Have you ever watched a stock you love run hard for months, then report absolutely killer numbers — only to see it drop a few percent in after-hours trading? That was the scene Tuesday night with CrowdStrike. Up more than 50% year-to-date heading into the print, the bar was sky-high. Yet when the cybersecurity leader dropped another textbook beat-and-raise quarter, the stock dipped anyway. Classic case of “buy the rumor, sell the news.” But here’s the thing — sometimes the news is actually better than the rumor ever suggested.
In my view, that’s exactly what just happened.
Another Quarter, Another Statement Performance
Let’s start with the headline numbers everyone saw. Fiscal third-quarter revenue climbed 22% year-over-year to $1.23 billion — good for a clean beat over the $1.22 billion consensus. Adjusted earnings per share landed at $0.96, two cents above expectations. Solid, but not exactly earth-shattering on the surface.
Except the real magic lives underneath those top-line figures, in the metrics that actually tell you whether this growth train still has fuel in the tank.
Record Everything (Yes, Literally)
This wasn’t just another beat. Management threw around the word record more times than I can count on the earnings call — and they weren’t exaggerating:
- Record operating cash flow
- Record adjusted operating income
- Record adjusted EPS
- Record free cash flow
- Record net new annual recurring revenue ($265 million)
That last one deserves its own spotlight. Net new ARR of $265 million drove total ARR to $4.92 billion, up 23% year-over-year and more than 5.7% sequentially. For a company already approaching $5 billion in recurring revenue, adding over a quarter-billion in a single quarter is the kind of momentum most SaaS names can only dream about.
Falcon Flex Is Changing the Game
Perhaps the most interesting development — and the one I believe the market is still under-appreciating — is the explosion of their new Falcon Flex subscription model.
Think of Falcon Flex as cybersecurity’s answer to the “unlimited” data plan. Customers buy credits upfront, then deploy additional modules as threats evolve — without waiting months for procurement approval. Nearly 30% of ending ARR now comes from Flex customers, and that book grew over 200% year-over-year.
“The number of customers ‘reflexing’ — re-upping once credits run dry — more than doubled sequentially to over 200, with 10 customers reflexing more than 2x their initial commitment.”
— CEO George Kurtz on the earnings call
That’s not just adoption. That’s addiction — the good kind for shareholders.
Management now expects Falcon Flex to become the default licensing model across the entire customer base. When your new pricing structure is so popular that customers are voluntarily spending 2x what they originally planned, you’ve officially cracked the code on land-and-expand.
AI: The Best (and Worst) Thing to Ever Happen to Cybersecurity
I’ve been covering tech long enough to remember when “AI-washing” was the hot new trend companies used to pump their stock prices. With CrowdStrike, we’re witnessing the real thing — and it’s working in both directions.
First, the scary part: Artificial intelligence is democratizing sophisticated attacks. As the CEO put it, “Anyone can now vibe hack, becoming a sophisticated adversary with AI.” We’re entering what he calls the “agentic era” — where autonomous AI agents create exponentially more surface area for breaches.
Now the beautiful part: The same forces supercharging threats are supercharging demand for CrowdStrike’s platform.
- More attack vectors = bigger budgets
- More complexity = less tolerance for point solutions
- Faster breach attempts = need for real-time, single-platform response
This is why you’re seeing platform consolidation accelerate. Companies don’t want five different tools from five different vendors anymore. They want one platform that ingests all their data, makes decisions at machine speed, and stops breaches before they happen.
“When you have multiple platforms, by definition, you don’t have a platform. Tap switching and contact switching cost time. Data stitching doesn’t scale. These are the seams and cracks where adversaries thrive.”
— George Kurtz
He’s not wrong. And he’s not being humble.
Guidance: Still Playing Conservative
For full-year fiscal 2026, management lifted the midpoint of revenue guidance by about $38 million and EPS by roughly $0.05. Not massive moves, but directionally perfect — especially when you’re already guiding above consensus.
More importantly, Q4 guidance came in ahead of Street expectations on both top and bottom lines. They’re calling for $1.29–1.30 billion in revenue (vs $1.293 billion consensus) and $1.09–1.11 in adjusted EPS (vs $1.08 expected).
Translation: Another beat-and-raise setup for February.
Why We’re Raising Our Price Target to $550
Look, I’ve been bullish on CrowdStrike for years, but even I have to admit the valuation has gotten stretched at times. Trading at roughly 18x forward sales heading into this print, this wasn’t a cheap stock.
But great companies deserve premium multiples when they’re executing flawlessly in a secular growth market. And right now, cybersecurity — particularly AI-native, platform-based cybersecurity — is about as secular as it gets.
The combination of:
- Falcon Flex turbocharging growth
- AI creating a permanent increase in budget priority
- Platform consolidation playing out exactly as hoped
- Still-pristine margins and cash flow generation
…makes this one of the highest-quality growth stories in all of technology.
We’re officially raising our price target from $520 to $550 — implying roughly 35% upside from current levels including the after-hours dip. That assumes the company continues growing ARR in the low-to-mid 20% range while expanding adjusted operating margins into the mid-30s over the next few years. Perfectly reasonable for a business this dominant.
The Bottom Line
Sometimes the market gives you a gift. A 3-4% pullback on a quarter this strong — in a name that’s up 51% year-to-date and remains one of the best-performing large-cap growth stocks of 2025 — feels exactly like that.
CrowdStrike isn’t just riding the cybersecurity wave. Thanks to AI on both sides of the equation and the brilliant Falcon Flex innovation, they’re creating the next wave.
And the best part? We’re still in the early innings.
If you own it, hold on tight. If you’ve been waiting for a better entry point, this might be the dip you’ve been looking for.
Either way, the long-term story just got even stronger.
