How CRWD (CrowdStrike Holdings) Makes Money in 2025: A Deep-Dive With Income Statement

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Understanding how a cybersecurity leader like CrowdStrike (CRWD) makes money is essential for investors and anyone interested in the business of digital security. In this post, we break down CrowdStrike's quarterly income statement (Q2 2025) using a Sankey chart to visualize the financial flows — what comes in, where it goes, and what's left as profit.

Quick CrowdStrike Overview

CrowdStrike operates a cloud-native cybersecurity platform, delivering endpoint protection, threat intelligence, and managed security services to enterprises worldwide. Revenue comes primarily from subscription-based software-as-a-service (SaaS) offerings, with a smaller portion from professional services. The business is structured around two main segments: Subscription Revenue and Professional Services Revenue.

Revenue Breakdown

• Total Revenue (Q2 2025): $1.17B (+21.3% YoY)
  • Subscription Revenue: $1.10B (94.4% of total)
  • Professional Services Revenue: $66M (5.6% of total)
  • Growth is powered by rapid customer adoption of cloud security solutions and expansion of existing client contracts.

Gross Profit and Margins

• Gross Profit: $858.7M (73.5% gross margin)
  • Cost of Revenue: $310.3M (+30.7% YoY)
  • CrowdStrike maintains robust margins due to its scalable digital business model and operational efficiencies in cloud infrastructure.
• Most costs come from cloud hosting, customer support, and service delivery infrastructure.

Operating Income and Expenses

• Operating Income: Not reported (operating expenses exceed gross profit in Q2 2025)
• Operating Expenses: $971.6M (+36.3% YoY)
  • R&D: $346.7M (+38.2% YoY, 29.7% of revenue) — Focused on platform innovation, AI-driven threat detection, and expanding product capabilities.
  • SG&A: $625.0M (+35.3% YoY, 53.5% of revenue) — Includes sales, marketing, and administrative functions to drive global expansion.
  • CrowdStrike continues to prioritize innovation and invest in growth while scaling its operations efficiently.

Net Income

• Pre-Tax Income: Not disclosed for Q2 2025
• Income Tax: Not disclosed for Q2 2025
• Net Income: $77.7M (flat YoY, 6.6% net margin)
• CrowdStrike converts a moderate portion of sales into profit due to its high gross margins and disciplined cost management, despite heavy investment in R&D and sales.

What Drives CrowdStrike's Money Machine?

• Subscription Revenue: 94%+ of revenue, driven by multi-year SaaS contracts and high customer retention.
• Annual Recurring Revenue (ARR): Key metric reflecting the strength of CrowdStrike’s subscription base and future revenue visibility.
• R&D Investment: $346.7M in Q2 2025, fueling AI, automation, and new security modules.
• Cloud Security Expansion: Future growth areas include identity protection, cloud workload security, and managed detection & response, though some are not yet profitable.

Visualizing CrowdStrike's Financial Flows

The Sankey chart below visualizes how each dollar flows from gross revenue, through costs and expenses, down to net income. This helps investors spot where value is created, what areas weigh on profits, and how efficiently the company operates.

• Most revenue flows into gross profit, with operating expenses (especially SG&A and R&D) taking the largest chunk.
• Even after significant investments in innovation and sales, 6.6% of revenue drops to the bottom line.

Key Takeaways

• CrowdStrike's money comes overwhelmingly from subscription-based cybersecurity services.
• High gross and net margins illustrate the power of CrowdStrike’s scalable SaaS business model.
• Heavy investment in R&D, balanced by efficiency in operating costs.
• Ongoing growth is driven by cloud adoption, platform expansion, and global enterprise demand.

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FAQ About CrowdStrike's Income Statement

1. What is the main source of CrowdStrike's revenue in 2025?

CrowdStrike generates over 94% of its revenue from subscription-based cybersecurity services. Professional services contribute a smaller but fast-growing share.

2. How profitable is CrowdStrike in Q2 2025?

CrowdStrike reported net income of $77.7M in Q2 2025, with a net margin of approximately 6.6%, reflecting moderate profitability driven by high gross margins and disciplined cost control.

3. What are the largest expense categories for CrowdStrike?

The biggest expenses on CrowdStrike's income statement are operating expenses, particularly Research & Development (R&D) at $346.7M and Sales, General & Administrative (SG&A) costs at $625.0M in Q2 2025, as CrowdStrike prioritizes innovation and global sales expansion.

4. Why does Professional Services operate at a loss?

Professional Services, despite generating $66M in revenue, posted an operating loss in Q2 2025. This is because CrowdStrike aggressively invests in customer onboarding and support, believing these will drive long-term subscription growth—even if the division is unprofitable today.

5. How does CrowdStrike's effective tax rate compare to previous years?

CrowdStrike's effective tax rate in Q2 2025 was not disclosed, but historically it has been moderate, influenced by international operations and share-based compensation.