CrowdStrike Holdings, Inc.

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 first quarter and fiscal year 2023, are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements represent our outlook only as to 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 risks 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 the filings we make with the SEC from time to time including the section titled Risk Factors in the company's quarterly and annual reports. Additionally, unless otherwise stated, excluding revenue, all financial measures discussed 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 will now turn the call over to George to begin.

Thank you, Maria, and thank you all for joining us. Before we get started, I would like to acknowledge the war in Ukraine. Our deepest thoughts and support are with all of those impacted by this tragedy, as we are reminded of the terrible human toll that military conflict brings. We are hoping for peace in Ukraine and the broader region. Turning to our financial results, I will start today's call by summarizing four key points. First, CrowdTrack delivered an exceptional fourth quarter that far exceeded our expectations. This quarter's results are headlined by an acceleration in net new ARR growth for the second consecutive quarter to reach $217 million. record 19% non-GAAP operating margin, and record free cash flow of $127 million or approximately $197 million when excluding the IP transfer tax payment related to the acquisition of Humeo. Second, our success outside of traditional endpoint security is now punctuated by both scale and hypergrowth as we surpass the $150 million ARR milestone while growing in excess of 100% year over year for our IT hygiene, vulnerability management, identity protection, and log management modules collectively. Third, we exit the year with tremendous momentum for ARR derived from Falcon deployments in the public cloud, where ARR eclipsed the $100 million milestone and grew 20% quarter on quarter as we lead the effort to transform security for the public cloud. And fourth, as you can see from our outstanding results, our growth engine is executing on all cylinders, which includes our thriving partner ecosystem. One partner I'd like to highlight is AWS. In fiscal 2022, ending ARR transacted through the AWS marketplace grew more than 100% year over year. Furthermore, CrowdStrike ended the year as one of the top ISV partners by transaction volume on the AWS marketplace with partner source deals growing strongly throughout the year. We believe this speaks to the success of our partnership with the world's largest public cloud provider and highlights the value we can provide to both partners and customers alike. Now let's discuss our results in more detail. Net new ARR growth accelerated for the second quarter in a row to reach $217 million, and for the first time in company history surpassed the $200 million milestone. Demand was driven by expansion in the core endpoint market, as well as a record quarter for cloud, identity protection, and Humeo. Growth was also fueled by rapid customer expansion among companies of all sizes, from large enterprises to small businesses. we added over 1,600 subscription customers for the third consecutive quarter, bringing the total number of customers that rely on CrowdStrike to protect their business to 16,325, a 65% increase year over year. Demand in the quarter was broad-based and new wins included, sizable deals with multiple top global financial services organizations, a record number of new Falcon Complete customers, including Fortune 500 and multinational companies across the technology, media, telecommunications, education, and government sectors, among many others. Record lands for our Cloud Workload Protection Module and Horizon, our agentless cloud security posture management module, including wins at a large US insurance provider, a Fortune 250 software company, and a Fortune 50 energy company. We achieved another record quarter for our identity protection modules, which significantly differentiate Falcon in the field and continue to lead to higher win rates. Key wins included a global leader in customer experience management, a global financial services company, public sector agencies, and multiple wins in the Fortune 500. Q4 was also another record quarter for Humio, with wins across multiple verticals such as retail, financial services, manufacturing, technology, and transportation. Our success with Umeo this quarter included securing a seven-figure deal with a financial services customer whose existing log management solutions had become budget prohibitive given the exponential growth of data being captured by their DevOps teams. And lastly, we are thrilled to announce that CloudFlare, a trusted CrowdStrike technology partner on a mission to build a better Internet, became a new customer in the quarter, adopting both Falcon Complete and Horizon. We look forward to deepening our natural partnership and identifying even more opportunities to work together. Among these many fantastic recent wins, let me take a moment to share some additional details about the expansion with a Fortune 50 financial institution that I think exemplifies our technology advantage in action and why scalability and trust matter. Mid-year, this particular customer had chosen CrowdStrike to protect its traditional endpoints and displace the legacy incumbent. At approximately the same time, for relationship reasons, this organization had chosen a next-gen competitor to protect a server environment But after six months, they were still struggling to deploy the other vendor's product in its server environment. They were plagued by forced reboots, significant memory usage, and unmet product roadmap promises. While they struggled to get their service protected, Falcon was fully deployed across their hundreds of thousands of endpoints in a matter of weeks without requiring a reboot. Side by side, we showcased our differentiation on a broad scale, in a real production environment. This customer was able to see the rich telemetry Falcon provided in real time and the power of our security cloud, all resulting in better efficacy. This customer terminated the other vendor's contract and is now deploying Falcon to protect their servers globally. This is just one of many customer stories that demonstrate the fundamental reason why we have earned our leadership with increased win rates and record displacements efficacy, scalability, manageability, real-time versus batch mode, and importantly, our ability to consolidate agents while solving a growing number of real-world business problems. Q4 was also a record quarter for our partner ecosystem. In total, for fiscal year 2022, we gained significant leverage from our partner ecosystem. During the year, partner stores and the ARR grew 83% year-over-year, with our MSSP business growing more than 200%. Our architecture is fundamentally different from any other vendor we see in the market. While our technology advantages are vast, it all starts with how we designed the platform from the beginning with smart filtering capabilities on the agent, which gives us the ability to dynamically adjust our aperture to stream rich telemetry to the cloud in real time. We believe these foundational architectural elements have created a high barrier to entry while competitors operate in batch mode and struggle with storing data on the endpoint. We continue to extend our technology leadership across the entire platform. As we announced yesterday, Humio sets the standards for streaming index-free data ingestion and reached a new benchmark of over one petabyte of data ingestion per day. CrowdStrike will continue to leverage the speed and scale of the Humio engine to extend our position in the XDR space. You have heard me say that CrowdStrike is more than just an endpoint provider. The success of our platform strategy is reflected in the hypergrowth we are deriving from many of our modules, as well as our strong module adoption metrics, which have consistently increased quarter after quarter. In Q4, subscription customers with four or more, five or more, and six or more modules increased to 69%, 57%, and 34% respectively. As both new and existing customers increasingly trust Falcon to solve security challenges outside of core endpoints, we have multiple product areas contributing significantly to ARR growth. We are seeing tremendous growth from our emerging products that solve use cases outside of traditional endpoint protection. This includes our Discover, Spotlight, and Identity Protection modules, as well as Umeo. ARR for this group grew more than 100% over last year, contributing $157 million to FY 2022 ending ARR. These modules are significant road drivers for our overall business, with ending ARR for these modules growing 30% quarter over quarter and representing approximately 17% of our Q4 net new ARR collectively. Our success to date in these adjacent areas speaks to the extensibility of our platform outside of core next-gen AV and EDR, the data we collect, and our ability to make meaningful inroads in accessing new TAMs. Changing from a module perspective to a deployment environment view, our public cloud business surpassed the $100 million milestone in Q4 to reach $106 million in ending ARR. This milestone encompasses our modules deployed in the public cloud, including our cloud runtime protection and CSPM modules. We have seen tremendous momentum in this business as we exit the year. Ending ARR growth for our business when viewed through a cloud deployment lens outpaced the growth of our overall business, growing 20% quarter over quarter and represented approximately 8% of our Q4 net new ARR. Cloud workloads are increasingly targeted by adversaries and are largely underprotected, representing a significant growth opportunity in FY23 and beyond. Moving to the market dynamics, there are powerful tailwinds driving our markets, and we do not currently see any indication that these trends will abate anytime soon. The adversaries are certainly not slowing down, actually quite the opposite. As we published in our most recent global threat report, 2021 provided no rest for the weary with an 82% increase in ransomware-related data leaks. As the nation-state events of the past few weeks have demonstrated, cyberspace is center stage, joining land, air, sea, and space as the fifth dimension of warfare. There are no borders in cyberspace, and the cyber blast radius has no bounds. putting every organization and government at risk, as attacks can extend far beyond their intended targets, as we saw with NotPetya. Last year, 62% of attacks we observed were malwareless, with most of these involving compromised identities. We expect that both e-criminals and nation-state adversaries alike will continue to exploit vulnerabilities across endpoints and cloud environments and ramp up tradecraft around the use of identity and stolen credentials to bypass legacy defenses. In addition to advancing adversary tactics in a heightened threat environment, organizations must contend with the ongoing security skills gap, which we have seen drive increased demand for our Falcon Complete offering. To help companies combat the increasing threat of compromised identities, last week we launched Falcon Identity Threat Protection Complete, the industry's first managed identity solution, and a new way to help customers scale their security teams to protect against sophisticated attacks and stop breaches. Additionally, the attack surface is expanding rapidly, and the digital supply chain is ever-growing as organizations embrace digital transformation and move more workloads to the cloud. We believe our TAM continues to expand, and all of these factors will lead to sustained market growth for the foreseeable future. We also continue to see a very favorable competitive environment and multi-year runway to displacing legacy endpoint vendors, which is bolstering our growth as companies look to transform their security stack. Before I hand it over to Bert, I will provide some final thoughts on the big picture of what we see unfolding. As I shared with you in my opening comments, in addition to our growing leadership in the EPP market, We now have multiple vectors driving our growth and scale that are outside what some might consider our core. We have been very deliberate and purposeful in choosing to enter markets. Enterprise risk is coalescing around three critical areas, endpoints or workloads, identity and data, all three areas we have been investing, innovating, and see as core to CrowdStrike's mission. These areas represent the biggest risk for organizations. and customers are increasingly looking to the Falcon platform to solve their most pressing security needs as legacy products in these markets are brittle, complicated, and struggle to deliver value to the customer. Given our footprint on the endpoint or workload, the data we collect, and the advantages our architecture and security cloud afford, we see great alignment and great opportunity in our approach to solving a multitude of problems for customers as we innovate, and disrupt in these emergent categories such as log management, SIM, and observability, which is reflected in our growing strength in these newer markets as well as endpoint protection. In closing, I would like to thank every CrowdStriker around the world for their tireless dedication to protecting our customers, which ultimately translates to the financial success of our company. I'm humbled and inspired by the commitment level of execution, and hard work CrowdStrikers exemplify on a daily basis. They are the everyday champions that make results like the fourth quarter possible. Thank you. With that, I will turn the call over to Bert to discuss our financial results in more detail.

Thank you, George, and good afternoon, everyone. As a quick reminder, unless otherwise noted, all numbers except revenue mentioned during my remarks today are non-GAAP. Before we get started, I will note that the results we are reporting today include the acquisition of Secure Circle, which was de minimis to both revenue and ARR, contributing less than $1 million in Q4 ARR. The acquisition of Secure Circle resulted in the addition of 26 net new customers in the quarter. We once again delivered exceptional results to top off a phenomenal year. We finished the year with over $1.73 billion in ending ARR. And in fiscal year 2022, we delivered 65% ARR growth, 66% total revenue growth, 215% operating income growth, 157% net income growth, and record free cash flow of $442 million, or 30% of revenue. This is the second year in a row CrowdStrike delivered 30% or better free cash flow margin, which is in line with our target model. Importantly, we accomplished these results while also aggressively investing in the business and expanding our remarkable team by 46%. We believe our strong performance highlights that in addition to our clear and defined mission and our cloud-native architecture, our business fundamentals possess the hallmark characteristics that have transformed and come to dominate their respective markets, including rapid growth at an ever-increasing scale, best-in-class gross retention rates, enduring market dynamics and a growing leadership position, as well as a highly leverageable model with the ability to deliver phenomenal free cash flow. As we continue to capitalize on our unique market position, I firmly believe CrowdStrike's best days are ahead. Now, moving to the fourth quarter. Net new ARR growth accelerated for the second consecutive quarter. Demand in the quarter was broad-based, fueled by strength in multiple areas of the business and reflects continued strong customer adoption of our core products, growing success with our newer product initiatives, including identity protection, log management and cloud, record expansion business, and continued rapid new customer acquisition. Net New ARR grew 52% to reach a new all-time high of $216.9 million. The composition of Net New ARR was very well balanced across deal size, even though two large accounts contributed approximately eight figures each to Net New ARR this quarter. We believe this represents our continued leadership in the enterprise segment, expanding deal sizes, and the pricing leverage attributable to our distinct product differentiation. Our dollar-based net retention rate was once again above our benchmark. We continue to be very pleased with the success of our land and expand strategy. Our gross retention rate remains high and best in class at 98.1% at year end. Our dollar-based net retention rate was above the 120% benchmark throughout the year. Net retention was 123.9% as of the end of FY22, which is essentially a similar level to last year, but on a much bigger base. For the interim FY22 quarters, net retention was 121.8% in Q3, 120.4% in Q2, and 123.4% in Q1. Our professional services organization is a strong lead generation engine for the Falcon platform. Among organizations who first become a customer after February 1st, 2020, for each $1 spent by those customers on their initial engagement for our incident response or proactive services, as of January 31st, 2022, we derived an average of $5.71 in ARR from those subscription contracts up from $5.51 reported last year. Moving to the P&L, total revenue grew 63% over Q4 of last year to reach $431.0 million. Subscription revenue grew 66% over Q4 of last year to reach $405.4 million. Professional services revenue was $25.6 million, setting a new record for the sixth consecutive quarter and representing 26% year-over-year growth. Fourth quarter total and subscription non-GAAP gross margins remained relatively consistent at 77% and 79% respectively. We continue to be pleased with our strong subscription gross margin performance as we continue to invest for growing demand. Total non-GAAP operating expenses in the fourth quarter were approximately $250.8 million or 58% of revenue versus $170.3 million last year, or 64% of revenue. In Q4, we ended with a magic number of 1.3 as we continue to ramp investments to capture more of the market opportunity at hand and expand globally. Our continued exceptional unit economics speaks to the efficiency of our go-to-market engine and our ability to rapidly onboard and support customers of all sizes. We also believe that a magic number of 1.3 continues to indicate that we should increase investments even more, given the massive market opportunity. The leverage we generated this year demonstrates the efficiency in our model and enables us to step up investments in new technologies, new international geographies, and other marketing programs, as well as continue to hire aggressively. We believe the investments we are making today will lead to sustained growth over the long term and maintain our pole position as the trusted security partner of choice. Fourth quarter non-GAAP operating income more than doubled, growing 134% year over year to reach a record $80.4 million, and operating margin improved approximately six percentage points over Q4 of last year to reach 19%. Non-GAAP net income attributable to CrowdStrike in Q4 also more than doubled, growing to a record $70.4 million, or 30 cents on a diluted per share basis. Our weighted average common shares used to calculate fourth quarter non-GAAP EPS attributable to CrowdStrike was on a diluted basis and totaled approximately 238 million shares. We ended the fourth quarter with a strong balance sheet. Cash and cash equivalents increased to approximately $2 billion and reflects the $61 million cash payment net of cash acquired for the acquisition of Secure Circle and the approximately $70 million cash payment for IP transfer tax related to the acquisition of Humio. Cash flow from operations in the fourth quarter was a record $159.7 million and free cash flow grew to a new record of $127.3 million or 30% of revenue. Excluding the approximately $70 million IP transfer tax payment related to the acquisition of Humio, free cash flow would have been approximately $197 million, or 46% of revenue for Q4, and $512 million, or 35% of revenue for the fiscal year. Before we move to guidance, I'd like to cover a few modeling notes. First, I would like to note that we have entered the quarter with the strongest pipeline ever for a Q1. While we do not specifically guide to ending or net new ARR, given the incredible performance of Q4, which included two accounts that contributed approximately eight figures each to net new ARR, I'd like to provide a framework for how to think about net new ARR for Q1. As you may recall, last year we significantly overperformed in Q1, and it was not indicative of typical season health. Consistent with years prior to that, 11% to 13% sequential seasonality was more typical for net new ARR, which we would expect this Q1 after adjusting for the two large contributors in Q4, and this is implied in our revenue guidance. Second, as we continue to invest for future growth and scale and invest to remain ahead of any potential supply chain delays, We expect capital expenditures as a percent of revenue to be between 10 and 12 percent in fiscal year 2023. We anticipate these investments will be more weighted to the first half of the year than the second. At the same time, we are planning to maintain free cash flow margin at 30 percent of revenue for the year, weighted more towards the second half. Moving to our guidance. We are starting the new year with a robust pipeline, and we remain optimistic about the demand for our offerings and the powerful secular trends fueling our growth. For the first quarter of FY23, we expect total revenue to be in the range of $458.9 to $465.4 million, reflecting a year-over-year growth rate of 52% to 54%, with subscription revenue being the dominant driver of growth. We expect non-GAAP income from operations to be in the range of $61.7 to $66.4 million, and non-GAAP net income attributable to CrowdStrike to be in the range of $52 to $56.7 million. We expect diluted non-GAAP net income per share attributable to CrowdStrike to be in the range of 22 to 24 cents, utilizing a weighted average share count of 240 million shares on a diluted basis. For the full fiscal year 2023, we currently expect total revenue to be in the range of $2,133.1 to $2,163.2 million, reflecting a growth rate of 47 to 49 percent over the prior fiscal year. Non-GAAP income from operations is expected to be between $289.2 and $311.8 million. We expect fiscal 2023 non-GAAP net income attributable to CrowdStrike to be between $251.1 and $273.6 million. Utilizing 243 million weighted average shares on a diluted basis, we expect non-GAAP net income per share attributable to CrowdStrike to be in the range of $1.03 to $1.13. We look forward to sharing additional details about our business on our next investor webinar scheduled for April 7th. George and I will now take your questions.