はA.S. Adaptive Shield Ltd.(「Adaptive Shield」)との全株式を取得する契約を締結しました。Adaptive Shieldは、お客様に包括的なsaasセキュリティポスト管理(「SSPM」)ソリューションを提供するsaasベースのサイバーセキュリティ企業です。Adaptive Shieldの取得は2024年11月20日に完了し、移転された合計対価は、先行取得サービスに帰属する代替株式報酬の公正価値を表し、標準的な純運転資本および購入価格の調整の対象となっています。会社は無形資産の評価と購入価格の割り当てを最終段階で行っています。213.8百万の現金、取得した現金$13.8百万を差し引いたもので、$0.7百万ドル、事前取得サービスに帰属する代替株式報酬の公正な価値を計上するもので、通常の純運転資本および購入価格の調整の対象となります。会社は無形資産の評価と購入価格の割り当てを最終調整中です。
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項目2.財務状況及び業績に関する経営者の議論と分析
以下の私たちの財務状況および業績に関する議論と分析は、この四半期報告書のForm 10-Qの他の部分に含まれる簡易化された連結財務諸表および関連する注記と合わせて読む必要があります。また、2024年1月31日に終了した年度のAnnual Report on Form 10-KがSECに提出されています。この議論と分析に含まれる情報や、この四半期報告書のForm 10-Qの他の部分に記載されている情報には、ビジネスに関する私たちの計画や戦略に関する情報が含まれており、リスクと不確実性を伴う将来予測的な発言が含まれています。これは、この四半期報告書のForm 10-Qの目次の後に記載されている「将来予測に関する特別注記」の見出しの下に説明されています。重要な要因についての議論は、実際の結果が以下の議論と分析に含まれる将来予測的な発言で示された結果と実質的に異なる可能性があることを示しているため、Part II, Item 1A, "リスク要因"の下の開示を確認する必要があります。
概要
CrowdStrike Holdings、Inc.は、サイバーセキュリティのグローバルリーダーであり、サイバーセキュリティの人工知能ネイティブプラットフォームをXDR時代に提供し、侵害を停止することを約束しています。2011年に設立され、私たちはクラウド時代のためにサイバーセキュリティを再発明し、顧客が体験するサイバーセキュリティの提供方法を変革しました。CrowdStrikeの創業時、サイバー攻撃者は、急速な敵対者の戦術の変化に対応できない古いサイバーセキュリティ製品に対して非対称な優位性を持っていました。私たちは、AIネイティブのCrowdStrike Falcon XDRプラットフォームでこの問題を解決するために根本的に異なるアプローチを取りました- AIを中心に構築された最初で真のクラウドネイティブの統合プラットフォームであり、膨大な量のセキュリティおよびエンタープライズデータを活用して、単一の軽量化エージェントを介して高度なモジュラーソリューションを提供できるようにしました。
私たちは、私たちのアプローチが「セキュリティクラウド」と呼ばれる新しいカテゴリを定義したと信じています。このカテゴリは、クラウドが顧客関係管理、人事、サービス管理業種を変革したのと同じように、サイバーセキュリティ業種を変革する力を持っています。クラウド規模の人工知能を利用して、私たちのセキュリティクラウドは、攻撃の指標、脅威インテリジェンス、エンタープライズデータ(エンドポイント、ワークロード、アイデンティティ、DevOps、IT資産、および構成のデータを含む)と関連付けて、毎週数兆件のサイバーセキュリティイベントを豊かにし、相関させ、実行可能なデータを生成し、敵の戦術の変化を特定し、顧客基盤全体でリアルタイムに脅威を自動的に防止します。私たちのファルコンプラットフォームに供給されるデータが多ければ多いほど、私たちのセキュリティクラウドはよりインテリジェントになり、顧客はさらに恩恵を受け、このことが全体的な価値を高める強力なネットワーク効果を生み出します。
私たちの市場進出戦略
私たちは、さまざまな業界の組織に対してFalconプラットフォームおよびクラウドモジュールのサブスクリプションを売り出しています。主に、チャネルパートナーのネットワークを活用する直接販売チームを通じて、Falconプラットフォームおよびクラウドモジュールのサブスクリプションを売り出しています。私たちの直接販売チームは、顧客のエンドポイントの数によってセグメント化されたフィールド営業とインサイド営業の専門家で構成されています。
私たちは、低摩擦のランディングアンドエクスパンデッド営業戦略を持っています。顧客が私たちのFalconプラットフォームを展開する際、どの数のクラウドモジュールからでもスタートでき、追加のクラウドモジュールを簡単に加えることができます。顧客が私たちのFalconプラットフォームの利点を体験すると、時間の経過と共にさらなるエンドポイントを追加したり、追加のモジュールを購入したりして、採用を拡大することがよくあります。また、私たちの営業チームを利用して、追加のクラウドモジュールの無料トライアルに興味を持つ現在の顧客を特定し、これが私たちのランディングアンドエクスパンデッドモデルの強力な推進力となります。営業チームをセグメント化することで、効率的に見込み客を特定する低タッチ営業モデルを展開することができます。
私たちは大企業向けのソリューションとして始まりましたが、Falconプラットフォームの柔軟性とスケーラビリティにより、あらゆる規模の顧客にシームレスにソリューションを提供できるようになりました。小規模および中規模の企業向けにFalconプラットフォームを変更する必要なく、あらゆる規模の組織を対象にした販売に焦点を広げました。
当社の顧客の大部分が、1年の契約期間で購読を行っています。当社の購読は、エンドポイントおよびモジュールごとに通常価格が設定されています。購読からの収益は、購読期間にわたって均等に認識されます。また、インシデント対応や積極的なプロフェッショナルサービスからも収益を生み出しており、これらは通常、時間と物品費に基づいて価格が設定されています。私たちは、プロフェッショナルサービスビジネスを主に、Falconプラットフォームとクラウドモジュールへの購読のクロスセル機会と捉えています。
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目次
私たちのパフォーマンスに影響を与える特定の要因
私たちのソリューションの採用。クラウドベースのsaas提供エンドポイントセキュリティソリューションの市場成長に大きく依存すると考えています。多くの組織は、大規模な人員や財務リソースを投資して設計・運用してきたオンプレミスのレガシープロダクトをまだ捨てていません。その結果、クラウドベースのソリューションへの顧客の採用率や需給を予測することが難しいです。
新規顧客獲得。私たちの将来の成長は、新規顧客を獲得する能力に大きく依存しています。新規顧客を引き付ける努力が成功しなければ、売上高と売上高の成長率は低下する可能性があります。私たちは、市場進出戦略とFalconプラットフォームの柔軟性およびスケーラビリティが、迅速に顧客基盤を拡大することを可能にすると信じています。私たちのインシデント対応およびプロアクティブサービスも新規顧客獲得を促進するのに役立ちます。なぜなら、これらのプロフェッショナルサービスの顧客は、その後、Falconプラットフォームのサブスクリプションを購入するからです。多くの組織はまだクラウドベースのセキュリティソリューションを採用しておらず、私たちのFalconプラットフォームはあらゆる規模の組織向けの提供を行っているため、世界中のさまざまな業界での成長の大きな機会があると信じています。
顧客の定着を維持し、売上高を増やす。 売上高を増やす能力は、主に既存顧客を定着させ、そのサブスクリプションのARRを増やす能力にかかっています。私たちは既存顧客への販売拡大に焦点を当てており、エンドポイントへの展開を増やしたり、機能を増やすための追加のクラウドモジュールを販売したりしています。経時的に、私たちのプラットフォームは、単一の提供から複数のクラウドモジュールを高度に統合された提供へ移行しました。
成長に投資してください。当社の市場機会は大きく、国内外の顧客基盤をさらに拡大するために、営業およびマーケティング活動に大規模な投資を継続する必要があると考えています。当社のオープンクラウドアーキテクチャと単一データモデルのおかげで、新しいクラウドモジュールを素早く構築・展開することが可能となり、これらの取り組みにさらに投資し、テクノロジープラットフォームと製品機能をさらに強化していく予定です。研究開発への継続的な投資に加え、Falconプラットフォームの機能を補完・拡張し、当社のテクノロジーやセキュリティの専門知識を強化し、新規顧客や市場へのアクセスを得ることでリーダーシップポジションを強化するため、事業やテクノロジー、資産の買収を検討することがあります。さらに、上場企業として成長する中で、会計、コンプライアンス、投資家関係などの追加経費により、一般管理費の金額が予期しうる将来に増加するものと見込んでいます。
July 19 Incident. On July 19, 2024, we released a content configuration update for our Falcon sensor that resulted in system crashes for certain Windows systems (the “July 19 Incident”). As a result of the July 19 Incident, we are subject to lawsuits, claims and inquiries as described in Note 8, “Commitments and Contingencies,” to our condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q. We have incurred, and expect to continue to incur, significant legal and professional services and other general and administrative expenses associated with the July 19 Incident in future periods. It is not reasonably possible to quantify the precise impact of the July 19 Incident, but the incident has adversely affected our results of operations, and we currently expect a number of factors relating to the incident to adversely affect our key metrics and results of operations in future periods. While we have not experienced high levels of customer churn following the incident, we have experienced delays in creating sales opportunities and longer sales cycles, including delays in customer purchasing decisions. We expect sales cycles to continue to be elongated in future periods. In addition, because our customers typically sign contracts with terms of twelve months or longer, customer churn and any corresponding impact to our key metrics and revenue may occur in future periods. Customer commitment packages introduced following the July 19 Incident may include discounting, additional modules, professional services, flexible payment terms or subscription period extensions. Our customer commitment packages have resulted, and are expected to continue to result, in increased contraction, due to elongated subscription terms, and decreased upsell dollar values.
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Key Metrics
We monitor the following key metrics to help us evaluate our business, identify trends affecting our business, formulate business plans, and make strategic decisions.
Annual Recurring Revenue (“ARR”)
ARR is calculated as the annualized value of our customer subscription contracts as of the measurement date, assuming any contract that expires during the next 12 months is renewed on its existing terms. To the extent that we are negotiating a renewal with a customer after the expiration of the subscription, we continue to include that revenue in ARR if we are actively in discussion with such organization for a new subscription or renewal, or until such organization notifies us that it is not renewing its subscription.
The following table sets forth our ARR as of the dates presented (dollars in thousands):
As of October 31,
20242023
Annual recurring revenue$4,017,540 $3,153,243 
Year-over-year growth27 %35 %
ARR grew to $4.0 billion as of October 31, 2024, of which $153.0 million and $582.3 million was net new ARR added for the three and nine months ended October 31, 2024, respectively. ARR grew to $3.2 billion as of October 31, 2023, of which $223.1 million and $593.5 million was net new ARR added for the three and nine months ended October 31, 2023, respectively.
While we normally recognize ARR contraction in the quarter a transaction is subject to renew, in the third quarter of fiscal 2025, we excluded approximately $26.0 million from ARR after a distributor in the federal space provided notice of its intention to exercise transferability rights with respect to a transaction, and we concluded that the transaction would not recur.
Dollar-Based Net Retention Rate
Our dollar-based net retention rate compares our ARR from a set of subscription customers against the same metric for those subscription customers from the prior year. Our dollar-based net retention rate reflects customer renewals, expansion, contraction, and churn, and excludes revenue from our incident response and proactive services. We calculate our dollar-based net retention rate as of period end by starting with the ARR from all subscription customers as of 12 months prior to such period end, or Prior Period ARR. We then calculate the ARR from these same subscription customers as of the current period end, or Current Period ARR. Current Period ARR includes any expansion and is net of contraction or churn over the trailing 12 months but excludes revenue from new subscription customers in the current period. We then divide the Current Period ARR by the Prior Period ARR to arrive at our dollar-based net retention rate. For the purposes of calculating our dollar-based net retention rate, we define a subscription customer as a separate legal entity that has entered into a distinct subscription agreement for access to our Falcon platform for which the term has not ended or with which we are negotiating a renewal contract. We do not consider our channel partners as customers, and we treat managed service security providers, who may purchase our products on behalf of multiple companies, as a single customer.
Our dollar-based net retention rate was 115% as of October 31, 2024. Our dollar-based net retention rate can fluctuate from period to period due to large customer contracts in a given period and ongoing increased contraction associated with our customer commitment packages, which may reduce our dollar-based net retention rate in subsequent periods.
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Components of Our Results of Operations
Revenue
Subscription Revenue. Subscription revenue primarily consists of subscription fees for our Falcon platform and additional cloud modules that are supported by our cloud-based platform. Subscription revenue is driven primarily by the number of subscription customers, the number of endpoints per customer, and the number of cloud modules included in the subscription. We recognize subscription revenue ratably over the term of the agreement, which is generally one to three years. Because the majority of our subscription customers are billed upfront, we have recorded significant deferred revenue. Consequently, a substantial portion of the revenue that we report in each period is attributable to the recognition of deferred revenue relating to subscriptions that we entered into during previous periods. The majority of our customers are invoiced annually in advance or multi-year in advance.
Professional Services Revenue. Professional services revenue includes incident response and proactive services, forensic and malware analysis, and attribution analysis. Professional services are generally sold separately from subscriptions to our Falcon platform, although customers frequently enter into a separate arrangement to purchase subscriptions to our Falcon platform at the conclusion of a professional services arrangement. Professional services are available through hourly rate and fixed fee contracts, one-time and ongoing engagements, and retainer-based agreements. For time and materials and retainer-based arrangements, revenue is recognized as services are performed. Fixed fee contracts account for an immaterial portion of our revenue.
Cost of Revenue
Subscription Cost of Revenue. Subscription cost of revenue consists primarily of costs related to hosting our cloud-based Falcon platform in data centers, amortization of our capitalized internal-use software, employee-related costs such as salaries and bonuses, stock-based compensation expense, benefits costs associated with our operations and support personnel, software license fees, property and equipment depreciation, amortization of acquired intangibles, and an allocated portion of facilities and administrative costs.
As new customers subscribe to our platform and existing subscription customers increase the number of endpoints on our Falcon platform, our cost of revenue will increase due to greater cloud hosting costs related to powering new cloud modules and the incremental costs for storing additional data collected for such cloud modules and employee-related costs. We intend to continue to invest additional resources in our cloud platform and our customer support organizations as we grow our business. The level and timing of investment in these areas could affect our cost of revenue in the future.
Professional Services Cost of Revenue. Professional services cost of revenue consists primarily of employee-related costs, such as salaries and bonuses, stock-based compensation expense, consulting expense, and an allocated portion of facilities and administrative costs.
Gross Profit and Gross Margin
Gross profit and gross margin have been and will continue to be affected by various factors, including the timing of our acquisition of new subscription customers, renewals from existing subscription customers, sales of additional modules to existing subscription customers, the data center and bandwidth costs associated with operating our cloud platform, the extent to which we expand our customer support and cloud operations organizations, and the extent to which we can increase the efficiency of our technology, infrastructure, and data centers through technological improvements. We expect our gross profit to increase in dollar amount and our gross margin to increase modestly over the long term as we grow our business, although our gross margin could fluctuate from period to period depending on the interplay of these factors. Demand for our incident response services is driven by the number of breaches experienced by non-customers. Also, we view our professional services solutions in the context of our larger business and as a significant lead generator for new subscriptions. Because of these factors, our services revenue and gross margin may fluctuate over time.
Operating Expenses
Our operating expenses consist of sales and marketing, research and development and general administrative expenses. For each of these categories of expense, employee-related expenses are the most significant component, which include salaries, employee bonuses, sales commissions, and employer payroll tax. Operating expenses also include an allocated portion of overhead costs for facilities and IT.
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Sales and Marketing. Sales and marketing expenses primarily consist of employee-related expenses such as salaries, commissions, and bonuses. Sales and marketing expenses also include stock-based compensation; expenses related to our marketing programs; an allocated portion of facilities and administrative expenses; amortization of acquired intangibles; and cloud hosting and related services costs related to proof of value efforts. Sales and marketing expenses also include sales commissions and any other incremental payments made upon the initial acquisition of a subscription or upsells to existing customers, which are capitalized and amortized over the estimated customer life. We also capitalize and amortize any such expenses paid for the renewal of a subscription over the term of the renewal.
We expect sales and marketing expenses to increase in dollar amount as we continue to make significant investments in our sales and marketing organization to drive additional revenue, further penetrate the market, and expand our global customer base. However, we anticipate sales and marketing expenses to decrease as a percentage of our total revenue over time as we grow our business, although our sales and marketing expenses may fluctuate as a percentage of our total revenue from period to period depending on the timing of these expenses.
Research and Development. Research and development expenses primarily consist of employee-related expenses such as salaries and bonuses; stock-based compensation; cloud hosting and related costs; and an allocated portion of facilities and administrative expenses. Our cloud platform is software-driven, and our research and development teams employ software engineers in the design, and the related development, testing, certification, and support of these solutions.
We expect research and development expenses to increase in dollar amount as we continue to increase investments in our technology architecture and software platform. However, we anticipate research and development expenses to decrease as a percentage of our total revenue over time as we grow our business, although our research and development expenses may fluctuate as a percentage of our total revenue from period to period depending on the timing of these expenses.
General and Administrative. General and administrative expenses consist of employee-related expenses such as salaries and bonuses; stock-based compensation; and related expenses for our executive, finance, human resources, and legal organizations. In addition, general and administrative expenses include outside legal, accounting, and other professional fees; and an allocated portion of facilities and administrative expenses.
We expect general and administrative expenses to increase in dollar amount over time. General and administrative expenses may fluctuate as a percentage of our total revenue from period to period depending on the timing of these expenses.
Interest Expense. Interest expense consists primarily of amortization of debt issuance costs, contractual interest expense for our Senior Notes issued in January 2021, and amortization of debt issuance costs on our Revolving Facility.
Interest Income. Interest income consists primarily of income earned on our cash, cash equivalents, and short-term investments.
Other Income (Expense), Net. Other income (expense), net consists primarily of gains and losses on strategic investments and foreign currency transaction gains and losses.
Provision for Income Taxes. Provision for income taxes consists of state income taxes in the United States, foreign income taxes, and withholding taxes related to customer payments in certain foreign jurisdictions in which we conduct business. We maintain a full valuation allowance on our U.S. federal and state and certain foreign deferred tax assets, including net operating loss carryforwards and tax credits, which we have determined are not realizable on a more-likely-than-not basis. We regularly evaluate the need for a valuation allowance. For the three and nine months ended October 31, 2024, we computed our U.S. tax provision on a discrete basis.
Net Income Attributable to Non-controlling Interest. Net income attributable to non-controlling interest consists of the Falcon Funds’ non-controlling interest share of gains and losses and interest income from our strategic investments.
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Results of Operations
The following tables set forth our condensed consolidated statements of operations for each period presented (in thousands, except percentages):
Three Months Ended October 31,Change
$
Change
%
Nine Months Ended October 31,Change
$
Change
%
2024202320242023
Revenue
Subscription$962,735 $733,463 $229,272 31 %$2,753,164 $2,074,610 $678,554 33 %
Professional services47,443 52,551 (5,108)(10)%141,922 135,610 6,312 %
Total revenue1,010,178 786,014 224,164 29 %2,895,086 2,210,220 684,866 31 %
Cost of revenue
Subscription 
216,301 159,830 56,471 35 %605,868 455,236 150,632 33 %
Professional services38,786 35,174 3,612 10 %111,623 91,915 19,708 21 %
Total cost of revenue255,087 195,004 60,083 31 %717,491 547,151 170,340 31 %
Gross profit755,091 591,010 164,081 28 %2,177,595 1,663,069 514,526 31 %
Operating expenses
Sales and marketing408,267 286,186 122,081 43 %1,113,852 850,209 263,643 31 %
Research and development275,602 196,072 79,530 41 %761,759 554,499 207,260 37 %
General and administrative126,945 105,589 21,356 20 %337,113 290,027 47,086 16 %
Total operating expenses810,814 587,847 222,967 38 %2,212,724 1,694,735 517,989 31 %
Income (loss) from operations(55,723)3,163 (58,886)(1,862)%(35,129)(31,666)(3,463)11 %
Interest expense(6,587)(6,503)(84)%(19,647)(19,334)(313)%
Interest income52,201 40,086 12,115 30 %149,577 107,245 42,332 39 %
Other income (expense), net(429)(474)45 (9)%6,196 (1,978)8,174 (413)%
Income (loss) before provision for income taxes(10,538)36,272 (46,810)(129)%100,997 54,267 46,730 86 %
Provision for income taxes6,281 9,603 (3,322)(35)%24,862 18,623 6,239 34 %
Net income (loss)(16,819)26,669 (43,488)(163)%76,135 35,644 40,491 114 %
Net income attributable to non-controlling interest(1)(25)%3,124 16 3,108 19,425 %
Net income (loss) attributable to CrowdStrike$(16,822)$26,665 $(43,487)(163)%$73,011 $35,628 $37,383 105 %

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The following table presents the components of our condensed consolidated statements of operations as a percentage of total revenue for the periods presented:
Three Months Ended October 31,Nine Months Ended October 31,
2024202320242023
%%
Revenue
Subscription95 %93 %95 %94 %
Professional services%%%%
Total revenue100 %100 %100 %100 %
Cost of revenue
Subscription21 %20 %21 %21 %
Professional services%%%%
Total cost of revenue25 %25 %25 %25 %
Gross profit75 %75 %75 %75 %
Operating expenses
Sales and marketing40 %36 %38 %38 %
Research and development27 %25 %26 %25 %
General and administrative13 %13 %12 %13 %
Total operating expenses80 %75 %76 %77 %
Income (loss) from operations(6)%— %(1)%(1)%
Interest expense(1)%(1)%(1)%(1)%
Interest income %%%%
Other income (expense), net— %— %— %— %
Income (loss) before provision for income taxes(1)%%%%
Provision for income taxes%%%%
Net income (loss)(2)%%%%
Net income attributable to non-controlling interest— %— %— %— %
Net income (loss) attributable to CrowdStrike(2)%%%%
Comparison of the Three Months Ended October 31, 2024 and 2023
Revenue
The following shows total revenue from subscriptions and professional services for the three months ended October 31, 2024 as compared to the three months ended October 31, 2023 (in thousands, except percentages):
Three Months Ended October 31,Change
$
Change
%
20242023
Subscription$962,735 $733,463 $229,272 31 %
Professional services47,443 52,551 (5,108)(10)%
Total revenue$1,010,178 $786,014 $224,164 29 %
Total revenue increased by $224.2 million, or 29%, for the three months ended October 31, 2024 compared to the three months ended October 31, 2023. Subscription revenue accounted for 95% and 93% of our total revenue for the three months ended October 31, 2024 and October 31, 2023, respectively. Professional services revenue accounted for 5% and 7% of our total revenue for the three months ended October 31, 2024 and October 31, 2023, respectively.
Subscription revenue increased by $229.3 million, or 31%, for the three months ended October 31, 2024 compared to the three months ended October 31, 2023, which was primarily driven by a combination of the addition of new customers and the sale of additional sensors and modules to existing customers.
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Professional services revenue decreased by $5.1 million, or 10%, for the three months ended October 31, 2024, compared to the three months ended October 31, 2023, which was primarily driven by a decrease in services provided based on billable and non-billable hours.
Cost of Revenue, Gross Profit, and Gross Margin
The following shows cost of revenue related to subscriptions and professional services for the three months ended October 31, 2024 as compared to the three months ended October 31, 2023 (in thousands, except percentages):
Three Months Ended October 31,Change
$
Change
%
20242023
Subscription$216,301 $159,830 $56,471 35 %
Professional services38,786 35,174 3,612 10 %
Total cost of revenue$255,087 $195,004 $60,083 31 %
Total cost of revenue increased by $60.1 million, or 31%, for the three months ended October 31, 2024 compared to the three months ended October 31, 2023. Subscription cost of revenue increased by $56.5 million, or 35%, for the three months ended October 31, 2024, compared to the three months ended October 31, 2023. The increase in subscription cost of revenue was primarily due to an increase in employee-related expenses of $13.9 million driven by a 30% increase in average headcount, an increase in cloud hosting and related services cost of $10.5 million, an increase in depreciation of data center equipment of $9.4 million, an increase in stock-based compensation expense of $7.1 million, an increase in allocated overhead costs of $5.5 million, an increase in amortization of internal-use software of $5.4 million, an increase in hardware maintenance costs of $1.4 million, and an increase in employee benefits of $1.2 million.
Professional services cost of revenue increased by $3.6 million, or 10%, for the three months ended October 31, 2024, compared to the three months ended October 31, 2023. The increase in professional services cost of revenue was primarily due to an increase in employee-related expenses of $3.2 million driven by an 20% increase in average headcount, an increase in stock-based compensation expense of $1.9 million, and an increase in allocated overhead costs of $1.6 million, partially offset by a decrease in consulting expense of $3.3 million.
The following shows gross profit and gross margin for subscriptions and professional services for the three months ended October 31, 2024 as compared to the three months ended October 31, 2023 (in thousands, except percentages):
Three Months Ended October 31,Change
$
Change
%
20242023
Subscription gross profit$746,434 $573,633 $172,801 30 %
Professional services gross profit8,657 17,377 (8,720)(50)%
Total gross profit$755,091 $591,010 $164,081 28 %
Three Months Ended October 31,Change
%
20242023
Subscription gross margin78 %78 %— %
Professional services gross margin18 %33 %(15)%
Total gross margin75 %75 %— %
Subscription gross margin was flat for the three months ended October 31, 2024, compared to the three months ended October 31, 2023.
Professional services gross margin decreased by 15% for the three months ended October 31, 2024, compared to the three months ended October 31, 2023. The decrease in professional services gross margin was primarily due to an increase in consulting expense and decreased utilization during the three months ended October 31, 2024.
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Operating Expenses
Sales and Marketing
The following shows sales and marketing expenses for the three months ended October 31, 2024 as compared to the three months ended October 31, 2023 (in thousands, except percentages):
Three Months Ended October 31,Change
$
Change
%
20242023
Sales and marketing expenses$408,267 $286,186 $122,081 43 %
Sales and marketing expenses increased by $122.1 million, or 43%, for the three months ended October 31, 2024 compared to the three months ended October 31, 2023. The increase in sales and marketing expenses was primarily due to an increase in employee-related expenses of $46.8 million driven by a 16% increase in average headcount, an increase in marketing programs of $22.9 million, $15.1 million of expenses relating to the July 19 Incident, an increase in stock-based compensation expense of $13.7 million, an increase in allocated overhead costs of $8.9 million, an increase in travel expenses of $3.8 million, an increase in cloud hosting and related costs of $1.5 million, an increase in employee benefits of $1.5 million, an increase in term-based software licenses of $1.3 million, and an increase in other labor expenses of $1.1 million.
Research and Development
The following shows research and development expenses for the three months ended October 31, 2024 as compared to the three months ended October 31, 2023 (in thousands, except percentages):
Three Months Ended October 31,Change
$
Change
%
20242023
Research and development expenses$275,602 $196,072 $79,530 41 %
Research and development expenses increased by $79.5 million, or 41%, for the three months ended October 31, 2024 compared to the three months ended October 31, 2023. This increase was primarily due to an increase in stock-based compensation expense of $29.5 million, an increase in employee-related expenses of $22.8 million driven by a 20% increase in average headcount, an increase in cloud hosting and related costs of $11.6 million, an increase in allocated overhead costs of $7.4 million, $3.5 million of expenses relating to the July 19 Incident, an increase in term-based software licenses of $1.5 million, and an increase in employee benefits of $1.0 million, partially offset by a decrease in other labor expenses of $2.7 million.
General and Administrative
The following shows general and administrative expenses for the three months ended October 31, 2024 as compared to the three months ended October 31, 2023 (in thousands, except percentages):
Three Months Ended October 31,Change
$
Change
%
20242023
General and administrative expenses$126,945 $105,589 $21,356 20 %
General and administrative expenses increased by $21.4 million, or 20%, for the three months ended October 31, 2024 compared to the three months ended October 31, 2023. The increase in general and administrative expenses was primarily due to $15.3 million of expenses relating to the July 19 Incident, an increase in employee-related expenses of $6.6 million driven by a 19% increase in average headcount, an increase in corporate insurance of $3.6 million, an increase in allocated overhead costs of $2.0 million, an increase in term-based software licenses of $1.0 million, and an increase in leased airfare costs of $1.0 million, partially offset by a decrease in stock-based compensation expense of $2.9 million, a decrease in legal expense of $4.9 million unrelated to the July 19 Incident, and a decrease in consulting expense of $1.8 million.
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Interest Expense, Interest Income, and Other Expense, Net
The following shows interest expense, interest income, and other expense, net for the three months ended October 31, 2024 as compared to the three months ended October 31, 2023 (in thousands, except percentages):
Three Months Ended October 31,Change
$
Change
%
20242023
Interest expense$(6,587)$(6,503)$(84)%
Interest income $52,201 $40,086 $12,115 30 %
Other expense, net$(429)$(474)$45 (9)%
Interest expense consists primarily of amortization of debt issuance costs, contractual interest expense, accretion of debt discount for our Senior Notes issued in January 2021, and amortization of debt issuance costs on our Revolving Facility.
The increase in interest income for the three months ended October 31, 2024 compared to the three months ended October 31, 2023 was driven by an increase in our cash and cash equivalents.
The decrease in other expense, net for the three months ended October 31, 2024 compared to the three months ended October 31, 2023 was primarily due to gains on deferred compensation assets and fluctuations in foreign currency transaction gains and losses.
Provision for Income Taxes
The following shows the provision for income taxes for the three months ended October 31, 2024 as compared to the three months ended October 31, 2023 (in thousands, except percentage):
Three Months Ended October 31,Change
$
Change
%
20242023
Provision for income taxes$6,281 $9,603 $(3,322)(35)%
The decrease in provision for income taxes of $3.3 million during the three months ended October 31, 2024 compared to the three months ended October 31, 2023 was primarily attributable to the tax benefit of effective settlement, offset by income taxes from pre-tax earnings and withholding taxes related to customer payments in certain foreign jurisdictions in which the Company conducts business.
Comparison of the Nine Months Ended October 31, 2024 and 2023
Revenue
The following shows total revenue from subscriptions and professional services for the nine months ended October 31, 2024 as compared to the nine months ended October 31, 2023 (in thousands, except percentages):
Nine Months Ended October 31,Change
$
Change
%
20242023
Subscription$2,753,164 $2,074,610 $678,554 33 %
Professional services141,922 135,610 6,312 %
Total revenue$2,895,086 $2,210,220 $684,866 31 %
Total revenue increased by $684.9 million, or 31%, for the nine months ended October 31, 2024 compared to the nine months ended October 31, 2023. Subscription revenue accounted for 95% and 94% of our total revenue for the nine months ended October 31, 2024 and October 31, 2023, respectively. Professional services revenue accounted for 5% and 6% of our total revenue for the nine months ended October 31, 2024 and October 31, 2023, respectively.
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Subscription revenue increased by $678.6 million, or 33%, for the nine months ended October 31, 2024 compared to the nine months ended October 31, 2023, which was primarily driven by a combination of the addition of new customers and the sale of additional sensors and modules to existing customers.
Professional services revenue increased by $6.3 million, or 5%, for the nine months ended October 31, 2024, compared to the nine months ended October 31, 2023, which was primarily attributable to an increase in the number of professional service hours performed.
Cost of Revenue, Gross Profit, and Gross Margin
The following shows cost of revenue related to subscriptions and professional services for the nine months ended October 31, 2024 as compared to the nine months ended October 31, 2023 (in thousands, except percentages):
Nine Months Ended October 31,Change
$
Change
%
20242023
Subscription$605,868 $455,236 $150,632 33 %
Professional services111,623 91,915 19,708 21 %
Total cost of revenue$717,491 $547,151 $170,340 31 %
Total cost of revenue increased by $170.3 million, or 31%, for the nine months ended October 31, 2024 compared to the nine months ended October 31, 2023. Subscription cost of revenue increased by $150.6 million, or 33%, for the nine months ended October 31, 2024, compared to the nine months ended October 31, 2023. The increase in subscription cost of revenue was primarily due to an increase in employee-related expenses of $43.0 million driven by a 29% increase in average headcount, an increase in depreciation of data center equipment of $28.0 million, an increase in stock-based compensation expense of $18.7 million, an increase in cloud hosting and related services cost of $18.5 million, an increase in amortization of internal-use software of $16.3 million, an increase in allocated overhead costs of $14.4 million, an increase in hardware maintenance costs of $4.7 million, and an increase in employee health benefits of $2.4 million.
Professional services cost of revenue increased by $19.7 million, or 21%, for the nine months ended October 31, 2024, compared to the nine months ended October 31, 2023. The increase in professional services cost of revenue was primarily due to an increase in employee-related expenses of $9.5 million driven by a 19% increase in average headcount, an increase in stock-based compensation expense of $5.1 million, and an increase in allocated overhead costs of $3.5 million.
The following shows gross profit and gross margin for subscriptions and professional services for the nine months ended October 31, 2024 as compared to the nine months ended October 31, 2023 (in thousands, except percentages):
Nine Months Ended October 31,Change
$
Change
%
20242023
Subscription gross profit$2,147,296 $1,619,374 $527,922 33 %
Professional services gross profit30,299 43,695 (13,396)(31)%
Total gross profit$2,177,595 $1,663,069 $514,526 31 %
Nine Months Ended October 31,Change
%
20242023
Subscription gross margin78 %78 %— %
Professional services gross margin21 %32 %(11)%
Total gross margin75 %75 %— %
Subscription gross margin was flat for the nine months ended October 31, 2024, compared to the nine months ended October 31, 2023.
Professional services gross margin decreased by 11% for the nine months ended October 31, 2024 compared to the nine months ended October 31, 2023. The decrease in professional services gross margin was primarily due to an increase in consulting expenses and decreased utilization during the nine months ended October 31, 2024.
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Operating Expenses
Sales and Marketing
The following shows sales and marketing expenses for the nine months ended October 31, 2024 as compared to the nine months ended October 31, 2023 (in thousands, except percentages):
Nine Months Ended October 31,Change
$
Change
%
20242023
Sales and marketing expenses$1,113,852 $850,209 $263,643 31 %
Sales and marketing expenses increased by $263.6 million, or 31%, for the nine months ended October 31, 2024 compared to the nine months ended October 31, 2023. The increase in sales and marketing expenses was primarily due to an increase in employee-related expenses of $108.3 million driven by a 13% increase in average headcount, an increase in marketing programs of $43.4 million, an increase in stock-based compensation expense of $36.2 million, an increase in allocated overhead costs of $19.5 million, $18.2 million of expenses relating to the July 19 Incident, an increase in travel expenses of $9.3 million, an increase in company events expenses of $5.4 million, an increase in term-based software licenses of $3.8 million, an increase in cloud hosting and related costs of $3.4 million, an increase in employee health benefits of $2.8 million, an increase in other labor expenses of $2.5 million, and an increase in consulting expense of $1.5 million, partially offset by a decrease in taxes and licenses of $1.3 million.
Research and Development
The following shows research and development expenses for the nine months ended October 31, 2024 as compared to the nine months ended October 31, 2023 (in thousands, except percentages):
Nine Months Ended October 31,Change
$
Change
%
20242023
Research and development expenses$761,759 $554,499 $207,260 37 %
Research and development expenses increased by $207.3 million, or 37%, for the nine months ended October 31, 2024 compared to the nine months ended October 31, 2023. This increase was primarily due an increase in stock-based compensation expense of $80.7 million, an increase in employee-related expenses of $69.3 million driven by a 15% increase in average headcount, an increase in cloud hosting and related costs of $21.9 million, an increase in allocated overhead costs of $17.7 million, $4.6 million of expenses relating to the July 19 Incident, an increase in term-based software licenses of $3.0 million, an increase in employee related benefits of $2.5 million, an increase in travel expenses of $2.4 million, and an increase in consulting expense of $1.1 million.
General and Administrative
The following shows general and administrative expenses for the nine months ended October 31, 2024 as compared to the nine months ended October 31, 2023 (in thousands, except percentages):
Nine Months Ended October 31,Change
$
Change
%
20242023
General and administrative expenses$337,113 $290,027 $47,086 16 %
General and administrative expenses increased by $47.1 million, or 16%, for the nine months ended October 31, 2024 compared to the nine months ended October 31, 2023. The increase in general and administrative expenses was primarily due to an increase in employee-related expenses of $21.0 million driven by an 17% increase in average headcount, $16.3 million of expenses relating to the July 19 Incident, an increase in allocated overhead costs of $4.4 million, an increase in consulting expense of $2.8 million, an increase in leased airfare costs of $2.6 million, an increase in tax and licenses of $1.6 million, and an increase in company events expenses of $1.0 million, partially offset by a decrease in legal expense of $7.5 million unrelated to the July 19 Incident.
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Interest Expense, Interest Income, and Other Income (Expense), Net
The following shows interest expense, interest income, and other income (expense), net for the nine months ended October 31, 2024 as compared to the nine months ended October 31, 2023 (in thousands, except percentages):
Nine Months Ended October 31,Change
$
Change
%
20242023
Interest expense$(19,647)$(19,334)$(313)%
Interest income $149,577 $107,245 $42,332 39 %
Other income (expense), net$6,196 $(1,978)$8,174 (413)%
Interest expense consists primarily of amortization of debt issuance costs, contractual interest expense, accretion of debt discount for our Senior Notes issued in January 2021, and amortization of debt issuance costs on our Revolving Facility.
The increase in interest income for the nine months ended October 31, 2024 compared to the nine months ended October 31, 2023 was driven by increases in market interest rates and an increase in our cash and cash equivalents.
The increase in other income (expense), net for the nine months ended October 31, 2024 compared to the nine months ended October 31, 2023 was primarily due to gains on sales of our strategic investments of $6.2 million and an increase in net foreign currency transaction gains of $1.1 million.
Provision for Income Taxes
The following shows the provision for income taxes for the nine months ended October 31, 2024 as compared to the nine months ended October 31, 2023 (in thousands, except percentage):
Nine Months Ended October 31,Change
$
Change
%
20242023
Provision for income taxes$24,862 $18,623 $6,239 34 %
The increase in provision for income taxes of $6.2 million during the nine months ended October 31, 2024 compared to the nine months ended October 31, 2023 was primarily attributable to the increase in pre-tax earnings and withholding taxes related to customer payments in certain foreign jurisdictions in which the Company conducts business.
Liquidity and Capital Resources
Our primary sources of liquidity as of October 31, 2024, consisted of: (i) $4.3 billion in cash and cash equivalents, which mainly consists of cash on hand and highly liquid investments in money market funds and U.S. Treasury bills, (ii) cash we expect to generate from operations, and (iii) available capacity under our $750.0 million Revolving Facility. It is not currently possible to reasonably estimate the amount of loss or range of possible loss that might result from adverse judgments, settlements, penalties, or other resolution of proceedings resulting from the July 19 Incident. However, despite such uncertainties, we expect that the combination of our existing cash and cash equivalents, cash flows from operations, and the Revolving Facility will be sufficient to meet our anticipated cash needs for working capital and capital expenditures for at least the next 12 months.
Our short-term and long-term liquidity requirements primarily arise from: (i) business acquisitions and investments we may make from time to time, (ii) working capital requirements, (iii) interest and principal payments related to our outstanding indebtedness, (iv) research and development and capital expenditure needs, and (v) license and service arrangements integral to our business operations. Our ability to fund these requirements will depend, in part, on our future cash flows, which are determined by our future operating performance and, therefore, subject to prevailing global macroeconomic conditions and financial, business and other factors, some of which are beyond our control.
We have historically generated operating losses prior to fiscal 2024 and during the three months ended October 31, 2024, which corresponds to the third quarter of fiscal 2025, as reflected in our accumulated deficit of $1.0 billion as of October 31, 2024. We expect to continue to make investments, particularly in sales and marketing and research and development. As a result, we may require additional capital resources in the future to execute strategic initiatives to grow our business.
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We typically invoice our subscription customers annually in advance. Therefore, a substantial source of our cash is from such prepayments, which are included on our condensed consolidated balance sheets as deferred revenue. Deferred revenue primarily consists of billed fees for our subscriptions, prior to satisfying the criteria for revenue recognition, which are subsequently recognized as revenue in accordance with our revenue recognition policy. As of October 31, 2024, we had deferred revenue of $3.2 billion, of which $2.4 billion was recorded as a current liability and is expected to be recorded as revenue in the next 12 months, provided all other revenue recognition criteria have been met.
We do not have any relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities. We do not have any outstanding derivative financial instruments, off-balance sheet guarantees, interest rate swap transactions, or foreign currency forward contracts.
Cash Flows
The following table summarizes our cash flows for the periods presented (in thousands):
Nine Months Ended October 31,
20242023
Net cash provided by operating activities$1,036,005 $819,191 
Net cash used in investing activities(211,569)(361,045)
Net cash provided by financing activities60,822 59,698 
Net change in cash, cash equivalents and restricted cash884,617 514,433 
Operating Activities
Net cash provided by operating activities during the nine months ended October 31, 2024 was $1,036.0 million, which resulted from net income of $76.1 million, adjusted for non-cash charges of $984.9 million and net cash outflow of $25.0 million from changes in operating assets and liabilities. Non-cash charges primarily consisted of $592.9 million in stock-based compensation expense, $227.7 million of amortization of deferred contract acquisition costs, $137.9 million of depreciation and amortization, $18.7 million of amortization of intangibles assets, $11.1 million of non-cash operating lease costs, $2.7 million of non-cash interest expense, and $2.3 million of accretion of short-term investments purchased at a discount, partially offset by $6.2 million realized gains on strategic investments and $2.1 million of deferred income taxes. The net cash outflow from changes in operating assets and liabilities was primarily due to a $361.4 million increase in deferred contract acquisition costs, a $42.8 million increase in prepaid expenses and other assets, and a $11.8 million decrease in operating lease liabilities, partially offset by a $142.2 million increase in deferred revenue, an $89.9 million increase in accrued payroll and benefits, an $85.7 million increase in accrued expenses and other liabilities, a $39.2 million decrease in accounts receivable, and a $34.1 million increase in accounts payable.
Investing Activities
Net cash used in investing activities of $211.6 million during the nine months ended October 31, 2024 was primarily due to purchases of property and equipment of $167.6 million, business acquisitions, net of cash acquired, of $96.4 million, which was related to the Flow Security acquisition, capitalized internal-use software and website development costs of $41.3 million, purchases of strategic investments of $12.7 million, and purchases of deferred compensation investments of $1.8 million, partially offset by proceeds from maturities of short-term investments of $97.3 million and proceeds from sales of strategic investments of $10.9 million.
Financing Activities
Net cash provided by financing activities of $60.8 million during the nine months ended October 31, 2024 was primarily due to proceeds from our employee stock purchase plan of $56.1 million, capital contributions from non-controlling interests of $5.5 million, and proceeds from the exercise of stock options of $3.3 million, partially offset by distributions to non-controlling interest holders of $4.1 million.
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Supplemental Guarantor Financial Information
Our Senior Notes are guaranteed on a senior, unsecured basis by CrowdStrike, Inc., a wholly owned subsidiary of CrowdStrike Holdings, Inc. (the “subsidiary guarantor,” and together with CrowdStrike Holdings, Inc., the “Obligor Group”). The guarantee is full and unconditional and is subject to certain conditions for release. See Note 4, “Debt,” to our condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q, for a brief description of the Senior Notes.
We conduct our operations almost entirely through our subsidiaries. Accordingly, the Obligor Group’s cash flows and ability to service the notes will depend on the earnings of our subsidiaries and the distribution of those earnings to the Obligor Group, whether by dividends, loans or otherwise. Holders of the guaranteed registered debt securities will have a direct claim only against the Obligor Group.
Summarized financial information is presented below for the Obligor Group on a combined basis after elimination of intercompany transactions and balances within the Obligor Group and equity in the earnings from and investments in any non-guarantor subsidiary. The revenue amounts presented in the summarized financial information include substantially all of our condensed consolidated revenue, and there is no intercompany revenue from the non-guarantor subsidiaries. This summarized financial information has been prepared and presented pursuant to Regulation S-X Rule 13-01, “Financial Disclosures about Guarantors and Issuers of Guaranteed Securities” and is not intended to present the financial position or results of operations of the Obligor Group in accordance with U.S. GAAP.
Statement of OperationsNine Months Ended
October 31, 2024
(in thousands)
Revenue$2,891,704 
Cost of revenue740,626 
Operating expenses2,197,725 
Loss from operations(46,647)
Net income63,365 
Net income attributable to CrowdStrike63,365 
October 31, 2024January 31, 2024
(in thousands)
Current assets (excluding current intercompany receivables from non-Guarantors)$5,403,852 $4,563,521 
Current intercompany receivables from non-Guarantors25,660 24,716 
Noncurrent assets (excluding noncurrent intercompany receivables from non-Guarantors)1,796,543 1,605,308 
Noncurrent intercompany receivables from non-Guarantors392,279 280,426 
Current liabilities (excluding current intercompany payables to non-Guarantors)2,882,966 2,605,892 
Current intercompany payables to non-Guarantors506 — 
Noncurrent liabilities (excluding noncurrent intercompany payables to non-Guarantors)1,663,028 1,586,566 
Noncurrent intercompany payables to non-Guarantors23,363 — 
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Strategic Investments
In July 2019, we agreed to commit up to $10.0 million to a newly formed entity, CrowdStrike Falcon Fund LLC (the “Original Falcon Fund”) in exchange for 50% of the sharing percentage of any distribution by the Original Falcon Fund. In December 2021, we agreed to commit an additional $50.0 million to a newly formed entity, CrowdStrike Falcon Fund II LLC (“Falcon Fund II”) in exchange for 50% of the sharing percentage of any distribution by Falcon Fund II. Further, entities associated with Accel also agreed to commit up to $10.0 million and $50.0 million, respectively, to the Original Falcon Fund and Falcon Fund II (collectively, the “Falcon Funds”), and collectively own the remaining 50% of the sharing percentage of the Falcon Funds. Both Falcon Funds are in the business of purchasing, selling, and investing in minority equity and convertible debt securities of privately-held companies that develop applications that have potential for substantial contribution to us and our platform. We are the manager of the Falcon Funds and control their investment decisions and day-to-day operations and accordingly have consolidated each of the Falcon Funds. Each Falcon Fund has a duration of ten years and may be extended for three additional years. At dissolution, the Falcon Funds will be liquidated, and the remaining assets will be distributed to the investors based on their respective sharing percentage.
Contractual Obligations and Commitments
During the nine months ended October 31, 2024, there were no significant changes to our debt obligations related to the Senior Notes or our contractual obligations under our non-cancelable real estate arrangements, as presented in Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the fiscal year ended January 31, 2024.
We have non-cancellable purchase commitments with various parties to purchase products and services entered in the normal course of business totaling $2.8 billion as of October 31, 2024, with remaining terms in excess of 12 months. We expect to fund these obligations with cash flows from operations and cash and cash equivalents on our balance sheet.
As of October 31, 2024, our unrecognized tax benefits included $12.3 million, which were classified as long-term liabilities due to the inherent uncertainty with respect to the timing of future cash outflows associated with our unrecognized tax benefits.
As of October 31, 2024, we had non-cancellable unfunded commitments from our financing arrangements totaling approximately $49.3 million.
On November 5, 2024, we entered into an agreement to acquire all of the ownership interests in A.S. Adaptive Shield Ltd. The acquisition was closed on November 20, 2024 and the total consideration transferred consisted of $213.8 million in cash, net of $13.8 million of cash acquired, and $0.7 million representing the fair value of replacement equity awards attributable to pre-acquisition service, subject to customary net working capital and purchase price adjustments. We are in the process of finalizing the intangible assets valuation and purchase price allocation.
Critical Accounting Policies and Estimates
Our condensed consolidated financial statements were prepared in accordance with U.S GAAP. The preparation of the condensed consolidated financial statements requires our management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. We base our estimates and judgments on our historical experience, knowledge of factors affecting our business and our belief as to what could occur in the future considering available information and assumptions that are believed to be reasonable under the circumstances.
The accounting estimates we use in the preparation of our condensed consolidated financial statements will change as new events occur, more experience is acquired, additional information is obtained and our operating environment changes. Changes in estimates are made when circumstances warrant. Such changes in estimates and refinements in estimation methodologies are reflected in our reported results of operations and, if material, the effects of changes in estimates are disclosed in the notes to our condensed consolidated financial statements. By their nature, these estimates and judgments are subject to an inherent degree of uncertainty and actual results could differ materially from the amounts reported based on these estimates.
There have been no significant changes in our critical accounting policies and estimates during the nine months ended October 31, 2024, as compared to the critical accounting policies and estimates disclosed in Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the year ended January 31, 2024, filed with the SEC on March 6, 2024.
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Backlog
We enter into both single and multi-year subscription contracts for our solutions. We generally invoice our customers at contract signing prior to commencement of subscription period. Until such time as these amounts are invoiced, they are not recorded in deferred revenue or elsewhere in our condensed consolidated financial statements, and are considered by us to be backlog. As of October 31, 2024, we had backlog of approximately $2.2 billion. We expect backlog will change from period to period for several reasons, including the timing and duration of customer agreements, varying billing cycles of subscription agreements, and the timing and duration of customer renewals. Because revenue for any period is a function of revenue recognized from deferred revenue under contracts in existence at the beginning of the period, as well as contract renewals and new customer contracts during the period, backlog at the beginning of any period is not necessarily indicative of future revenue performance. We do not utilize backlog as a key management metric internally.
Seasonality
Given the annual budget approval processes of many of our customers, we see seasonal patterns in our business. Net new ARR generation is typically greater in the second half of the year, particularly in the fourth quarter, as compared to the first half of the year. In addition, we also experience seasonality in our operating margin, typically with a lower margin in the first half of our fiscal year due to a step up in costs for payroll taxes and annual sales and marketing events. This also impacts the timing of operating cash flow.
Employees
As of October 31, 2024, we had 9,666 full-time employees. We also engage temporary employees and consultants as needed to support our operations. None of our employees in the United States are represented by a labor union or subject to a collective bargaining agreement. In certain countries in which we operate, we are subject to local labor law requirements which may automatically make our employees subject to industry-wide collective bargaining agreements. We have not experienced any work stoppages, and we consider our relations with our employees to be good.
Corporate Information
Our principal executive offices are located at 206 E. 9th Street, Suite 1400, Austin, Texas 78701 and our telephone number is (888) 512-8906. We are a holding company and all of our business operations are conducted through our subsidiaries, including CrowdStrike, Inc. Our website address is www.crowdstrike.com. Information contained on, or that can be accessed through, our website does not constitute part of this Quarterly Report on Form 10-Q.
Recently Issued Accounting Pronouncements
See Note 1, “Description of Business and Significant Accounting Policies,” to our condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q, for more information about the impact of certain recent accounting pronouncements on our condensed consolidated financial statements.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
There have been no material changes to our market risks during the three and nine months ended October 31, 2024 compared to our disclosures in Part II, Item 7A of our Annual Report on Form 10-K for the fiscal year ended January 31, 2024.
ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
We maintain “disclosure controls and procedures,” as defined in Rule 13a–15(e) and Rule 15d–15(e) under the Exchange Act that are designed to provide reasonable assurance that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to provide reasonable assurance that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.
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Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures as of October 31, 2024. Based on such evaluation of our disclosure controls and procedures as of October 31, 2024, our Chief Executive Officer and Chief Financial Officer concluded that, as of such date, our disclosure controls and procedures were effective at the reasonable assurance level.
Changes in Internal Control Over Financial Reporting
There was no change in our internal control over financial reporting identified in connection with the evaluation required by Rule 13a-15(d) and Rule 15d-15(d) of the Exchange Act that occurred during the period covered by this Quarterly Report on Form 10-Q that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
Inherent Limitations on Effectiveness of Controls
A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Inherent limitations in all control systems include the realities that judgments in decision making can be faulty, and that breakdowns can occur because of a simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people or by management override of the controls. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with policies or procedures may deteriorate. Because of the inherent limitations in a cost–effective control system, misstatements due to error or fraud may occur and not be detected.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
We are currently a party to, and may from time to time in the future be involved in, various litigation matters and subject to claims that arise in the ordinary course of business, including claims asserted by third parties in the form of letters and other communications. For information regarding legal proceedings and other claims asserted against us, including in relation to the July 19 Incident, see Note 8, “Commitments and Contingencies,” to our condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q.
For any claims for which we believe a liability is both probable and reasonably estimable, we record a liability in the period in which we make this determination. Other than as disclosed in Note 8, there is no pending or threatened legal proceeding to which we are a party that, in our opinion, is likely to have a material adverse effect on our business and our condensed consolidated financial statements; however, the results of legal proceedings and claims are inherently unpredictable. Regardless of the outcome, litigation can have an adverse impact on our business because of defense and settlement costs, diversion of management resources, and other factors. In addition, the expense of litigation and the timing of this expense from period to period are difficult to estimate, subject to change and could adversely affect our condensed consolidated financial statements.
ITEM 1A. RISK FACTORS
A description of the risks and uncertainties associated with our business is set forth below. You should carefully consider the risks and uncertainties described below, as well as the other information in this Quarterly Report on Form 10-Q, including our condensed consolidated financial statements and the related notes and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” The occurrence of any of the events or developments described below, or of additional risks and uncertainties not presently known to us or that we currently deem immaterial, could materially and adversely affect our business, results of operations, financial condition and growth prospects. In such an event, the market price of our Class A common stock could decline, and you could lose all or part of your investment.
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Risks Related to Our Business and Industry
The July 19 Incident has had, and is expected to continue to have, an adverse effect on our business, sales, customer and partner relations, reputation, results of operations and financial condition.
On July 19, 2024, we released a content configuration update for our Falcon sensor that resulted in system crashes for certain Windows systems (the “July 19 Incident”). We have incurred, and expect to continue to incur, significant costs and expenses related to the incident, including in connection with remediation efforts, customer and partner relations, measures taken to address the damage to our reputation, and other measures taken in response to the incident. Our management and other personnel are devoting significant time and resources to address the impacts of the July 19 Incident. We may also hire additional personnel to assist with our ongoing efforts. Any real or perceived failure, by us or the third-party service providers we engage, to remediate and respond to the July 19 Incident could adversely impact our business. While we are investing in enhancements to software resiliency, testing and customer controls following the July 19 Incident, we cannot guarantee that such enhancements will be effective, or that our products do not have or will not have defects, errors, or vulnerabilities.
The July 19 Incident has harmed, and is expected to continue to harm, our business, sales, customer and partner relations, and our reputation. As a result of the incident, certain of our existing or prospective customers have elected to, and may in the future elect to, defer purchasing decisions relating to our products and services or not purchase our products and services at all. Customers have also decided, and may in the future decide, to terminate or not renew their agreements with us. The July 19 Incident has negatively impacted, and may in the future negatively impact, our existing or prospective partners’ ability or willingness to promote our products or services. Certain of our competitors have aggressively approached our current and prospective customers and partners to attempt to capitalize on the incident, and may continue to do so. Furthermore, we have agreed to, and expect to agree to in the future, provide incentives in connection with our commercial arrangements with our customers, including subscription period extensions, discounts or promotional modules. The July 19 Incident has received negative media coverage and harmed our reputation and brand. If we are unable to regain the trust of our current and prospective customers and partners, or if negative media coverage and publicity continues, our reputation and brand may suffer further, exacerbating the effects discussed herein. These factors may result in harm to our business, results of operations and financial condition.
We are party to a number of legal proceedings relating to the July 19 Incident, such as lawsuits filed by or on behalf of third parties, including securities litigation brought on behalf of certain purchasers of our Class A common stock, derivative litigation asserting claims against certain officers and directors, and putative class actions brought by individual consumers. We have also received inquiries from governmental authorities and other third parties, and governmental authorities may seek to impose undertakings, injunctive relief, consent decrees or other penalties, which could, among other things, materially increase our expenses or otherwise require us to alter how we operate our business. Third parties, including governmental authorities, may take certain actions in response to the July 19 Incident that may negatively impact our business and operations and may result in additional costs and expenses relating to compliance, product development or other matters. Some customers and other third parties claiming to have been impacted by the incident have asserted claims against us or otherwise communicated their intent to seek indemnification or compensation from us. Additional claims may also be asserted by or on behalf of customers, customers’ insurers, partners, stockholders or others seeking monetary damages or other relief. These lawsuits, claims and inquiries are resulting, and are expected to result in the future, in the incurrence of significant costs and expenses, the diversion of management’s attention from the operation of our business and other negative impacts on our business and operations.
While we maintain insurance policies that may cover certain costs, claims and liabilities in connection with the July 19 Incident, we expect that our insurance coverage will not cover all costs, claims and liabilities actually incurred, and we cannot be certain that our insurance will continue to be available to us on commercially reasonable terms, or at all, or that any insurer will not deny coverage as to any future claim. The successful assertion of one or more large claims against us that exceed available insurance coverage, or the occurrence of changes in our insurance policies, including premium increases or the imposition of large deductible or co-insurance requirements, could have a material adverse effect on our business, including our financial condition, results of operations and reputation.
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We have experienced rapid growth in recent periods, and if we do not manage our future growth, our business and results of operations will be adversely affected.
We have experienced rapid revenue growth in recent periods and we expect to continue to invest broadly across our organization to support our growth. For example, our headcount grew from 4,965 employees as of January 31, 2022, to 9,666 employees as of October 31, 2024. Although we have experienced rapid growth historically, we may not sustain our current growth rates and our investments to support our growth may not be successful. The growth and expansion of our business will require us to invest significant financial and operational resources and the continuous dedication of our management team. Our future success will depend in part on our ability to manage our growth effectively, which will require us to, among other things:
effectively attract, integrate, and retain a large number of new employees, particularly members of our sales and marketing and research and development teams;
further improve our Falcon platform, including our cloud modules, and IT infrastructure, including expanding and optimizing our data centers, to support our business needs;
enhance our information and communication systems to ensure that our employees and offices around the world are well coordinated and can effectively communicate with each other and our growing base of channel partners and customers; and
improve our financial, management, and compliance systems and controls.
If we fail to achieve these objectives effectively, our ability to manage our expected growth, ensure uninterrupted operation of our Falcon platform and key business systems, and comply with the rules and regulations applicable to our business could be impaired. Additionally, the quality of our platform and services could suffer and we may not be able to adequately address competitive challenges. Any of the foregoing could adversely affect our business, results of operations, and financial condition.
We have a history of losses, and while we have achieved profitability in certain periods, including fiscal 2024, we may not be able to achieve or sustain profitability in the future.
We have incurred net losses each year prior to fiscal 2024, and we may not achieve or maintain profitability in the future. We experienced net gains of $89.3 million for fiscal 2024, and net losses of $183.2 million, and $234.8 million for fiscal 2023, and fiscal 2022, respectively. As of October 31, 2024, we had an accumulated deficit of $1.0 billion. While we have experienced significant growth in revenue in recent periods, and have achieved profitability during certain periods, including fiscal 2024, we cannot assure you when or whether we will reach sustained profitability. We also expect our operating expenses to increase in the future as we continue to invest for our future growth, which will negatively affect our results of operations if our total revenue does not increase. We cannot assure you that these investments will result in substantial increases in our total revenue or improvements in our results of operations. We also have incurred and expect to continue to incur significant additional legal, accounting, and other expenses as a public company. Any failure to increase our revenue as we invest in our business or to manage our costs could prevent us from achieving or maintaining profitability or positive cash flow.
If organizations do not adopt cloud-based SaaS-delivered endpoint security solutions, our ability to grow our business and results of operations may be adversely affected.
We believe our future success will depend in large part on the growth, if any, in the market for cloud-based SaaS-delivered endpoint security solutions. The use of SaaS solutions to manage and automate security and IT operations is at an early stage and rapidly evolving. As such, it is difficult to predict its potential growth, if any, customer adoption and retention rates, customer demand for our solutions, customer consolidation on our platform, or the success of existing competitive products. Any expansion in our market depends on a number of factors, including the cost, performance, and perceived value associated with our solutions and those of our competitors. If our solutions do not achieve widespread adoption or there is a reduction in demand for our solutions due to a lack of customer acceptance, technological challenges, damage to our reputation including as a result of the July 19 Incident, competing products, privacy concerns, decreases in corporate spending, weakening economic conditions or otherwise, it could result in early terminations, reduced customer retention rates, or decreased revenue, any of which would adversely affect our business, results of operations, and financial results. We do not know whether the trend in adoption of cloud-based SaaS-delivered endpoint security solutions we have experienced in the past will continue in the future. Furthermore, to the extent we or other SaaS security providers experience security incidents, loss or disclosure of customer data, disruptions in delivery, or other problems, the market for SaaS solutions as a whole, including our security solutions, could be negatively
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affected. You should consider our business and prospects in light of the risks and difficulties we encounter in this new and evolving market.
If we are unable to successfully enhance our existing products and services and introduce new products and services in response to rapid technological changes and market developments as well as evolving security threats, our competitive position and prospects will be harmed.
Our ability to increase revenue from existing customers and attract new customers will depend in significant part on our ability to anticipate and respond effectively to rapid technological changes and market developments as well as evolving security threats. The success of our Falcon platform depends on our ability to take such changes into account and invest effectively in our research and development organization to increase the reliability, availability and scalability of our existing solutions and introduce new solutions. If we fail to effectively anticipate, identify or respond to such changes in a timely manner, or at all, our business could be harmed. Even if we adequately fund our research and development efforts there is no guarantee that we will realize a return on such efforts.
Success in delivering enhancements and new solutions depends on several factors, including the timely completion, introduction and market acceptance of the enhancement or new solution, the risk that such enhancement or new solution may have quality or other defects or deficiencies (such as we experienced in connection with the July 19 Incident), especially in the early stages of introduction, as well as our ability to seamlessly integrate all of our product and service offerings and develop adequate sales capabilities in new markets. Failure to effectively deliver, integrate, and manage perceptions with respect to enhancements and new solutions could erode our competitive position, significantly impair our revenue growth, and negatively impact our operating results.
If we are unable to attract new customers, our future results of operations could be harmed.
To expand our customer base, we need to convince potential customers to allocate a portion of their discretionary budgets to purchase our Falcon platform. Our sales efforts often involve educating our prospective customers about the uses and benefits of our Falcon platform. Enterprises and governments that use legacy security products, such as signature-based or malware-based products, firewalls, intrusion prevention systems, and antivirus, for their IT security may be hesitant to purchase our Falcon platform if they believe that these products are more cost effective, provide substantially the same functionality as our Falcon platform or provide a level of IT security that is sufficient to meet their needs. We may have difficulty convincing prospective customers of the value of adopting our solution. Even if we are successful in convincing prospective customers that a cloud native platform like ours is critical to protect against cyberattacks, they may not decide to purchase our Falcon platform for a variety of reasons, some of which are out of our control. For example, any deterioration in general economic conditions, including as a result of the geopolitical environment, the outbreak of diseases or other public health crises, volatility in the banking and financial services sector, or inflation (as well as government policies such as raising interest rates in response to inflation), have in the past and may in the future cause our current and prospective customers to delay or cut their overall security and IT operations spending, and such delays or cuts may fall disproportionately on cloud-based security solutions like ours. Economic weakness, customer financial difficulties, constrained spending on security and IT operations, and the impact of the July 19 Incident may result in decreased revenue, reduced sales, an increase in multi-phase subscription start dates, shorter terms for customer subscriptions, lengthened sales cycles, increased churn, lower demand for our products, and adversely affect our results of operations and financial conditions. Furthermore, we may need to exercise more flexibility in customer payment terms as customers navigate a more challenging economic environment. Additionally, if the incidence of cyberattacks were to decline, or be perceived to decline, or if organizations adopt endpoints that use operating systems we do not adequately support, our ability to attract new customers and expand sales of our solutions to existing customers could be adversely affected. If organizations do not continue to adopt our Falcon platform, our sales will not grow as quickly as anticipated, or at all, and our business, results of operations, and financial condition would be harmed.
If our customers do not renew their subscriptions for our products and add additional cloud modules to their subscriptions, our future results of operations could be harmed.
In order for us to maintain or improve our results of operations, it is important that our customers renew their subscriptions for our Falcon platform when existing contract terms expire, and that we expand our commercial relationships with our existing customers by selling additional cloud modules and by deploying to more endpoints in their environments. Our customers have no obligation to renew their subscription for our Falcon platform after the expiration of their contractual subscription period, which is generally one year, and in the normal course of business, some customers have elected not to renew. In addition, customers that previously signed multi-year subscription contracts may renew for shorter contract subscription lengths, and customers may cease using certain cloud modules altogether. Even if customers choose to renew their subscription of certain cloud modules, they may
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decline to purchase additional cloud modules or choose not to consolidate onto our Falcon platform. Our customer retention and expansion may decline or fluctuate as a result of a number of factors, including our customers’ satisfaction with our services, our pricing, customer security and networking issues and requirements, our customers’ spending levels, decreases in the number of endpoints to which our customers deploy our solutions, mergers and acquisitions involving our customers, industry developments, competition, the impact of the July 19 Incident, and general economic and geopolitical conditions. If our efforts to maintain and expand our relationships with our existing customers are not successful, our business, results of operations, and financial condition may materially suffer.
Our sales cycles can be long and unpredictable, and our sales efforts require considerable time and expense.
Our revenue recognition is difficult to predict because of the length and unpredictability of the sales cycle for our Falcon platform. Customers often view the subscription to our Falcon platform as a significant strategic decision and, as a result, frequently require considerable time to evaluate, test and qualify our Falcon platform prior to entering into or expanding a relationship with us. Large enterprises and government entities in particular often undertake a significant evaluation process that further lengthens and adds uncertainty to our sales cycle. In addition, uncertain economic conditions may lead to additional scrutiny of budgets by current and prospective customers, which has resulted in, for example, longer sales cycles for products and services, and may result in shifting demand for IT products and services, and slower adoption of new technologies. We have also experienced, and expect to continue to experience, longer sales cycles in connection with the July 19 Incident.
Our direct sales team develops relationships with our customers, and works with our channel partners on account penetration, account coordination, sales and overall market development. We spend substantial time and resources on our sales efforts without any assurance that our efforts will produce a sale. Security solution purchases are frequently subject to budget constraints, multiple approvals and unanticipated administrative, processing and other delays. As a result, it is difficult to predict whether and when a sale will be completed. The failure of our efforts to secure sales after investing resources in a lengthy sales process could adversely affect our business and results of operations.
We face intense competition and could lose market share to our competitors, which could adversely affect our business, financial condition, and results of operations.
The market for security and IT operations solutions is intensely competitive, fragmented, and characterized by rapid changes in technology, customer requirements, industry standards, increasingly sophisticated attackers, and by frequent introductions of new or improved products or services to combat security threats. We expect to continue to face intense competition from current competitors, as well as from new entrants into the market. If we are unable to anticipate or react to these challenges, our competitive position could weaken, and we could experience a decline in revenue or reduced revenue growth, and loss of market share that would adversely affect our business, financial condition, and results of operations. Our ability to compete effectively depends upon numerous factors, many of which are beyond our control, including, but not limited to:
product capabilities, including performance and reliability, of our Falcon platform, including our cloud modules, services, and features compared to those of our competitors;
our ability, and the ability of our competitors, to improve existing products, services, and features, or to develop new ones to address evolving customer needs;
our ability to attract, retain, and motivate talented employees;
our ability to establish and maintain relationships with channel partners and direct customers;
the strength of our sales and marketing efforts;
the strength of our reputation and brand, including the impact to our reputation and brand as a result of the July 19 Incident; and
acquisitions or consolidation within our industry, which may result in more formidable competitors.
Our competitors include the following by general category:
legacy antivirus product providers who offer a broad range of approaches and solutions including traditional signature-based anti-virus protection;
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alternative endpoint security providers who generally offer a mix of on-premise and cloud-hosted products that rely heavily on malware-only or application whitelisting techniques;
network security vendors who are supplementing their core perimeter-based offerings with endpoint or cloud security solutions;
cloud security vendors, including those who focus on public cloud infrastructure and services;
identity security vendors that seek to identify and secure user accounts and related activities; and
professional service providers who offer cybersecurity response services.
Many of our competitors have greater financial, technical, marketing, sales, and other resources, greater name recognition, longer operating histories, and a larger base of customers than we do. They may be able to devote greater resources to the development, promotion, and sale of services than we can, and they may offer lower pricing than we do. Further, they may have greater resources for research and development of new technologies, the provision of customer support, and the pursuit of acquisitions. Our larger competitors have substantially broader and more diverse product and services offerings as well as routes to market, which allows them to leverage their relationships based on other products or incorporate functionality into existing products to gain business in a manner that discourages users from purchasing our platform, including our cloud modules. Conditions in our market could change rapidly and significantly as a result of technological advancements, including with respect to AI. Our competitors may more successfully incorporate AI into their products, gain or leverage superior access to certain AI technologies, and achieve higher market acceptance of their AI solutions. Conditions in our market could also change rapidly and significantly due to partnering or acquisitions by our competitors or continuing market consolidation. Some of our competitors have recently made acquisitions of businesses or have established cooperative relationships that may allow them to offer more directly competitive and comprehensive solutions than were previously offered and adapt more quickly to new technologies and customer needs. These competitive pressures in our market or our failure to compete effectively may result in price reductions, fewer orders, reduced revenue and gross margins, increased net losses and loss of market share. Further, competitors that specialize in providing protection from a single type of security threat may be able to deliver these targeted security products to the market quicker than we can or convince organizations that these limited products meet their needs. Even if there is significant demand for cloud-based security solutions like ours, if our competitors include functionality that is, or is perceived to be, equivalent to or better than ours in legacy products that are already generally accepted as necessary components of an organization’s IT security architecture, we may have difficulty increasing the market penetration of our solutions. Furthermore, even if the functionality offered by other security and IT operations providers is more limited than the functionality of our platform, organizations may elect to accept such limited functionality in lieu of adding products from additional vendors like us. If we are unable to compete successfully, or if competing successfully requires us to take aggressive pricing or other actions, our business, financial condition, and results of operations would be adversely affected.
Competitive pricing pressure may reduce our gross profits and adversely affect our financial results.
If we are unable to maintain our pricing due to competitive pressures or other factors, our margins will be reduced and our gross profits, business, results of operations, and financial condition would be adversely affected. The subscription prices for our Falcon platform, cloud modules, and professional services may decline for a variety of reasons, including competitive pricing pressures, discounts, anticipation of the introduction of new solutions by our competitors, or promotional programs offered by us or our competitors. The cybersecurity market remains very competitive, and competition may further increase in the future. Competitors may reduce the price of products or subscriptions that compete with ours or may bundle them with other products and subscriptions.
If our solutions fail or are perceived to fail to detect or prevent incidents or have or are perceived to have defects, errors, or vulnerabilities, our brand and reputation would be harmed, which would adversely affect our business and results of operations.

Real or perceived defects, errors or vulnerabilities in our Falcon platform and cloud modules, the failure of our platform to detect or prevent incidents, including advanced and newly developed attacks, misconfiguration of our solutions, or the failure of customers to take action on attacks identified by our platform could harm our reputation and adversely affect our business, financial position and results of operations. Because our cloud native security platform is complex, it has contained, and may in the future contain defects, errors or vulnerabilities that are not detected until after deployment. For example, the July 19 Incident harmed our brand and reputation, business and results of operations. If we fail to timely detect defects or errors before deployment in the future, our brand and reputation, business and results of operations will suffer further. We cannot assure you that our
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products will detect all cyberattacks, especially in light of the rapidly changing security threat landscape that our solution seeks to address. Due to a variety of both internal and external factors, including, without limitation, defects or misconfigurations of our or third-party solutions, our solutions could be or become vulnerable to security incidents (both from intentional attacks and accidental causes) that cause them to fail to secure endpoints and detect and block attacks. Furthermore, any defects, errors or vulnerabilities in third-party technology or solutions we rely on could result in disruptions to our operations and adversely impact our business, financial condition and results of operations. In addition, because the techniques used by computer hackers to access or sabotage networks and endpoints change frequently and generally are not recognized until launched against a target, there is a risk that an advanced attack could emerge that our cloud native security platform is unable to detect or prevent until after some of our customers are affected. Additionally, our Falcon platform may falsely indicate a cyberattack or threat that does not actually exist, which may lessen customers’ trust in our solutions.
Moreover, as our cloud native security platform is adopted by an increasing number of enterprises and governments, individuals and organizations behind advanced cyberattacks may intensify their efforts to defeat our security platform. If this happens, our systems and subscription customers could be specifically targeted by attackers and could result in vulnerabilities in our platform or undermine the market acceptance of our Falcon platform and could adversely affect our reputation as a provider of security solutions. Because we host customer data on our cloud platform, which in some cases may contain personally-identifiable information or potentially confidential information, a security compromise, or an accidental or intentional misconfiguration or malfunction of our platform or third-party platforms, could result in personally-identifiable information and other customer data being accessible such as to attackers or to other customers. Further, if a high profile security breach occurs with respect to another next-generation or cloud-based security system, our customers and potential customers may lose trust in cloud solutions generally, and cloud-based security solutions such as ours in particular.
Organizations are increasingly subject to a wide variety of attacks on their networks, systems, and endpoints. No security solution, including our Falcon platform, can address all possible security threats or block all methods of penetrating a network or otherwise perpetrating a security incident. If any of our customers experiences a successful cyberattack while using our solutions or services, such customer could be disappointed with our Falcon platform, regardless of whether our solutions or services blocked the theft of any of such customer’s data, if the customer failed to protect its own credentials, or if the attack would have otherwise been mitigated or prevented if the customer had fully deployed aspects of our Falcon platform. Similarly, if our solutions detect attacks against a customer but the customer does not address the vulnerability, customers and the public may erroneously believe that our solutions were not effective. Security breaches against customers that use our solutions may result in customers and the public believing that our solutions failed. Our Falcon platform may fail to detect or prevent malware, viruses, worms or similar threats for any number of reasons, including our failure to enhance and expand our Falcon platform to reflect the increasing sophistication of malware, viruses and other threats. Real or perceived security breaches of our customers’ networks could cause disruption or damage to their networks or other negative consequences and could result in negative publicity to us, damage to our reputation, and other customer relations issues, and may adversely affect our revenue and results of operations.
As a cybersecurity provider, we have been, and expect to continue to be, a target of cyberattacks. If our or our service providers internal networks, systems, or data are or are perceived to have been compromised, our reputation may be damaged and our financial results may be negatively affected.
As a provider of security solutions, we have in the past been, and may in the future be, specifically targeted by bad actors for attacks intended to circumvent our security capabilities or to exploit our Falcon platform as an entry point into customers’ endpoints, networks, or systems. In particular, because we have been involved in the identification of organized cybercriminals and nation-state actors, we have been the subject of intense efforts by sophisticated cyber adversaries who seek to compromise our systems. Such efforts may also intensify as geopolitical tensions increase. In addition, bad actors have attempted to leverage the July 19 Incident to facilitate malicious activity, including, for example, through sending phishing emails posing as CrowdStrike support. Such activity, whether or not successful, could result in additional harm to our business. We are also susceptible to inadvertent compromises of our systems and data, including those arising from process, coding, or human errors. Moreover, we utilize third-party service providers to, among other things, host, transmit, or otherwise process electronic data in connection with our business activities, including our supply chain, operations, and communications. Our third-party service providers and other vendors have faced and may continue to face cyberattacks, compromises, interruptions in service, or other security incidents from a variety of sources. A successful attack or other incident that results in an interruption of service or that compromises our or our service providers’ internal networks, systems, or data could have a significant negative effect on our operations, reputation, financial resources, and the value of our intellectual property. We cannot assure you that any of our efforts to manage this risk, including adoption of a comprehensive incident response plan and process for detecting, mitigating, and investigating security incidents that we regularly test through table-top exercises, testing of our security protocols through additional techniques, such as penetration testing, debriefing after security incidents, to improve our security and responses, and
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regular briefing of our directors and officers on our cybersecurity risks, preparedness, and management, will be effective in protecting us from such attacks.
It is virtually impossible for us to entirely eliminate the risk of such attacks, compromises, interruptions in service, or other security incidents affecting our internal systems or data, or that of our third-party service providers and vendors. Organizations are subject to a wide variety of attacks on their supply chain, networks, systems, and endpoints, and techniques used to sabotage or to obtain unauthorized access to networks in which data is stored or through which data is transmitted change frequently. Furthermore, employee error or malicious activity could compromise our systems. As a result, we may be unable to anticipate these techniques or implement adequate measures to prevent an intrusion into our networks, which could result in unauthorized access to customer data, intellectual property including access to our source code, and information about vulnerabilities in our product, which in turn, could reduce the effectiveness of our solutions, or lead to cyberattacks or other intrusions of our customers’ networks, litigation, governmental audits and investigations and significant legal fees, any or all of which could damage our relationships with our existing customers and could have a negative effect on our ability to attract and retain new customers. We have expended, and anticipate continuing to expend, significant resources in an effort to prevent security breaches and other security incidents impacting our systems and data. Since our business is focused on providing reliable security services to our customers, we believe that an actual or perceived security incident affecting our internal systems or data or data of our customers would be especially detrimental to our reputation, customer confidence in our solution, and our business.
In addition, while we maintain insurance policies that may cover certain liabilities in connection with a cybersecurity incident, we cannot be certain that our insurance coverage will be adequate for liabilities actually incurred, that insurance will continue to be available to us on commercially reasonable terms, or at all, or that any insurer will not deny coverage as to any future claim. The successful assertion of one or more large claims against us that exceed available insurance coverage, or the occurrence of changes in our insurance policies, including premium increases or the imposition of large deductible or co-insurance requirements, could have a material adverse effect on our business, including our financial condition, results of operations and reputation.
We rely on third-party data centers, such as Amazon Web Services, and our own colocation data centers to host and operate our Falcon platform, and any disruption of or interference with our use of these facilities may negatively affect our ability to maintain the performance and reliability of our Falcon platform which could cause our business to suffer.
Our customers depend on the continuous availability of our Falcon platform. We currently host our Falcon platform and serve our customers using a mix of third-party data centers, primarily Amazon Web Services, Inc., or AWS, and our data centers, hosted in colocation facilities. Consequently, we may be subject to service disruptions as well as failures to provide adequate support for reasons that are outside of our direct control. We have experienced, and expect that in the future we may experience interruptions, delays and outages in service and availability from time to time due to a variety of factors, including infrastructure changes, human or software errors, website hosting disruptions and capacity constraints.
The following factors, many of which are beyond our control, can affect the delivery, availability, and the performance of our Falcon platform:
the development and maintenance of the infrastructure of the internet;
the performance and availability of third-party providers of cloud infrastructure services, such as AWS, with the necessary speed, data capacity and security for providing reliable internet access and services;
decisions by the owners and operators of the data centers where our cloud infrastructure is deployed to terminate our contracts, discontinue services to us, shut down operations or facilities, increase prices, change service levels, limit bandwidth, declare bankruptcy or prioritize the traffic of other parties;
physical or electronic break-ins, acts of war or terrorism, human error or interference (including by disgruntled employees, former employees or contractors) and other catastrophic events;
cyberattacks, including denial of service attacks, targeted at us, our data centers, or the infrastructure of the internet;
failure by us to maintain and update our cloud infrastructure to meet our data capacity requirements;
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errors, defects or performance problems in our software, including third-party software incorporated in our software;
improper deployment or configuration of our solutions;
the failure of our redundancy systems, in the event of a service disruption at one of our data centers, to provide failover to other data centers in our data center network; and
the failure of our disaster recovery and business continuity arrangements.
The adverse effects of any service interruptions on our reputation, results of operations, and financial condition may be disproportionately heightened due to the nature of our business and the fact that our customers have a low tolerance for interruptions of any duration. Interruptions or failures in our service delivery could result in a cyberattack or other security threat to us or to one of our customers during such periods of interruption or failure. Additionally, interruptions or failures in our service could cause customers to terminate their subscriptions with us, adversely affect our renewal rates, and harm our ability to attract new customers. Our business would also be harmed if our customers believe that a cloud-based SaaS-delivered endpoint security solution is unreliable. We have experienced, and may in the future experience, service interruptions and other performance problems due to a variety of factors. The occurrence of any of these factors, or if we are unable to rapidly and cost-effectively fix such errors or other problems that may be identified, could damage our reputation, negatively affect our relationship with our customers or otherwise harm our business, results of operations and financial condition.
We rely on our key technical, sales and management personnel to grow our business, and the loss of one or more key employees could harm our business.
Our future success is substantially dependent on our ability to attract, retain, and motivate the members of our management team and other key employees throughout our organization. In particular, we are highly dependent on the services of George Kurtz, our President and Chief Executive Officer, who is critical to our future vision and strategic direction. We rely on our leadership team in the areas of operations, security, research and development, marketing, sales, support and general and administrative functions. Although we have entered into employment agreements with our key personnel, our employees, including our executive officers, work for us on an “at-will” basis, which means they may terminate their employment with us at any time. Leadership transitions can be inherently difficult to manage. In particular, they can cause operational and administrative inefficiencies, and could impact relationships with key customers and vendors. If Mr. Kurtz, or one or more of our key employees, or members of our management team resigns or otherwise ceases to provide us with their service, our business could be harmed.
If we are unable to attract and retain qualified personnel, our business could be harmed.
There is significant competition for personnel with the skills and technical knowledge that we require across our technology, cyber, sales, professional services, and administrative support functions. Competition for these personnel is intense, especially for experienced sales professionals and for engineers experienced in designing and developing cloud applications and security software. We have from time to time experienced, and we expect to continue to experience, difficulty in hiring and retaining employees with appropriate qualifications. For example, in recent years, recruiting, hiring and retaining employees with expertise in the cybersecurity industry has become increasingly difficult as the demand for cybersecurity professionals has increased as a result of the recent cybersecurity attacks on global corporations and governments. Additionally, our incident response and proactive services team is small and comprised of personnel with highly technical skills and experience, who are in high demand, and who would be difficult to replace. More generally, the technology industry is subject to substantial and continuous competition for engineers with high levels of experience in designing, developing and managing software and Internet-related services. Many of the companies with which we compete for experienced personnel have greater resources than we have. Our competitors also may be successful in recruiting and hiring members of our management team or other key employees, and it may be difficult for us to find suitable replacements on a timely basis, on competitive terms, or at all. We have in the past, and may in the future, be subject to allegations that employees we hire have been improperly solicited, or that they have divulged proprietary or other confidential information or that their former employers own such employees’ inventions or other work product, or that they have been hired in violation of non-compete provisions or non-solicitation provisions.
In addition, job candidates and existing employees often consider the value of the equity awards they receive in connection with their employment. Therefore, volatility or lack of performance in our stock price could affect our ability to attract and retain our key employees. Also, many of our employees have become, or will soon become, vested in a substantial amount of equity awards, which may give them a substantial amount of personal wealth. This may make it more difficult for us to retain and motivate these employees, and this wealth could affect their decision about whether or not they continue to work for us. Any
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failure to successfully attract, integrate or retain qualified personnel to fulfill our current or future needs could adversely affect our business, results of operations and financial condition.
If we do not effectively expand and train our direct sales force, we may be unable to add new customers or increase sales to our existing customers, and our business will be adversely affected.
We depend on our direct sales force to obtain new customers and increase sales with existing customers. Our ability to achieve significant revenue growth will depend, in large part, on our success in recruiting, training and retaining sufficient numbers of sales personnel, particularly in international markets. We have expanded our sales organization significantly in recent periods and expect to continue to add additional sales capabilities in the near term. There is significant competition for sales personnel with the skills and technical knowledge that we require. New hires require significant training and may take significant time before they achieve full productivity, and this delay is accentuated by our long sales cycles. Our recent hires and planned hires may not become productive as quickly as we expect, and we may be unable to hire or retain sufficient numbers of qualified individuals in the markets where we do business or plan to do business. In addition, a large percentage of our sales force is new to our company and selling our solutions, and therefore this team may be less effective than our more seasoned sales personnel. Furthermore, hiring sales personnel in new countries, or expanding our existing presence, requires upfront and ongoing expenditures that we may not recover if the sales personnel fail to achieve full productivity. We cannot predict whether, or to what extent, our sales will increase as we expand our sales force or how long it will take for sales personnel to become productive. If we are unable to hire and train a sufficient number of effective sales personnel, or the sales personnel we hire are not successful in obtaining new customers or increasing sales to our existing customer base, our business and results of operations will be adversely affected.
Because we recognize revenue from subscriptions to our platform over the term of the subscription, downturns or upturns in new business will not be immediately reflected in our results of operations.
We generally recognize revenue from customers ratably over the terms of their subscription, which is generally one year. As a result, a substantial portion of the revenue we report in each period is attributable to the recognition of deferred revenue relating to agreements that we entered into during previous periods. Consequently, any increase or decline in new sales or renewals in any one period will not be immediately reflected in our revenue for that period. Any such change, however, would affect our revenue in future periods. Accordingly, the effect of downturns or upturns in new sales and potential changes in our rate of renewals, including as a result of the July 19 Incident, may not be fully reflected in our results of operations until future periods. In addition, customer commitment packages introduced following the July 19 Incident that extend subscription periods will lengthen the applicable term over which we recognize revenue, which has adversely affected, and is expected to continue to adversely affect, our results. We may also be unable to timely reduce our cost structure in line with a significant deterioration in sales or renewals that would adversely affect our results of operations and financial condition.
Our results of operations may fluctuate significantly, which could make our future results difficult to predict and could cause our results of operations to fall below expectations.
Our results of operations may vary significantly from period to period, which could adversely affect our business, financial condition and results of operations. Our results of operations have varied significantly from period to period, and we expect that our results of operations will continue to vary as a result of a number of factors, many of which are outside of our control and may be difficult to predict, including:
our ability to attract new and retain existing customers;
the budgeting cycles, seasonal buying patterns, and purchasing practices of customers;
economic difficulties confronting our customers, which may impact the number of modules or endpoint deployments they are willing or able to purchase;
insolvency or credit difficulties confronting our customers, affecting their ability to purchase or pay for our solutions, including in connection with our customer and end-user financing arrangements;
the timing and length of our sales cycles;
changes in customer or channel partner requirements or market needs;
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any disruption in our relationship with channel partners;
changes in the growth rate of the cloud-based SaaS-delivered endpoint security solutions market;
the timing and success of new product and service introductions by us or our competitors or any other competitive developments, including consolidation among our customers or competitors;
decisions by organizations to purchase security solutions from larger, more established security vendors or from their primary IT equipment vendors;
changes in our pricing policies or those of our competitors;
the level of awareness of cybersecurity threats, particularly advanced cyberattacks, and the market adoption of our Falcon platform;
significant security breaches of, technical difficulties with or interruptions to, the use of our Falcon platform;
the impact to our business from the July 19 Incident;
negative media coverage or publicity;
our ability to successfully expand our business domestically and internationally;
the amount and timing of operating costs (including new hires), tightening of labor markets and capital expenditures related to the expansion of our business;
extraordinary expenses such as litigation or other dispute-related settlement payments or outcomes;
increases or decreases in our expenses caused by fluctuations in foreign currency exchange rates;
future accounting pronouncements or changes in our accounting policies or practices;
developments relating to our valuation allowances for our deferred tax assets;
deteriorating or volatile conditions in the global economy and financial markets, including as a result of weak or negative gross domestic product growth, uncertainty or disruptions in the capital and credit markets, changing interest rates, inflation, bank failures or adverse conditions impacting financial institutions, and supply-chain disruptions; and
political events, geopolitical unrest or tension, acts of war and terrorism.
In addition, we experience seasonal fluctuations in our financial results as we typically receive a higher percentage of our annual orders from new customers, as well as renewal orders from existing customers, in the second half of the fiscal year as compared to the first half of the year due to the annual budget approval processes of many of our customers. In addition, we also experience seasonality in our operating margin, typically with a lower margin in the first half of our fiscal year. Any of the above factors, individually or in the aggregate, may result in significant fluctuations in our financial and other results of operations from period to period. As a result of this variability, our historical results of operations should not be relied upon as an indication of future performance. Moreover, this variability and unpredictability could result in our failure to meet our operating plan or the expectations of investors or analysts for any period. If we fail to meet such expectations for these or other reasons, our stock price could fall substantially, and we could face costly lawsuits, including securities class action suits. For example, we are currently party to securities litigation brought in connection with the July 19 Incident on behalf of certain purchasers of our Class A common stock.
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If we are not able to maintain and enhance our CrowdStrike and Falcon brand and our reputation as a provider of high-efficacy security solutions, our business and results of operations may be adversely affected.
We believe that maintaining and enhancing our CrowdStrike and Falcon brand and our reputation as a provider of high-efficacy security solutions is critical to our relationship with our existing customers, channel partners, and technology alliance partners and our ability to attract new customers and partners. The successful promotion of our CrowdStrike and Falcon brand depends on a number of factors, including our marketing efforts, our ability to continue to develop additional cloud modules and features for our Falcon platform, our ability to successfully differentiate our Falcon platform from competitive cloud-based or legacy security solutions and, ultimately, our ability to detect and stop breaches. Although we believe it is important for our growth, our brand promotion activities may not be successful or yield increased revenue.
In addition, independent industry or financial analysts and research firms often test our solutions and provide reviews of our Falcon platform, as well as the products of our competitors, and perception of our Falcon platform in the marketplace may be significantly influenced by these reviews. If these reviews are negative, or less positive as compared to those of our competitors’ products, our brand may be adversely affected. Our solutions may fail to detect or prevent threats in any particular test for a number of reasons that may or may not be related to the efficacy of our solutions in real world environments. To the extent potential customers, industry analysts or testing firms believe that the occurrence of a failure to detect or prevent any particular threat is a flaw or indicates that our solutions or services do not provide significant value, we may lose customers, and our reputation, financial condition and business would be harmed. Additionally, the performance of our channel partners and technology alliance partners may affect our brand and reputation if customers do not have a positive experience with these partners. In addition, we have in the past worked, and continue to work, with high profile private and public customers as well as assist in analyzing and remediating high profile cyberattacks, which sometimes involve nation-state actors. Our work with such customers has exposed us to publicity and media coverage. Changing political environments in the United States and abroad may amplify the media and political scrutiny we face. Negative publicity about us, including about our management, the efficacy and reliability of our Falcon platform, our products offerings, our professional services, and the customers we work with, even if inaccurate, has in the past adversely affected, and may in the future adversely affect, our reputation and brand. For example, the July 19 Incident, which received significant media attention and negative publicity, harmed our reputation and brand.
If we are unable to maintain successful relationships with our channel partners and technology alliance partners, or if our channel partners or technology alliance partners fail to perform, our ability to market, sell and distribute our Falcon platform will be limited, and our business, financial position and results of operations will be harmed.
In addition to our direct sales force, we rely on our channel partners to sell and support our Falcon platform. The vast majority of sales of our Falcon platform flow through our channel partners, and we expect this to continue for the foreseeable future. Additionally, we have entered, and intend to continue to enter, into technology alliance partnerships with third parties to support our future growth plans. The loss of a substantial number of our channel partners or technology alliance partners, or the failure to recruit additional partners, could adversely affect our results of operations. Our ability to achieve revenue growth in the future will depend in part on our success in maintaining successful relationships with our channel partners and in training our channel partners to independently sell and deploy our Falcon platform. If we fail to effectively manage our existing sales channels, or if our channel partners are unsuccessful in fulfilling the orders for our solutions, or if we are unable to enter into arrangements with, and retain a sufficient number of, high quality channel partners in each of the regions in which we sell solutions and keep them motivated to sell our products, our ability to sell our products and results of operations will be harmed.
Our international operations and plans for future international expansion expose us to significant risks, and failure to manage those risks could adversely impact our business.
We derived approximately 28%, 30%, 32% and 32% of our total revenue from our international customers for fiscal 2022, fiscal 2023, fiscal 2024 and the nine months ended October 31, 2024, respectively. We are continuing to adapt to and develop strategies to address international markets and our growth strategy includes expansion into target geographies, but there is no guarantee that such efforts will be successful. We expect that our international activities will continue to grow in the future, as we continue to pursue opportunities in international markets. These international operations will require significant management attention and financial resources and are subject to substantial risks, including:
greater difficulty in negotiating contracts with standard terms, enforcing contracts and managing collections, and longer collection periods;
higher costs of doing business internationally, including costs incurred in establishing and maintaining office space and equipment for our international operations;
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management communication and integration problems resulting from cultural and geographic dispersion;
risks associated with trade restrictions and foreign legal requirements, including any importation, certification, and localization of our Falcon platform that may be required in foreign countries;
greater risk of unexpected changes in regulatory practices, tariffs, and tax laws and treaties;
compliance with anti-bribery laws, including, without limitation, compliance with the U.S. Foreign Corrupt Practices Act of 1977, as amended, or FCPA, the U.S. Travel Act and the U.K. Bribery Act 2010, or Bribery Act, violations of which could lead to significant fines, penalties, and collateral consequences for our company;
heightened risk of unfair or corrupt business practices in certain geographies and of improper or fraudulent sales arrangements that may impact financial results and result in restatements of, or irregularities in, financial statements;
the uncertainty of protection for intellectual property rights in some countries;
general economic and political conditions in these foreign markets;
foreign exchange controls or tax regulations that might prevent us from repatriating cash earned outside the United States;
political and economic instability in some countries;
double taxation of our international earnings and potentially adverse tax consequences due to changes in the tax laws of the United States or the foreign jurisdictions in which we operate;
unexpected costs for the localization of our services, including translation into foreign languages and adaptation for local practices and regulatory requirements (including, but not limited to data localization requirements);
requirements to comply with foreign privacy, data protection, and information security laws and regulations and the risks and costs of noncompliance;
greater difficulty in identifying, attracting and retaining local qualified personnel, and the costs and expenses associated with such activities;
greater difficulty identifying qualified channel partners and maintaining successful relationships with such partners;
differing employment practices and labor relations issues; and
difficulties in managing and staffing international offices and increased travel, infrastructure, and legal compliance costs associated with multiple international locations.
Additionally, nearly all of our sales contracts are currently denominated in U.S. dollars. However, a strengthening of the U.S. dollar could increase the cost of our solutions to our international customers, which could adversely affect our business and results of operations. In addition, an increasing portion of our operating expenses is incurred outside the United States; is denominated in foreign currencies, such as the Australian Dollar, British Pound, Canadian Dollar, Euro, Indian Rupee, and Japanese Yen; and is subject to fluctuations due to changes in foreign currency exchange rates. If we become more exposed to currency fluctuations and are not able to successfully hedge against the risks associated with currency fluctuations, our results of operations could be adversely affected.
As we continue to develop and grow our business globally, our success will depend in large part on our ability to anticipate and effectively manage these risks. The expansion of our existing international operations and entry into additional international markets will require significant management attention and financial resources. Our failure to successfully manage our international operations and the associated risks could limit the future growth of our business.
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Our business depends, in part, on sales to government organizations, and significant changes in the contracting or fiscal policies of such government organizations could have an adverse effect on our business and results of operations.
Our future growth depends, in part, on increasing sales to government organizations. Demand from government organizations is often unpredictable, subject to budgetary uncertainty and typically involves long sales cycles. We have made significant investment to address the government sector, but we cannot assure you that these investments will be successful, or that we will be able to maintain or grow our revenue from the government sector. U.S. federal, state and local government sales as well as foreign government sales are subject to a number of challenges and risks that may adversely impact our business.
Sales to such government entities include, but are not limited to, the following risks:
selling to governmental agencies can be highly competitive, expensive and time consuming, often requiring significant upfront time and expense without any assurance that such efforts will generate a sale;
we may be required to obtain personnel security clearances and facility clearances to perform on classified contracts for government agencies, and there is no guarantee that we will be able to obtain or maintain such clearances;
government certification, software supply chain, or source code transparency requirements applicable to us or our products are constantly evolving and, in doing so, restrict our ability to sell to certain government customers until we have attained the new or revised certification or meet other applicable requirements, which we are not guaranteed to do. For example, although we are currently certified under the U.S. Federal Risk and Authorization Management Program, or FedRAMP, such certification is costly to maintain and if we lose our certification, it would restrict our ability to sell to government customers;
government product requirements are often technically complex and assessors may require us to make costly changes to our products to meet such requirements without any assurance that such changes will generate a sale or improve the efficacy of our products;
government demand and payment for our Falcon platform may be impacted by public sector budgetary cycles and funding authorizations, with funding reductions or delays in the government appropriations or procurement processes adversely affecting public sector demand for our Falcon platform, including as a result of abrupt events such as war, incidents of terrorism, natural disasters, and public health concerns or epidemics;
government attitudes towards us as a company, our platform or the capabilities that we offer as a viable software solution may change, and reduce interest in our products and services as acceptable solutions;
changes in the political environment, including before or after a change to the leadership within the government administration, can create uncertainty or changes in policy or priorities and reduce available funding for our products and services;
third parties may compete intensely with us on pending, new or existing contracts with government products, which can also lead to appeals, disputes, or litigation relating to government procurement, including but not limited to bid protests by unsuccessful bidders on potential or actual awards of contracts to us or our partners by the government;
even if we are awarded a sale, the terms of such contracts may be unusually burdensome;
governments routinely investigate and audit government contractors’ administrative processes, and any unfavorable audit could result in the government refusing to continue buying our Falcon platform, which would adversely impact our revenue and results of operations, or institute fines or civil or criminal liability if the audit were to uncover improper or illegal activities; and
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governments may require certain products to be manufactured, hosted, or accessed solely in their country or in other relatively high-cost manufacturing locations, and we may not manufacture all products in locations that meet these requirements, affecting our ability to sell these products to governmental agencies.
The occurrence of any of the foregoing risks could cause governments and governmental agencies to delay or refrain from purchasing our solutions in the future or otherwise have an adverse effect on our business and results of operations.
We may not timely and cost-effectively scale and adapt our existing technology to meet our customers’ performance and other requirements.
Our future growth is dependent upon our ability to continue to meet the needs of new customers and the expanding needs of our existing customers as their use of our solutions grow. As our customers gain more experience with our solutions, the number of endpoints and events, the amount of data transferred, processed and stored by us, the number of locations where our platform and services are being accessed, have in the past, and may in the future, expand rapidly. In order to meet the performance and other requirements of our customers, we intend to continue to make significant investments to increase capacity and to develop and implement new technologies in our service and cloud infrastructure operations. These technologies, which include databases, applications and server optimizations, network and hosting strategies, and automation, are often advanced, complex, new and untested. We may not be successful in developing or implementing these technologies. In addition, as our business grows, we must continue to improve and expand our information technology infrastructure. It takes a significant amount of time to plan, develop and test improvements to our technologies and infrastructure, and we may not be able to accurately forecast demand or predict the results we will realize from such improvements. We rely on external ecosystems, such as operating systems, to operate and make our products and services available to customers. If we are unable to adapt to product or policy changes in such ecosystems, or if we do not effectively operate with such ecosystems, demand for and availability of our products or services could decline. To the extent that we do not effectively scale our operations and infrastructure to meet the needs of our business, our growing customer base and to maintain performance as our customers expand their use of our solutions, we may not be able to grow as quickly as we anticipate, our customers may reduce or cancel use of our solutions and we may be unable to compete as effectively and our business and results of operations may be harmed.
Additionally, we have and will continue to make substantial investments to support growth at our data centers and improve the profitability of our cloud platform. For example, because of the importance of AWS’ services to our business and AWS’ position in the cloud-based server industry, any renegotiation or renewal of our agreement with AWS may be on terms that are significantly less favorable to us than our current agreement. If our cloud-based server costs were to increase, our business, results of operations and financial condition may be adversely affected. Although we expect that we could receive similar services from other third parties, if any of our arrangements with AWS are terminated, we could experience interruptions on our Falcon platform and in our ability to make our solutions available to customers, as well as delays and additional expenses in arranging alternative cloud infrastructure services. Ongoing improvements to cloud infrastructure may be more expensive than we anticipate, and may not yield the expected savings in operating costs or the expected performance benefits. In addition, we may be required to re-invest any cost savings achieved from prior cloud infrastructure improvements in future infrastructure projects to maintain the levels of service required by our customers. We may not be able to maintain or achieve cost savings from our investments, which could harm our financial results.
Our ability to maintain customer satisfaction depends in part on the quality of our customer support.
Once our Falcon platform is deployed within our customers’ networks, our customers depend on our customer support services to resolve any issues relating to the implementation and maintenance of our Falcon platform. If we do not provide effective ongoing support, customer renewals and our ability to sell additional modules as part of our Falcon platform to existing customers could be adversely affected and our reputation with potential customers could be damaged. Many of our larger organizational customers have more complex networks and require higher levels of support than smaller customers and we offer premium services for these customers. Failure to maintain high-quality customer support could have a material adverse effect on our business, results of operations, and financial condition.
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We may need to raise additional capital to expand our operations and invest in new solutions, which capital may not be available on terms acceptable to us, or at all, and which could reduce our ability to compete and could harm our business.
We expect that our existing cash and cash equivalents will be sufficient to meet our anticipated cash needs for working capital and capital expenditures for at least the next 12 months. Retaining or expanding our current levels of personnel and product and service offerings may require additional funds to respond to business challenges, including the need to develop new products or services and enhancements to our Falcon platform, improve our operating infrastructure, or acquire complementary businesses and technologies. Our failure to raise additional capital or generate the significant capital necessary to expand our operations and invest in new products or services could reduce our ability to compete and could harm our business. Accordingly, we may need to engage in additional equity or debt financings to secure additional funds. If we raise additional equity financing, our stockholders may experience significant dilution of their ownership interests and the market price of our Class A common stock could decline. If we engage in additional debt financing, the holders of such debt would have priority over the holders of our Class A common stock, and we may be required to accept terms that further restrict our operations or our ability to incur additional indebtedness or to take other actions that would otherwise be in the interests of the debt holders. Any of the above could harm our business, results of operations, and financial condition.
If we cannot maintain our company culture as we grow, we could lose the innovation, teamwork, passion, and focus on execution that we believe contribute to our success and our business may be harmed.
We believe that our corporate culture has been a contributor to our success, which we believe fosters innovation, teamwork, passion and focus on building and marketing our Falcon platform. As we grow, we may find it difficult to maintain our corporate culture. Any failure to preserve our culture could harm our future success, including our ability to retain and recruit personnel, innovate and operate effectively and execute on our business strategy. Additionally, our productivity and the quality of our solutions may be adversely affected if we do not integrate and train our new employees quickly and effectively. If we experience any of these effects in connection with future growth, it could impair our ability to attract new customers, retain existing customers and expand their use of our Falcon platform, all of which would adversely affect our business, financial condition and results of operations.
We rely on a limited number of suppliers for certain components of the equipment we use to operate our cloud platform. Supply chain disruptions could delay our ability to expand or increase the capacity of our global data center network, replace defective equipment in our existing data centers and impact our operating costs.
We rely on a limited number of suppliers for several components of the equipment we use to operate our cloud platform and provide services to our customers. We generally purchase these components on a purchase order basis, and do not have long-term contracts guaranteeing supply. Our reliance on these suppliers exposes us to risks, including reduced control over production costs and constraints based on the then current availability, terms and pricing of these components. If we experience disruption or delay from our suppliers, we may not be able to obtain supplies or components from alternative suppliers on a timely basis or on terms that are favorable to us, if at all. The technology industry has experienced widespread component shortages and delivery delays, including as a result of geopolitical tensions, public health crises and natural disasters. While we have taken steps to mitigate our supply chain risk, supply chain disruptions and delays could nevertheless adversely impact our operations by, among other things, causing us to delay opening new data centers, delay increasing capacity or replacing defective equipment at existing data centers, and experience increased operating costs.
We are exposed to the credit risks of certain of our customers and end-users, which could adversely impact our business, financial condition or results of operations.
We provide financing arrangements for certain of our customers and end-users to purchase our products and services. Such financing activities expose us to the credit risks of our customers and end-users and these risks may be more pronounced if our customers and end-users are negatively impacted by a global economic downturn or periods of economic uncertainty. There can be no assurance that our efforts to monitor and mitigate these credit risks will be effective. If we are unable to adequately control these risks, our business, financial condition or results of operations could be harmed.
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Risks Related to Intellectual Property, Legal, and Regulatory Matters
The success of our business depends in part on our ability to protect and enforce our intellectual property rights.
We believe our intellectual property is an essential asset of our business, and our success and ability to compete depend in part upon protection of our intellectual property rights. We rely on a combination of patent, copyright, trademark and trade secret laws, as well as confidentiality procedures and contractual provisions, to establish and protect our intellectual property rights in the United States and abroad, all of which provide only limited protection. The efforts we have taken to protect our intellectual property may not be sufficient or effective, and our trademarks, copyrights and patents may be held invalid or unenforceable. Moreover, we cannot assure you that any patents will be issued with respect to our currently pending patent applications in a manner that gives us adequate defensive protection or competitive advantages, or that any patents issued to us will not be challenged, invalidated or circumvented. We have filed for patents in the United States and in certain non-U.S. jurisdictions, but such protections may not be available in all countries in which we operate or in which we seek to enforce our intellectual property rights, or may be difficult to enforce in practice. For example, many foreign countries have compulsory licensing laws under which a patent owner must grant licenses to third parties. In addition, many countries limit the enforceability of patents against certain third parties, including government agencies or government contractors. In these countries, patents may provide limited or no benefit. Moreover, we may need to expend additional resources to defend our intellectual property rights in these countries, and our inability to do so could impair our business or adversely affect our international expansion. Our currently issued patents and any patents that may be issued in the future with respect to pending or future patent applications may not provide sufficiently broad protection or they may not prove to be enforceable in actions against alleged infringers.
We may not be effective in policing unauthorized use of our intellectual property, and even if we do detect violations, litigation or technical changes to our products may be necessary to enforce our intellectual property rights. Protecting against the unauthorized use of our intellectual property rights, technology and other proprietary rights is expensive and difficult, particularly outside of the United States. Any enforcement efforts we undertake, including litigation, could be time-consuming and expensive and could divert management’s attention, which could harm our business and results of operations. Further, attempts to enforce our rights against third parties could also provoke these third parties to assert their own intellectual property or other rights against us, or result in a holding that invalidates or narrows the scope of our rights, in whole or in part. The inability to adequately protect and enforce our intellectual property and other proprietary rights could seriously harm our business, results of operations and financial condition. Even if we are able to secure our intellectual property rights, we cannot assure you that such rights will provide us with competitive advantages or distinguish our services from those of our competitors or that our competitors will not independently develop similar technology, duplicate any of our technology, or design around our patents.
Claims by others that we infringe their proprietary technology or other intellectual property rights could result in significant costs and substantially harm our business, financial condition, results of operations, and prospects.
Claims by others that we infringe their proprietary technology or other intellectual property rights could harm our business. A number of companies in our industry hold a large number of patents and also protect their copyright, trade secret and other intellectual property rights, and companies in the networking and security industry frequently enter into litigation based on allegations of patent infringement or other violations of intellectual property rights. As we face increasing competition and grow, the possibility of intellectual property rights claims against us also grows. In addition, to the extent we hire personnel from competitors, we may be subject to allegations that such personnel have divulged proprietary or other confidential information to us. From time to time, third parties have in the past and may in the future assert claims of infringement of intellectual property rights against us.
Third parties may in the future also assert claims against our customers or channel partners, whom our standard license and other agreements obligate us to indemnify against claims that our solutions infringe the intellectual property rights of third parties. As the number of products and competitors in the security and IT operations market increases and overlaps occur, claims of infringement, misappropriation, and other violations of intellectual property rights may increase. While we intend to increase the size of our patent portfolio, many of our competitors and others may now and in the future have significantly larger and more mature patent portfolios than we have. In addition, future litigation may involve non-practicing entities, companies or other patent owners who have no relevant product offerings or revenue and against whom our own patents may therefore provide little or no deterrence or protection. Any claim of intellectual property infringement by a third party, even a claim without merit, could cause us to incur substantial costs defending against such claim, could distract our management from our business and could require us to cease use of such intellectual property.
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Additionally, our insurance may not cover intellectual property rights infringement claims that may be made. In the event that we fail to successfully defend ourselves against an infringement claim, a successful claimant could secure a judgment or otherwise require payment of legal fees, settlement payments, ongoing royalties or other costs or damages; or we may agree to a settlement that prevents us from offering certain services or features; or we may be required to obtain a license, which may not be available on reasonable terms, or at all, to use the relevant technology. If we are prevented from using certain technology or intellectual property, we may be required to develop alternative, non-infringing technology, which could require significant time, effort and expense and may ultimately not be successful. Additionally, we may be unable to continue to offer our affected services or features while developing such technology.
Although third parties may offer a license to their technology or other intellectual property, the terms of any offered license may not be acceptable, and the failure to obtain a license or the costs associated with any license could cause our business, financial condition and results of operations to be adversely affected. In addition, some licenses may be nonexclusive, and therefore our competitors may have access to the same technology licensed to us. If a third party does not offer us a license to its technology or other intellectual property on reasonable terms, or at all, we could be enjoined from continued use of such intellectual property. As a result, we may be required to develop alternative, non-infringing technology, which could require significant time, effort and expense and may ultimately not be successful. Additionally, we may be unable to continue to offer our affected products, subscriptions or services, while developing such technology. Furthermore, a successful claimant could secure a judgment or we may agree to a settlement that prevents us from distributing certain products, providing certain subscriptions or performing certain services. Any such judgment or settlement could also require us to pay substantial damages, royalties or other fees. Any of these events could harm our business, financial condition and results of operations.
We license technology from third parties, and our inability to maintain those licenses could harm our business.
We currently incorporate, and will in the future incorporate, technology that we license from third parties, including software, into our solutions. We cannot be certain that our licensors do not or will not infringe on the intellectual property rights of third parties or that our licensors have or will have sufficient rights to the licensed intellectual property in all jurisdictions in which we may sell our Falcon platform. Some of our agreements with our licensors may be terminated by them for convenience, or otherwise provide for a limited term. If we are unable to continue to license technology because of intellectual property infringement claims brought by third parties against our licensors or against us, or if we are unable to continue our license agreements or enter into new licenses on commercially reasonable terms, our ability to develop and sell solutions and services containing or dependent on that technology would be limited, and our business could be harmed. Additionally, if we are unable to license technology from third parties, we may be forced to acquire or develop alternative technology, which we may be unable to do in a commercially feasible manner or at all, and may require us to use alternative technology of lower quality or performance standards. This could limit or delay our ability to offer new or competitive solutions and increase our costs. As a result, our margins, market share, and results of operations could be significantly harmed.
We are required to comply with stringent, complex and evolving laws, rules, regulations and standards in many jurisdictions, as well as contractual obligations, relating to data privacy and security. Any actual or perceived failure to comply with these requirements could have a material adverse effect on our business.
We are required to comply with stringent, complex and evolving laws, rules, regulations and standards in many jurisdictions, as well as contractual obligations, relating to data privacy and security. Ensuring compliance with such requirements may increase operating costs, impact our data processing practices and policies and the development of new products or services, and reduce operational efficiency, any of which could adversely affect our business and operations.
In the United States, there are numerous federal, state and local data privacy and security laws, rules, and regulations governing the collection, sharing, use, retention, disclosure, security, transfer, storage and other processing of personal information, including federal and state data privacy and security laws, data breach notification laws, and data disposal laws. For example, at the federal level, we are subject to, among other laws and regulations, the rules and regulations promulgated under the authority of the Federal Trade Commission (which has the authority to regulate and enforce against unfair or deceptive acts or practices in or affecting commerce, including acts and practices with respect to data privacy and security), as well as the Electronic Communication Privacy Act, the Computer Fraud and Abuse Act, the Health Insurance Portability and Accountability Act, and the Gramm Leach Bliley Act. The United States Congress also has considered, is currently considering, and may in the future consider, various proposals for comprehensive federal data privacy and security legislation, to which we may become subject if passed.
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At the state level, we are subject to laws and regulations such as the California Consumer Privacy Act, as amended by the California Privacy Rights Act (collectively, the “CCPA”). The CCPA broadly defines personal information and gives California residents expanded privacy rights and protections, such as affording them the right to access and request deletion of their information and to opt out of certain sharing and sales of personal information. The CCPA provides for severe civil penalties and statutory damages for violations and a private right of action for certain data breaches that result in the loss of unencrypted personal information. This private right of action is expected to increase the likelihood of, and risks associated with, data breach litigation. Numerous other states have also enacted, or are in the process of enacting or considering, comprehensive state-level data privacy and security laws, rules, and regulations that share similarities with the CCPA. Moreover, laws in all 50 U.S. states require businesses to provide notice under certain circumstances to consumers whose personal information has been disclosed as a result of a data breach.
Internationally, virtually every jurisdiction in which we operate has established its own data privacy and security legal framework with which we must comply. For example, we are required to comply with the European Union (“EU”) General Data Protection Regulation (“GDPR”) and its equivalent in the U.K. (“U.K. GDPR”), which impose stringent obligations regarding the collection, control, use, sharing, disclosure and other processing of personal data and create mandatory breach notification requirements under certain circumstances. While the GDPR and U.K. GDPR remain substantially similar for the time being, the U.K. government has announced that it would seek to chart its own path on data protection and reform its relevant laws, including in ways that may differ from the GDPR. While these developments increase uncertainty with regard to data protection regulation in the U.K., even in their current, substantially similar form, the GDPR and U.K. GDPR can expose businesses to divergent parallel regimes that may be subject to potentially different interpretations and enforcement actions for certain violations and related uncertainty. Failure to comply with the GDPR or the U.K. GDPR can result in significant fines and other liability, including, under the GDPR, fines of up to EUR 20 million (or GBP 17.5 million under the U.K. GDPR) or four percent (4%) of annual global revenue, whichever is greater. European data protection authorities have already imposed fines for GDPR violations of up to, in some cases, hundreds of millions of Euros.
Legal developments in the European Economic Area (“EEA”) have created complexity and uncertainty regarding processing and transfers of personal data from the EEA to the United States and other so-called third countries outside the EEA, including in the context of website cookies. Similar complexities and uncertainties also apply to transfers from the U.K. to third countries. While we have taken steps to mitigate the impact on us, such as implementing the European Commission’s standard contractual clauses (“SCCs”) and the U.K.’s international Data Transfer Agreement (or the U.K.’s international data transfer addendum that can be used with the SCCs), the efficacy and longevity of these mechanisms remains uncertain. On July 10, 2023, the European Commission adopted an adequacy decision concluding that the U.S. ensures an adequate level of protection for personal data transferred from the EU to the U.S. under the recently adopted EU-U.S. Data Privacy Framework (followed on October 12, 2023 with the adoption of an adequacy decision in the U.K. for the U.K.-U.S. Data Bridge); however, such new adequacy decision has been challenged in EU courts, and is likely to face additional challenges. Moreover, although the U.K. currently has an adequacy decision from the European Commission, such that SCCs are not required for the transfer of personal data from the EEA to the U.K., that decision will sunset in June 2025 unless extended and it may be revoked in the future by the European Commission if the U.K. data protection regime is reformed in ways that deviate substantially from the GDPR. The EU has also proposed legislation that would regulate non-personal data and establish new cybersecurity standards, and other countries, including the U.K., may similarly do so in the future. If we are otherwise unable to transfer data, including personal data, between and among countries and regions in which we operate, it could affect the manner in which we provide our services, the geographical location or segregation of our relevant systems and operations, and could adversely affect our financial results. While we have implemented new controls and procedures designed to comply with the requirements of the GDPR, U.K. GDPR and the data privacy and security laws of other jurisdictions in which we operate, such procedures and controls may not be effective in ensuring compliance or preventing unauthorized transfers of personal data.
Moreover, while we strive to publish and prominently display privacy policies that are accurate, comprehensive, and compliant with applicable laws, rules regulations and industry standards, we cannot ensure that our privacy policies and other statements regarding our practices will be sufficient to protect us from claims, proceedings, liability or adverse publicity relating to data privacy and security. Although we endeavor to comply with our privacy policies, we may at times fail to do so or be alleged to have failed to do so. If our public statements about our use, collection, disclosure and other processing of personal information, whether made through our privacy policies, information provided on our website, press statements or otherwise, are alleged to be deceptive, unfair or misrepresentative of our actual practices, we may be subject to potential government or legal investigation or action, including by the Federal Trade Commission or applicable state attorneys general.
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Our compliance efforts are further complicated by the fact that data privacy and security laws, rules, regulations and standards around the world are rapidly evolving, may be subject to uncertain or inconsistent interpretations and enforcement, and may conflict among various jurisdictions. In many jurisdictions, enforcement actions and consequences for non-compliance with data privacy and security laws, rules, regulations, standards, certifications, contractual requirements or other obligations are rising. Data subjects may also have a private right of action, as well as support from consumer privacy advocates or organizations, to lodge complaints with supervisory authorities, seek judicial remedies and obtain compensation for damages resulting from violations of applicable data privacy and security laws, rules and regulations. In addition, privacy advocates and industry groups have proposed, and may propose in the future, self-regulatory standards that may legally or contractually apply to us or be alleged to apply to us. Any failure or perceived failure by us or any third parties with which we do business to comply with applicable privacy policies, data privacy or security laws, rules, regulations, standards, certifications or contractual obligations, or any compromise of security that results in unauthorized access to, or unauthorized loss, destruction, use, modification, acquisition, disclosure, release, transfer or other processing of personal information, may result in requirements to modify or cease certain operations or practices, the expenditure of substantial costs, time and other resources, proceedings or actions against us, legal liability, governmental investigations, enforcement actions, claims, fines, judgments, awards, penalties, sanctions and costly litigation (including class actions). There also has been increased regulatory scrutiny from the SEC with respect to adequately disclosing risks concerning cybersecurity and data privacy. Such scrutiny from the SEC increases the risk of investigations into the cybersecurity practices, and related disclosures, of companies within its jurisdiction. Any of the foregoing could harm our reputation, distract our management and technical personnel, increase our costs of doing business, adversely affect the demand for our products and services, and ultimately result in the imposition of liability, any of which could have a material adverse effect on our business, financial condition and results of operations.
Failure to comply with laws and regulations applicable to our business could subject us to fines and penalties and could also cause us to lose customers or negatively impact our ability to contract with customers, including those in the public sector.
Our business is subject to regulation by various federal, state, local and foreign governmental agencies, including agencies responsible for monitoring and enforcing data privacy and security laws and regulations, employment and labor laws, workplace safety, product safety, environmental laws, consumer protection laws, anti-bribery laws, import and export controls, federal securities laws and tax laws and regulations. In certain jurisdictions, these regulatory requirements may be more stringent than in the United States. Increased scrutiny may also lead to new laws and regulations, or new applications of existing laws and regulations, that target topics such as AI, critical infrastructure software resiliency and concentration risk. Noncompliance by us, our employees, representatives, contractors, channel partners, agents, intermediaries, or other third parties with applicable regulations or requirements could subject us to:
investigations, enforcement actions and sanctions;
mandatory changes to our Falcon platform;
disgorgement of profits, fines and damages;
civil and criminal penalties or injunctions;
claims for damages by our customers or channel partners;
termination of contracts;
loss of intellectual property rights;
loss of our license to do business in the jurisdictions in which we operate; or
temporary or permanent debarment from sales to government organizations.
If any governmental sanctions are imposed, or if we do not prevail in any possible civil or criminal litigation, our business, results of operations and financial condition could be adversely affected. In addition, responding to any action will likely result in a significant diversion of management’s attention and resources and an increase in professional fees. Enforcement actions and sanctions could harm our business, results of operations and financial condition.
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We endeavor to properly classify employees as exempt versus non-exempt under applicable law. Although there are no pending or threatened material claims or investigations against us asserting that some employees are improperly classified as exempt, the possibility exists that some of our current or former employees could have been incorrectly classified as exempt employees.
These laws and regulations impose added costs on our business, and failure by us, our employees, representatives, contractors, channel partners, agents, intermediaries, or other third parties to comply with these or other applicable regulations and requirements could lead to claims for damages, penalties, termination of contracts, loss of exclusive rights in our intellectual property and temporary suspension or permanent debarment from government contracting. Any such damages, penalties, disruptions or limitations in our ability to do business with customers, including those in the public sector, could result in reduced sales of our products or services, substantial product inventory write-offs, reputational damage, penalties, and other sanctions, any of which could harm our business, reputation, and results of operations.
We are subject to governmental export controls and economic sanctions laws that could impair our ability to compete in international markets and subject us to liability if we are not in full compliance with applicable laws.
Our products, services and business activities, including our collection of information about cyber threats, are subject to various restrictions under U.S. export controls and trade and economic sanctions laws, including the U.S. Commerce Department’s Export Administration Regulations and economic and trade sanctions regulations maintained by the U.S. Treasury Department’s Office of Foreign Assets Control. The U.S. export control laws and U.S. economic sanctions laws include prohibitions on the sale or supply of certain products and services to U.S. embargoed or sanctioned countries, governments, persons and entities and also require authorization for the export of encryption items. In addition, various countries regulate the import of certain encryption technology, including through import and licensing requirements, and have enacted laws that could limit our ability to distribute our products or service or could limit our customers’ ability to implement our service in those countries. Changes in our products or services or changes in these laws and regulations may create delays in the introduction of our products or services into international markets, prevent our customers with international operations from deploying our products or services globally or, in some cases, prevent the export or import of our products or services to certain countries, governments or persons altogether. Any decreased use of our products or services or limitation on our ability to export to or sell our products or services in international markets would likely adversely affect our business, financial condition, and operating results. Obtaining the necessary authorizations, including any required license, for a particular transaction may be time-consuming, is not guaranteed, and may result in the delay or loss of sales opportunities. If we fail to comply with these laws and regulations, we and certain of our employees could be subject to civil or criminal penalties, including the possible loss of export privileges and monetary penalties. Although we take precautions to prevent our products or services from being provided in violation of such laws, our products or services may have been in the past, and could in the future be, provided in violation of such laws, despite the precautions we take. This could result in negative consequences to us, including government investigations, penalties and harm to our reputation.
We are subject to anti-corruption, anti-bribery and similar laws, and non-compliance with such laws can subject us to criminal penalties or significant fines and harm our business and reputation.
We are subject to the U.S. Foreign Corrupt Practices Act of 1977, as amended (“FCPA”), the U.K. Bribery Act 2010 and other anti-corruption, anti-bribery, anti-money laundering and similar laws in the United States and other countries in which we conduct activities. Anti-corruption and anti-bribery laws have been enforced aggressively in recent years and are interpreted broadly and prohibit companies and their employees and agents from promising, authorizing, making or offering improper payments or other benefits to government officials and others in the private sector. As we increase our international sales and business, our risks under these laws may increase.
In addition, we use channel partners, agents and other third-parties to sell our products or conduct business on our behalf. We or such third parties may have direct or indirect interactions with officials and employees of government agencies or state-owned or affiliated entities and under certain circumstances we could be held liable for the corrupt or other illegal activities of such partners, and our employees, representatives, contractors, partners, and agents, even if we do not explicitly authorize such activities. We have implemented an anti-corruption compliance program but cannot ensure that all our employees and agents, as well as those companies to which we outsource certain of our business operations, will not take actions in violation of our policies and applicable law, for which we may be ultimately held responsible.
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Noncompliance with the FCPA, other applicable anti-corruption, anti-bribery, or anti-money laundering laws could subject us to investigations, whistleblower complaints, sanctions, settlements, prosecution, and other enforcement actions within the U.S. and internationally. Any violation of these laws could result in disgorgement of profits, significant fines, damages, other civil and criminal penalties or injunctions, adverse media coverage, loss of export privileges, severe criminal or civil sanctions, suspension or debarment from U.S. government contracts and other consequences, any of which could have a material adverse effect on our reputation, business, results of operations, and financial condition.
Some of our technology incorporates “open source” software, which could negatively affect our ability to sell our Falcon platform and subject us to possible litigation.
Our products and subscriptions contain third-party open source software components, and failure to comply with the terms of the underlying open source software licenses could restrict our ability to sell our products and subscriptions. The use and distribution of open source software may entail greater risks than the use of third-party commercial software, as open source licensors generally do not provide warranties or other contractual protections regarding infringement claims or the quality of the code and they can change the license terms on which they offer the open source software. Many of the risks associated with use of open source software cannot be eliminated and could negatively affect our business. In addition, the wide availability of source code used in our solutions could expose us to security vulnerabilities.
Some open source licenses contain requirements that we make available source code for modifications or derivative works we create based upon the type of open source software we use. If we combine our proprietary software with open source software in a certain manner, we could, under certain open source licenses, be required to release the source code of our proprietary software to the public, including authorizing further modification and redistribution, or otherwise be limited in the licensing of our services, each of which could provide an advantage to our competitors or other entrants to the market, create security vulnerabilities in our solutions, require us to re-engineer all or a portion of our Falcon platform, and could reduce or eliminate the value of our services. This would allow our competitors to create similar products with lower development effort and time and ultimately could result in a loss of sales for us.
The terms of many open source licenses have not been interpreted by U.S. courts, and there is a risk that these licenses could be construed in ways that could impose unanticipated conditions or restrictions on our ability to commercialize products and subscriptions incorporating such software. Moreover, we cannot assure you that our processes for controlling our use of open source software in our products and subscriptions will be effective. From time to time, we may face claims from third parties asserting ownership of, or demanding release of, the open source software or derivative works that we developed using such software (which could include our proprietary source code), or otherwise seeking to enforce the terms of the applicable open source license. These claims could result in litigation. Litigation could be costly for us to defend, have a negative effect on our results of operations and financial condition or require us to devote additional research and development resources to change our solutions. Responding to any infringement or noncompliance claim by an open source vendor, regardless of its validity, discovering certain open source software code in our Falcon platform, or a finding that we have breached the terms of an open source software license, could harm our business, results of operations and financial condition, by, among other things:
resulting in time-consuming and costly litigation;
diverting management’s time and attention from developing our business;
requiring us to pay monetary damages or enter into royalty and licensing agreements that we would not normally find acceptable;
causing delays in the deployment of our Falcon platform or service offerings to our customers;
requiring us to stop offering certain services or features of our Falcon platform;
requiring us to redesign certain components of our Falcon platform using alternative non-infringing or non-open source technology, which could require significant effort and expense;
requiring us to disclose our software source code and the detailed program commands for our software; and
requiring us to satisfy indemnification obligations to our customers.
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We utilize AI, which could expose us to liability or adversely affect our business.
We incorporate novel uses of AI technologies, including generative AI, into our products and operations, such as our Falcon platform. AI is complex and rapidly evolving, and we face significant competition from other companies who may incorporate AI into their products more quickly or more successfully than us, as well as an evolving regulatory landscape. The introduction of AI, and particularly generative AI, a relatively new and emerging technology in the early stages of commercial use, into new or existing products, and our operations, may result in new or enhanced governmental or regulatory scrutiny, litigation, confidentiality, ethical concerns, or other complications that could adversely affect our business, reputation, or financial results. For example, generative AI has been known to produce a false or “hallucinatory” interferences or output, and certain generative AI uses machine learning and predictive analytics, which may be flawed, insufficient, of poor quality, reflect unwanted forms of bias, or contain other errors or inadequacies, any of which may not be easily detectable. Our customers or others may rely on or use this flawed content to their detriment, which may expose us to brand or reputational harm, competitive harm, and/or legal liability. In addition, the use of AI by other companies has resulted in, and may in the future result in, data breaches and cybersecurity incidents that implicate the personal information of AI users. Further, the use of AI presents emerging ethical and social issues, and if we enable or offer solutions that draw scrutiny or controversy due to their perceived or actual impact on customers or on society as a whole, we may experience brand or reputational harm, competitive harm, and/or legal liability.
The technologies underlying AI and its uses are subject to a variety of laws and regulations, including intellectual property, privacy, data protection cybersecurity, consumer protection, competition, and equal opportunity laws and regulations, and are expected to be subject to new laws and regulations or new applications of existing laws and regulations. AI is the subject of ongoing review by various U.S. governmental and regulatory agencies, and various U.S. states and other foreign jurisdictions are applying, or are considering applying, their cybersecurity and data protection laws to AI or are considering general legal frameworks for AI. For example, in Europe, the EU’s AI Act was published in the Official Journal of the EU on July 12, 2024 and entered into force on August 1, 2024. The AI Act establishes, among other things, a risk-based governance framework for regulating AI systems in the EU by categorizing AI systems, based on the risks associated with such AI systems’ intended purposes, as creating unacceptable or high risks, with all other AI systems being considered low risk. This regulatory framework is expected to have a material impact on the way AI is regulated in the EU and beyond. As further indication of a trend in increased regulatory and legislative oversight of the use and development of AI, in 2024, California enacted a range of laws regulating the use and development of AI, which generally relate to transparency, privacy and fairness, among other concerns.
As a fast-evolving and complicated technology subject to significant government attention, AI-related legislation and regulation may be developed and apply to AI in unexpected ways. We may not be able to anticipate how to respond to or comply with these rapidly evolving frameworks, and we may need to expend resources to adjust our offerings in certain jurisdictions if the legal frameworks are inconsistent across jurisdictions. The cost to comply with such frameworks could be significant and may increase our operating expenses. Additionally, if we do not have sufficient rights to use the data or other material or content on which our AI technologies rely, we may incur liability through the violation of applicable laws or regulations, third-party intellectual property, privacy or other rights, or contracts to which we are a party. Further, any content or other output created by our use of AI-powered tools may not be subject to copyright protection, which may adversely affect our ability to enforce our intellectual property rights. Because AI technology itself is highly complex and rapidly developing, it is not possible to predict all of the legal, operational or technological risks that may arise relating to the use of AI.
We provide service level commitments under some of our customer contracts. If we fail to meet these contractual commitments, we could be obligated to provide credits for future service and our business could suffer.
Certain of our customer agreements contain service level commitments, which contain specifications regarding the availability and performance of our Falcon platform. Any failure of or disruption to our infrastructure could impact the performance of our Falcon platform and the availability of services to customers. To the extent we are unable to meet our stated service level commitments or to the extent we suffer extended periods of poor performance or unavailability of our Falcon platform, we may be contractually obligated to provide affected customers with service credits for future subscriptions, and, in certain cases, refunds. To date, there has not been a material failure to meet our service level commitments, and we do not currently have any material liabilities accrued on our balance sheets for such commitments. Our revenue, other results of operations and financial condition could be harmed to the extent we suffer performance issues or downtime that exceeds the service level commitments under our agreements with our customers.
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We are currently, and may in the future become, involved in litigation that may adversely affect us.
We are regularly subject to claims, suits, and government investigations and other proceedings including patent, product liability, class action, whistleblower, personal injury, property damage, labor and employment (including allegations of wage and hour violations), commercial disputes, securities litigation, compliance with laws and regulatory requirements and other matters, and we may become subject to additional types of claims, suits, investigations and proceedings as our business develops or in connection with the July 19 Incident. Such claims, suits, and government investigations and proceedings are inherently uncertain and their results cannot be predicted with certainty. Regardless of the outcome, any of these types of legal proceedings can have an adverse impact on us because of legal costs and diversion of management attention and resources, and could cause us to incur significant expenses or liability, adversely affect our brand recognition, and/or require us to change our business practices. The expense of litigation and the timing of this expense from period to period are difficult to estimate, subject to change and could adversely affect our results of operations. It is possible that a resolution of one or more such proceedings could result in substantial damages, settlement costs, fines and penalties that could adversely affect our business, condensed consolidated financial position, results of operations, or cash flows in a particular period. These proceedings could also result in reputational harm, sanctions, consent decrees, or orders requiring a change in our business practices. Because of the potential risks, expenses and uncertainties of litigation, we may, from time to time, settle disputes, even where we have meritorious claims or defenses, by agreeing to settlement agreements. Because litigation is inherently unpredictable, we cannot assure you that the results of any of these actions will not have a material adverse effect on our business, financial condition, results of operations, and prospects. Any of these consequences could adversely affect our business and results of operations.
We have in the past experienced, and may in the future experience, warranty claims, product returns, and claims related to product liability and product defects from real or perceived defects in our solutions or their misuse by our customers or third parties and indemnity provisions in various agreements potentially expose us to substantial liability for intellectual property infringement and other losses.
We may be subject to liability claims for damages related to errors or defects in our solutions, and we are currently subject to claims, and may in the future become subject to additional claims, arising out of the July 19 Incident. A material liability claim or other occurrence that harms our reputation or decreases market acceptance of our products may harm our business and results of operations. Although we generally have limitation of liability provisions in our terms and conditions of sale, these provisions may not cover all of our indemnification obligations and they may not fully or effectively protect us from claims as a result of federal, state, or local laws or ordinances, or unfavorable judicial decisions in the United States or other countries. The sale and support of our products also entail the risk of product liability claims.
Additionally, our agreements with customers and other third parties typically include indemnification or other provisions under which we agree to indemnify or otherwise be liable to them for losses suffered or incurred as a result of claims regarding intellectual property infringement, breach of agreement, including confidentiality, privacy and security obligations, violation of applicable laws, damages caused by failures of our solutions or to property or persons, or other liabilities relating to or arising from our products and services, or other acts or omissions. These contractual provisions often survive termination or expiration of the applicable agreement. We have received, and may continue to receive, claims in connection with the July 19 Incident.
If our customers or other third parties we do business with make intellectual property rights or other indemnification claims against us, we will incur significant legal expenses and may have to pay damages, license fees, and/or stop using technology found to be in violation of the third party’s rights. We may also have to seek a license for the technology. Such license may not be available on reasonable terms, if at all, and may significantly increase our operating expenses or may require us to restrict our business activities and limit our ability to deliver certain solutions or features. We may also be required to develop alternative non-infringing technology, which could require significant effort and expense and/or cause us to alter our products and services, which could harm our business. Large indemnity obligations, whether for intellectual property or other claims, could harm our business, results of operations, and financial condition.
Additionally, our Falcon platform may be used by our customers and other third parties who obtain access to our solutions for purposes other than for which our platform was intended. For example, our Falcon platform might be misused by a customer to monitor its employee’s activities in a manner that violates the employee’s privacy rights under applicable law.
During the course of performing certain solution-related services and our professional services, our teams may have significant access to our customers’ networks. We cannot be sure that an employee may not take advantage of such access which may make our customers vulnerable to malicious activity by such employee. Any such misuse of our Falcon platform could result in negative press coverage and negatively affect our reputation, which could result in harm to our business, reputation, and results of operations.
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We maintain insurance to mitigate potential losses arising from certain claims associated with the use of our products, but our insurance coverage may not adequately cover all claims asserted against us, including our liability related to the July 19 Incident. In addition, even claims that ultimately are unsuccessful could result in our expenditure of funds in litigation, divert management’s time and other resources, and harm our business and reputation. We offer our Falcon Complete customers a limited warranty, subject to certain conditions. While we maintain insurance relating to our warranty, we cannot be certain that our insurance coverage will be adequate to cover such claims, that such insurance will continue to be available to us on commercially reasonable terms, or at all, or that any insurer will not deny coverage as to any claim. Any failure or refusal of our insurance providers to provide the expected insurance benefits to us after we have paid the warranty claims would cause us to incur significant expense or cause us to cease offering this warranty which could damage our reputation, cause us to lose customers, expose us to liability claims by our customers, negatively impact our sales and marketing efforts, and have an adverse effect on our business, financial condition and results of operations.
Risks Related to Ownership of Our Class A Common Stock
The market price of our Class A common stock may be volatile regardless of our operating performance, and you could lose all or part of your investment.
We cannot predict the prices at which our Class A common stock will trade. The market price of our Class A common stock depends on a number of factors, including those described in this “Risk Factors” section, many of which are beyond our control and may not be related to our operating performance. These fluctuations could cause you to lose all or part of your investment in our Class A common stock. Factors that could cause fluctuations in the market price of our Class A common stock include the following:
actual or anticipated changes or fluctuations in our results of operations;
the financial projections we may provide to the public, any changes in these projections or our failure to meet these projections;
announcements by us or our competitors of new products or services or new or terminated significant contracts, commercial relationships or capital commitments;
industry or financial analyst or investor reaction to our press releases, other public announcements and filings with the SEC;
rumors and market speculation involving us or other companies in our industry;
price and volume fluctuations in the overall stock market from time to time;
changes in operating performance and stock market valuations of other technology companies generally, or those in our industry in particular;
failure of industry or financial analysts to maintain coverage of us, changes in financial estimates by any analysts who follow our company, or our failure to meet these estimates or the expectations of investors;
actual or anticipated developments in our business or our competitors’ businesses or the competitive landscape generally;
litigation involving us, our industry or both, or investigations by regulators into our operations or those of our competitors;
developments or disputes concerning our intellectual property rights or our solutions, or third-party proprietary rights;
announced or completed acquisitions of businesses or technologies by us or our competitors;
new laws or regulations or new interpretations of existing laws or regulations applicable to our business;
any major changes in our management or our board of directors, particularly with respect to Mr. Kurtz;
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effects of public health crises, pandemics and epidemics;
the emergence of new or different information relating to the impact of the July 19 Incident;
general economic conditions and slow or negative growth of our markets; and
other events or factors, including those resulting from war, incidents of terrorism or responses to these events.
In addition, the stock market in general, and the market for technology companies in particular, has experienced
extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of those companies. Broad market and industry factors may seriously affect the market price of our Class A common stock, regardless of our actual operating performance. In addition, in the past, following periods of volatility in the overall market and the market prices of a particular company’s securities, securities class action litigation has often been instituted against that company. We are currently party to securities litigation asserted against us arising out of the July 19 Incident. Any securities litigation could result in substantial costs and divert our management’s attention and resources from our business. This could have an adverse effect on our business, results of operations and financial condition.
Sales of substantial amounts of our Class A common stock in the public markets, or the perception that they might occur, could reduce the price that our Class A common stock might otherwise attain and may dilute your voting power and your ownership interest in us.
Sales of a substantial number of shares of our Class A common stock in the public market, including shares of Class A stock that have been converted from shares of Class B common stock, and particularly sales by our directors, executive officers and significant stockholders, or the perception that these sales could occur, could adversely affect the market price of our Class A common stock. As of November 15, 2024, we had 233,851,230 shares of Class A common stock outstanding and 12,460,182 shares of Class B common stock outstanding.
In addition, certain holders of our Class B common stock are entitled to rights with respect to registration of these shares under the Securities Act pursuant to our amended and restated registration rights agreement. If these holders of our Class B common stock, by exercising their registration rights, sell a large number of shares, they could adversely affect the market price for our Class A common stock.
We may also issue our shares of Class A common stock or securities convertible into shares of our Class A common stock from time to time in connection with a financing, acquisition, investments or otherwise. Any such issuance could result in substantial dilution to our existing stockholders and cause the market price of our Class A common stock to decline.
If industry or financial analysts do not publish research or reports about our business, or if they issue inaccurate or unfavorable research regarding our Class A common stock, our stock price and trading volume could decline.
The trading market for our Class A common stock will be influenced by the research and reports that industry or financial analysts publish about us or our business. We do not control these analysts or the content and opinions included in their reports. If any of the analysts who cover us issues an inaccurate or unfavorable opinion regarding our stock price, our stock price would likely decline. In addition, the stock prices of many companies in the technology industry have declined significantly after those companies have failed to meet, or significantly exceed, the financial guidance publicly announced by the companies or the expectations of analysts. If our financial results fail to meet, or significantly exceed, our announced guidance or the expectations of analysts or public investors, analysts could downgrade our Class A common stock or publish unfavorable research about us. If one or more of these analysts cease coverage of our company or fail to publish reports on us regularly, our visibility in the financial markets could decrease, which in turn could cause our stock price or trading volume to decline.
The dual class structure of our common stock has the effect of concentrating voting control with those stockholders who held our capital stock (or options or other securities convertible into or exercisable for our capital stock) prior to the completion of our initial public offering, including our executive officers, employees, directors, principal stockholders, and their affiliates, which will limit your ability to influence the outcome of matters submitted to our stockholders for approval.
Our Class B common stock has 10 votes per share, and our Class A common stock has one vote per share. The dual class structure of our common stock has the effect of concentrating voting control with those stockholders who held our capital stock (or options or other securities convertible into or exercisable for our capital stock) prior to our initial public offering, including our executive officers, employees, directors, principal stockholders, and their affiliates, which will limit your ability to influence the
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outcome of matters submitted to our stockholders for approval, including the election of our directors and the approval of any change in control transaction. Future transfers by holders of Class B common stock will generally result in those shares converting to Class A common stock, which will have the effect, over time, of increasing the relative voting power of those holders of Class B common stock who retain their shares in the long term.
As of October 31, 2024, our executive officers, directors, one of our current stockholders and its respective affiliates held, in aggregate, 35% of the voting power of our outstanding capital stock. As a result, these stockholders, acting together, have control over most matters that require approval by our stockholders, including the election of directors and approval of significant corporate transactions. They may also have interests that differ from yours and may vote in a way with which you disagree and which may be adverse to your interests. This concentration of ownership may have the effect of delaying, preventing or deterring a change of control or other liquidity event of our company, could deprive our stockholders of an opportunity to receive a premium for their shares of common stock as part of a sale or other liquidity event and might ultimately affect the market price of our common stock.
Further, our amended and restated certificate of incorporation provides that, to the fullest extent permitted by law, the doctrine of “corporate opportunity” does not apply to Accel, or its respective affiliates, in a manner that would prohibit them from investing in competing businesses or doing business with our partners or customers.
We do not intend to pay dividends in the foreseeable future. As a result, your ability to achieve a return on your investment will depend on appreciation in the price of our Class A common stock.
We have never declared or paid any cash dividends on our capital stock. We currently intend to retain all available funds and any future earnings for use in the operation of our business and do not anticipate paying any dividends in the foreseeable future. Any determination to pay dividends in the future will be at the discretion of our board of directors. Additionally, our ability to pay dividends is limited by restrictions on our ability to pay dividends or make distributions under the terms of our credit facility. Accordingly, investors must rely on sales of their Class A common stock after price appreciation, which may never occur, as the only way to realize any future gains on their investments.
Certain provisions in our charter documents and under Delaware law could make an acquisition of our company more difficult, limit attempts by our stockholders to replace or remove members of our board of directors or current management, and may adversely affect the market price of our Class A common stock.
Our amended and restated certificate of incorporation and amended and restated bylaws contain provisions that could delay or prevent a change in control of our company. These provisions could also make it difficult for stockholders to elect directors that are not nominated by the current members of our board of directors or take other corporate actions, including effecting changes in our management. These provisions include:
our dual class common stock structure, which provides our holders of Class B common stock with the ability to significantly influence the outcome of matters requiring stockholder approval, even if they own significantly less than a majority of the shares of our outstanding Class A and Class B common stock;
a classified board of directors with three-year staggered terms, which could delay the ability of stockholders to change the membership of a majority of our board of directors;
the ability of our board of directors to issue shares of preferred stock and to determine the price and other terms of those shares, including preferences and voting rights, without stockholder approval, which could be used to significantly dilute the ownership of a hostile acquirer;
the exclusive right of our board of directors to elect a director to fill a vacancy created by the expansion of our board of directors or the resignation, death or removal of a director, which prevents stockholders from being able to fill vacancies on our board of directors;
a prohibition on stockholder action by written consent, which forces stockholder action to be taken at an annual or special meeting of our stockholders, which prohibition will take effect on the first date on which the number of outstanding shares of our Class B common stock represents less than 10% of the aggregate number of outstanding shares of our Class A common stock and our Class B common stock, taken together as a single class;
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the requirement that a special meeting of stockholders may be called only by the chairperson of our board of directors, chief executive officer or by the board of directors acting pursuant to a resolution adopted by a majority of our board of directors, which could delay the ability of our stockholders to force consideration of a proposal or to take action, including the removal of directors;
certain amendments to our amended and restated certificate of incorporation require the approval of two-thirds of the then-outstanding voting power of our capital stock; and
advance notice procedures with which stockholders must comply to nominate candidates to our board of directors or to propose matters to be acted upon at a stockholders’ meeting, which may discourage or deter a potential acquirer from conducting a solicitation of proxies to elect the acquirer’s own slate of directors or otherwise attempting to obtain control of us.
These provisions may prohibit large stockholders, in particular those owning 15% or more of our outstanding voting stock, from merging or combining with us for a certain period of time.
Our amended and restated bylaws provide that the Court of Chancery of the State of Delaware, and to the extent enforceable, the federal district courts of the United States, will be the exclusive forum for certain disputes between us and our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers or employees.
Our amended and restated bylaws provide that the Court of Chancery of the State of Delaware is the exclusive forum for:
any derivative action or proceeding brought on our behalf;
any action asserting a breach of fiduciary duty;
any action asserting a claim against us arising under the Delaware General Corporation Law, our amended and restated certificate of incorporation or our amended and restated bylaws;
any action to interpret, apply, enforce or determine the validity of our amended and restated certificate of incorporation or our amended and restated bylaws; and
any action asserting a claim against us that is governed by the internal-affairs doctrine.
However, this exclusive forum provision does not apply to suits brought to enforce a duty or liability created by the Exchange Act. In addition, our amended and restated bylaws provide that the federal district courts of the United States will be the exclusive forum for resolving any complaint asserting a cause of action arising under the Securities Act, subject to and contingent upon a final adjudication in the State of Delaware of the enforceability of such exclusive forum provision.
These exclusive-forum provisions may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors, officers or other employees, which may discourage lawsuits against us and our directors, officers and other employees.
Risks Related to our Indebtedness
Our indebtedness could adversely affect our financial condition.
As of October 31, 2024, we had $750.0 million principal amount of indebtedness outstanding (excluding intercompany indebtedness), and there is additional availability under our revolving facility of up to $750.0 million (excluding issued but undrawn letters of credit). Our indebtedness could have important consequences, including:
limiting our ability to obtain additional financing to fund future working capital, capital expenditures, acquisitions or other general corporate requirements;
requiring a portion of our cash flows to be dedicated to debt service payments instead of other purposes, thereby reducing the amount of cash flows available for working capital, capital expenditures, acquisitions and other general corporate purposes;
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increasing our vulnerability to adverse changes in general economic, industry and competitive conditions; and
exposing us to the risk of increased interest rates as certain of our borrowings, including borrowings under our revolving facility, are at variable rates of interest; and increasing our cost of borrowing.
We may not be able to generate sufficient cash to service all of our indebtedness, including the notes, and may be forced to take other actions to satisfy our obligations under our indebtedness, which may not be successful.
Our ability to make scheduled payments on or to refinance our debt obligations, including the Senior Notes, depends on our financial condition and results of operations, which in turn are subject to prevailing economic and competitive conditions and to certain financial, business and other factors beyond our control. We may not be able to maintain a level of cash flows from operating activities sufficient to permit us to pay the principal, premium, if any, and interest on our indebtedness, including the notes.
If our cash flows and capital resources are insufficient to fund our debt service obligations, we could face substantial liquidity problems and may be forced to reduce or delay investments and capital expenditures, or to sell assets, seek additional capital or restructure or refinance our indebtedness, including the Senior Notes. Our ability to restructure or refinance our debt will depend on, among other things, the condition of the capital markets and our financial condition at such time. Any refinancing of our debt could be at higher interest rates and may require us to comply with more onerous covenants, which could further restrict our business operations. The terms of existing or future debt instruments and the indenture that governs the Senior Notes may restrict us from adopting some of these alternatives. In addition, any failure to make payments of interest and principal on our outstanding indebtedness on a timely basis would likely result in a reduction of our credit rating, which could harm our ability to incur additional indebtedness. In the absence of such cash flows and resources, we could face substantial liquidity problems and might be required to dispose of material assets or operations to meet our debt service and other obligations.
Further, our credit agreement contains provisions that restrict our ability to dispose of assets and use the proceeds from any such disposition. We may not be able to consummate those dispositions or to obtain the proceeds that we could realize from them and these proceeds may not be adequate to meet any debt service obligations then due. These alternative measures may not be successful and may not permit us to meet our scheduled debt service obligations.
If we cannot make scheduled payments on our indebtedness, we will be in default and holders of our Senior Notes could declare all outstanding principal and interest to be due and payable, the lenders under our revolving facility could terminate their commitments to loan money, our secured lenders could foreclose against the assets securing their borrowings and we could be forced into bankruptcy or liquidation. If we breach the covenants under our debt instruments, we would be in default under such instruments. The holders of such indebtedness could exercise their rights, as described above, and we could be forced into bankruptcy or liquidation.
Our revolving facility and the indenture that governs our Senior Notes contain terms which restrict our current and future operations, particularly our ability to respond to changes or to take certain actions.
Our revolving facility and the indenture that governs our Senior Notes contain a number of restrictive covenants that impose significant operating and financial restrictions on us and may limit our ability to engage in acts that may be in our long-term best interest, including, among other things, restrictions on our ability to:
incur additional indebtedness and guarantee indebtedness;
prepay, redeem or repurchase certain indebtedness;
sell or otherwise dispose of assets;
incur liens;
enter into transactions with affiliates;
alter the businesses we conduct;
enter into agreements restricting our subsidiaries’ ability to pay dividends; and
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consolidate, merge with, or sell all or substantially all of our assets to, another person.
The covenants in the indenture and supplemental indenture that govern the Senior Notes are subject to exceptions and qualifications.
In addition, the restrictive covenants in the credit agreement governing our revolving facility require us to maintain specified financial ratios and satisfy other financial condition tests. Our ability to meet those financial ratios and tests can be affected by events beyond our control, and we may not be able to meet them. These restrictive covenants could adversely affect our ability to:
finance our operations;
make needed capital expenditures;
make strategic acquisitions or investments or enter into joint ventures;
withstand a future downturn in our business, the industry or the economy in general;
engage in business activities, including future opportunities, that may be in our best interest; and
plan for or react to market conditions or otherwise execute our business strategies.
These restrictions may affect our ability to expand our business, which could have a material adverse effect on our business, financial condition and results of operations.
As a result of these restrictions, we will be limited as to how we conduct our business and we may be unable to raise additional debt or equity financing to compete effectively or to take advantage of new business opportunities. The terms of any future indebtedness we may incur could include more restrictive covenants. We cannot assure you that we will be able to maintain compliance with these covenants in the future and, if we fail to do so, that we will be able to obtain waivers from the lenders and/or amend the covenants.
Our failure to comply with the restrictive covenants described above and/or the terms of any future indebtedness from time to time could result in an event of default, which, if not cured or waived, could result in our being required to repay these borrowings before their due date. If we are forced to refinance these borrowings on less favorable terms or cannot refinance these borrowings, our business, financial condition and results of operations could be adversely affected.
Our revolving facility and the indenture that governs our Senior Notes contain cross-default provisions that could result in the acceleration of all of our indebtedness.
A breach of the covenants under our revolving facility or the indenture that governs our Senior Notes could result in an event of default under the applicable indebtedness. Such a default may allow the creditors to accelerate the related indebtedness and may result in the acceleration of any other indebtedness to which a cross-acceleration or cross-default provision applies. In addition, an event of default under the credit agreement governing our revolving facility would permit the lenders under our revolving facility to terminate all commitments to extend further credit under that facility. Furthermore, if we were unable to repay amounts due and payable under our revolving facility, those lenders could proceed against the collateral granted to them to secure that indebtedness. In the event our lenders or noteholders accelerate the repayment of our borrowings, we and our guarantors may not have sufficient assets to repay that indebtedness. Additionally, we may not be able to borrow money from other lenders to enable us to refinance our indebtedness.
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General Risk Factors
If we fail to maintain an effective system of internal controls, our ability to produce timely and accurate financial statements or comply with applicable regulations could be impaired.
We are subject to the reporting requirements of the Exchange Act, the Sarbanes-Oxley Act of 2002 (“Sarbanes-Oxley Act”), the rules and regulations of Nasdaq, and other securities rules and regulations that impose various requirements on public companies. Our management and other personnel devote substantial time and resources to comply with these rules and regulations. Such compliance has increased, and will continue to increase our legal, accounting and financial compliance costs; make some activities more difficult, time-consuming and costly, and place significant strain on our personnel, systems and resources. The Sarbanes-Oxley Act requires, among other things, that we maintain effective disclosure controls and procedures and internal control over financial reporting. We are continuing to develop and refine our disclosure controls, internal control over financial reporting and other procedures that are designed to ensure information required to be disclosed by us in our condensed consolidated financial statements and in the reports that we file with the SEC is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and information required to be disclosed in reports under the Exchange Act is accumulated and communicated to our principal executive and financial officers.
Our current controls and any new controls we develop may become inadequate because of changes in conditions in our business. Additionally, to the extent we acquire other businesses, the acquired company may not have a sufficiently robust system of internal controls and we may uncover new deficiencies. Weaknesses in our internal controls may be discovered in the future. Any failure to develop or maintain effective controls, or any difficulties encountered in their implementation or improvement, could harm our results of operations, may result in a restatement of our condensed consolidated financial statements for prior periods, cause us to fail to meet our reporting obligations, and could result in an adverse opinion regarding our internal control over financial reporting from our independent registered public accounting firm, and lead to investigations or sanctions by regulatory authorities.
Section 404 of the Sarbanes-Oxley Act requires our management to certify financial and other information in our quarterly and annual reports and provide an annual management report on the effectiveness of our internal control over financial reporting. We are also required to have our independent registered public accounting firm attest to, and issue an opinion on, the effectiveness of our internal control over financial reporting. If we are unable to assert that our internal control over financial reporting is effective, or if, when required, our independent registered public accounting firm is unable to express an opinion on the effectiveness of our internal control over financial reporting, we could lose investor confidence in the accuracy and completeness of our financial reports, which would cause the price of our Class A common stock to decline.
Any failure to maintain effective disclosure controls and internal control over financial reporting could have a material and adverse effect on our business and results of operations and could cause a decline in the price of our stock.
Future acquisitions, strategic investments, partnerships, or alliances could be difficult to identify and integrate, divert the attention of key management personnel, disrupt our business, dilute stockholder value and adversely affect our business, financial condition, and results of operations.
As part of our business strategy, we have in the past made, and expect to continue to make, investments in and/or acquire complementary companies, services or technologies. Our ability as an organization to acquire and integrate other companies, services or technologies in a successful manner in the future is not guaranteed. We may not be able to find suitable acquisition candidates, and we may not be able to complete such acquisitions on favorable terms, if at all. If we do complete acquisitions, we may not ultimately strengthen our competitive position or ability to achieve our business objectives, and any acquisitions we complete could be viewed negatively by our end-customers or investors. In addition, our due diligence may fail to identify all of the problems, liabilities or other shortcomings or challenges of an acquired business, product or technology, including issues related to intellectual property, product quality or product architecture, regulatory compliance practices, revenue recognition or other accounting practices or issues with employees or customers. If we are unsuccessful at integrating such acquisitions, or the technologies associated with such acquisitions, into our company, the revenue and results of operations of the combined company could be adversely affected. Any integration process may require significant time and resources, and we may not be able to manage the process successfully. We may not successfully evaluate or utilize the acquired technology or personnel, or accurately forecast the financial impact of an acquisition transaction, causing unanticipated write-offs or accounting charges. We may have to pay cash, incur debt or issue equity securities to pay for any such acquisition, each of which could adversely affect our financial condition and the market price of our Class A common stock. The sale of equity or issuance of debt to finance any such acquisitions could result in dilution to our stockholders. The incurrence of indebtedness would result in increased fixed obligations and could also include covenants or other restrictions that would impede our ability to manage our operations.
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Additional risks we may face in connection with acquisitions include:
diversion of management time and focus from operating our business to addressing acquisition integration challenges;
coordination of research and development and sales and marketing functions;
integration of administrative systems, employee, product and service offerings;
retention of key employees from the acquired company;
changes in relationships with strategic partners as a result of product acquisitions or strategic positioning resulting from the acquisition;
the need to implement or improve controls, procedures, and policies at a business that prior to the acquisition may have lacked sufficiently effective controls, procedures and policies;
additional legal, regulatory or compliance requirements;
financial reporting, revenue recognition or other financial or control deficiencies of the acquired company that we do not adequately address and that cause our reported results to be incorrect;
liability for activities of the acquired company before the acquisition, including intellectual property infringement claims, violations of laws, commercial disputes, tax liabilities and other known and unknown liabilities; and
litigation or other claims in connection with the acquired company, including claims from terminated employees, customers, former stockholders or other third parties.
Our failure to address these risks or other problems encountered in connection with acquisitions and investments could cause us to fail to realize the anticipated benefits of these acquisitions or investments, cause us to incur unanticipated liabilities, and harm our business generally.
Our corporate structure and intercompany arrangements are subject to the tax laws of various jurisdictions, and we could be obligated to pay additional taxes, which would harm our results of operations.
We are expanding our international operations and staff to support our business in international markets. We generally conduct our international operations through wholly-owned subsidiaries and are or may be required to report our taxable income in various jurisdictions worldwide based upon our business operations in those jurisdictions. Our intercompany relationships are subject to complex transfer pricing regulations administered by taxing authorities in various jurisdictions. The amount of taxes we pay in different jurisdictions may depend on the application of the tax laws of the various jurisdictions, including the United States, to our international business activities, changes in tax rates, new or revised tax laws or interpretations of existing tax laws and policies, and our ability to operate our business in a manner consistent with our corporate structure and intercompany arrangements. The relevant taxing authorities may disagree with our determinations as to the income and expenses attributable to specific jurisdictions. If such a disagreement were to occur, and our position was not sustained, we could be required to pay additional taxes, interest and penalties, which could result in one-time tax charges, higher effective tax rates, reduced cash flows and lower overall profitability of our operations.
We are subject to federal, state, and local income, sales, and other taxes in the United States and income, withholding, transaction, and other taxes in numerous foreign jurisdictions. Significant judgment is required in evaluating our tax positions and our worldwide provision for taxes. During the ordinary course of business, there are many activities and transactions for which the ultimate tax determination may be uncertain. In addition, our tax obligations and effective tax rates could be adversely affected, among other things, by (i) changes in the relevant tax, accounting and other laws, regulations, principles and interpretations, including increases in corporate tax rates and greater taxation of international income and changes relating to income tax nexus, (ii) recognizing tax losses or lower than anticipated earnings in jurisdictions where we have lower statutory rates and higher than anticipated earnings in jurisdictions where we have higher statutory rates, (iii) changes in foreign currency exchange rates, or (iv) changes in the valuation of our deferred tax assets and liabilities. We may be audited in various jurisdictions, and such jurisdictions may assess additional taxes, sales taxes and value added taxes against us. Although we believe our tax estimates are reasonable, the final determination of any tax audits or litigation could be materially different from our historical tax provisions
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and accruals, which could have an adverse effect on our results of operations or cash flows in the period or periods for which a determination is made.
In addition, the Organization for Economic Cooperation and Development (“OECD”) has published proposals covering a number of issues, including country-by-country reporting, permanent establishment rules, transfer pricing rules, tax treaties and taxation of the digital economy. On October 8, 2021, the OECD/G20 inclusive framework on Base Erosion and Profit Shifting (the “Inclusive Framework”) published a statement updating and finalizing the key components of a two-pillar plan on global tax reform originally agreed on July 1, 2021, and a timetable for implementation by 2023. The timetable for implementation has since been extended to 2024 and, with respect to certain components of the plan, to 2025. Under Pillar Two, the Inclusive Framework has agreed on a global minimum corporate tax rate of 15% for companies with revenue above €750 million, calculated on a jurisdictional basis. While substantial work remains to be completed by the OECD and national governments on the implementation of these proposals, future tax reform resulting from these developments may result in changes to long-standing tax principles, which could adversely affect our effective tax rate or result in higher cash tax liabilities. On February 1, 2023, the U.S. Financial Accounting Standards Board ("FASB") indicated that they believe the minimum tax imposed under Pillar Two is an alternative minimum tax, and, accordingly, deferred tax assets and liabilities associated with the minimum tax would not be recognized or adjusted for the estimated future effects of the minimum tax but would be recognized in the period incurred. In addition, the OECD’s proposed solution envisages new international tax rules and the removal of all Digital Services Taxes (“DST”). Notwithstanding this, some countries, in the European Union and beyond, continue to operate existing DST regimes to capture tax revenue on digital services more immediately. Such laws may increase our tax obligations in those countries or change the manner in which we operate our business. We have analyzed jurisdictional Pillar Two regulations, as well as the OECD Model Rules, and have assessed no material Pillar Two impact on the income tax provision for the nine months ended October 31, 2024.
Our ability to use our net operating loss carryforwards and certain other tax attributes may be limited.
As of January 31, 2024, we had aggregate U.S. federal and California net operating loss carryforwards of $1.5 billion and $243.9 million, respectively, which may be available to offset future taxable income for income tax purposes. The federal net operating losses are carried forward indefinitely, and California net operating loss carryforwards will begin to expire in fiscal 2032. As of January 31, 2024, we had net operating loss carryforwards for other states of $0.8 billion that will begin to expire in fiscal 2025. As of January 31, 2024, we had federal and California research and development credit carryforwards of $113.9 million and $27.4 million, respectively. The federal research and development credit carryforwards will begin to expire in fiscal 2036, and the California carryforwards are carried forward indefinitely. As of January 31, 2024, we had aggregate United Kingdom net operating loss carryforwards of $78.0 million and Israel net operating loss carryforwards of $51.5 million, which are carried forward indefinitely. Realization of these net operating loss and research and development credit carryforwards depends on future income, and there is a risk that our existing carryforwards could expire unused and be unavailable to offset future income tax liabilities, which could adversely affect our results of operations.
In addition, under Sections 382 and 383 of the Internal Revenue Code, if a corporation undergoes an “ownership change,” generally defined as a greater than 50% change (by value) in ownership by “5 percent shareholders” over a rolling three-year period, the corporation’s ability to use its pre-change net operating loss carryovers and other pre-change tax attributes, such as research and development credits, to offset its post-change income or taxes may be limited. We may experience ownership changes in the future as a result of shifts in our stock ownership. As a result, if we earn net taxable income, our ability to use our pre-change net operating loss carryforwards to offset U.S. federal taxable income may be subject to limitations, which could potentially result in increased future tax liability to us.
Taxing authorities may successfully assert that we should have collected or in the future should collect sales and use, value added or similar taxes, and we could be subject to liability with respect to past or future sales, which could adversely affect our results of operations.
We do not collect sales and use, value added or similar taxes in all jurisdictions in which we have sales because we have been advised that such taxes are not applicable to our services in certain jurisdictions. Sales and use, value added, and similar tax laws and rates vary greatly by jurisdiction. Certain jurisdictions in which we do not collect such taxes may assert that such taxes are applicable, which could result in tax assessments, penalties and interest, to us or our customers for the past amounts, and we may be required to collect such taxes in the future. If we are unsuccessful in collecting such taxes from our customers, we could be held liable for such costs, which may adversely affect our results of operations.
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If our estimates or judgments relating to our critical accounting policies prove to be incorrect or financial reporting standards or interpretations change, our results of operations could be adversely affected.
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in our condensed consolidated financial statements and accompanying notes. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, as discussed in the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” The results of these estimates form the basis for making judgments about the carrying values of assets, liabilities and equity, and the amount of revenue and expenses that are not readily apparent from other sources. Significant assumptions and estimates used in preparing our condensed consolidated financial statements include those related to revenue recognition; allowance for credit losses; valuation of common stock and redeemable convertible preferred stock warrants; carrying value and useful lives of long-lived assets; loss contingencies; and the provision for income taxes and related deferred taxes. Our results of operations may be adversely affected if our assumptions change or if actual circumstances differ from those in our assumptions, which could cause our results of operations to fall below the expectations of industry or financial analysts and investors, resulting in a decline in the market price of our Class A common stock.
Additionally, we regularly monitor our compliance with applicable financial reporting standards and review new pronouncements and drafts thereof that are relevant to us. As a result of new standards, changes to existing standards and changes in their interpretation, we might be required to change our accounting policies, alter our operational policies and implement new or enhance existing systems so that they reflect new or amended financial reporting standards, or we may be required to restate our published financial statements. Such changes to existing standards or changes in their interpretation may have an adverse effect on our reputation, business, financial position and profit, or cause an adverse deviation from our revenue and operating profit target, which may negatively impact our financial results.
We are subject to risks associated with our equity investments, including partial or complete loss of invested capital, and significant changes in the fair value of this portfolio could adversely impact our financial results.
Through our Falcon Funds, we invest in early to late stage private companies, and we may not realize a return on our equity investments. Many such companies generate net losses and the market for their products, services, or technologies may be slow to develop or never materialize. These companies are often dependent on the availability of later rounds of financing from banks or investors on favorable terms to continue their operations. The financial success of our investment in any company is typically dependent on a liquidity event, such as a public offering, acquisition, or other favorable market event reflecting appreciation to the cost of our initial investment. The capital markets for public offerings and acquisitions are dynamic and the likelihood of liquidity events for the companies in which we have invested could deteriorate, which could result in a loss of all or a substantial part of our investment in these companies. In addition, our ability to realize gains on investments may be impacted by our contractual obligations to hold securities for a set period of time. For example, to the extent a company we have invested in undergoes an initial public offering, we may be subject to a lock-up agreement that restricts our ability to sell our securities for a period of time after the public offering or otherwise impedes our ability to mitigate market volatility in such securities.
Further, valuations of non-marketable equity investments are inherently complex due to the lack of readily available market data. In addition, we may experience additional volatility to our statements of operations due to changes in market prices of our marketable equity investments, the valuation and timing of observable price changes or impairments of our non-marketable equity investments, and changes in the proportionate share of earnings and losses or impairment of our equity investments accounted for under the equity method. This volatility could be material to our results in any given quarter and may cause our stock price to decline.
Expectations of our performance relating to environmental, social and governance factors may impose additional costs and expose us to new risks.
There is an increasing focus from regulators, certain investors, and other stakeholders concerning environmental, social and governance (“ESG”) matters, both in the United States and internationally. We have undertaken and expect to continue to undertake certain ESG-related initiatives, goals and commitments, which we have communicated on our website, in our SEC filings and elsewhere. These initiatives, goals, or commitments could be difficult to achieve and costly to implement. We could fail to achieve, or be perceived to fail to achieve, our ESG-related initiatives, goals, or commitments. In addition, we could be criticized for the timing, scope or nature of these initiatives, goals, or commitments, or for any revisions to them. Stakeholders could also challenge the accuracy, adequacy, or completeness of our ESG-related disclosures. Our actual or perceived failure to achieve some or all of our ESG-related initiatives, goals, or commitments or maintain ESG practices that meet evolving stakeholder expectations or regulatory requirements could harm our reputation, adversely impact our ability to attract and retain
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employees or customers and expose us to increased scrutiny from ESG-focused investors, regulatory authorities and others, or subject us to liability. Damage to our reputation or reduced demand for our products may adversely impact our business, financial condition, or results of operations.
Our business is subject to the risks of catastrophic events, including, but not limited to, natural events such as earthquakes, fire, floods, and the outbreak of diseases, as well as man-made problems such as power disruptions, computer viruses or data security breaches.
Our principal executive offices are located in Austin, Texas, and we also maintain other office locations around the world, including in California and India, that are prone to natural disasters including severe weather and seismic activity. A significant natural disaster, such as an earthquake, a fire, a flood, or significant power outage and other catastrophic events, including the occurrence of a contagious disease or illness, such as COVID-19, could have a material adverse impact on our business, results of operations, and financial condition. Natural disasters and other catastrophic events such as public health crises, could affect our personnel, recovery of our assets, data centers, supply chain, manufacturing vendors, or logistics providers’ ability to provide materials and perform services such as manufacturing products or assisting with shipments on a timely basis. In addition, climate change could result in an increase in the frequency or severity of natural disasters. If our or our service providers’ information technology systems or manufacturing or logistics abilities are hindered by any of the events discussed above, shipments could be delayed, resulting in missed financial targets, such as revenue and shipment targets, for a particular quarter. In addition, computer malware, viruses and computer hacking, fraudulent use attempts, and phishing attacks have become more prevalent in our industry and may be further enhanced in frequency or effectiveness through threat actors’ use of AI, and our internal systems may be victimized by such attacks. Although we maintain incident management and disaster response plans, in the event of a major disruption caused by a catastrophic event, such as a natural disaster, or man-made problem, we may be unable to continue our operations and may endure system interruptions, reputational harm, delays in our development activities, lengthy interruptions in service, breaches of data security and loss of critical data, and our insurance may not cover such events or may be insufficient to compensate us for the potentially significant losses we may incur. All of the aforementioned risks may be further increased if the disaster recovery plans for us and our suppliers prove to be inadequate. To the extent that any of the above should result in delays or cancellations of customer orders, delays in the manufacture, deployment or shipment of our products, or delays in the rendering of our services, our business, financial condition and results of operations would be adversely affected.
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ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
The following table provides information with respect to purchases by the Company of shares of Class A Common Stock during the three months ended October 31, 2024:
Period
(a) Total number of shares (or units) purchased (1)
(b) Average price paid per share (or unit)(c) Total number of shares (or units) purchased as part of publicly announced plans or programs(d) Maximum number (or approximate dollar value) of shares (or units) that may yet be purchased under the plans or programs
August 1, 2024 to August 31, 2024$— 
September 1, 2024 to September 30, 202423$309.85 
October 1, 2024 to October 31, 2024$— 
(1)    We repurchased, in open market transactions, 23 shares in connection with the administration of the 2019 Plan.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
ITEM 5. OTHER INFORMATION

On November 26, 2024, the Company’s board of directors adopted and approved, effective immediately, amended and restated bylaws of the Company (as amended and restated, the “Amended and Restated Bylaws”). The amendments set forth in the Amended and Restated Bylaws, among other things, enhance and clarify certain procedural and disclosure requirements related to shareholder nominations of directors and submissions of proposals regarding other business at annual or special meetings of shareholders, including with respect to (x) the information about any such shareholders and Stockholder Associated Persons (as defined in the Amended and Restated Bylaws) required to be disclosed to the Company and (y) certain other updates in light of the “universal proxy” rules adopted by the SEC pursuant to Rule 14a-19 of the Exchange Act. The Amended and Restated Bylaws also include updates to matters related to officer appointments and removals, and certain other technical, clarifying and conforming changes.
The foregoing summary of the Amended and Restated Bylaws does not purport to be complete and is qualified in its entirety by reference to the full text of the Amended and Restated Bylaws, which is attached as Exhibit 3.2 to this Quarterly Report on Form 10-Q and incorporated herein by reference.
ITEM 6. EXHIBITS
We have filed the exhibits listed on the accompanying Exhibit Index, which is incorporated herein by reference.
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Index to Exhibits
Incorporated by Reference
Exhibit
Number
Exhibit DescriptionFormFile No.ExhibitFiling
Date
Filed
Herewith
8-K001-389333.1June 14, 2019
X
S-3ASR333-25200722.1January 11, 2021
X
X
X
101.INSInline XBRL Instance DocumentX
101.SCHInline XBRL Taxonomy Extension Schema DocumentX
101.CALInline XBRL Taxonomy Extension Calculation Linkbase DocumentX
101.DEFInline XBRL Taxonomy Extension Definition Linkbase DocumentX
101.LABInline XBRL Taxonomy Extension Label Linkbase DocumentX
101.PREInline XBRL Taxonomy Extension Presentation Linkbase DocumentX
104Cover Page Interactive Data File – the cover page XBRL tags are embedded within the Inline Instance XBRL document
Indicates management contract or compensatory plan, contract or agreement.
*
The certifications furnished in Exhibit 32.1 hereto are deemed to accompany this Quarterly Report on Form 10-Q and will not be deemed “filed” or purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and are not to be incorporated by reference into any of CrowdStrike Holdings, Inc.’s filings under the Securities Act of 1933, as amended, irrespective of any general incorporation language contained in such filing.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized on the day of November 26, 2024.
CROWDSTRIKE HOLDINGS, INC.
By:/s/ Burt W. Podbere
Burt W. Podbere
Chief Financial Officer (Principal Financial Officer)
By:/s/ Anurag Saha
Anurag Saha
Chief Accounting Officer (Principal Accounting Officer)
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