CrowdStrike cuts 5% of workforce after revenue jumped 29% last year

CrowdStrike is cutting 5% of its workforce, about 500 positions, telling its staff that it’s shifting resources and realigning its operating model for growth in new market segments, according to a Wednesday filing with the Securities and Exchange Commission.

The company is slashing headcount following a year of significant growth in a strong market. CrowdStrike’s revenue jumped 29% year-over-year to $3.95 billion in fiscal year 2025, which ended Jan. 31. Yet, the company also reported a net loss of $19.3 million in FY25 after reporting net income of $89.3 million the previous year.

CrowdStrike’s growing use of artificial intelligence for internal operations was a factor behind the decision to cut staff in certain roles, according to CEO George Kurtz. “AI flattens our hiring curve, and helps us innovate from idea to product faster,” he said in a letter to employees. “It streamlines go-to-market, improves customer outcomes, and drives efficiencies across both the front and back office. AI is a force multiplier throughout the business.”

The company plans to continue hiring customer-facing and product engineering roles, but layoffs in other areas of the business suggests AI’s ability to automate some tasks and boost productivity has made some roles redundant.

Industry analysts question the extent to which CrowdStrike needed to or chose to point to AI as a factor leading to layoffs.

“We have to be careful that AI isn’t being used as an excuse for some area of the business that is underperforming,” said Neil MacDonald, a vice president and analyst at Gartner. 

“AI tools are used to make a given employee more productive, therefore you don’t need as many people,” MacDonald said. “But if you’re growing, what it means is you don’t have to hire as many [people], but it doesn’t necessarily mean you have to lay people off.”

CrowdStrike is the second-largest provider of endpoint protection, a market segment that drives the bulk of its revenue. Its market share in that segment grew from 20.3% in 2023 to 21.3% in 2024, according to Gartner.

Jeff Pollard, VP and principal analyst at Forrester, said Kurtz’s mention of AI likely came from some AI-related efficiency gains, but noted there’s also an industrywide trend at play. 

“Some amount of AI-washing is now prevalent in every one of these announcements and this is no exception,” he said. “In much the same way that ‘we take privacy and security very seriously’ can be found in every breach disclosure, so too can ‘AI productivity’ in workforce reduction announcements.”

Unfortunately, Pollard said, CrowdStrike’s “obligatory mention of AI” will be widely emulated by other cybersecurity vendors. 

Business leaders across multiple industries say they are looking to use AI to cut their workforce by at least 10% and up to 30%, including customer service, creative and administrative roles, according to Zeus Kerravala, principal analyst at ZK Research. 

“The layoffs are part of a broader set of efficiencies and I’m fully expecting to see more. This was only 5% and I think it’s more indicative of the state of AI rather than the state of cyber,” Kerravala said. 

“The layoffs should be viewed more as the evolution of AI and the changing nature of cyber rather than issues at CrowdStrike,” he added.

Kurtz said the decision to cut staff was predicated and driven by other factors as well. This includes, he said, a push to consolidate more customers on CrowdStrike’s Falcon platform, and multibillion-dollar opportunities in new market segments, such as tools for next generation security information and event management, identity, cloud and exposure management.

The company’s goals beyond its core business in endpoint protection pose an important question in the face of these layoffs, according to MacDonald. 

CrowdStrike is growing, gaining market share in cloud protection and SIEM last year, he said, but the company is still a relatively small player in those areas, and perhaps it’s not growing as quickly as it hoped in newer market segments.

“The cyber industry is changing with platforms starting to take hold over point products,” Kerravala said. “CrowdStrike will likely have to cut heads as they bring in talent around how to build and monetize platforms.”

The layoffs also come nearly 10 months after a faulty CrowdStrike Falcon security software update caused millions of Microsoft Windows systems to malfunction. That mistake caused major issues for businesses worldwide, and company executives have repeatedly said they need to regain the trust of customers.

CrowdStrike expects to incur up to $53 million in charges related to the layoffs, including severance payments, benefits and stock-based compensation.

“I know this is difficult news and it affects all of us. These decisions were made with care and guided by a clear view of where we need to go,” Kurtz said.

“As we evolve, we are laser-focused on transforming cybersecurity,” he said. “We stop breaches. This mission defines our purpose, unites our team and keeps us focused on what matters most: protecting our customers.”