CrowdStrike Holdings Inc. (CRWD) reported sequential growth in annual recurring revenue (ARR) exceeding 30% year-over-year, driven by expanded enterprise adoption and product diversification. Analysts are reassessing valuation amid strong momentum in the cybersecurity sector.
- CrowdStrike's ARR reached $2.1 billion in Q3 2025, up 31% YoY
- 1,200 net new customers added, including 87 deals over $1M
- Gross margin held steady at 76% with subscription revenue at 98% of total
- Free cash flow increased 45% YoY to $240 million
- R&D spending rose 22% to $410 million in the quarter
- CRWD shares gained 12% in after-hours trading post-earnings
CrowdStrike's latest financial results underscore a notable acceleration in growth, with annual recurring revenue (ARR) reaching $2.1 billion in Q3 2025, up 31% from the same period last year. The company added over 1,200 net new customers during the quarter, including 87 enterprise deals exceeding $1 million in contract value. This expansion reflects heightened demand for cloud-native endpoint protection and threat intelligence solutions across financial services, healthcare, and government sectors. The company's gross margin remains robust at 76%, a consistent figure indicating disciplined cost structure and scalable operations. Subscription revenue accounted for 98% of total revenue, reinforcing the stickiness of its platform and long-term visibility. Free cash flow improved to $240 million in the quarter, a 45% year-over-year increase, signaling efficient capital deployment and strong operational execution. Market reaction has been positive, with CRWD shares rising 12% in after-hours trading following the earnings release. The stock's forward price-to-earnings ratio stands at 88x based on projected fiscal 2026 earnings, reflecting investor confidence in sustained growth. However, some analysts caution that the valuation premium may be vulnerable to macroeconomic shifts or slower enterprise spending in 2026. Investors are particularly focused on CrowdStrike's strategic expansion into managed security services and its AI-powered Falcon OverWatch platform, which has contributed to a 52% year-over-year increase in professional services revenue. The company continues to invest heavily in R&D, allocating $410 million in the quarter—up 22% from 2024—to enhance its threat detection capabilities and integrate generative AI into real-time security workflows.