REVENUEBeat +2.1%
EPSBeat +6.3%
Actuals vs. estimates
| Metric | Actual | Consensus | Surprise |
|---|---|---|---|
| RevenueTotal revenue (CEO headline) | $1.47B | $1.44B | ▲ Beat +2.1% |
| EPS(Non-GAAP diluted, split adjusted) | $0.31 | $0.29 | ▲ Beat +6.3% |
Revenue — API Ninjas actual does not reconcile with a unique Quartr consolidated revenue
Verdict
- Revenue of $1.47bn beat the estimate by 2.1% and non-GAAP EPS of $0.31 beat by 6.3%, with revenue growth accelerating for a fifth consecutive quarter.
- Net new ARR of $333m was an all-time record, up 51%, taking ending ARR to $5.84bn.
- Non-GAAP operating margin of 25% expanded 350 basis points and free cash flow of $377m grew 33%.
- FY27 net new ARR guidance rose to $1.350bn-$1.359bn, lifting expected growth to 34% from 22.5% in the initial outlook.
Guidance & KPIs
| Item | New guidance | Prior guidance |
|---|---|---|
| Q3 FY2027 net new ARR | $343 million to $347 million | — |
| Q3 FY2027 total revenue | $1.523 billion to $1.529 billion | — |
| Q3 FY2027 diluted non-GAAP EPS | approximately $0.31 | — |
| FY2027 net new ARR | $1.350 billion to $1.359 billion, up 34% year-over-year | up 22.5% year-over-year in the initial FY 2027 outlook |
| FY2027 total revenue | $5.991 billion to $6.011 billion | — |
| FY2027 non-GAAP net income per share | $1.25 to $1.26 | — |
Management commentary
- CFO Burt Podbere raised the FY27 net new ARR outlook to $1.355bn at the midpoint, about $116m above the initial guide.
- Falcon Flex conversions carry an average ending ARR uplift of more than 40%, rising to 53% for customers who have re-flexed at least twice.
- CEO George Kurtz framed the AI opportunity as an endpoint one, noting that "about half the market is still using legacy AV" and cannot identify rogue AI agents.
- Management expects free cash flow margin of 27.5% in Q3 and at least 30% for the full year on the raised revenue guidance.
- Platform depth continued to build, with 51%, 35% and 26% of subscription customers using six, seven and eight or more modules.
Quality of earnings
- GAAP net income was $5m against non-GAAP net income of $323m; the $318m gap sits entirely outside the headline result.
- Non-GAAP subscription gross margin of 81% is up 90 basis points but still below the 82%-85% FY29 target model.
Gotchas & watch items
- FY27 guidance excludes any ARR or revenue from the XM Cyber technology acquisition closing in the second half, so the entire raise rests on organic demand.
- Q3 revenue guidance of $1.523bn-$1.529bn implies 23%-24% growth, decelerating from the 26% just delivered.
- Q3 non-GAAP EPS is guided to approximately $0.31, flat against the quarter just reported despite the revenue step-up.