Is Falcon Flex Now the Main Driver of CrowdStrike's ARR Growth?

CrowdStrike’s CRWD Falcon Flex subscription model is becoming a key driver of the company’s growth. In the third quarter of fiscal 2026, management said that more customers are choosing Flex as their main way to buy and expand across the Falcon platform. Annual recurring revenue (ARR) from Flex accounts crossed $1.35 billion, growing more than 200% year over year during the third quarter, showing strong adoption across enterprise customers. 

Falcon Flex helps customers adopt new modules without long contract steps, which leads to faster platform usage. This structure is leading to larger deals. During the third quarter, CrowdStrike highlighted several Falcon Flex expansion deals. One example was a large European bank that renewed more than 500,000 workload endpoint deployments and added Next-Gen SIEM, Onum, and Charlotte AI in a large eight-figure deal. Another example was a global healthcare customer that signed an eight-figure Falcon Flex contract, with Charlotte AI playing a central role in its security operations transformation. 

Re-Flex activity is also increasing. These deals happen when customers finish deploying their initial Flex contract and return to sign a new one. Management said the number of re-Flex customers more than doubled sequentially, with 10 customers signing re-Flex deals at more than twice their original spend. This shows customers are expanding usage after seeing value from the platform. 

Overall, Falcon Flex is supporting CrowdStrike’s broader growth. Total ARR reached $4.92 billion, up 23% year over year, with record net new ARR of $265 million. As Flex adoption and re-Flex activity continue, Falcon Flex is likely to remain a key driver of CRWD’s ARR growth in the coming periods. The Zacks Consensus Estimate for both fiscal 2026 and 2027 revenues indicates a year-over-year increase of around 21%.

How Competitors Fare Against CRWD

Competitors like Palo Alto Networks PANW and SentinelOne S are also gaining ground through platform expansion and AI innovation.
In the first quarter of fiscal 2026, Palo Alto Networks saw robust growth in its Next-Gen Security ARR, which increased 29% year over year. The growth was driven by increased customer adoption of PANW’s advanced cybersecurity offerings, including its AI-driven XSIAM platform, SASE and software firewalls.

Though comparatively a small competitor, SentinelOne posted third-quarter fiscal 2026 year-over-year growth of 23% in its ARR. The growth was fueled by the rising adoption of SentinelOne’s AI-first Singularity platform and Purple AI.

CRWD’s Price Performance, Valuation and Estimates

Shares of CrowdStrike have lost 8.6% in the past three months compared with the Zacks Security industry’s decline of 14%.

CRWD 3-Month Price Return Performance

From a valuation standpoint, CrowdStrike trades at a forward price-to-sales ratio of 19.87, way higher than the industry’s average of 12.17.

CRWD Forward 12-Month P/S Ratio

The Zacks Consensus Estimate for CrowdStrike’s fiscal 2026 earnings implies a year-over-year decline of 5.6%, while the same for fiscal 2027 earnings indicates year-over-year growth of 28.7%. The estimates for fiscal 2026 and 2027 have been revised upward by 4 cents and 3 cents, respectively, over the past 60 days. 

CrowdStrike currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research