Key Takeaways
- CrowdStrike agreed to buy Fiddler AI and Dreadnode, two AI agent security startups, for about $495 million, The Wall Street Journal reported.
- Net new ARR hit a record $333 million last quarter, up 51%, and CEO George Kurtz called it “the best quarter in CrowdStrike’s history.”
- Palo Alto Networks grew revenue faster last quarter, yet CrowdStrike still carries the richer valuation, which leaves little room for a soft quarter.
- The December 1 report has to show roughly $345 million of net new ARR to meet guidance, another record.
CrowdStrike (CRWD) just agreed to buy two startups that watch and test AI agents. It didn’t disclose the prices, but The Wall Street Journal reported about $495 million for the pair.
The stock closed at $230 on November 12. That leaves little cushion, since the shares still price in a long run of record quarters.
Palo Alto Networks (PANW) is the obvious yardstick. It just grew fiscal fourth quarter revenue 34% to $3.41 billion, and it is chasing the same AI security budgets.
So the deals are only half the story. The December 1 report is the other half.
Two bets on AI agents
CrowdStrike announced both deals at its Fal.Con Europe conference in Barcelona on November 3.
- Fiddler AI will cost about $400 million and become Falcon Observe, which tracks what agents do in production.
- Dreadnode will cost about $95 million and run automated attacks on models before they go live.
- Both deals are mostly cash and should close by January 31, 2027.
The price is easy to absorb. CrowdStrike ended July with $5.01 billion in cash, and the business keeps adding more…
Free cash flow reached $377 million in the July quarter, up from $284 million a year earlier.
Net new ARR is doing the work
The July quarter was the strongest in the company’s history. Revenue rose 26% to $1.47 billion, while ending ARR grew 25% to $5.84 billion.
“Q2 was the best quarter in CrowdStrike’s history,” CEO George Kurtz said in the earnings release.
Net new ARR matters more than either headline. It hit a record $333 million, up 51%, so management raised its full-year net new ARR growth outlook to about 34%.
Falcon Flex explains much of that jump. ARR from Flex customers topped $2.29 billion, up 101%, and all ten of the quarter’s largest deals were Flex subscriptions.
How has that demand shown up in reported sales?
Subscription revenue climbed 27% to $1.40 billion. Meanwhile, non-GAAP subscription gross margin improved by a point to 81%.
TIKR tracks 54 analysts on CrowdStrike. How many say “Buy”?
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The premium needs another record
Here the comparison with Palo Alto gets uncomfortable. Palo Alto grew revenue faster last quarter, yet CrowdStrike still carries the richer valuation.
Investors pay that premium because they expect CrowdStrike to keep accelerating. And the valuation picture shows how much they already assume.
Even after recent swings, the multiple sits well above Palo Alto’s. A soft quarter would leave little room to hide.
Three risks stand out. Software multiples could keep compressing, two new deals add integration work, and CrowdStrike still posted a GAAP operating loss of $33 million last quarter.
My take: I like these deals. Fiddler and Dreadnode push CrowdStrike deeper into securing AI agents, and the price is small next to its cash pile. Still, I wouldn’t chase the stock on acquisitions alone. The valuation only holds if net new ARR keeps setting records.
The next test arrives December 1, after the close. CrowdStrike guided third quarter ending ARR of $6.184 billion to $6.188 billion. By my math, that implies roughly $345 million of net new ARR, which would top the record it just set. Anything short of that would make the stock look expensive quickly.
So what is CrowdStrike stock actually worth?
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any stocks mentioned. Thank you for reading, and happy investing!
