CrowdStrike (CRWD) looks like one of the strongest growth stories in cybersecurity right now. It had a lot to prove in the fiscal second-quarter earnings. The company delivered on all three numbers that I flagged ahead of the Q2 print, and in some cases it did much better than expected. And the stock’s massive 90% gains so far this year reflect that outstanding performance.
About CrowdStrike
With a market cap of $220 billion, CrowdStrike is a cloud-based cybersecurity company best known for its Falcon platform. The company helps businesses protect endpoints, cloud workloads, identities, and other parts of their technology infrastructure from cyber threats.
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CrowdStrike mostly makes money by selling recurring cybersecurity subscriptions. This business model is attractive, as once customers have deployed its cybersecurity software, switching providers becomes complicated and risky. This advantage shows up in its financials. The company generated 95% of total revenue, or $1.39 billion, just from subscriptions, while professional-services revenue was $71 million in the second quarter of fiscal 2027. Total revenue of $1.47 billion also increased 26% year-over-year (YOY).
Net New ARR Delivered Far More Than Expected
The first number I recommended watching was net new annual recurring revenue, or ARR, which would show whether CrowdStrike’s growth acceleration was continuing. While management had guided for $284 million to $286 million, CrowdStrike recorded $333 million in net new ARR, representing growth of 51%. Plus, ending ARR reached $5.84 billion, up more than 25% from the year-ago period. CrowdStrike even raised its full fiscal 2027 net new ARR outlook to $1.35 to $1.36 billion, which would imply a 34% YOY growth at the midpoint. This shows that CrowdStrike’s core business is growing faster than expected.
AIDR is Starting to Look Like a Real Business
The second thing I wanted investors watching was AI security, specifically its AI Detection and Response, or AIDR. In Q1, AIDR ending ARR had grown more than 250% sequentially. In the second quarter, AIDR ending ARR tripled sequentially. CrowdStrike has also been pushing Falcon Flex, a more flexible subscription model that allows customers to consume different Falcon capabilities as their security needs change. In fact, second-quarter ending ARR from customers using Falcon Flex crossed $2.3 billion, increasing 101% YOY. The company even added 935 Flex accounts in just Q2.
