CrowdStrike lifts outlook after record ARR quarter

CrowdStrike reported second-quarter fiscal 2027 results that included record net new annual recurring revenue of USD $333 million, its strongest quarter on record.

Annual recurring revenue rose 25% year on year to USD $5.84 billion. Total revenue increased 26% to USD $1.47 billion, while subscription revenue climbed 27% to USD $1.40 billion.

The cyber security group also raised its full-year outlook for net new annual recurring revenue growth to 34% at the midpoint, up 630 basis points from its previous view and 1,150 basis points since the start of the fiscal year.

Profitability improved alongside top-line growth. GAAP net income attributable to CrowdStrike was USD $5.3 million, compared with a loss of USD $70.2 million in the same quarter a year earlier. Non-GAAP net income attributable to the company rose to USD $322.9 million from USD $237.4 million.

Cash generation also strengthened. Net cash from operations climbed to USD $530.3 million from USD $332.8 million, and free cash flow rose to USD $377.4 million from USD $283.6 million.

Cash and cash equivalents stood at USD $5.01 billion at the end of the quarter.

Growth Drivers

CrowdStrike attributed the quarter's performance to customer demand for its Falcon platform and broader adoption of artificial intelligence across large organisations. Customers are consolidating legacy security tools and using Falcon to secure AI deployments.

Falcon Flex, the company's subscription model, was a key contributor. Ending annual recurring revenue from Falcon Flex customers surpassed USD $2.29 billion, up 101% year on year, and all of CrowdStrike's top 10 deals in the quarter were Flex subscriptions.

Module adoption also continued to rise among subscription customers. The proportion using six or more modules reached 51%, while 35% used seven or more and 26% used eight or more.

George Kurtz, Founder and Chief Executive Officer, highlighted the scale of the quarter in the company's remarks.

"Q2 was the best quarter in CrowdStrike's history," said George Kurtz, Founder and Chief Executive Officer, CrowdStrike.

"Delivering record Falcon Flex results, record net new ARR, and accelerating growth, the Falcon is soaring. We're raising our full year fiscal 2027 net new ARR growth outlook by 630 basis points. The Mythos moment translated into mass-market acceptance that AI adoption needs security, and that's CrowdStrike. Every enterprise will run on AI, and securing it is the largest market opportunity in our history," Kurtz said.

Outlook Raised

For the third quarter, CrowdStrike forecast annual recurring revenue of between USD $6.184 billion and USD $6.188 billion, with total revenue expected between USD $1.523 billion and USD $1.529 billion. It projected non-GAAP net income attributable to CrowdStrike of USD $325.4 million to USD $327.9 million, with diluted non-GAAP earnings per share of USD $0.31.

For the full fiscal year, CrowdStrike guided for annual recurring revenue of USD $6.603 billion to USD $6.612 billion and total revenue of USD $5.991 billion to USD $6.011 billion. It expects non-GAAP net income attributable to CrowdStrike of USD $1.303 billion to USD $1.312 billion, with diluted non-GAAP earnings per share of USD $1.25 to USD $1.26.

Burt Podbere, Chief Financial Officer, said the quarter combined growth in new business with stronger customer retention and cash flow.

"Q2 was a record-breaking quarter. We achieved record net new ARR of $333 million alongside record net new ARR from new logos, increased dollar-based gross and net retention rates, and Q2 record cash flow from operations and free cash flow. Given our strong Q2 results and record Q3 pipeline, we are raising our full-year fiscal 2027 net new ARR growth outlook to 34% at the midpoint, positioning us for continued durable, profitable growth," Podbere said.

Product Moves

Alongside the financial update, CrowdStrike outlined a series of product and partnership announcements tied to AI, cloud security and identity protection. These included Continuous Identity for AI Agents, new work with Amazon Web Services around AI applications and cloud workloads, and an expansion of Falcon AI Detection and Response through partners including Databricks, Google Cloud and Microsoft Azure.

The company also disclosed a broader partnership with Schwarz Digits and said it had agreed to acquire the technology assets of XM Cyber, a Schwarz Digits company focused on attack path visualisation and offensive simulation.

CrowdStrike said the quarter reflected stronger demand across the platform as customers reassessed how to secure AI systems and reduce the number of separate security products they use.