CrowdStrike’s Revenue Grows to $1.01 Billion in Q3, but Rising Costs Cut Into Gains
CrowdStrike Holdings (NASDAQ: CRWD) delivered a robust performance in its third quarter of fiscal year 2025, crossing the $1 billion quarterly revenue milestone and achieving 29% year-over-year revenue growth. This marks a critical achievement for the cybersecurity giant as enterprises increase their defenses against rising AI-driven cyber threats.
The company’s revenue for the quarter ending October 31, 2024, reached $1.01 billion, marking a 29% year-over-year increase compared to $786 million in the third quarter of fiscal 2024. This also represented sequential growth of 6% from the previous quarter’s $951 million.
Annual Recurring Revenue (ARR), a metric for subscription-based companies, grew 27% year-over-year to $4.02 billion, an increase of $153 million from the previous quarter. While this growth reinforces CrowdStrike’s ability to scale its Falcon platform, the net new ARR added this quarter fell short of the $167 million added in Q2 2025.
Subscription revenue, which accounts for the bulk of CrowdStrike’s business, climbed 31% to $962.7 million from $733.5 million in the same period last year and rose 6.5% sequentially from $904 million in Q2 2025. Despite this growth, professional services revenue—a smaller component—declined 10% year-over-year to $47.4 million, compared to $52.6 million in Q3 2024. This drop represents a continuation of a downward trend from $49.2 million in Q2 2025.
The company’s gross margins held steady at 75% on a GAAP basis and 78% on a non-GAAP basis, consistent with the same quarter last year and the previous quarter. Subscription gross margins remained robust at 78% on a GAAP basis and 80% on a non-GAAP basis, reflecting strong operational efficiency in delivering the Falcon platform. However, professional services gross margins fell to 18% on a GAAP basis, down from 33% a year ago and 28% in the prior quarter, reflecting increased costs and declining revenue in this segment.
Operating expenses surged significantly, climbing 38% year-over-year to $810.8 million from $587.8 million in Q3 2024 and 11% sequentially from $728.6 million in Q2 2025. Sales and marketing expenses accounted for the largest portion of this increase, rising 43% year-over-year to $408.3 million, reflecting aggressive customer acquisition strategies. Research and development expenses also increased by 41% to $275.6 million, indicating continued investment in product innovation. General and administrative expenses rose 20% year-over-year to $126.9 million.
On a GAAP basis, the company posted a net loss of $16.8 million, a significant reversal from the $26.7 million net income reported in Q3 2024 and a deterioration from the $4.6 million net income reported in Q2 2025. The loss translates to a GAAP loss per share of $0.07, compared to a profit of $0.11 per share in the same quarter last year and $0.02 per share last quarter.
On a non-GAAP basis, however, net income rose to $234.3 million, a 17.6% increase year-over-year from $199.2 million in Q3 2024 and a sequential rise from $227.7 million in Q2 2025. This discrepancy underscores the growing impact of stock-based compensation and other non-operational costs on CrowdStrike’s financial performance.
Net cash from operating activities reached $326.1 million, up 19% year-over-year from $273.5 million in Q3 2024 but slightly below the $343.8 million reported in Q2 2025. Free cash flow stood at $230.6 million, down from $239 million a year ago and $243.7 million last quarter. The decline in free cash flow reflects higher capital expenditures and increased spending on internal software development, which grew to $95 million, up from $33.9 million in Q3 2024.
The balance sheet remained strong, with cash and cash equivalents rising to $4.26 billion from $3.38 billion at the start of the fiscal year, bolstered by the company’s robust cash generation and prudent liquidity management. However, total liabilities also increased, reaching $4.69 billion from $4.31 billion at the start of the fiscal year, driven by higher deferred revenue and accrued expenses.
Looking ahead, CrowdStrike’s guidance for Q4 2025 projects revenue between $1.028 billion and $1.035 billion, representing year-over-year growth of approximately 28%, and non-GAAP earnings per share between $0.84 and $0.86. For the full fiscal year, the company anticipates total revenue between $3.92 billion and $3.93 billion, implying a deceleration in growth compared to the 33% year-over-year increase achieved in fiscal 2024.
Information for this briefing was found via the sources mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
