CrowdStrike (CRWD) Q1 FY2027: Revenue Up 25.6%, RPO Hits $8.8B
Note on period labeling: this 10-Q covers the three months ended April 30, 2026 — CrowdStrike's fiscal first quarter of the year ending January 31, 2027. All year-over-year comparisons are against the three months ended April 30, 2025.
Revenue growth has reaccelerated, and the direction is unambiguous: $1,385.6 million against $1,103.4 million a year earlier, up 25.6% after growing 19.8% in the comparable quarter of the prior year. Remaining performance obligations reached $8.8 billion, up roughly 29% from $6.8 billion — contracted backlog is now expanding faster than recognized revenue, which is the cleanest forward signal a subscription business can give. But the headline profit deserves scrutiny: CrowdStrike reported net income attributable to the company of $27.8 million and diluted EPS of $0.11 versus a $104.3 million loss and $(0.42) a year ago, yet the operating line was still a loss of $30.6 million. The quarter also carries the fingerprints of two large acquisitions and one accounting-estimate change that, together, shape almost every line of the statements.
1. Condensed Consolidated Balance Sheet
1-1. Major Asset Items
| Item | Jan 31, 2026 ($M) | Apr 30, 2026 ($M) | Change % |
|---|---|---|---|
| Cash and cash equivalents | 5,230.1 | 4,552.8 | −12.9% |
| Accounts receivable, net | 1,361.8 | 933.9 | −31.4% |
| Deferred contract acquisition costs (total) | 1,103.1 | 1,097.1 | −0.5% |
| Property and equipment, net | 976.3 | 1,066.2 | +9.2% |
| Goodwill | 1,363.3 | 2,267.5 | +66.3% |
| Intangible assets, net | 136.7 | 285.7 | +109.0% |
| Total assets | 11,086.7 | 11,270.1 | +1.7% |
Total assets barely moved, but the composition changed materially. Goodwill rose $904.2 million and intangibles $149.0 million, funded by $881.4 million of cash paid for the acquisitions of SGNL.AI and Seraphic Algorithms plus $22.9 million of replacement equity awards. Goodwill acquired was $886.6 million against roughly $161.5 million of additional gross developed technology — meaning about 85% of the identified purchase allocation landed in goodwill. That is common for early-stage security software targets, but it also means the balance sheet now carries $2.27 billion of goodwill equal to 48.5% of total stockholders' equity, with no market-value cushion available under U.S. GAAP historical-cost rules.
The 31.4% drop in receivables is seasonal rather than a demand signal: CrowdStrike bills heavily in its January-ending fourth quarter and collects in the first, and the same pattern appeared a year earlier. Property and equipment tells a different story — construction in progress stands at $282.4 million, of which $225.0 million is data center equipment purchased but not yet placed in service. Depreciation rose 33.9% to $75.5 million, ahead of revenue growth, confirming an infrastructure build that runs ahead of the revenue it will eventually support.
Debt maturity is trivially simple and, for now, a non-issue: the only borrowing is $750.0 million of 3.00% Senior Notes maturing February 2029, carried at $745.8 million. That maturity falls roughly 33 months after the balance sheet date — inside the three-year window — but the coupon sits well below current market rates (the notes carry a fair value of $715.4 million versus $745.8 million on the books), and net cash after debt is roughly $3.81 billion. Operating lease liabilities total $75.5 million with $103.7 million of additional undiscounted commitments on leases not yet commenced — immaterial at this scale.
1-2. Liability Structure — Financial vs. Operating
Financial liabilities (senior notes plus lease obligations) total $821.3 million against $820.1 million at year-end. Operating liabilities total $5,773.4 million, down slightly from $5,794.0 million, and are dominated by deferred revenue of $4,722.2 million — 71.6% of all liabilities. This is the structural point that separates a subscription platform from a leveraged company: the great majority of what appears as "liability" is customer cash already collected for services not yet delivered. Accounts payable fell to $54.2 million from $105.3 million and accrued commissions to $144.8 million from $207.4 million, both consistent with the post-Q4 payment cycle.
1-3. Capital Structure
Additional paid-in capital reached $5,853.4 million against an accumulated deficit of $1,255.3 million. The deficit narrowed by exactly the $27.8 million of net income — no dividends are paid. What moved paid-in capital is instructive: stock-based compensation added $293.2 million, capitalized SBC $15.9 million and acquisition replacement awards $22.9 million, against $175.6 million of share repurchases charged to APIC. Equity is being built by compensation expense rather than retained profit, and buybacks recovered only 59% of the quarter's SBC. Shares outstanding still rose to 254.5 million from 253.4 million despite the repurchase of 480 thousand shares.
2. Condensed Consolidated Statement of Operations
2-1. Core Revenue and Profit Metrics
| Item | Q1 FY2024 ($M) | Q1 FY2026 ($M) | Q1 FY2027 ($M) | 3Y CAGR |
|---|---|---|---|---|
| Total revenue | 692.6 | 1,103.4 | 1,385.6 | +26.0% |
| Gross profit | 523.4 | 815.6 | 1,043.4 | +25.9% |
| Gross margin (%) | 75.6 | 73.9 | 75.3 | — |
| Operating income (loss) | (19.5) | (118.7) | (30.6) | — |
| Operating margin (%) | (2.8) | (10.8) | (2.2) | — |
| Net income (loss) attributable to CrowdStrike | 0.5 | (104.3) | 27.8 | — |
| Net margin (%) | 0.1 | (9.4) | 2.0 | — |
The Q1 FY2024 column (quarter ended April 30, 2023) is sourced from SEC XBRL company facts, CIK 0001535527. The Q1 FY2026 column (quarter ended April 30, 2025) matches the comparative statements presented in this 10-Q. CrowdStrike's fiscal year ends January 31, so Q1 FY2027 is the quarter ended April 30, 2026.
Revenue has exactly doubled in three years. Subscription revenue of $1,320.9 million grew 25.7% and now represents 95.3% of the total; professional services of $64.8 million grew 23.0%. Subscription gross margin improved to 78.2% from 77.0%, and professional services margin — historically the drag — improved to 16.9% from 11.7%.
Operating leverage was real. Revenue rose $282.2 million while the operating loss narrowed $88.1 million, an incremental operating margin of 31.2%; total operating expenses grew only 14.9% against 25.6% revenue growth. Gross profit converted at 80.7% on incremental revenue.
The separation of recurring from one-off effects, however, changes the picture. In February 2026 the company extended the estimated benefit period for sales commissions from four years to five, reducing sales and marketing expense by $27.9 million in this quarter alone. Strip that out and the operating loss is roughly $58.5 million rather than $30.6 million, and sales and marketing growth becomes about 17.6% rather than the reported 11.3%. Separately, $18.1 million of expenses net of insurance recoveries related to the July 19, 2024 incident and $12.4 million of acquired intangible amortization also sit inside the operating line.
Below the operating line, the swing to profit is almost entirely non-operating. Interest income of $40.5 million and other income of $35.2 million — which includes $36.4 million of realized gains on strategic investments — carried pre-tax income to $39.1 million, and a $6.9 million tax benefit (effective rate −17.7%, driven by deferred tax asset realization tied to the acquisitions) lifted consolidated net income to $46.0 million. Of that, $18.2 million, or 39.6%, was attributable to non-controlling interest holders, leaving $27.8 million for CrowdStrike shareholders. The EPS swing from $(0.42) to $0.11 is therefore an earnings story, not a buyback story: weighted average basic shares actually rose 2.1% to 253.7 million.
2-2. Fixed vs. Variable Cost Structure
| Expense line | Q1 FY2026 ($M) | Q1 FY2027 ($M) | Change % | % of revenue (current) |
|---|---|---|---|---|
| Cost of revenue | 287.9 | 342.3 | +18.9% | 24.7% |
| Sales and marketing | 439.2 | 488.7 | +11.3% | 35.3% |
| Research and development | 330.9 | 408.3 | +23.4% | 29.5% |
| General and administrative | 164.1 | 177.0 | +7.8% | 12.8% |
Sales and marketing fell from 39.8% to 35.3% of revenue and G&A from 14.9% to 12.8% — the classic subscription leverage pattern, though roughly two percentage points of the S&M improvement is the commission-amortization change rather than operating discipline. R&D held near 29.5% of revenue and is the one line management is clearly unwilling to leverage. Note that under U.S. GAAP most research and development is expensed as incurred (ASC 730), with software development costs the main exception — CrowdStrike itself capitalized $22.6 million of internal-use software and website development costs this quarter (reported in investing activities on the cash flow statement). Direct operating-margin comparisons across accounting regimes still require care.
3. Condensed Consolidated Statement of Cash Flows
| Item | Q1 FY2026 ($M) | Q1 FY2027 ($M) | Change |
|---|---|---|---|
| Operating cash flow | 384.1 | 590.9 | +53.8% |
| Investing cash flow | (101.8) | (994.1) | — |
| Financing cash flow | 2.1 | (195.9) | — |
| Ending cash (incl. restricted) | 4,615.6 | 4,715.7 | +2.2% |
Free cash flow, defined as operating cash flow less purchases of property and equipment ($97.6 million) and capitalized internal-use software ($22.6 million), came to $470.7 million against $280.9 million, a margin of 34.0% versus 25.5%. Capital intensity was 8.7% of revenue, slightly below the prior year's 9.4%, and is predominantly growth-oriented — data center capacity ahead of demand — rather than maintenance.
Earnings quality requires two lenses here. Operating cash flow was 12.9 times consolidated net income, which for a deferred-revenue business is normal rather than remarkable. The more useful test is composition: non-cash add-backs (SBC $297.7 million, depreciation $75.5 million, intangible amortization $12.4 million, deferred commission amortization $98.9 million) totaled $484.5 million, and the collection of receivables contributed a further $428.8 million. Excluding that receivable swing, operating cash flow was roughly $162.1 million — still up sharply from about $64.2 million on the same basis a year earlier, but a reminder that first-quarter cash generation is seasonally flattered.
Investing outflows were nearly ten times the prior year, entirely because of the $881.4 million spent on acquisitions. Financing turned negative on $175.6 million of buybacks and $21.0 million of distributions to non-controlling interest holders. Cash and equivalents fell $677.3 million, though $162.9 million now sits in restricted cash — including $74.0 million held in escrow for business-combination consideration — against $1.5 million a year earlier.
Because this is a software platform, the SBC-to-revenue ratio belongs alongside the cash figures: $297.7 million on $1,385.6 million is 21.5%, down from 22.4% a year ago but up from 18.9% three years ago. Free cash flow of $470.7 million is comfortably positive; free cash flow after fully charging SBC as a cash-equivalent cost would be closer to $173.0 million.
4. What Else Matters This Quarter
Backlog is outrunning revenue. RPO of $8.8 billion grew roughly 29% against 25.6% revenue growth, with 52% expected to convert within twelve months (roughly $4.6 billion) and 42% between thirteen and thirty-six months. Total deferred revenue of $4,722.2 million rose 25.2% year over year. Gross additions to deferred revenue in the quarter were $1,354.4 million against $1,385.6 million recognized — a normal Q1 seasonal drawdown, not a deterioration.
The regulatory inquiry sits directly in the risk register. Both the U.S. Department of Justice and the U.S. Securities and Exchange Commission have requested information from CrowdStrike relating to the company's recognition of revenue and reporting of annual recurring revenue (ARR) for transactions with certain customers, the July 19, 2024 Falcon sensor incident, and related matters. The company states it is cooperating and providing information in response to these requests. No loss accrual has been established — under U.S. GAAP, a liability is recorded only when a loss is both probable and reasonably estimable; the company indicates that neither condition is met at the current stage of proceedings.
On the civil litigation front, the picture has substantially cleared. The consolidated airline passenger class action — brought by individuals who had flights delayed or cancelled as a result of the July 19 Incident — was dismissed at the district court level in June 2025 and, on May 20, 2026, the U.S. Court of Appeals for the Fifth Circuit affirmed that dismissal, ending that track. Multiple waves of derivative suits filed between September 2024 and July 2025, alleging breach of fiduciary duty, unjust enrichment and federal securities-law violations, have all been ordered dismissed by the respective courts as of March and April 2026. The Delta Air Lines complaint — alleging computer trespass, breach of contract, gross negligence and product defect, and seeking unspecified monetary damages and punitive damages — remains active in the Metro Atlanta Business Case Division. CrowdStrike's motion to dismiss was granted in part and denied in part in May 2025, and discovery is ongoing. The DOJ and SEC inquiries into revenue recognition and ARR reporting are qualitatively distinct from civil proceedings: their trajectory and timeline are not disclosed in the filing, and they represent the most significant open risk for investors tracking CrowdStrike's premium valuation.
Disclaimer: This article is based on CrowdStrike Holdings, Inc.'s Quarterly Report on Form 10-Q filed with the U.S. Securities and Exchange Commission for the three months ended April 30, 2026. All financial data cited is sourced from that filing. This article is for informational and journalistic purposes only and does not constitute investment advice or a recommendation to buy or sell any security. LineVest News is an independent publication and is not affiliated with any brokerage or investment advisory firm.
