CRWD • 10-K • FY 2021 • Positive

CrowdStrike Dominates Cloud Security with 82% ARR Growth, Eyes Enterprise Expansion

March 18, 2021 • 1 min read

TL;DR

CrowdStrike delivered exceptional FY2021 performance with ARR surging 82% to $1.05B and revenue growing 82% to $874.4M. Customer count expanded 82% YoY to 9,896, driven by increased cloud adoption and remote work security demands. Gross margins improved to 77% while operating margin turned positive at 7%, demonstrating strong operational leverage. The company's strategic expansion beyond endpoint security into cloud workload protection and identity solutions positions it for continued growth in

Financial Performance Overview: Revenue surged 82% YoY to $874.4M while subscription revenue grew 83% to $804.7M, representing 92% of total revenue. Gross margin expanded 300bps to 77%, reflecting improved scale and cloud infrastructure optimization. Operating margin turned positive at 7%, a 1,200bps improvement YoY, demonstrating strong operational leverage. Dollar-based net retention rate remained above 125% for the eighth consecutive quarter, indicating strong customer expansion.
Strategic Initiatives and Operational Changes: CrowdStrike expanded beyond core endpoint security with the launch of Falcon Horizon for cloud security posture management and Falcon X Recon for threat intelligence. Strategic partnerships with AWS, ServiceNow, and Zscaler enhanced enterprise reach. R&D investment increased 76% to $172.7M to accelerate platform capabilities. Management expects continued momentum in cloud workload protection as enterprises accelerate digital transformation.
Market Position and Competitive Dynamics: Market share in endpoint security grew to 12.4%, solidifying leadership position against legacy vendors. Enterprise customer count ($1M+ ARR) increased 71% YoY to 1,480 customers. No single customer represented more than 3% of revenue, indicating healthy diversification. Competitive win rates remained above 60% with particularly strong performance against Microsoft and McAfee in large enterprise deals.
Operational Efficiency and Profitability: Subscription gross margin improved to 78% from 75% as cloud infrastructure investments yielded efficiency gains. Sales efficiency metrics strengthened with magic number at 1.2, up from 1.0 last year. Operating expenses as percentage of revenue decreased 900bps to 70%, demonstrating improved scale. Free cash flow margin expanded to 34% from 19%, generating $292.9M in FCF.
Growth Catalysts and Material Risks: Key growth drivers include cloud workload protection expansion, identity protection solutions, and international markets (currently 30% of revenue). Macro tailwinds from ransomware threats and digital transformation continue to drive demand. Primary risks include intensifying competition from Microsoft, potential cloud infrastructure cost increases, and cybersecurity talent retention in a competitive market.

Revenue

$874.4M ( YoY) with subscription revenue at $804.7M ( YoY)

↑ +82%

Rd Spend

$172.7M ( YoY) representing of revenue

↑ +76%

Net Income

-$92.6M (improved from -$141.8M) with path to GAAP profitability

Gross Margin

(+300bps YoY) driven by cloud infrastructure optimization

↑ 77%

Free Cash Flow

$292.9M ( YoY) with margin

↑ +249%

Operating Margin

(+1,200bps YoY) demonstrating operational leverage

↑ 7%

Growth Indicators

$1.05B ( YoY)

↑ +82%

Customer Count ↑9,896 (+82% YoY)

Retention Metrics ↑125%+ net retention rate for 8 consecutive quarters

Key Risks

Microsoft competitive threat in integrated security offerings
Cloud infrastructure cost management with rapid growth
Cybersecurity talent retention in competitive market
Execution risks in new market expansion

Key Opportunities

Cloud workload protection in $23B market
Identity security expansion addressing $15B market
International growth potential (70% of revenue still domestic)
Zero Trust initiatives driving platform adoption

Bottom Line

CrowdStrike's FY2021 performance demonstrates successful execution of its platform expansion strategy while maintaining exceptional growth rates and improving profitability. The combination of strong unit economics, expanding market opportunity, and technology leadership positions the company for continued success. Key metrics to watch include module adoption rates, cloud workload protection growth, and international expansion progress. The company's ability to maintain high growth while improving operational leverage suggests a sustainable growth trajectory. The most non-obvious insight is the potential for CrowdStrike to become the de facto cloud security platform through its cloud-native architecture advantage and expanding module ecosystem.