CrowdStrike Holdings Inc. (NASDAQ:CRWD)

The analysis reveals a concerning trend in economic profit over the observed period. While initial values indicated positive economic value creation, subsequent years demonstrate a consistent decline, culminating in substantial economic losses.

Net Operating Profit After Taxes (NOPAT)

NOPAT exhibited substantial growth from 2020 to 2023, increasing from US$139,090 thousand to US$625,859 thousand. However, a significant decrease is observed in 2024 and 2025, with NOPAT falling to US$690,745 thousand and then US$516,439 thousand respectively. This suggests a potential weakening in operational profitability in the later years.

Cost of Capital

The cost of capital remained relatively stable throughout the period, fluctuating between 16.43% and 16.68%. This indicates that the company’s financing costs did not significantly contribute to the observed changes in economic profit. The consistency suggests external factors, or internal operational performance, are more influential.

Invested Capital

Invested capital experienced a considerable increase over the period, growing from US$669,497 thousand in 2020 to US$7,614,215 thousand in 2025. This substantial growth in capital employed, without a corresponding increase in profitability, is a key driver of the declining economic profit.

Economic Profit

Economic profit began at US$27,392 thousand in 2020, indicating value creation. However, it quickly turned negative in 2021, reaching -US$170,575 thousand. This negative trend continued, with economic profit worsening to -US$749,467 thousand in 2025. The magnitude of the losses in the later years is particularly noteworthy, suggesting that the returns generated from invested capital are consistently failing to cover the cost of that capital. The increasing invested capital, coupled with relatively stable cost of capital, amplifies the negative economic profit.

In summary, the company’s ability to generate returns exceeding its cost of capital has deteriorated significantly. While NOPAT initially increased, it has recently declined, and the rapid expansion of invested capital has outpaced profitability, resulting in substantial and growing economic losses.

Net Income (Loss) Attributable to CrowdStrike

The net income figures demonstrate significant variability over the periods. Starting with a net loss of approximately $141.8 million in the year ending January 2020, the loss decreased to about $92.6 million in January 2021. However, this was followed by an increased loss to roughly $234.8 million in January 2022. Thereafter, the loss narrowed to $183.2 million in 2023. Notably, in 2024, there was a reversal to a positive net income of $89.3 million, indicating a substantial recovery. In the following year, 2025, the figure returned to a loss, though much smaller than previous years, at approximately $19.3 million.

Net Operating Profit After Taxes (NOPAT)

The NOPAT values exhibit a consistent and strong upward trend over the years observed. Starting at $139.1 million in 2020, there was a steep increase to $246.0 million in 2021. The upward momentum continued in 2022 with $389.9 million, then sharply increased to $625.9 million in 2023. In 2024, NOPAT further grew to $690.7 million before experiencing a decline to $516.4 million in 2025. Despite the decrease in the final year, the overall trend across the period indicates strong growth in operational profitability after taxes.

Summary of Trends and Insights

The financial data reveals a divergence between net income and NOPAT trends. While net income shows volatility with alternating losses and positive results, NOPAT consistently increased until 2024 before slightly declining in 2025. This suggests that operational efficiency and profitability improvements were achieved, but other factors such as non-operating expenses, taxes, or one-time items might have adversely impacted the net income figures. The significant positive net income in 2024 stands out as an anomaly compared to other years with net losses. The decreasing net loss in 2025 alongside a decline in NOPAT might indicate emerging challenges or increased costs affecting overall profitability despite strong operational earnings.

Provision for Income Taxes

The provision for income taxes shows significant fluctuation over the observed periods. From 2020 to 2021, there is a noticeable increase from approximately 2 million to nearly 4.8 million US dollars. This upward trend continues sharply into 2022, reaching over 72 million US dollars. However, in 2023, the provision declines substantially to around 22 million US dollars before increasing again in the subsequent years, rising to about 32 million and then further to approximately 71 million US dollars by 2025. This pattern indicates periods of considerable variability in tax provisioning, suggesting changes in taxable income or adjustments in tax strategy during these years.

Cash Operating Taxes

Cash operating taxes follow a somewhat similar but less volatile pattern compared to the provision for income taxes. Starting at close to 2.8 million US dollars in 2020, the cash taxes increase to around 6 million US dollars in 2021. There is a significant spike in 2022 reaching over 91 million US dollars, which is a marked increase from previous years. Following this peak, the cash tax payments decrease sharply to approximately 15.8 million US dollars in 2023, then decline further to just over 10 million in 2024, before increasing again to about 45.9 million US dollars in 2025. The fluctuations in cash taxes suggest variability in actual tax payments that may reflect changes in cash flows or timing differences relative to the provision for income taxes.

Comparison and Insights

Both provision for income taxes and cash operating taxes exhibit significant fluctuations, with peaks around 2022, followed by declines and then increases toward 2025. The provision generally exceeds the cash taxes in some years, particularly noticeable in 2022, indicating potential deferred tax liabilities or adjustments in tax accounting treatments. The volatile nature of both metrics implies an underlying variability in taxable income or strategic tax management, possibly linked to changes in operating performance or tax regulations during the analyzed periods.

The financial data indicates significant changes in the capital structure and equity position over the observed periods.

Total Reported Debt & Leases

The reported debt and leases showed a substantial increase from approximately $50.7 million in early 2020 to around $779.0 million in early 2021. From 2021 through 2025, the value of reported debt and leases remained relatively stable, fluctuating slightly around the $780 million mark. This suggests that after a sharp rise in debt, the company maintained a consistent level of liabilities related to debt and leases.

Total Stockholders’ Equity

Stockholders’ equity consistently increased throughout the period, starting from approximately $742.1 million at the beginning of 2020 and rising to nearly $3.28 billion by January 2025. The growth trend appears to accelerate over time, with a remarkable increase especially after 2022, indicating a significant strengthening of the company's equity base and potentially reflecting retained earnings growth, capital raises, or other equity improvements.

Invested Capital

Invested capital experienced a dramatic increase, jumping from about $669.5 million in 2020 to roughly $2.52 billion in 2021. This upward trend continued steadily, reaching over $7.61 billion by early 2025. The data reflects substantial investments and growth in company assets financed by both debt and equity over these years, underscoring rapid expansion or capital deployment activities.

Overall, the data reveals a period of rapid growth in invested capital accompanied by a stable level of debt and a strong expansion of stockholders’ equity. The company's capital structure appears to have shifted towards greater equity financing while maintaining a steady debt position. This trend suggests increased financial strength and capacity to support ongoing operations and growth initiatives.

The economic spread ratio exhibits a declining trend over the observed period. Initially positive, the ratio transitions to negative values and demonstrates increasing negativity through the final reported year. This suggests a diminishing ability to generate returns exceeding the cost of capital.

Economic Spread Ratio

The economic spread ratio began at 4.09% in January 2020, indicating that returns on invested capital exceeded the cost of capital by this percentage. However, the ratio decreased significantly to -6.76% by January 2021, signaling that returns fell below the cost of capital. This negative trend continued, with the ratio reaching -4.49% in January 2022 and -1.22% in January 2023. The decline accelerated in subsequent years, reaching -4.91% in January 2024 and further deteriorating to -9.84% in January 2025. This consistent decline suggests a worsening of the company’s profitability relative to its capital costs.

Economic profit mirrors the trend in the economic spread ratio, transitioning from a positive value to increasingly negative values. This reinforces the observation that the company’s returns are not keeping pace with the cost of its invested capital.

Economic Profit & Invested Capital Relationship

While invested capital consistently increased throughout the period, from US$669,497 thousand in January 2020 to US$7,614,215 thousand in January 2025, economic profit decreased from US$27,392 thousand to -US$749,467 thousand. The increasing invested capital, coupled with declining economic profit, directly contributes to the observed deterioration in the economic spread ratio. The magnitude of the negative economic profit grows substantially in the later years, indicating a widening gap between the cost of capital and the returns generated.

The consistent growth in invested capital without a corresponding improvement, or even maintenance, of economic profit is a key observation. The increasing scale of operations does not appear to be translating into sufficient returns to cover the associated capital costs, as evidenced by the worsening economic spread ratio.

The economic profit margin demonstrates a concerning trend over the observed period. Initially positive, the margin has deteriorated significantly, culminating in a substantial negative value by the final year presented. This indicates a growing disparity between the company’s economic profit and its adjusted revenue.

Economic Profit Margin Trend

The economic profit margin began at 3.59% in January 2020. It then experienced a sharp decline, becoming negative at -14.04% in January 2021. While there was a partial recovery to -7.03% in January 2022 and -1.64% in January 2023, the margin resumed its downward trajectory, reaching -7.70% in January 2024 and further declining to -16.19% in January 2025. This consistent negative trend suggests increasing costs relative to revenue, or a decline in the return generated from revenue.

Relationship to Economic Profit

The economic profit margin’s negative trend directly correlates with the trend in economic profit. While economic profit was positive in January 2020, it became negative in January 2021 and remained so throughout the period. The magnitude of the negative economic profit increased substantially over time, which is reflected in the increasingly negative economic profit margin. The acceleration of the decline in both metrics from January 2024 to January 2025 is particularly noteworthy.

Relationship to Adjusted Revenue

Adjusted revenue consistently increased throughout the period, growing from US$762,514 thousand in January 2020 to US$4,628,202 thousand in January 2025. However, this revenue growth has not translated into improved economic profitability. The widening gap between increasing revenue and decreasing economic profit, as evidenced by the declining economic profit margin, suggests that the cost of generating that revenue is increasing at a faster rate, or that the revenue is not being converted into economic profit effectively.

The consistent deterioration of the economic profit margin warrants further investigation into the underlying drivers of profitability. A detailed analysis of cost structures, pricing strategies, and capital allocation is recommended to understand the reasons for this negative trend and to identify potential areas for improvement.