CrowdStrike Holdings, Inc.

Thank you for standing by, and welcome to CrowdStrike Holdings' fourth quarter and fiscal year 2023 financial results conference call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1-1 on your telephone. I would now like to hand the call over to Maria Riley, VP, 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 first quarter and fiscal year 2024 and any assumptions for fiscal periods beyond that 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 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 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 disclosed on this call will be non-GAAP. A discussion of why we use non-GAAP financial measures in the reconciliation schedule showing GAAP versus non-GAAP results is currently available in our earnings press release, which may be found on our investor relations website at ir.cloudstrike.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. CrowdStrike delivered a record fourth quarter that exceeded our expectations across the board. I will focus my comments today on a few key points. First, CrowdStrike is executing exceptionally well in a challenging macro environment. We believe this is best showcased by the fourth quarter's record net new ARR of $222 million, record net new customers of 1,873, strong retention rates, record operating income, record free cash flow of $209 million, and a rule of 81 on a free cash flow basis. Second, the dual mandate of high efficacy and low total cost of ownership plays to CrowdStrike's strength as a leading consolidator. CrowdStrike's growing market share showcases the Falcon platform's advanced AI and technology leadership that drives better security outcomes, automation, and lower TCO for customers. And third, our conviction in CrowdStrike's expansive opportunity continues to grow. We see a massive opportunity to leverage our AI-driven collect data once, reuse many times platform to expand share across our markets. As Bert will discuss, we are continuing our thoughtful and balanced approach to investing to drive both top line and bottom line growth. We remain steadfast in our vision to grow ending ARR to $5 billion by the end of fiscal year 2026 and to reach our target operating model sometime within fiscal year 2025. The key to our success in the fourth quarter was execution and strong market demand for the Falcon platform. We converted our pipeline into WINS and built a record Q1 pipeline, even as sales cycles elongated, as we saw late in Q3, and we did not see the typical budget flush as organizations continue to work through macro concerns. Our competitive win rate remained high, and ASPs remained consistent, and we ended the year with a best-in-class gross retention rate and a strong net retention rate. We believe our strong fourth quarter performance in record Q1 pipeline demonstrates the mission-critical nature of cybersecurity for modern businesses the resiliency of our market, and CrowdStrike's growing leadership as the cybersecurity platform of record. I'd like to thank each and every CrowdStriker for their dedication and hard work in making the fourth quarter our best quarter to date. As a team, we should be proud of the amazing accomplishments we have achieved and excited about the opportunities ahead of us. Let's take a moment to highlight several year-over-year milestones the CrowdStrike team delivered in FY23 that I'm most excited about. Ending ARR grew 48% to reach $2.56 billion. Net new ARR grew 22% to reach $828 million, setting a new record. Our emerging product category contributed $182 million to net new ARR, which was 22% of all net new ARR and a 97% increase. Emerging products ended ARR growing 116% to $339 million, surpassing CrowdStrike's total ARR at the time of IPO in 2019. This included a standout year for our identity protection modules which contributed over $100 million in ending ARR and over 1,000 net new identity customers. Additionally, LogScale posted over 200% ending ARR growth. From a public cloud deployment view, ending ARR surpassed the $200 million milestone to reach $224 million. And we added a record 6,694 net new customers for the fiscal year to bring us to 23,019 subscription customers, a 41% increase. CrowdStrike now serves 556 of the global 2,000, 271 of the Fortune 500, and 15 of the top 20 U.S. banks. On the bottom line, FY23 operating and net income growth well outpaced revenue growth, showcasing the leverage in our model. Non-GAAP operating income grew 81% year over year to reach a record $356 million. Non-GAAP diluted EPS grew 130% to reach a record $1.54. Free cash flow grew 53% to reach a record $677 million. and we achieved at least 30% free cash flow margin for the third consecutive year. Our market leadership continues to grow as customers are voting for their platform of choice with their wallets. CrowdStrike ranked first in IDC's annual worldwide modern endpoint security market share report for the third consecutive year with 17.7% market share. outpacing all vendors by posting the largest increase in revenue and market share. The efficacy of the Falcon platform continues to be widely tested and recognized for delivering superior outcomes, regardless of whether you are looking at MITRE, TrustRadius, G2, Frost & Sullivan, Forrester Wave, SE Labs, Gartner Peer Insights, or Gartner Magic Quadrant, Falcon Superior Technology has been awarded a lead or number one position. This was most recently highlighted by winning the 2023 SE Labs Award for Best EDR and Best Product Development. This is the third consecutive time that CrowdStrike has won in the Best EDR category, further reinforcing our innovation in endpoint security and putting us in the pole position to help customers Enter the XDR era. Additionally, CrowdStrike was once again positioned as a leader, furthest to the right for completeness of vision in Gartner's magic quadrant for endpoint protection platforms for the third consecutive year. We believe this recognition highlights our longstanding track record of disruptive innovation, including our use of AI and indicators of attack to stop cyber adversaries in real time. While the use of AI has become the new topic of the day, it is not new to CrowdStrike. We were a pioneer in applying AI in cybersecurity. The Falcon platform was designed from the ground up to effectively process and correlate the massive volume of data required for effective AI and leverage it across our entire platform from prevention through to detection and response. This enables Falcon to spot fainter signals and identify activity earlier in the kill chain. We have become experts at leveraging data science to deliver best-of-breed attack discovery and prevention for our more than 23,000 customers. This drives immense leverage across the platform and better, more efficient outcomes for our customers. There's a clear mandate from customers. They want to reduce cost and headcount, reduce the number of point products and agents, reduce complexity, and simplify operations. This mandate is even more acute for customers given the current macro climate, and it is the exact imperative the Falcon platform was built to deliver from day one with its advanced AI engine and collect once, reuse many architecture. CrowdStrike delivers on these customer mandates with our hallmark immediate time to value that accelerates cost savings for the customer. Let's take a look at a few customers that are using CrowdStrike to drive consolidation, lower TCO, and realize better outcomes within their environments. One of our marquee enterprise customer wins this quarter was with a leading financial institution in the Fortune 50 that is consolidating on Falcon and replacing four vendors and multiple point products, including Symantec, Trellix, Trend Micro, and Aqua. Their testing proved Falcon's superior visibility, protection, and threat hunting capabilities over both incumbent and prospective new vendors. These factors, along with Falcon's holistic approach to protecting the cloud environment with our integrated CNAP offering, drove the decision to adopt the Falcon platform. Another customer win I'd like to highlight was with a multinational fintech company looking for a security partner to consolidate their hodgepodge of legacy and next-gen vendors this customer identified eight vendors they could eliminate with their initial deployment of falcon including microsoft carbon black trellix trend micro sofos eset fprot and clam av the falcon platform provides them the ability to significantly reduce the complexity reduce agent bloat reduce TCO, and improve security outcomes. Additionally, this customer purchased LogScale to store its security data to gain better performance and avoid the high cost associated with existing log management solutions. Another LogScale win this quarter was with a leading global financial institution that wanted to increase the volume of Falcon data retained, as well as gain faster query results and avoid the high cost associated with expanding the usage of their legacy log management system. Their testing showed that LogScale delivered query speed orders of magnitude faster than their existing tools. This customer is now ingesting close to 40 terabytes of data per day, which plans to standardize on LogScale across their organization over time. The next exciting win I'd like to share with you is an expansion to Falcon Complete with one of the largest global transportation and logistic companies. In a highly targeted sector by cyber adversaries, this customer wanted around-the-clock 365-day stock. While this customer had budget and headcount reserved to build out an internal stock, after performing a thorough cost-benefit analysis, this customer determined that Falcon Complete, including Falcon Complete for identity threat protection, would deliver the best coverage, protection, and value without adding headcount. Falcon Complete for identity threat protection was a key aspect to the win as they sought to run an effective and mature identity security program without the burden, cost, and time associated with managing it internally. Even as doing more with fewer internal resources has become the new normal for many companies, the outcome of stopping breaches remains the number one priority for CISOs and CIOs. As cited in our global threat report, the threat landscape remains elevated with an observed 50% increase in the number of interactive intrusion campaigns and 95% growth of the number of cloud exploitation cases in 2022. Compromising on security can easily translate to compromised coverage, added complexity, and catastrophe. Let me be clear, there is no participation trophy for coming in second place when up against cyber adversaries. Good is never good enough on the cyber battlefield and perceived free is never free. To demonstrate my point, I'd like to share a recent win with a company that suffered a breach after relying on an OS vendor that claimed their legacy signature-based product was good enough to take on today's threat actors. This company had initially chosen Microsoft to replace existing AV products across their estate, but quickly ran into trouble when they discovered that Defender could not be fully deployed within their heterogeneous environment, leaving their servers vulnerable. Unfortunately, it did not take long for threat actors to find these gaps and breach their environments. They turned to one of our incident response partners, a leading global SI that uses Falcon as a key part of their response and remediation service. During the engagement, the customer found that Falcon provided 2.5 times more coverage than Defender and was much simpler to operationalize. It quickly became obvious to this company why AI protection was far superior to signature-based technologies, and they needed world-class protection across heterogeneous operating systems. The CISO also determined that excluding the cost to remediate the breach, Defender cost twice as much and would still fall short of the functionality, simplicity, and efficacy of Falcon. Having lost faith in Microsoft's low cost, good enough promise, this new CrowdStrike customer adopted Falcon Complete. Our professional services organization is a strong lead generation engine for the Falcon platform. The average ARR per dollar of professional services revenue derived from organizations new to CrowdStrike through our incident response or proactive services grew to $6.07 as of January 31, 2023. To summarize, every dollar from these professional services engagements in the past two years has turned into $6.07 of ARR. Our thriving partner ecosystem is also growing to become a powerful source of lead generation. In FY23, MSSP ending ARR grew over 100% and partner sourced ending ARR grew over 50% year over year. Additionally, revenue through channel partners grew to 83% of total revenue. Strategically expanding and investing in our partner ecosystem with the goal of further expanding our reach within the enterprise as well as down market in the SMB is one of our top initiatives in FY24. As we recently announced, we entered into a new multifaceted strategic partnership with Dell to deliver the Falcon platform to Dell's customers globally. The Falcon platform is now offered through Dell's global go-to-market organization via several avenues, including a traditional reseller agreement on-device for new purchases made through Dell's direct sales team, and as the cornerstone to Dell's managed cybersecurity service offering. While it is still early days for this new go-to-market partnership, we expect it to significantly expand our reach across the market from large enterprises to the small S in the SMB. Customers have chosen CrowdStrike as the platform of choice, and so has Dell. We had tremendous initial success with our Falcon Go bundle, which was specifically designed as a starter package or landing point for smaller businesses with 100 endpoints or less that may be more price sensitive. We launched Falcon Go a little more than two quarters ago and have already added over 1,000 net new customers through the program. We believe this early success reaching the S in the SMB demonstrates the immense demand for CrowdStrike's best-in-class endpoint protection, even among the smallest and cost-conscious organizations. In late January, we launched the next-gen iteration of our e-commerce engine with the goal of removing even more friction out of the buying process and driving higher connection between digital top of funnel and conversion into buying. We view these advancements in our e-commerce engine as a differentiator, and within just a few weeks, Post-launch, we have seen a dramatic increase in no-touch digital conversions. The market dynamics in the SMB are velocity-driven and very different from our traditional enterprise customer base. To accelerate growth and drive market share within the massive SMB opportunity, as well as increase growth through all of our channels, we changed the organizational structure and created a new leadership role with the appointment of Daniel Bernard as Chief Business Officer. Daniel has a proven track record in leading channel partnerships and business development at several high-growth SaaS, cloud, and cybersecurity companies, and is most recently recognized for transforming Sentinel-1's market awareness. I'd also like to welcome Raj Rajamani to the CrowdStrike team, who also joined us from Sentinel-1. Reporting to Amal Kankarni, Raj is our Chief Product Officer for Data Identity Cloud and Endpoint. I've worked with Raj in the past, and I'm excited to have him join our team as we continue to drive disruptive innovation. And finally, I'm extremely proud to congratulate Mike Santonis on his promotion to president. Mike has been an invaluable contributor to CrowdStrike's success, and as president, he has responsibility for leading the company's product and go-to-market functions. These leadership changes are designed to drive greater focus and alignment across our key growth initiatives and enable me to spend more time with customers as we scale CrowdStrike to achieve our vision of $5 billion in ending ARR and beyond. In summary, CrowdStrike is executing across all facets of our strategy, winning in our markets and providing customers with protection that powers them. With that, I will turn the call over to Bert. to discuss our financial results in more detail.