CRWD FCF Margin Soars to 25%: Can it Hit FY27 Target of More Than 30%?

CrowdStrike Holdings CRWD delivered a solid start to fiscal 2026 with its free cash flow (FCF) margin climbing to 25% in the first quarter from 23% in the previous quarter. In the first quarter of fiscal 2026, CrowdStrike generated $279 million in free cash flow. This represents double-digit quarter-over-quarter growth. This was achieved even though the company suffered $61 million in outage-related expenses. 

Key to CrowdStrike’s FCF margin expansion is robust top-line growth. The company’s revenues soared 20% year over year to $1.1 billion in the fiscal first quarter, primarily driven by the growing adoption of the Falcon Flex platform, its subscription-based model that accelerates customer adoption of multiple modules. At the end of the fiscal first quarter, more than 820 customer accounts have adopted the Falcon Flex model. CrowdStrike achieved the $3.2 billion deal value milestone within two years since its launch, and grew 31% sequentially and more than six times year over year.

The company’s May 2025 strategic realignment also plays a role. CrowdStrike reallocated investments into platform growth areas like cloud, identity, exposure management, artificial intelligence (AI), and Next-Gen Security Information and Event Management to improve platform resilience. CrowdStrike expects this strategic move to add at least 1% to its non-GAAP operating margin target in fiscal 2027 and projects free cash flow margins to exceed 30% by then.

If CrowdStrike’s platform gains and Flex adoption sustain their current pace, then the cybersecurity firm may be well set for its goal of achieving free cash flow margins exceeding 30% by fiscal 2027.

How Competitors Fare Against CrowdStrike

Zscaler ZS and SentinelOne S are also evolving their platforms to meet enterprise security demands.

Zscaler continues to expand its Zero Trust Exchange platform. In the third quarter of fiscal 2025, Zscaler reported ARR of $2.9 billion, up 23% year over year. Zscaler’s Zero Trust Everywhere, Data Security Everywhere, and Agentic Operations are becoming its main growth engine. Together, these innovative categories are approaching $1 billion in ARR and are growing faster than Zscaler’s total ARR.

Though comparatively a small competitor, SentinelOne posted year-over-year growth of 24% in its ARR in the first quarter of fiscal 2026. The growth was driven 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 gained 47.5% year to date compared with the Security industry’s growth of 25.6%.

CRWD YTD Price Return Performance

From a valuation standpoint, CrowdStrike trades at a forward price-to-sales ratio of 24.14X, way higher than the industry’s average of 15.06X.

CRWD Forward 12-Month P/S Ratio

The Zacks Consensus Estimate for CRWD’s fiscal 2026 earnings implies a year-over-year decline of 10.94%, while for fiscal 2027 earnings implies year-over-year growth of 34.68%. The estimates for fiscal 2026 and 2027 have been revised upward in 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.

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

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