CrowdStrike : Q1 FY2021 Supplemental Financial Information

Explanation of Non-GAAP Financial Measures

In addition to our results determined in accordance with U.S. generally accepted accounting principles ("GAAP"), we believe the following non-GAAP measures are useful in evaluating our operating performance. We use the following non-GAAP financial information to evaluate our ongoing operations and for internal planning and forecasting purposes. We believe that non-GAAP financial information, when taken collectively, may be helpful to investors because it provides consistency and comparability with past financial performance. However, non-GAAP financial information is presented for supplemental informational purposes only, has limitations as an analytical tool, and should not be considered in isolation or as a substitute for financial information presented in accordance with GAAP.

Other companies, including companies in our industry, may calculate similarly titled non-GAAP measures differently or may use other measures to evaluate their performance, all of which could reduce the usefulness of our non-GAAP financial measures as tools for comparison. In addition, the utility of free cash flow as a measure of our financial performance and liquidity is limited as it does not represent the total increase or decrease in our cash balance for a given period.

Investors are encouraged to review the related GAAP financial measures and the reconciliation of these non-GAAP financial measures to their most directly comparable GAAP financial measures and not rely on any single financial measure to evaluate our business.

Non-GAAP Subscription Gross Profit and Non-GAAP Subscription Gross Margin

We define non-GAAP subscription gross profit and non-GAAP subscription gross margin as GAAP subscription gross profit and GAAP subscription gross margin, respectively, excluding stock-based compensation expense and amortization of acquired intangible assets. We believe non-GAAP subscription gross profit and non-GAAP subscription gross margin provide our management and investors consistency and comparability with our past financial performance and facilitate period-to-period comparisons of operations, as these measures eliminate the effects of certain variables unrelated to our overall operating performance.

Non-GAAP Income (Loss) from Operations

We define non-GAAP income (loss) from operations as GAAP loss from operations excluding stock-based compensation expense, amortization of acquired intangible assets, and acquisition-related expenses. We believe non-GAAP income (loss) from operations provides our management and investors consistency and comparability with our past financial performance and facilitate period-to-period comparisons of operations, as this metric generally eliminates the effects of certain variables unrelated to our overall operating performance.

Non-GAAP Net Income (Loss) per Share Attributable to Common Stockholders, Basic and Diluted

We define non-GAAP net income (loss) per share attributable to common stockholders, as non-GAAP net income (loss) divided by the weighted-average shares outstanding, which includes the dilutive effect of potentially diluted common stock equivalents outstanding during the period. We may periodically incur charges or receive payments in connection with litigation settlements. We exclude these charges and payments received from non-GAAP net income (loss) when associated with a significant settlement because we do not believe they are reflective of ongoing business and operating results.

Free Cash Flow

Free cash flow is a non-GAAP financial measure that we define as net cash provided by (used in) operating activities less purchases of property and equipment and capitalized internal-use software. We monitor free cash flow as one measure of our overall business performance, which enables us to analyze our future performance without the effects of non-cash items and allow us to better understand the cash needs of our business. While we believe that free cash flow is useful in evaluating our business, free cash flow is a non-GAAP financial measure that has limitations as an analytical tool, and free cash flow should not be considered as an alternative to, or substitute for, net cash provided by (used in) operating activities in accordance with GAAP. The utility of free cash flow as a measure of our liquidity is further limited as it does not represent the total increase or decrease in our cash balance for any given period. In addition, other companies, including companies in our industry, may calculate free cash flow differently or not at all, which reduces the usefulness of free cash flow as a tool for comparison.

Explanation of Operational Measures

Annual Recurring Revenue

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 an organization for a new subscription or renewal, or until such organization notifies us that it is not renewing its subscription.

Magic Number

Magic Number is calculated by performing the following calculation for the most recent four quarters and taking the average: annualizing the difference between a quarter's Subscription Revenue and the prior quarter's Subscription Revenue, and then dividing the resulting number by the previous quarter's Non-GAAP Sales & Marketing Expense. Magic Number = Average of previous four quarters: ((Quarter Subscription Revenue - Prior Quarter Subscription Revenue) x 4) / Prior Quarter Non-GAAP Sales & Marketing Expense.

CROWDSTRIKE HOLDINGS, INC.

Condensed Consolidated Statements of Operations

(in thousands, except per share data)

(unaudited)

		Q1 FY20			Q2 FY20			Q3 FY20			Q4 FY20			Q1 FY21			FY19			FY20
Revenue
Subscription	$	85,990	$	97,575	$	114,221	$	138,537	$	162,222		$	219,401	$	436,323
Professional services		10,087			10,533			10,898			13,572			15,856				30,423			45,090
Total revenue		96,077			108,108			125,119			152,109			178,078				249,824			481,413
Cost of revenue
Subscription		23,691			24,946			29,221			34,616			37,244				69,208			112,474
Professional services		5,582			6,636			8,134			8,801			9,651				18,030			29,153
Total cost of revenue		29,273			31,582			37,355			43,417			46,895				87,238			141,627
Gross profit
Subscription		62,299			72,629			85,000			103,921			124,978				150,193			323,849
Professional services		4,505			3,897			2,764			4,771			6,205				12,393			15,937
Total gross profit		66,804			76,526			87,764			108,692			131,183				162,586			339,786
Operating expenses
Sales and marketing		56,843			65,274			68,675			75,803			88,138				172,682			266,595
Research and development		23,875			31,630			35,992			38,691			40,578				84,551			130,188
General and administrative		11,861			30,261			21,615			25,331			25,043				42,217			89,068
Total operating expenses		92,579			127,165			126,282			139,825			153,759				299,450			485,851
Loss from operations		(25,775)			(50,639)			(38,518)			(31,133)			(22,576)				(136,864)			(146,065)
Interest expense		(1)			(164)			(132)			(145)			(143)				(428)			(442)
Other income (expense), net		394			(451)			3,579			3,203			4,533				(1,418)			6,725
Loss before provision for income taxes
	(25,382)			(51,254)			(35,071)			(28,075)			(18,186)				(138,710)			(139,782)
Provision for income taxes		(595)			(635)			(434)			(333)			(1,036)				(1,367)			(1,997)
Net loss
$	(25,977)		$	(51,889)		$	(35,505)		$	(28,408)		$	(19,222)			$	(140,077)		$	(141,779)
Net loss attributable to Class A and Class B common stockholders, basic and diluted	$	(0.55)	$	(0.40)	$	(0.17)	$	(0.14)	$	(0.09)		$	(3.12)	$	(0.96)
Weighted-average shares used in computing net loss per share attributable to Class A
	47,205			130,091			204,096			207,565			213,129				44,863			148,062
and Class B common stockholders, basic and diluted

CROWDSTRIKE HOLDINGS, INC.

Condensed Consolidated Balance Sheets

(in thousands)

(unaudited)

																		As of			As of
		Q1 FY20			Q2 FY20			Q3 FY20			Q4 FY20			Q1 FY21			January 31,			January 31,
												2019			2020
Assets
Current assets:
Cash and cash equivalents	$	92,993	$	732,808	$	743,605	$	264,798	$	1,004,991		$	88,408	$	264,798
Marketable securities		82,066			94,003			90,083			647,266			-			103,247			647,266
Accounts receivable, net of allowance for doubtful accounts		87,355			115,256			145,694			164,987			144,187				92,476			164,987
Deferred contract acquisition costs, current		26,193			34,017			35,924			42,971			53,410				28,847			42,971
Prepaid expenses and other current assets		22,644			29,348			37,914			51,614			45,874				18,410			51,614
Total current assets		311,251			1,005,432			1,053,220			1,171,636			1,248,462				331,388			1,171,636
Strategic investments		-			-			-			1,000			1,000				-			1,000
Property and equipment, net		86,349			107,989			129,504			136,078			139,096				73,735			136,078
Operating lease right-of-use assets		-			-			-			-			35,738				-			-
Deferred contract acquisition costs, noncurrent		38,004			41,766			58,260			71,235			69,908				9,918			71,235
Goodwill		7,809			7,780			7,794			7,722			7,652				7,947			7,722
Intangible assets, net		879			738			637			527			419				1,048			527
Other assets		13,069			7,881			6,639			16,708			17,121				9,183			16,708
Total assets	$	457,361	$	1,171,586	$	1,256,054	$	1,404,906	$	1,519,396		$	433,219	$	1,404,906
Liabilities, Redeemable Convertible Preferred Stock, and Stockholders' Equity (Deficit)
Current liabilities:
Accounts payable	$	9,915	$	1,126	$	5,244	$	1,345	$	6,528		$	6,855	$	1,345
Accrued expenses		31,185			32,568			29,460			30,355			26,396				32,541			30,355
Accrued payroll and benefits		12,683			20,057			36,905			36,810			37,458				19,284			36,810
Operating lease liabilities		-			-			-			-			6,673				-			-
Deferred revenue		244,271			279,951			335,801			412,985			465,569				218,700			412,985
Other current liabilities		4,667			8,079			8,194			11,601			13,020				4,040			11,601
Total current liabilities		302,721			341,781			415,604			493,096			555,644				281,420			493,096
Deferred revenue, noncurrent		70,941			89,811			111,838			158,183			170,404				71,367			158,183
Operating lease liabilities, noncurrent		-			-			-			-			32,907				-			-
Other liabilities, noncurrent		10,964			11,897			11,570			11,020			7,288				10,313			11,020
Total liabilities		384,626			443,489			539,012			662,299			766,243				363,100			662,299
Redeemable Convertible Preferred Stock
Redeemable convertible preferred stock		557,912			-			-			-			-			557,912			-
Stockholders' Equity (Deficit)
Common stock		24			103			103			106			108				24			106
Additional paid-in capital		36,670			1,302,098			1,326,116			1,378,479			1,409,758				31,211			1,378,479
Accumulated deficit		(521,685)			(573,574)			(609,079)			(637,487)			(656,709)				(519,126)			(637,487)
Accumulated other comprehensive income (loss)		(186)			(530)			(98)			1,009			(1,004)				98			1,009
Total CrowdStrike Holdings, Inc. stockholders' equity (deficit)		(485,177)			728,097			717,042			742,107			752,153				(487,793)			742,107
Non-controlling interest		-			-			-			500			1,000				-			500
Total stockholders' equity (deficit)		(485,177)			728,097			717,042			742,607			753,153				(487,793)			742,607
Total liabilities, redeemable convertible preferred stock, and stockholders' equity (deficit)	$	457,361		$	1,171,586		$	1,256,054		$	1,404,906		$	1,519,396			$	433,219		$	1,404,906

CROWDSTRIKE HOLDINGS, INC.

Condensed Consolidated Statements of Cash Flows

(in thousands)

(unaudited)

		Q1 FY20			Q2 FY20			Q3 FY20			Q4 FY20			Q1 FY21			FY19			FY20
Operating activities
Net loss	$	(25,977)	$	(51,889)	$	(35,505)	$	(28,408)	$	(19,222)		$	(140,077)	$	(141,779)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization		4,873			5,320			5,830			7,003			8,202				14,815			23,026
Loss on disposal of fixed assets		-			-			-			-			-			191			-
Amortization of intangible assets		146			139			100			102			103				583			487
Amortization of deferred contract acquisition costs		7,345			7,731			9,049			11,334			13,451				28,642			35,459
Non-cash operating lease cost		-			-			-			-			2,283				-			-
Change in fair value of redeemable convertible preferred stock warrant liability		1,167			4,855			-			-			-			3576			6022
Provision for bad debts		(254)			276			391			143			149				551			556
Stock-based compensation expense		3,752			29,859			21,966			24,363			23,638				20,505			79,940
Gain on sale of debt securities, net		-			-			-			-			(1,347)				-			-
Amortization (accretion) of marketable securities purchased at a discount		(513)			(447)			(353)			66			578				(1,152)			(1,247)
Non-cash interest expense		(424)			587			130			142			151				98			435
Other non-cash charges		-			-			-			(427)			-			-			(427)
Changes in operating assets and liabilities
Accounts receivable		5,375			(28,177)			(30,829)			(19,436)			20,651				(33,413)			(73,067)
Deferred contract acquisition costs		(8,471)			(19,317)			(27,450)			(31,356)			(22,563)				(45,073)			(86,594)
Prepaid expenses and other assets		(4,049)			(8,456)			(7,378)			(23,584)			5,332				(5,819)			(43,467)
Accounts payable		2,818			(8,715)			2,124			(2,797)			4,736				(2,403)			(6,570)
Accrued expenses and other current liabilities		(2,407)			312			5,500			5,768			(1,095)				3,564			9,173
Accrued payroll and benefits		(6,601)			7,374			16,848			(95)			648				971			17,526
Operating lease liabilities		-			-			-			-			(2,975)				-			-
Deferred revenue		24,812			54,550			77,877			123,529			64,805				131,117			280,768
Other liabilities		(177)			(216)			335			(240)			1,052				356			(298)
Net cash provided by (used in) operating activities		1,415			(6,214)			38,635			66,107			98,577				(22,968)			99,943
Investing activities
Purchases of property and equipment		(15,541)			(21,618)			(29,689)			(13,350)			(9,694)				(35,851)			(80,198)
Capitalized internal-use software		(1,984)			(1,326)			(1,898)			(2,081)			(1,882)				(6,794)			(7,289)
Purchase of strategic investments		-			-			-			(1,000)			-			-			(1,000)
Purchases of marketable securities		(51,805)			(65,767)			(70,125)			(592,004)			(84,904)				(199,335)			(779,701)
Proceeds from sales of marketable securities		4,473			-			-			5,108			639,586				-			9,581
Maturities of marketable securities		68,995			54,319			74,450			31,212			91,605				99,950			228,976
Net cash provided by (used in) investing activities		4,138			(34,392)			(27,262)			(572,115)			634,711				(142,030)			(629,631)
Financing activities
Proceeds from the issuance of common stock upon initial public offering, net of underwriting discounts		-			665,092			-			-			-			-			665,092
Proceeds from the issuance of redeemable convertible preferred stock, net of issuance costs		-			-			-			-			-			206,896			-
Repayment of loan payable		-			-			-			-			-			(6,158)			-
Proceeds from revolving line of credit		-			-			-			-			-			10,000			-
Repayment of revolving line of credit		-			-			-			-			-			(20,000)			-
Repayment of notes receivable from related parties		-			-			-			-			-			198			-
Payments of contingent consideration		-			-			-			-			-			(242)			-
Payments of indemnity holdback		-			-			-			-			-			(1,887)			-
Repurchase of stock options		-			-			-			-			-			(2,330)			-
Payments of deferred offering costs		(2,392)			(1,688)			(1,792)			-			-			-			(5872)
Proceeds from issuance of common stock upon exercise of stock options		1,510			7,016			824			12,162			6,393				3,912			21,512
Proceeds from the issuance of common stock upon exercise of early exercisable stock options		-			10,264			-			-			-			-			10,264
Proceeds from issuance of common stock under the employee stock purchase plan		-			-			-			12,365			-			-			12,365
Settlement related to stockholder short-swing trade profit		-			-			-			2,283			-			-			2,283
Capital contributions from non-controlling interest holders		-			-			-			500			500				-			500
Net cash provided by (used in) financing activities		(882)			680,684			(968)			27,310			6,893				190,389			706,144
Effect of foreign exchange rates on cash and cash equivalents		(86)			(263)			392			(109)			12				(162)			(66)
Cash & Cash Equivalents
Cash and cash equivalents, beginning of period		88,408			92,993			732,808			743,605			264,798				63,179			88,408
Net increase (decrease) in cash and cash equivalents		4,585			639,815			10,797			(478,807)			740,193				25,229			176,390
Cash and cash equivalents, end of period	$	92,993		$	732,808		$	743,605		$	264,798		$	1,004,991			$	88,408		$	264,798

	CROWDSTRIKE HOLDINGS, INC.
	Statements of Operations: GAAP to Non-GAAP Reconciliations
	(in thousands, except per share data)
			(unaudited)
			Q1 FY20			Q2 FY20			Q3 FY20			Q4 FY20			Q1 FY21				FY19			FY20
GAAP cost of revenue	$	29,273	$	31,582	$	37,355	$	43,417	$	46,895		$	87,238	$	141,627
Less:
Stock based compensation expense			368			1,877			2,450			3,017			2,966				894			7,712
Amortization of acquired intangible assets			104			97			61			61			62				327			323
Non-GAAP cost of revenue		$	28,801		$	29,608		$	34,844		$	40,339		$	43,867			$	86,017		$	133,592
GAAP subscription gross profit	$	62,299	$	72,629	$	85,000	$	103,921	$	124,978		$	150,193	$	323,849
Add:
Stock based compensation expense			265			1,233			1,666			2,062			1,995				689			5,226
Amortization of acquired intangible assets			104			97			61			61			62				327			323
Non-GAAP subscription gross profit		$	62,668		$	73,959		$	86,727		$	106,044		$	127,035			$	151,209		$	329,398
GAAP professional services gross profit	$	4,505	$	3,897	$	2,764	$	4,771	$	6,205		$	12,393	$	15,937
Add:
Stock based compensation expense			103			644			784			955			971				205			2,486
Non-GAAP professional services gross profit		$	4,608		$	4,541		$	3,548		$	5,726		$	7,176			$	12,598		$	18,423
GAAP Sales and marketing operating expenses	$	56,843	$	65,274	$	68,675	$	75,803	$	88,138		$	172,682	$	266,595
Less:
Stock based compensation expense			1,518			6,638			7,355			8,408			8,687				5,175			23,919
Amortization of acquired intangible assets			30			32			30			31			31				143			123
Non-GAAP sales and marketing operating expenses		$	55,295		$	58,604		$	61,290		$	67,364		$	79,420			$	167,364		$	242,553
GAAP research and development operating expenses	$	23,875	$	31,630	$	35,992	$	38,691	$	40,578		$	84,551	$	130,188
Less:
Stock based compensation expense			681			4,976			4,696			5,050			4,900				7,815			15,403
Amortization of acquired intangible assets			11			10			10			10			10				113			41
Non-GAAP research and development operating expenses		$	23,183		$	26,644		$	31,286		$	33,631		$	35,668			$	76,623		$	114,744
GAAP general and administrative operating expenses	$	11,861	$	30,261	$	21,615	$	25,331	$	25,043		$	42,217	$	89,068
Less:
Stock based compensation expense			1,185			16,368			7,465			7,888			7,085				6,621			32,906
Non-GAAP general and administrative operating expenses		$	10,676		$	13,893		$	14,150		$	17,443		$	17,958			$	35,596		$	56,162
GAAP loss from operations	$	(25,775)	$	(50,639)	$	(38,518)	$	(31,133)	$	(22,576)		$	(136,864)	$	(146,065)
Add:
Stock based compensation expense			3,752			29,859			21,966			24,363			23,638				20,505			79,940
Amortization of acquired intangible assets			145			139			101			102			103				583			487
Non-GAAP income (loss) from operations		$	(21,878)		$	(20,641)		$	(16,451)		$	(6,668)		$	1,165			$	(115,776)		$	(65,638)

CROWDSTRIKE HOLDINGS, INC.

Statements of Operations: GAAP to Non-GAAP Reconciliations (continued)

(in thousands, except per share data)

(unaudited)

GAAP net loss		Q1 FY20			Q2 FY20			Q3 FY20			Q4 FY20			Q1 FY21			FY19			FY20
$	(25,977)		$	(51,889)		$	(35,505)		$	(28,408)		$	(19,222)			$	(140,077)		$	(141,779)
Add:
Stock based compensation expense		3,752			29,859			21,966			24,363			23,638				20,505			79,940
Amortization of acquired intangible assets		145			139			101			102			103				583			487
Less:
Gain on settlement of lawsuit		-			1,250			-			-			-				-			1,250
Non-GAAP net income (loss)	$	(22,080)	$	(23,141)	$	(13,438)	$	(3,943)	$	4,519		$	(118,989)	$	(62,602)
Weighted-average shares used in computing basic net income (loss) per share
	47,205			130,091			204,096			207,565			213,129				44,863			148,062
(GAAP and Non-GAAP)
GAAP basic net loss per share	$	(0.55)	$	(0.40)	$	(0.17)	$	(0.14)	$	(0.09)		$	(3.12)	$	(0.96)
Non-GAAP basic net income (loss) per share	$	(0.47)	$	(0.18)	$	(0.07)	$	(0.02)	$	0.02		$	(2.65)	$	(0.42)
GAAP diluted loss per common share	$	(0.55)	$	(0.40)	$	(0.17)	$	(0.14)	$	(0.09)		$	(3.12)	$	(0.96)
Stock-based compensation		-			-			-			-			0.10				-			-
Amortization of acquired intangible assets		-			-			-			-			-			-			-
Gain on settlement of lawsuit		-			-			-			-			-			-			-
Provision for income taxes(1)		-			-			-			-			-			-			-
Adjustment to fully diluted earnings per share(2)		-			-			-			-			0.01				-			-
Non-GAAP diluted income (loss) per common share	$	(0.55)	$	(0.40)	$	(0.17)	$	(0.14)	$	0.02		$	(3.12)	$	(0.96)
Weighted-average shares used in diluted earnings per common share calculation:
GAAP		47,205			130,091			204,096			207,565			213,129				44,863			148,062
Non-GAAP		47,205			130,091			204,096			207,565			229,796				44,863			148,062
_____________________________

1. We use our GAAP provision for income taxes for the purpose of determining ournon-GAAP income tax expense. The difference between our GAAP and non-GAAP income tax expense represents the excess tax of stock-based compensation expense recognized in foreign jurisdictions. The income tax benefit related to stock-based compensation expense included in the GAAP provision for income taxes was not material for all periods presented.
2. For periods in which we had dilutednon-GAAP net income per share, the sum of the impact of individual reconciling items may not total to diluted Non-GAAP net income per share because the basic share counts used to calculate GAAP net loss per share differ from the diluted share counts used to calculate non-GAAP net income per share and because of rounding differences. The GAAP net loss per share calculation uses a lower share count as it excludes dilutive shares which are included in calculating the non-GAAP net income per share.

CROWDSTRIKE HOLDINGS, INC.

Additional Metrics

(In thousands, except percentages and customer count)

(unaudited)

		Q1 FY20			Q2 FY20			Q3 FY20			Q4 FY20			Q1 FY21				FY19			FY20
Annual recurring revenue	$	364,648	$	423,780	$	501,721	$	600,456	$	686,125		$	312,656	$	600,456
Year-over-year growth		114%			104%			97%			92%			88%				121%			92%
Subscription customer count		3,059			3,789			4,561			5,431			6,261				2,516			5,431
Year-over-year growth		105%			111%			112%			116%			105%				103%			116%
Free cash flow reconciliation
GAAP net cash provided by (used in) operating activities	$	1,415	$	(6,214)	$	38,635	$	66,107	$	98,577		$	(22,968)	$	99,943
Less: Purchases of property and equipment		(15,541)			(21,618)			(29,689)			(13,350)			(9,694)				(35,851)			(80,198)
Less: Capitalized internal-use software		(1,984)			(1,326)			(1,898)			(2,081)			(1,882)				(6,794)			(7,289)
Free cash flow	$	(16,110)	$	(29,158)	$	7,048	$	50,676	$	87,001		$	(65,613)	$	12,456
Geographic breakdown of total revenue:
United States		75%			74%			74%			73%			73%				77%			74%
International		25%			26%			26%			27%			27%				23%			26%
Non-GAAP gross margin		70%			73%			72%			73%			75%				66%			72%
Non-GAAP subscription gross margin		73%			76%			76%			77%			78%				69%			75%
Non-GAAP operating expenses	$	89,154	$	99,141	$	106,726	$	118,438	$	133,046		$	279,583	$	413,459
Non-GAAP operating expenses as a percentage of revenue		93%			92%			85%			78%			75%				112%			86%