CrowdStrike Holdings, Inc.

Thank you for standing by and welcome to the CrowdStrike Holding Inc. Q3 2022 Financial Results Conference Call. At this time, all participants are in listen-only mode. After the speaker's presentations, there will be a question-and-answer session. To ask a question at that time, please press star then 1 on your touch-tone telephone. As a reminder, today's conference call is being recorded. I would now like to turn the conference to the host, Ms. Maria Raleigh, Vice President of Investor Relations. Please go ahead.

Good afternoon, and thank you for your participation today. With me on the call are George Kurtz, President and Chief Executive Officer and co-founder of CrowdStrike, and Bert Podbear, Chief Financial Officer. Before we get started, I would like to note that certain statements made during this conference call that are not historical facts, including those regarding our future plans, objectives, growth, and expected performance, including our outlook for the fourth quarter and fiscal year 2022, our forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements represent our outlook only as of the date of this call. While we believe any forward-looking statements we make are reasonable, actual results could differ materially because the statements are based on current expectations and are subject to risk and uncertainties. We do not undertake and expressly disclaim any obligation to update or alter our forward-looking statements, whether as a result of new information, future events, or otherwise. Further information on these and other factors that could affect the company's financial results is included in filings we make with the SEC from time to time, including the section titled Risk Factors in the company's quarterly and annual reports that we file with the SEC. Additionally, unless otherwise stated, excluding revenue, all financial measures included on this call will be non-GAAP. A discussion of why we use non-GAAP financial measures and a reconciliation schedule showing GAAP versus non-GAAP results is currently available in our press release, which may be found on our investor relations website at ir.crowdtrack.com or on our Form 8K filed with the SEC today. With that, I'll turn the call over to George to begin.

Thank you, Maria, and thank you all for joining us. I will start today's call by summarizing three key points. First, we delivered an outstanding third quarter, headlined by an acceleration in net new ARR growth, strong execution across the market from large enterprises to small businesses, and expansion within the U.S. federal government. Second, We are seeing an inflection in new products with growing demand for our identity protection and zero trust, Cumio, and cloud security modules. And third, the competitive and pricing environment remains favorable to CrowdStrike. We continue to expand our lead over legacy and next-gen vendors because of our scalability, efficacy, and differentiated offerings such as Falcon Complete. Now let's discuss our results and get into the topics in more detail. We delivered a robust third quarter with net new ARR growth accelerating and ending ARR growing 67% to surpass the $1.5 billion milestone. We added $170 million in net new ARR, which was ahead of our expectations, and gained over 1,600 net new subscription customers for the second consecutive quarter. We proudly serve 14,687 subscription customers. In addition to accelerating net new ARR growth, we delivered record bottom line results and free cash flow, reaching a new high watermark of $124 million. In the third quarter, we saw broad-based strength in multiple areas of the business, and among SMB, mid-market, and large enterprises. Our outstanding results this quarter reflect continued strong customer adoption of our core products, growing success with our newer product initiatives, including identity protection, log management, and cloud, and our growing leadership in the market with a continued groundswell of customers turning to CrowdStrike as their trusted platform of record with our 21 modules. We also gained significant momentum and delivered a record quarter in the public sector, including wins with educational institutions, states and local governments, and the US federal government. Our performance on this front is highlighted by a large win with CISA, the Cybersecurity and Infrastructure Security Agency, to secure a significant portion of endpoints and workloads for multiple federal agencies as they operationalize the White House Executive Order to improve the nation's cyber resiliency. This win represents the culmination of our dedication and hard work over the course of several years on our public sector strategy and government certifications. We believe this significant win will create new opportunities and unlock additional business within the massive U.S. federal government. For additional information, please visit my new post to the CrowdStrike blog. Moving to the competitive environment, we continue to believe we have a significant technology lead with no competitor matching our scalability, performance, ease of use, and commitment to customers. I could not be more excited by our opportunity, which has continued to grow. This quarter, our win rates increased across the board, and we saw a record number of wins against both legacy and next-gen vendors with SMB, mid-market, and large enterprise customers. We also landed a record number of wins and displacements over a recently public next-gen vendor, Sentinel-1. To be clear, we define a displacement as removing an incumbent's product and replacing it with Falcon. Let me share a recent example with one of the largest nonprofit hospital systems in the U.S., which had initially chosen the recently public next-gen vendor based on price and promised features that were never delivered. Just a few months into their multi-year contract with the other vendor, this organization realized the product failed to scale, caused major performance issues, prohibited critical processes from functioning properly, and drove significant friction within the organization and its subsidiaries. That is when they turned to CrowdStrike. purchased multiple modules in a multi-million dollar ARR deal and realized immediate improvement, gaining up to 30% performance increase on their servers alone and greater efficacy without intrusive false positives. Another marquee win this quarter included Qualtrics, a leader in experience management. Customer focus and trust are key parts of Qualtrics DNA. Therefore, it was critical for them to adopt best-of-breed security capable of fortifying their entire estate of traditional endpoints and cloud workloads without sacrificing end user experience. Qualtrics moved off the next gen endpoint security provider to Falcon in order to have a single solution that can be easily deployed and scaled along with their fast growing business. We look forward to continuing our relationship with Qualtrics as their trusted security partner. We continue to see success winning new customers among our larger competitors as well. Take, for example, a leading healthcare system that was using a combination of two legacy vendors, Microsoft and Symantec, when it was hit with a massive ransomware attack that disrupted their business. This organization turned to CrowdStrike's renowned incident response services team to remediate the breach They also came to realize that while Microsoft attempts to check most of the boxes on paper and appeal to the CFO office, in reality, when every second counts, they needed CrowdStrike and standardized on Falcon Complete. With our leading technology, unmatched platform, and adversary-focused approach to stopping breaches, we continue to eclipse our competitors and extend our leadership. which was once again recognized by industry analysts and third-party testing agencies, including IDC, which named CrowdStrike a leader in IDC marketscape, worldwide modern endpoint security for enterprise 2021 vendor assessment. Enterprise Management Associates, EMA, granted Humio their top three award in log management and observability. Humio was recognized for its index research and its ability to ingest structured and unstructured data at real time and at scale. Last month, SE Labs recognized CrowdStrike as the best endpoint detection and response product for the second year in a row. And just this week, CrowdStrike earned the highest rating in the October 2021 Gartner Peer Insights Voice of the Customer for Endpoint Protection Platforms. Cyber adversaries are increasingly attempting to accomplish their objectives without using malware. As we cited in our 2021 Threat Hunting Report, based on recent customer data indexed by ThreatGraph, 68% of detections analyzed were not malware-based. This is why companies need to employ a holistic breach prevention strategy rather than overly relying on malware prevention, regardless if it's legacy or next-gen. This increasing trend in the adversary landscape is driving a generational shift to zero trust technologies, including CrowdStrike Falcon. We are seeing this trend play out in our module adoption metrics, which have continued to increase. Our module adoption rates demonstrate the flywheel effect of our platform in motion with subscription customers that have adopted four or more modules, five or more modules, and six or more modules increasing to 68%, 55%, and 32% respectively in the third quarter. We believe high adoption rates of our modules drive high retention rates and reflect our growing position as the trusted platform of record with the average number of modules per customer also increasing quarter after quarter. Our results have proven quarter after quarter that transformational differentiation built into the Falcon platform continues its technology dominance over legacy and next-gen vendors alike, delivering strong results in the field. On the cloud front, our footprint continues to grow even faster than our overall server endpoint growth, with over 25% of the servers we protect now in the public cloud. CrowdStrike has redefined the approach to cloud security. With Falcon Horizon, we are selling into and enabling DevOps teams to improve decision-making and innovate faster. Falcon Horizon is API-driven and agentless, enabling customers to scan configurations and workloads across multiple cloud environments. Falcon Horizon provides continuous control plane threat detection and machine learning and indicator of attack detection, as well as guided remediation for all cloud accounts services, and users across the cloud estate. During the quarter, we extended Falcon Horizon to support Google Cloud environments, now supporting the three largest clouds. We also deepened our partnership with AWS with new features that work hand-in-hand with services from AWS to further protect customers from growing ransomware threats and increasingly complex cyber attacks. Moving to the partner front, as our leadership in the market increases, our partnerships grow and deepen with large name brand system integrators, VARs and MSSPs alike, building revenue streams for their businesses with Falcon. The third quarter was a breakout quarter for our MSSP ecosystem with our MSSP business growing more than 30% quarter over quarter and triple digits year over year. We also expanded our relationship with Google by joining their Work Safer program, which is designed to protect organizations, including small businesses, enterprises, and public sector institutions against modern cyber attacks. Just as we ushered the industry into a new era when we launched EDR and pioneered Zero Trust for the Endpoint with deep visibility, we are leading the industry forward and once again, redefining security by focusing on the greatest source of enterprise risk and friction. Unlike any other competitor in the market today, our identity protection modules give customers the ability to prevent the spread of ransomware and stop lateral movement when credentials are stolen. This is a major advantage to winning deals in the field and increasing deal size. The third quarter marks the one-year anniversary of our acquisition of Preempt, And in this one quarter alone, we generated more net new ARR from our zero trust modules than in the history of preempt before the acquisition. Large identity-driven deals in the quarter included AIA Insurance, one of the largest public insurers in the Asia-Pacific region, multiple major airlines, and a Fortune 100 manufacturer. CrowdStrike already natively enforces zero-trust protection at the device layer and the identity layer. By harnessing technology from our recent acquisition of Secure Circle, we plan to take data protection to a new level by enforcing zero-trust at the data layer. Legacy Point products like DLP are aging, brittle, prone to false positives, and require a high reliance on human interventions. Based on IDC estimates, we believe the market for DLP and related technologies to be approximately $3 billion in calendar year 2022. Our innovative approach to data protection will put power back into the hands of customers without changing the way users work. Moreover, after we combine Secure Circles technology with CrowdStrike Zero Trust modules, customers will gain even more fine-grained visibility and control as well as continuous risk monitoring to detect and respond to threats, whether they manifest as a device, identity, or data layer. While the acquisition just closed, it will take some time to integrate into the Falcon platform. We have already received a tremendous response from customers that would like to replace their legacy DLP products from the likes of Symantec with Falcon's data protection module delivered today. through our single lightweight agent. CrowdStrike is the only platform in the market to connect the machine to identity and to data. It has been an unparalleled year of innovation at CrowdStrike. At this year's Falcon User Conference, we showcased our thought leadership, newest innovations, and continued commitment to providing customers gold standard protection to stay ahead of adversaries today and in the future. Our new Falcon XDR module headlined the event. Falcon XDR leverages the technology we acquired from Jumio and extends CrowdStrike's industry-leading endpoint detection and response capabilities to deliver real-time detection and automated response across the entire security stack. We also launched the CrowdXDR Alliance, which is a groundbreaking partnership with industry leaders, including Google Cloud, Okta, ServiceNow, Zscaler, Proofpoint, and Mindcast, among others. We invite you to learn more about XDR and our other new capabilities as well as hear discussions with our partners, AWS and Accenture, and our customer Zoom by tuning into our Falcon Investor Briefing, which is accessible on our Investor Relations website. Turning to Yumio, Q3 was a record quarter, and we see increasing momentum in the log management space that has exceeded our expectations. In addition to the seven-figure new customer land with the DevOps team of a financial services company we mentioned on our last call, Yumio wins in the third quarter included a Fortune 150 food brand, a leading European cloud-based e-commerce platform company, and Mimecast, a leader in cloud-based email management and security, and a CrowdStrike technology partner. We are also seeing strong uptake for our recently announced Humio Community Edition, which gives users 16 gigabytes of streaming data ingestion per day with seven-day retention for free. In less than six weeks since our launch, we have already reached 100% of our six-month customer registration goal. Humio's log management platform is unmatched in speed, performance, and storage abilities. Humio Community Edition offers customers unprecedented access to best-in-class log management that they won't see anywhere else. We expect this program to be a strong avenue for lead generation as customers experience the power of Humio. Before closing, I would like to announce that we are promoting Jim Seidel to Chief Sales Officer for and he will be responsible for global sales. Jim has been with CrowdStrike for over eight years, and for the past five years, he has done an outstanding job leading our America sales team, our largest region, and contributor to United States revenue, which accounts for 73% of our total revenue. During Jim's tenure, America's revenue has grown significantly and exceeded my expectations quarter after quarter. And for the past four months, while Mike Carpenter was on leave to welcome the arrival of his child, Jim has served as acting head of global sales and field operations. And true to form, as you can see from the results we published today, Jim delivered an exceptional third quarter on a global basis. Mike is transitioning to an advisory role until his departure from the company to spend more time with his family. We are very grateful to Mike for his years of service and contributions to building a world-class sales organization. Mike, it has been a great partnership, and I can't thank you enough. We wish you all the best. In closing, we delivered an outstanding third quarter that can be characterized by phenomenal execution across the board and accelerated net new ARR growth. We continue to see a very favorable competitive environment today and into the future. We continue to expand our leadership and rapidly innovate as we once again redefine security. Looking forward, I could not be more excited about our future opportunities for growth. We have built a best-in-SaaS platform that not only significantly expands our reach beyond the core endpoint market, but also unifies the opportunity across cloud security, log management, and identity protection. We see a long runway ahead in displacing legacy and next-gen point product vendors. And the fourth quarter is off to a great start It already includes a notable land with one of the world's largest financial institutions. With that, I will turn the call over to Bert to discuss our financial results in more detail.