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spk_0: there you could standing by and welcome for crowd strike holdings fourth quarter and fiscal year twenty twenty three financial results conference call at this time all participants are any listen the only mode after the speaker presentation there will be of question and answer session to ask the question during the session you will need to press star one the one on your telephone i when i like the hand the call of it's a maria riley vp investor relations please go ahead
spk_1: it happen in and thank you for your participation today with me a call or george current president and chief executive officer intel founder of captured and but at their chief financial officer before we get started i would like to know that certain segments mean during this conference call that are not historical facts including those regarding our future plans adjusted gross and expected performance including our outlook for the first quarter and fiscal year twenty twenty four and any assumptions for fiscal period beyond that are forward looking statements within the meaning of the private securities litigation reform act at nineteen ninety five he's forward looking statements represent our outlook only as as the data and as call while we believe any forward looking statements we make a reasonable asshole result could differ materially because his statements are based on current expectations are subject to risk and uncertainty we do not undertaken expressly this claim any obligation to update or alter of forward looking statements by their as a result of new information future events or otherwise further information on these and other factors that could assess the company's financial results is included in the filing for we make with as pc some time to time including the section titled risk factor in the company's quarterly and annual report additionally unless otherwise stated excluding revenue all financial measures disclose some car will be non gaap a discussion of why we use non gaap financial measures and the reconciliation schedule showing gap versus non gaap result is currently available and are earning petrolia which may be found on our investor relations website as i are dark outside cause harm or on our form ha filed with as he see today okay with that i will now trying the call over to george to begin
spk_2: thank you maria and thank you all for joining us pressure i delivered a record fourth quarter that exceeded our expectations across the board i will focus my comments today out a few key points burst proud strike is executing a exceptionally well and a challenging macro environment we believe this is best your case for the fourth quarters record met new a are or of two hundred and twenty two million dollars record net new customers have one thousand eight hundred and seventy three ball retention rates record operating income record free cash flow of two hundred and nine million dollars in a rule of eight one on a free cash flow basis beckett the dual mandate of i efficacy and low total cost of ownership based the crafts right thread as a leading consolidator crawford growing market share showcases the falcon platforms advanced ai that technology leadership that drugs better security outcomes automation and lower p feel for customers and third are conviction and crowd strikes expansive opportunity continues to grow wifi a massive opportunity to leverage are ai driven collect data was reuse many times platform to expand share across our markets as bert will discuss we are continuing our thoughtful and bells approach to investing to drive rival top line and bottom line growth we remain steadfast in our vision to grow and the air or five billion dollars by the end of fiscal year twenty twenty six and to reach our target operating model sometime within fiscal year twenty twenty five the key to our success in the fourth quarter was executed and strong market demand for the falcon platform we converted are pipeline is a wins and built the record you want pipeline even fl cycles you on gated as we saw late into three and we did not see the typical budget flush at work innovations continue to work through a macro concerns are competitive win rate remain high and a of peace remained consistent and we ended the year with the best in class growth retention rate and a strong net retention rate we believe our strong fourth quarter performance in record you want pipeline demonstrates the mission critical nature of cyber security or mater businesses the resiliency of our market and crafts right growing leadership as the cyber security platform a record i'd like to thank each and every drop striker for their dedication and hard work in making the fourth quarter or death quarter to date as a team we should be proud of the amazing accomplishment we have achieved and excited about the opportunities ahead of us we'll take a moment the highlight several year over year milestones the crowd strike team delivered in f y twenty three that i'm most excited about ending a our group forty eight percent to reach two point five six billion dollars net new a are our group twenty two percent to reach eight hundred twenty eight million dollars steady a new record are emerging product category contributed one hundred and eighty two million dollars to net new a are our which was twenty two percent of all net new a are are and a ninety seven percent increase emerging products and it a are are growing one hundred and sixty percent to three hundred and thirty nine million dollars they're passing crowd total a are are at the time of i feel in two thousand and nineteen this included a standout year for our identity protection modules which contributed over one hundred million dollars in ending a or are in over one thousand net new identity customers additionally like scale posted over two hundred percent ending a our our group from a public cloud deployment view ending a are through path the two hundred million dollar milestone to reach two hundred and twenty four million dollars and we added a record six thousand six hundred ninety four net new customers for the fiscal year to bring us to twenty three thousand and night live subscription customers a forty one percent increase props right now serve five hundred and fifty six of the global two thousand two hundred seventy one of the fortune five hundred and fifteen of the top twenty us banks on the bottom line f y twenty three operating a net income growth well outpace revenue growth showcasing a leveraging our model not gap operating income group eighty one percent year over year to reach your record three hundred and fifty six million dollars mom kept eluded mps through one hundred and thirty percent he reached a record one dollar and fifty four said free cash flow group fifty three percent to reach a record six hundred and seventy seven million dollars and we achieved at least thirty percent recast low margin for the third and second of year our market leadership continues to grow as customers are voting for their platform of choice with their wallet prostrate ranked first in id fees annual worldwide modern and points you dirty market share report for the third consecutive year with seventy point seven percent market share outpacing all vendors by posting the largest increase in revenue the 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 press radius she to profit sullivan force their wave as the lad gardener pure insight or gardener magic quadrant falcon superior technology has been awarded a read or number one position this was most recently highlighted by winning and twenty twenty three se labs award for best cdr and best product development this is the third consecutive guy that prof strike has one in the best edi category further reinforcing or innovation and employed security and putting us in the pole position to help customers after the x the our era additionally crouser i was once again position as a leader burgess to the right for completeness a vision and gardeners magic roger it for employ protection platforms with a third consecutive year we believe this recognition highlights our longstanding track record of disruptive innovation including i use of ai and indicators of attack to stop cyber adversaries in real time while the use of ai has become a new topic of the day it is not new to craft strike we were a pioneer in applying a i'd cyber security 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 plot more from prevention through kids detection and response this enables falcon to spot saved your signal and identify activity earlier in the kill chain become experts and leveraging data science to deliver best of breed attack discovery and prevention or are more than twenty three thousand customers this drives meds leverage across the platform and better more efficient outcomes for customers there's a clear mandate from customers they want to reduce cost and headcount reduce the number of point products canadian reduce complexity and simplify operation 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 his advanced ai engine and collect was reused many architecture wow strike delivers are nice customer mandates with our hallmark and media tied to value that accelerates cost savings for the customer let's take a look at a few customers that are using pressure right to drive consolidation lower tcl in realize better outcomes within their environments one of our marquee enterprise customer wins this quarter was with a leading financial institution in a fortune fifty that is consolidating on falcon and replacing war vendors and multiple point products including semantic trucks trend micro an awkward they're testing he proved falcon superior visibility protection of threat hugging capabilities and were both incumbent and perspective new vendors these factors along with falcons holistic approach to protecting mcleod environment with are integrated see nap offering drove the decision to adopt the falcon platform another customer when i'd like to highlight was with a multinational in tech company looking for a security partner to consolidate their hodgepodge of legacy and action vendors this customer identified a vendor's they could eliminate with your initial deployment a falcon including microsoft carbon black tropics trend micro help both he said eff pride and clammy be the falcon platform provide them the ability to significantly reduce the complexity reduced agent bloat reduce pcl and improve security outcomes additionally discussing repurchase large scale distorted security data the game better performance and avoid the high cost associated with existing logged management solution another large scale when this quarter was with a leading global financial institution that wanted to increase the volume of falcon data retain as well as game faster query results and avoid the high costs associated with expanding the usage of your legacy log management system they're casting showed that large scale delivered query speed orders of magnitude faster than their existing tools this customers now ingesting close to forty terabyte had data per day with plans to standardize on large scale across their organization overtime the next exciting when i like to share with you is an expansion the falcon complete with one of the largest global transportation and and logistic companies in a highly targeted sector by cyber adversary this customer wanting around the clock three hundred and sixty five they sock while the customer had budget and have count reserved to build out in internal stock after performing a thorough cost benefit analysis this customer determinant 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 of the when as they sought to run an effective and mature identity security program without a bird and 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 sills and see ios as cited in our global threat report the threat landscape remains elevate within observed fifty percent increase in a number of interactive intrusion campaigns and ninety five percent growth of the number of cloud exploitation cases and twenty twenty two compromising on security can easily translate to compromise covers 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 proceed free he has never free to demonstrate my point i'd like to share a recent when with a company that suffered a breach after really lying on an alice vendor they claim their legacy signature based product was going off to take on kiddies threat actors this company had initially chosen microsoft you replace existing a be products across the state would quickly ran into trouble when they discover that defender could not be fully deployed within their heterogeneous environment leaving their service vulnerable unfortunately did not take long for threat actors to find these gaps and brief their environment hrc one of our incident response partners a leading global as by that uses falcon and a key part of their response to remediation third during engagement the customer found that falcon provided two point five times more coverage and defender and was much work to operationalize it quickly became obvious to this company why ai protection was far superior to signature based technologies and then is world class protecting across heterogeneous operating systems the cecile also determined that excluding the cost to remediate the breach defender costs twice as much and would still fall short of the functionality and publicity and efficacy of falcon having lost faith in microsoft low cost good enough promise this new craft a customer adopted falcon complete our professional services organization is a strong regeneration engine for the falcon platform the average a or are per dollar of professional services revenue derived from organizations new to craft right through our into the response or proactive services grew to six dollars and seven cents as of january thirty first twenty twenty three to summarize every dollar from these professional services engagements and the past two years as turned into six dollars and seven cents of a are are are thriving partner ecosystem is also growing to become a powerful source of lead generation and f y twenty three msft d a r r grew over one hundred percent and partner sourced and the a are grew over fifty percent year over year additionally revenue through channel partners grew to eighty three percent 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 snb is one of our pop initiative in f y twenty four as we recently announced we entered into a new multi faceted strategic partnership with dell to deliver the falcon platform to delve customers globally the falcon platform is now offered through global go to market organization the a several avenues including a traditional we sell agreement on device for new purchases made riddles direct sales the in and as the cornerstone to delve managed cyber security service offering while it's still early days said his new go to market partnership we expected to significantly expand our reach across the market from large enterprises is a small as any smb customers had chosen crowd strike as the platform of choice and so has bill we have tremendous initial success with our falcon go bundle which were specifically designed as a starter package or landing point for smaller businesses with one hundred and points or less that may be more price sensitive we launched falcon go a little more than two cores ago and have already added over one thousand net new customers through the program we believe this early success reaching the as in the smb demonstrate the immense demand for crawford best in class and point protection even among the smallest and cost conscious organizations in late january we launched his next generation of our ecommerce engine with the goal of removing even more friction out of the buying process and driving higher connection between digital top a final and conversion into by we view these advancements in our ecommerce engine as a differentiator and within just a few weeks post laws we have seen a dramatic increase in know touch digital conversion the market dynamics in the f b r velocity driven and very different from our traditional enterprise customer base to accelerate growth and drive market share with in the massive and be opportunity as well as increase growth through all of our channels we changed the organizational structure and created a new leadership role with the apply minute daniel bernard as chief business officer daniel has a proven track record in leading channel partnerships and business development as several high growth that cloud and cyber security companies and is most recently recognized for transforming center one market awareness i'd also like to welcome raj regime body to the craft reiki who also joined us from a one reporting to a mark carney raj is our chief product officer for data identity cloud and and point i've worked with raj in the past and i'm excited them join our team as we continue to drive disruptive innovation and finally i'm extremely proud you can gradually make the tony on his promotion the president mike has been an invaluable contributor to craft rate success and as president he has responsibility for meeting the company's product and go to market punches these leadership changes are designed to drive greater focus in alignment across our key growth initiative and enable me to spend more time with customers as we scale crafts right to achieve our vision of five billion dollars in and behavior or and beyond
spk_3: in summary crowd strike is executing across all facets of our strategy winning in our markets and providing customers with protection their powers them with that i will turn to call over the birth to discuss their financial results in more detail thank you george and good afternoon everyone has a quick reminder unless otherwise noted all numbers except revenue mentioned during my remarks today or non gaap we delivered an exceptional fourth quarter and a strong finish to the year with two hundred and twenty one point seven million dollars in net new era bringing ending any or are to two point five six billion dollars a forty eight percent over last year in the quarter we saw strong expansion within our customer base including an eight figure net new air are expansion ending air are for the one million dollar plus go forward grew fifty seven percent year over year we now have over four hundred subscription customers with ending a are are over one million dollars and an average of ten modules overall and queue for we landed a record number of met new customers field by growth and enterprise not enterprise and public sector accounts we continue to be very pleased with the success of our land and expand strategy our dollar base that retention rate was above the one hundred and twenty percent benchmark throughout the year ending queue for at one hundred and twenty five point three percent which is higher than last year and on a much bigger base for the interim f y twenty three quarters net retention was a hundred and twenty seven point six percent in que three hundred and twenty seven point six percent in queue two and a one hundred and twenty five point five percent think you are our best in class most retention rate remained exceptionally strong at ninety eight point zero percent as if you're and subscription customers with five or more secure more and seven or more modules grew fifty to sixty two and seventy five percent year over year respectably now the respective module adoption over represent sixty two thirty nine and twenty two percent of subscription customers respectively given this one moment when we have seen with our falcon go bundle of three modules for very small businesses we are now excluding nice customers from our module adoption metres and i provided comparable metrics for prior periods in the investor presentation on our website
spk_4: additionally given the growing number of smaller and customers that we serve to our msft partners which we estimate exceeds eighteen thousand and are downmarket bundles as george disgust we don't believe that quarterly fluctuation in our new logo metric appropriately reflects the health of our business
spk_3: as we have discussed previously therefore we are moving to recording logo metric on an annual basis own we look forward to providing additional details including the usual annual deep dive of our customer cohorts on our investor are scheduled for april fourth moving to the piano total revenue grew forty eight percent over queue for of last year to reach six hundred and thirty seven point four million dollars subscription revenue grew forty eight percent over key for last year to reach five hundred and ninety eight point three million dollars professional services revenue was thirty nine point one million dollars setting a new record for the tenth consecutive quarter and representing fifty three percent year over year growth this brings total revenue growth for f y twenty three to fifty four percent in terms of our geographic performance and queue for we continue to see strong growth in the us and forty four percent an international revenue growth and fifty seven percent year over year fourth quarter total and subscription non gap gross margins where seventy five and seventy seven percent respectively looking into key one we expect subscription gross margin to increase by up to one percentage point quarter over quarter driven by cost optimization total non that operating expenses in the fourth quarter and fiscal year twenty twenty three were three hundred and eighty five point zero million and one point three five billion dollars respectively operating expenses and fiscal year twenty twenty three were sixty percent of revenue compared to sixty three percent of revenue in fiscal year twenty twenty two in queue for our magic number was one point one reflecting the continued efficiency of our go to market engine
spk_2: fourth quarter non gap operating income grew nineteen percent year over year to reach a record ninety five point six million dollars and we've reported operating margin of fifteen percent
spk_3: looking at fiscal year twenty twenty three not gap operating income growth outpaced revenue growth increasing eighty one percent year over year to reach three hundred and fifty five point six million dollars and sixteen percent of revenue picking up two hundred and thirty five basis points of operating margin for the year as our magic number and rule of forty reflect we have a highly efficient model but the past three years we have grown operating income faster than revenue and we remain focused on continuing to drive efficiency balancing robust growth with increased leverage in f y twenty three we took advantage of opportunities we saw the labor market and expanded attained by forty six percent over last year we are now more than seven thousand crowd striker strong this gives us a significant start to achieving our goals for f y twenty four and enables us to significantly moderate the pace of new hires while continuing to invest responsibly for the long term
spk_2: non gaap net income attributable to crowd strike and queue for grew to a record one hundred eleven point six million dollars or forty seven cents on a by lead pressure basis
spk_3: are weighted average common shares used to calculate fourth quarter non gaap dps attributable to crowds rate was on a daily basis and total of approximately two hundred and forty million shares we ended the fourth quarter with a strong balance sheet cash cash equivalents and short term investments increase to approximately two point seven one billion dollars
spk_2: cash flow from operations be seventy one percent year over year to a record two hundred and seventy three point three million dollars
spk_3: free cash flow be sixty five percent year over year to a record two hundred and nine point five million dollars or approximately thirty three percent of revenue this brings free cash flow for the year two six hundred and seventy six point eight million dollars or thirty percent of revenue before i moved toward guidance i'd like to provide a few comments about how we view the ongoing impact of the current microclimate on her business and a few modeling notes we delivered a record que for and have a record que one pipeline however given continued increased budget scrutiny and elongated fail cycles we believe it is prudent to me paying the f y twenty four a our our assumptions we discussed on our last earnings call that normalized the first half of the year for the current macro environment with a full year net new air our assumption abruptly glad the very modestly up year over year albeit on a higher be than expected three months ago this would imply a low thirties ending air our growth rate for the year as our guidance implies we expect to deliver operating margin leverage for the full year with operating income going faster than that in terms of seasonality we expect operating margin leverage to be more waited for the back half of the year in comparison to apply twenty three we expect to deliver a free cash flow margin of approximately thirty percent of revenue and y twenty four
spk_0: this assumes cap act as a percentage of revenue to be between six and eight percent for f y twenty four and approximately thirty two million dollars in cash outlay for income taxes compared with twelve million dollars and f y twenty three
spk_3: the midpoint of our f y twenty four non gaap net income guidance assumes one hundred and twenty nine million dollars in interest income and we expect interest expense to remain consistent with f y twenty three and lastly as implied in our guides we expect weighted average diluted share county increase less than two percent in fiscal twenty twenty four for the first quarter of like twenty four we expect total revenue to be in the range of six hundred and seventy four point nine to six hundred and seventy eight point two million dollars reflecting a year over year growth rate of thirty eight thirty nine percent with subscription revenue been dominant driver of growth we expect non gaap income from operations to be in the range of a hundred and seven point one two hundred nine point five million dollars and non that net income attributable to crowds right to be in the range of one hundred and twenty one point one two hundred and twenty three point five million dollars we expect diluted non got net income per share attributable to crowds right to be in range of fifty fans the fifty one sense utilizing a weighted average share count of two hundred and forty one million shares on a daily basis for the full fiscal year twenty twenty four we currently expect total revenue to be in the range of two thousand nine hundred and fifty five point one to three thousand and fourteen point eight million dollars reflecting a growth rate of thirty two to thirty five percent over the prior fiscal year non gap income from operations as expected to be between four hundred and seventy four point zero and five hundred and eighteen point seven million dollars we expect fiscal twenty twenty four non gaap net income attributed to project to be between five hundred and thirty five point nine and five hundred a point seven million dollars utilizing two hundred and forty three million weighted average shares i'd that needed basis we expect non gaap net income per share attributable to prescribe the be in the range of two dollars and twenty one or two two dollars and thirty nine cents
spk_0: we look forward to sharing additional details about our business our next investor women are scheduled for april for georgian and i will now take your questions thank you as a reminder to ask a question you will need to press star one one on your telephone you are to limit yourself to one question then returned to the queue please stand by while we compile the q and a roster our first question
spk_5: come from the line of sakic kallio a barkley your question please second a good afternoon guys thanks for taking my question here and george maybe for you hey george and maybe maybe i'll ultra violent person you have very helpful
spk_2: customer example are of that of that microsoft switch out you know a number of certainly wouldn't indicated that curious if you can just talk about the that general competitive environment particularly with respect to microsoft and how if at all that competitive backdrop is impacting industry pricing sure i think sackett ah are a fps remained consistent certainly you've seen what we've been able to do in the smb market i think we've been very focused on that where we have run some promotions which is where we designed the the promotion to be wrong but i think when you look at the competitive positioning just as an example you don't i deceived minor and point security market sure a pointed out were seventeen point seven percent and we gained three point eight percentage points which is more share game and any other venues including outpacing microsoft and were customers are really telling us that microsoft good enough security not good enough and you know we've been winning because of our coverage across multiple operating system
spk_0: the complexity of microsoft six console in fact yesterday alone they had six signature updates and in general as i call the three season blast one catastrophe yeah during our incident response engagement or the majority of the systems that are breached are using defend yourself when you wrap all that together we feel good that arc had of conditioning and again from uprising perspective a fps have remained consistent
spk_6: thank you i next question comes from the line of sterling audi of moffat natanson please go ahead sterling
spk_2: that thanks hi guys though by question actually is on george what you touch fun with as and be a martyr if you can cut go a layer deeper in terms of what you're doing to drive the business back and that's one area that we'd seen ya some sluggishness out of vendors you know what are you doing to drive the velocity in that business and how much durability you think that kids you but we're really excited about that segment as i mentioned we hired that daniel bernard with agenda wanted is now achieve business officer and a big part of his remit only channel and partnerships is the and be our market you saw the partnership with dell were excited about that as and exclusive partner for the and point peace ah in their in their market and then when we think about falcon go it really is is a very lightweight bundle that is perfect for it the and be market the in the us and be self we go down market we've got some updates that we've done in our ecommerce engine to make it even more frictionless to acquire customers and yeah we've seen great adoption ah in those markets and you know it's not only delivering what we believe is the best technology by making it also the best go to market motion with or partnerships and channel so i'm we continue to focus on that yeah we're still in the early innings of our as
spk_0: and be journey ah but again customers are wanting this
spk_6: the other telling the likes of del ah that they want our technology which is why we were selected by the i'll end up yeah more to go by early innings in and very favorable in the us and be mark thank you are next question comes from the line of joe this may have to ask your question please joe
spk_2: thanks for taking my questions and congrats mike on that promotion bert for you just you get a very tough cop this quarter and you caught out the eight figure a net new a or expansion just like did get anywhere color on any larger deals for contributed a quarter and obviously this is a big were no quarter how those trended as well that would be really helpful thank you
spk_7: idle yes we were really pleased with you being able to felony for your deal into an existing clients
spk_0: i think in general we were really happy with the overall mix of our million dollar plus the feels as well as our up and be so overall just a really well balanced order and we're really happy with that rebel
spk_3: thank you are next question
spk_2: come from the line of met hedberg the of rb see your question please met
spk_7: great guys things with a guy my question of george a lot of great year and metrics at the immersion prada growth is is particularly exciting and identity really sticks out the us from what you said what we've been hearing a best forty years from now which working product didn't will look back at having the biggest incremental impact on on fiscal twenty four in life
spk_2: while we continue our be excited about identity as you called out a church a big business for us it's one of those modules that super easy to turn on is tremendous amount of competitive differentiation between what we have in a single agent and how it actually works vs our competitors i including the likes and microsoft so if you're really get about that and then i called out like scale i think that it out to have one of the largest financial institutions in the world adopter technology battle tested the understand the scale ability and when it's able to do and sub second search results were friendly excited about that
spk_0: you know and and even as surface which is an enterprise tax service management has been one of our fastest growing serve early adopter module and of your post acquisition a you know
spk_3: by and large it when you look at sort of the kind of emerging business putting cloud great opportunity there are fantastic growth and i think it really showcases the power of the platform
spk_0: thank you are next question comes from a line of rob owings of piper sandler please go ahead rob
spk_2: thank you for think my questions building on math question a little bit are using those emerging modules
spk_8: as the tip of the spear as you see new customer acquisition at this point you can you give us some color with regard to that thanks
spk_2: sure at when we think about how a customer can come into the crowd strike family it certainly you know the traditional way as been on the and point your core modules of a vdr things that nature but when you look at something like i'm a surface it's so easy to get up and running just you know you can get a trial
spk_0: you can use a hot install anything and we see customers coming in in various ways my thing the a large scale as it is another good example i'm you know someone might have a need for the collection of data as and you know looking at the the cost an expensive the current him and looking at this and saying hey can we get something that's you know
spk_8: faster better cheaper and a my answer that way and then even when you think about our cloud offering we have plenty customers that actually come to us in the cloud first before they actually deploy of on their internal network sell i think we've got enough modules and coverage and breath in the environment in the in the marketplace that customers can get us in various ways depending on whether needs are
spk_2: thank you i next question becomes from the line of answering the wins keep of wells fargo please go ahead answer okay great thank you are great quarter i and nice recovery from last quarter despite not being a real change in the macro i just had a question on the dell partnership so i thought those billions thing i know is that it will help you reach or smb customers all lived a large enterprise but you give up any more color around how their partnership a work in any for a framework for higher thinking about as relief your fiscal twenty four guidance sure let me take the yeah the first part of that though i think about what we're doing with dell will be on the box so you can check the button and i will be shipped on a box as you buy in l a dell computer will actually del will have the ability to actually sell subscriptions to customers think they covered ninety six percent of the fortune five hundred so large and small customers in smb bundle so they actually have a device is a service which is really interesting and that's a subscription service they have will be part of that and then part of their manners service they actually are selected as the drive their demand a source on the and point side so there's various go to market motions with them what you're really excited about and
spk_3: again i think it is it showcases you know our technology leadership in the market and the customer paul the biggest customers been clamoring for this technology citadel soda a break you want to talk about the outlook
spk_0: two thanks george like that the partnership is just getting started so we have not factor that into our guidance
spk_9: as with any new alliance it does take time around but we're excited to be reengage with though
spk_10: thank you are next question comes on the line of tagliani a bank of america please go ahead die
spk_9: did you say palliative yes or a guy quiet okay sorry i didn't hear my name wow
spk_11: i have a few questions
spk_3: gross my so you've beaten revenues are great numbers but gross margin was down and he did this kind of not the above not much above expectations so is the pricing environment you're eating did you have to give ah
spk_12: by profession in order to grow faster or is it the impact of microsoft or anything about fighting and and a difference between the beat on revenues them and margin
spk_8: ah maybe i'll start with us
spk_12: who are so first on gross margin it's not but really about pricing i think you know he expected to fluctuate poorer quarter and as i said on the prepared remarks we expected to increase up the one percent and que one but there are few things that are impacting gross margin in the in the short term which will pay dividends in the long term one is working
spk_0: canoeing to invest in our dataset and as we continue to do that that is going to impact or gross margin again in short term but long term that's what we believe is the right strategy and second with her acquisition of fumio it's not been fully synchronize so in that does happen you know that will take some pressure off of of cogs are those two things know the are really from other drivers on the qualified and i think
spk_13: as we continue to move into que on and beyond will be looking for more a bad cough optimization and i feel strongly imply believe in our long term model which talked about our subscription gross margin going up it you know he to put that thank you i next question comes from a lie
spk_14: oh hamza father walla morgan stanley your question please hampshire
spk_15: they are good afternoon they give or take my question
spk_13: george he talked about ai being loving you in cyber security other to there's a lot of focus on of these days from
spk_2: customers key talk about
spk_8: how your quipping yourself those are handled it growing threat around ai and how being on the and point is you that strategic real the attack this growing opportunity and brett
spk_2: sure thanks and what we think about a i will we really are one of the pioneers ah in a i from a security perspective week we started the company leveraging big data a i to be able to identify threats of never been seen before and prevent against those we continue to build out our ai capabilities across all our different modules with a massive data and telemetry that we collect every week this is mind boggling we can use that to continually train and learn and are a i can continued to get smarter as we put more data into the system so when we think about stopping breaches the tip of the sphere really is the endpoint the workloads
spk_0: that's where the adversaries are are targeting that's where the focused on feeling data encrypting and breaking in and and doing damage and i think you know when you look at our technology lead in this area we've proven or efficacy of through various testing outlets we continue to get ah
spk_5: incredible scores and at the end it a day it's really about the brand promises stopping breaches and a i as a massive part of what we're able to do tab implemented how we stopped as breaches and it does represent a competitive advantage and moat for us
spk_6: thank you onyx next question comes from the line and brian essex of jp morgan your question please brian hi good afternoon at thank you for taking the question i guess and hurt for you would like to begin with it in terms of the letters easy for mark expansion of appreciate the comic carry the you had on accelerator hired and twenty twenty two and it sounded like the moderation and twenty twenty three the you've already get free cash flow morgan with about thirty percent on operating margin to about sixteen as we kind of model out and find you know model that the next few years of really think about the lever the you have a better operating profitability cash flow
spk_3: what should the spread between the to be and house with think it out you you consistently been conservative but this this one understand
spk_16: you know how you're thinking about the spend versus growth and privatization given that excessively seen so far with the martin expansion thank you
spk_3: great question so number one we're going to continue our balanced approach to supporting our rapid growth at an at you know even are greater scale with probability i think it's always going to be a fighter and i think we've done a great job in being able to manage that growth not at all costs but with a realize bottom i been operating in a magic number about one and a rule of eighty one on a free casual basis or best last and and we're excited about being able to continue monitor that watch that
spk_0: look i think we posted record operating coming due for an f y twenty three growing up or a margin you know to sixty percent of the year i think that you know what we talked about last quarter with respect to are hiring are prefer firing me a week we've taken a really tall approach about moderating the piece of hiring for the fear and i think that it goes to home watching how and who were hiring or with an increased either making sure we're hiring the best
spk_17: and up rough that really matters and we're going to get the without that we want to get by doing thank you
spk_18: our next question come from a line of gabriella borgias of goldman sachs your line is open gabrielle
spk_12: can i think you are unless the a few their way to change person on the punchline environment last he gave sick on field kicking eleven percent person acquired stop looking for a quantitative up update and lunch and he qualitative overlay either for myself with for he charged more insurance and customers and during a suspended and plane and twenty twenty three vessels maybe what they were expecting might as well thank you
spk_8: a gary oh it's great to hear your voice overs your deals the take longer to to close the score
spk_2: we did see that and we do anticipate to see you know you know those headwind continue throughout next year and for us as we think about next year if can see our thoughts are consistent with what we said leffler i'll turn over to george yes it in terms of modernizing their i the security stack i think that's run center others isn't a cia oh that am talk it doesn't want to consolidate their hodgepodge of technologies out there are and again that goes beyond just i just enjoy right in terms of the things that we often a capabilities and the outcome and if you just think about the endpoint market itself as we talked about the i did she numbers were seventy point seven percent is a lot more to go right is still a massive massive amount of legacy
spk_0: technology that's out there and i'm again customers are looking to really pick up a modern platform approach and consolidator spend so
spk_19: the you know it's it it's been something that customers or not looking to to just stick with what they haven't breaches are not getting any any better the getting worse a threat actors he could be more sophisticated and it's going to require better protection ah with a better outcome
spk_2: thank you are next question comes from a line of brian mccauley of stevens your question please brian
spk_8: i better take my question so i'm curious on the xd our front ah if you've seen an acceleration and next the or adoption since you've entered his dog and inside xdr and new pricing strategy there it'll also wondering if you've you can i share what the average air are or as p a
spk_2: blessed as looked like for from those customers that have implemented it next to our strategy
spk_0: yes you're so am i a we haven't given that level of information out specific xdr so i i can't comment on that below we think about xdr am i think as an industry still nearly any some work at were of course one the pioneer the vdr we've extended that out into xdr were third party in a great
spk_5: since i think we've got
spk_20: some incredible partners that we're now flowing data into the crowd strike platform and be able to make ah advanced decisions on whether something is good or bad across multiple platforms including crowd strike and i it's been well received so far but still nearly any i just added know we are theme great early traction thank you i next question comes from the line of a tie kidron of oppenheimer your line is open a tie ah thanks guys and nice quarter i'm i'm hoping to get more color and for be clear it's a very big opportunity for you done and with the go bundles you're doing how often very good start there
spk_3: or maybe the point of reference can you tell how much of of your of enjoy our our are concentrated in got out here how do you how much you think where do you think i can go with in a year's time and and also bird specifically on hundred dollar retention rate mom i can't imagine that the expansion opportunity with those type of customers is similar to that it opened up
spk_12: price i'm a so i don't think about the impact of goes of of the growing makes of those type of customers on the dollar ah ah dollar best retention rates
spk_0: the we're we're really excited about or fm be face george talked about or another are coming on board we think we've got you know great products for them to come in and to expand it's not just limited to or enterprise although certainly be and the are is going to be driven by i'm or enterprise customers
spk_21: you know for debate and with has another think about next year i think we're going to see if slightly more net new a are are coming from you know expansion deal than net new air are coming from you logos i think that we've got this incredible base of twenty three thousand subscription customers today
spk_22: a and we can certainly continue to add more module for their security faq and continue to delight them so that's how we that's how we think about the at the flips
spk_0: thank you are question comes on the line of patrick causal of scotiabank your line is open is patrick and a this article is from from scotiabank damn
spk_12: my questions about
spk_3: the net cash you got about two billion of net cash on
spk_8: the balance sheet we saw crm he so what day and just last week snowflake announced by back programs do thing that's something that you guys might consider on a good would basis to limit dilution in color tween twenty three and beyond
spk_0: yeah look we will evaluate every quarter you know that proposition
spk_23: so i think that that's just the a quarter by quarter decision that will will come up with we do look at it
spk_5: we do look at what's happening in the environment there are many backer that we're going to decide whether we were going to do something like that too would be really awkward like or basis where we would you the evaluation
spk_24: thank you are next question comes from the line of john the sushi of guggenheim please go ahead shot how far you can hear me
spk_25: hi
spk_2: thanks to take my question i'm george yeah i guess or ever fall of to several of the question third has to do with the enterprise versus the mid market and new logo is versus add on sales i mean i would think like it's a lot tougher to sell to new lows in the smack backdrop especially in the enterprise be you obviously sold a lot of new logo is this a quarter and sounds like a lot to the mid market nesson the because kid can you remind us how you think a typical mid market customer arrest because her will evolve will they eventually buy as many module as as enterprises i could see how they could cook says it really makes security security easier for them to to have an integrated solution but then again it's tough to see the in the mid market customers are typically much less sophisticated buyers of i t just curious your thoughts there
spk_8: sure is so let's let's think about this than a worldwide base that been market customer in the us is much different than a mid market customer the a pack as an example right so the sizing it is quite different but when you think about of not enterprise customers they still have all the same problems be there you know billion dollar comp
spk_0: nice
spk_2: that have one i cheaper to i'd keep people half as security person and we think that's a perfect opportunity for falcon complete where we can sell them multiple modules we've added now identity into falcon complete ah
spk_0: and and we can service that account and and basically take a lot of the burden away in a in a challenge the macro environment and not getting more headcount but they still have a great risk that from a security perspective sell
spk_26: and that's that's the mid market all the way down as and the were very small companies that are falcon complete customer sell if they can't quite digest everything that we have that's okay what they're buying as an outcome and are outcome is stopping the breaches reducing complexity and lowering our overall cost and that is resonating or customers as we consolidate in is challenging mackerel environment thank you i would now like to turn the conference back over to george kurds for closing remarks sir great i want to thank all of you take your time we certainly appreciate your interests and look forward to seeing you at our upcoming investor web in r thanks so much and i his him this concludes to them bastards call thank you for participating you may now disconnect the conference will begin t to raise and lower your hand doing una you can dying star one one the conference will begin to t to raise and lower your hand doing you any you can dying star one one
spk_0: the conference will begin shortly to raise and lower your hand during una you can dial star one one and the conference will begin shortly to raise and lower your hand during una you can dial star one one and
spk_1: the conference will begin shortly to raise and lower your hand during una you can dial star one one and the conference will begin shortly to raise and lower your hand during una you can dial star one one and the conference will begin shortly to raise and lower your hand during una you can dial star one one and as thank you for standing by and welcome for crowd strike holdings fourth quarter and fiscal year twenty twenty three financial results conference call at this time off it has been sarney listen the only mode
spk_2: after the speaker presentation there will be of question and answer session to ask a question during the session you will need to press star one the one on your telephone or when i like to hand the call of it's a maria riley vp investor relations please it it happen in and thank you for your participation today with me and a call or george current president and chief executive officer on ten pounder of a and that are their chief financial officer before we get started i would like to know that certain segments mean during this conference call that are not historical facts including those regarding our future plans adjusted gross and expected performance including our outlook for the first quarter and fiscal year twenty twenty four and any assumptions for fiscal period beyond that are forward looking statements within the meaning of the private securities litigation reform act that nineteen ninety five he's forward looking statements represent our outlook only as as the data and call while we believe any forward looking statements we make a reasonable asshole result could differ materially because his statements are based on current expectations are subject to risk and uncertainty we did not undertake expressly disclaims any obligation to update or alter of forward looking statements by their as a result of new information future events or otherwise further information on knees and other factors that could affect the company's financial results is included in the filing for we may with the as pc some time to time including the section titled risk factor in the company's quarterly and annual report additionally unless otherwise stated excluding revenue all financial measures disclose summit car will be non gaap a discussion of why we use non gaap financial measures and the reconciliation schedule showing gap versus non gaap result is currently available in our earnings petrolia which may be found on our investor relations website and i are duck outside dot com or on our form a cave filed with as cc today okay with that i will now trying to call over to george to begin you maria and thank you all for joining us for our for i delivered a record fourth quarter that exceeded our expectations across the board i will focus my comments today on a few key points burst browser i is executing exceptionally well a jealousy macro environment we believe that is best showcase teeth the fourth quarters record net new a are are a few hundred and twenty three million dollars record net new customers have one thousand eight hundred and seventy three ball retention rates record operating income record free cash flow of two hundred and nine million dollars in a rule of eight he won on a free cash flow basis beckett the dual mandate of i feet and low total cost of ownership by the crowd strikes thread as a beating consolidator crawford growing market share showcases the falcon platforms advanced ai that technology leadership that drugs better security outcomes automation and lower fee feel for customers and third are conviction and crowd strikes expansive opportunity continues to grow with a massive opportunity to leverage are ai driven collect data was reuse many times platform to expand share across our markets as bert will discuss we are continuing our thoughtful and bells approach to investing to drive both top line and bottom line growth we remain steadfast in our vision to grow and the air or five billion dollars by the end of fiscal year twenty twenty six and to reach our target operating model sometime within fiscal year twenty twenty five the key to our success in the fourth quarter was executed and strong market demand for the falcon platform we converted are pipeline is a wins and built the record you want pipeline even fl cycles you on gated as we saw late into three and we did not see the typical budget flush as work innovations continue to work through a macro concerns are competitive win rate remains high and a of peace remained consistent and we ended the year with the best in class growth retention rate and a strong net retention rate we believe our strong fourth quarter performance in record you want pipeline demonstrates the mission critical nature of cyber security or mater businesses the resiliency of our market and crafts right growing leadership as the cyber security platform a record i'd like to thank each and every drop striker for their dedication and hard work in making the fourth quarter or best quarter to date as a team we should be proud of the amazing accomplishment we have achieved and excited about the opportunities ahead of us we'll take a moment to highlight several year over year milestones the crowd striking delivered in f y twenty three that i'm most excited about ending a are group forty eight percent to reach two point five six billion dollars net new a our our group twenty two percent to reach eight hundred twenty eight million dollars steady a new record are emerging product category contributed one hundred and eighty two million dollars to net new a are our which was twenty two percent of all that new a are are and a ninety seven percent increase emerging products and ended a are are growing one hundred and sixty percent to three hundred and thirty nine million dollars they're passing crossroads total a are are at the time of out in two thousand and nineteen this included a standout year for our identity protection modules which contributed over one hundred million dollars in ending a are are in over one thousand net new identity customers additionally like scale posted over two hundred percent ending a our our group from a public cloud deployment view ending a are are through pass the two hundred million dollar milestone to reach two hundred and twenty four million dollars we added a record six thousand six hundred ninety four net new customers for the fiscal year to bring us to twenty three thousand and nightly subscription customers a forty one percent increase props right now serve five hundred and fifty six of the global two thousand two hundred seventy one of the fortune five hundred and fifteen of the top twenty us banks on the bottom line f y twenty three operating a net income growth well outpace revenue growth showcasing the leverage in our model non gap operating income group eighty one percent year over year to reach a record three hundred and fifty six million dollars non gap deluded mps group one hundred and thirty percent can reach a record one dollar and fifty four said free cash flow group fifty three percent to reach a record six hundred and seventy seven million dollars and we achieved at least thirty percent recast little margin for the third and second of year our market leadership continues to grow as customers are voting for their platform of choice with their wallet cross right ranked first in id disease annual worldwide modern and point you dirty market share report for the third consecutive year with seventy point seven percent 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 press radius g to brosnan sullivan forster wave as the lad gardener pure insight or gardener magic quadrant falcons superior technology has been awarded a lead or number one position this was most recently highlighted by winning the twenty twenty three se labs award for best ddr and best product development this is the third consecutive guy that prof strike has one in the best edi are category further reinforcing or innovation and and point security and putting us in pole position to help customers after the x the our era additionally crouser i was once again position as a leader further to the right for completeness a vision and gardeners magic roger it for employ protection platforms for the third consecutive year we believe this recognition highlights our longstanding track record of disruptive innovation including our use in ai and indicators of attack to stop cyber adversaries in real time while the use of ai has become a new topic of the day it is not new to craft strike we were a pioneer in applying ai cyber security 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 for prevention through to detection and response this enables falcon to spot saved your signal and identify activity earlier in the kill chain we have become experts and leveraging data science to deliver best of breed attack discovery and prevention or are more than twenty three thousand customers this drives meds leverage across the platform and better more efficient outcomes for our customers there's was a clear mandate from customers they want to reduce cost and headcount reduce the number of point product canadian reduced complexity and simplify operation 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 his advanced ai engine and collect was reused many architecture prostrate delivers are nice customer mandate with our hallmark and media time to value that accelerates cost savings for the customer let's take a look at a few customers that are using pressure i could drive consolidation lower tcl in realize better outcomes within their environments one of our marquee enterprise customer wins this quarter was with a leading financial institution in a fortune fifty that is consolidating on falcon and replacing war vendors and multiple play products including semantic trucks trend micro and awkward they're testing he proved falcon superior visibility protection it's threat hugging capabilities and were both incumbent and perspective new vendors these factors along with falcons holistic approach to protecting mcleod environment with are integrated see nap offering drove the decision to adopt the falcon platform another customer when i'd like to highlight was with a multinational in tech company looking for a security partner to consolidate their hodgepodge of legacy and next and vendors this customer identified a vendors they can eliminate with their initial deployment of falcon including microsoft carbon black tropics trend micro help both he said eff pride and clammy the the falcon platform provide them the ability to significantly reduce the complexity reduce asian bloat reduce tcl and improve security outcomes additionally discussing repurchase large scale distorted security data the game better performance and avoid the high cost associated with existing law management solution another large scale when this quarter was with a leading global financial institution that wanted to increase the volume of falcon data retain as well as game faster query results and avoid the high costs associated with expanding the usage of your legacy log management system they're casting show that large scale delivered query speed orders of magnitude faster than their existing tools this customers now getting close to forty terabyte had data per day with plans to standardize on large scale across their organization overtime the next exciting when i like to share with you is an expansive falcon complete with one of the largest global transportation and and legit the companies in a highly targeted sector by cyber adversary this customer wanted around the clock three hundred and sixty five they suck while the customer had budget and have count reserve to build out in internal stock after performing a thorough cost benefit analysis this customer determinant falcon complete including falcon complete for identity threat protection would deliver the best coverage protection and value without adding headcount gao can complete for identity threat protection was a key aspect of the when as they sought to run and effective and with your identity security program without the bird and 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 syphilis and see ios as cited in our global threat report the threat landscape remains elevate within observed fifty percent increase in a number of in or active intrusion campaigns and ninety five percent growth of the number of cloud exploitation cases and twenty twenty two compromising on security can easily translate to compromise 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 proceed free he has never free to demonstrate my point i'd like to share a recent when with a company that suffered a breach after relying on an alice vendor they claim their legacy signature based product was going off to take on today's threat actors this company had initially chosen microsoft you replace existing a be products across the state would quickly ran into trouble when they discover that defender could not be fully deployed within their heterogeneous environment leaving their service horrible unfortunately did not take long for threat actors to find these gaps and brief their environment he turned to one of our internet response partners a leading global at by that uses falcon and the key part of their response or remediation third during engagement the customer found that falcon provided two point five times more coverage and defender and was much work for operationalize it quickly became obvious to this company why ai protection with far superior to cigarettes are based technologies and then he is world class protection across heterogeneous operating systems is so also determined that excluding the cost to remediate the breach defender costs twice as much and would still fall short of the functionality and publicity and efficacy of falcon having lost faith in microsoft low cost good enough promise this new craft for a customer adopted falcon complete our professional services organization is a strong regeneration engine for the falcon platform the average a or are per dollar of professional services revenue derived from organizations new to craft right through our into the response or proactive services route to six dollars and seven cents as of january thirty first twenty twenty three to summarize every dollar from these professional services engagements and the past two years as turned into six dollars and seven cents of a are are are writing partner ecosystem is also growing to become a powerful source of lead generation and f y twenty three msft ending a are our grew over one hundred percent and partner sourced and a are grew over fifty percent year over year additionally revenue through channel partners grew to eighty three percent of total revenue strategically expanding and investing in our partner ecosystem with the goal of further expanding our reach with any enterprise as well as down market in the snb is one of our pop initiative and f y twenty four as we recently announced we entered into a new multi faceted strategic partnership with dell to deliver the falcon platform to delve customers globally the falcon platform is now average retells global go to market organization the a several avenues including a traditional we sell agreement on device for new purchases made riddles direct filthy in and as the cornerstone cuddles managed cyber security service offering while it's still early days for this new go to market partnership we expected to significantly expand our reach across the market from large enterprises is a small as any smb customers had chosen krauss rake as the platform of choice and so has bill we have tremendous initial success with our falcon go bundle which were specifically designed as a starter package or landing point for smaller businesses with one hundred and points or less that may be more price sensitive we launched falcon go a little more than two cores ago and have already added over one thing wasn't net new customers through the program we believe this early success reaching the as in the smb demonstrates the immense demand for crawford best in class and point protection even among the smallest and cost conscious organizations
spk_3: in late january we launched his next generation of our ecommerce engine with the goal of removing even more friction out of the buying process and driving higher connection between digital top a funnel and conversion into by we view these advancements in our ecommerce engine as a differentiator and within just a few weeks outlaws we have seen a dramatic increase in know touch digital conversion the market dynamics in the snb are velocity driven and very different from our traditional enterprise customer base to accelerate growth and drive market share it with in the massive s and be opportunity as well as increase grow through all of our channels we changed the organizational structure and created a new leadership role with your point of daniel bernard as chief business officer daniel has a proven track record in leading channel partnerships and business development as several high growth that cloud and cyber security companies and is most recently recognized for transforming cena lunch market awareness i'd also like to welcome raj roger body to the craft key who also joined us from santa one reporting to a mark on carney raj is our chief product officer for data identity cloud and and point i've worked with raj in the past and i'm excited them join our team as we continue to drive disruptive innovation and finally i'm extremely proud to congratulate my son tony on his promotion a president mike has been an invaluable contributor to craft rake success and as president he has responsibility for meeting the company's product and go to market punches these leadership changes are designed to drive greater focus in alignment across our key growth initiative and enable me to spend more time with customers as we scale crafts right to achieve our vision of five billion dollars in and again or are and beyond in summary crowd strike is executing across all facets of our strategy winning and our markets and providing customers with protection their powers them with that i will turn to call over the birth to discuss their 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 we delivered an exceptional fourth quarter in a strong finish to the year with two hundred and twenty one point seven million dollars in net new era bringing ending any or are to two point five six billion dollars a forty eight percent over last year in the quarter we saw strong expansion within our customer base including and eight figure net new air are expansion ending air are for the one million dollar plus go forward grew fifty seven percent year over year we now have over four hundred subscription customers with ending a are are over one million dollars and an average of ten modules overall and queue for we landed a record number of met new customers filled by growth and enterprise non enterprise and public sector accounts we continue to be very pleased with the success of our land and expand strategy our dollar base that retention rate was above the one hundred and twenty percent benchmark throughout the year and in queue for at a hundred and twenty five point three percent which is higher than last year and on a much bigger base for the interim f y twenty three quarters net retention was one hundred and twenty seven point six percent in que three hundred and twenty seven point six percent in queue two and one hundred and twenty five point five percent think you are our best in class most retention rate remains exceptionally strong at ninety eight point zero percent as if you're and subscription customers with five or more secure more and seven or more modules grew fifty to sixty two and seventy five percent year over year respectably now the respective module adoption coral reefs represent sixty two thirty nine and twenty two percent of subscription customers respectably given this one moment in we've seen with our falcon go bundle of three modules for very small businesses we are now excluding these customers from our module adoption metres and i provided comparable metrics for prior periods in the investor presentation on our website additionally given the growing number of smaller and customers that we serve to our msft partners which we estimate exceeds eighteen thousand and are down market bundles as george disgust we don't believe that quarterly fluctuation in our new logo metric appropriately reflects the health of our business as we have discussed previously therefore we are moving to recording logo metrics on an annual basis own we look forward to providing additional details including usual annual deep dive of our customer cohorts on our investor web and are scheduled for april fourth
spk_2: moving to the piano total revenue grew forty eight percent over queue for of last year to reach six hundred and thirty seven point four million dollars
spk_3: subscription revenue grew forty eight percent over key for last year to reach five hundred and ninety four three million dollars professional services revenue was thirty nine point one million dollars setting a new record for the tenth consecutive quarter and representing fifty three percent year over year growth this brings total revenue growth for f y twenty three to fifty four percent in terms of our geographic performance and queue for we continue to see strong growth in the us and forty four percent an international revenue growth and fifty seven percent year over year fourth quarter total and subscription non gap gross margins where seventy five and seventy seven percent respectively looking into key one we expect subscription gross margin to increase by up to one percentage point quarter over quarter driven by cost optimization
spk_2: total non they're operating expenses in the fourth quarter and fiscal year twenty twenty three were three hundred and eighty five point zero million and one point three five billion dollars respectively
spk_3: operating expenses and fiscal year twenty twenty three were sixty percent of revenue compared to sixty three percent of revenue in fiscal year twenty twenty two in queue for or magic number was one point one reflecting the continued efficiency of our go to market engine
spk_2: fourth quarter non that operating income grew nineteen percent year over year to reach a record ninety five point six million dollars and we've reported operating margin of fifteen percent
spk_3: looking at fiscal year twenty twenty three not gap operating income growth outpaced revenue growth increasing eighty one percent year over year to reach three hundred and fifty five point six million dollars and sixteen percent of revenue picking up two hundred and thirty five basis points of operating margin for the year as our magic number and rule of forty reflect we have a highly efficient model the past three years we have grown operating income faster than revenue and we remain focused on continuing to drive efficiency balancing robust growth with increased leverage it at y twenty three we took advantage of opportunities we found the labor market and expanded attained by forty six percent over last year we are now more than seven thousand crowd striker strong this gives us a significant headstart to achieving our goals for f y twenty four and enables us to significantly moderate the pace of new hires while continuing to invest responsibly for the long term non gaap net income attributable to crowd strike and queue for grew to a record one hundred eleven point six million dollars or forty seven cents on a by leading pressure basis are weighted average common shares used to calculate fourth quarter non gaap dps attributable to crowds rate was on a daily basis and total of approximately two hundred and forty million shares we ended the fourth quarter with a strong balance sheet cash cash equivalents and short term investments increase to approximately two point seven one billion dollars cash flow from operations be seventy one percent year over year to a record two hundred and seventy three point three million dollars free cash flow be sixty five percent year over year to a record two hundred and nine point five million dollars or approximately thirty three percent of rabbit
spk_0: this brings free cash flow for the year two six hundred and seventy six point eight million dollars or thirty percent of revenue
spk_3: before i moved toward guidance i'd like to provide a few comments about how we view the ongoing impact of the current microclimate on our business and a few modeling notes we delivered a record que for and have a record que one pipeline however given continued increased budget scrutiny and elongated fail cycles we believe it is prudent to maintain the f y twenty four a our our assumptions we discussed on our last earnings call that normalized the first half of the year for the current macro environment with a full year net new air our assumption abruptly glad the very modestly up year over year albeit on a higher be than expected three months ago this would imply a low thirties ending air our growth rate for the year as our guidance implies we expect to deliver operating margin leverage from a full year with operating income growing faster than that in terms of seasonality we expect operating margin leverage to be more waited for the back half of the year in comparison to apply twenty three we expect to deliver a free cash flow margin of approximately thirty percent of revenue and y twenty four
spk_0: this assumes cap act as a percentage of revenue to be between six and eight percent for f y twenty four and approximately thirty two million dollars in cash outlay for income taxes
spk_3: compared with twelve million dollars and f y twenty three
spk_0: the midpoint of our f wife twenty for non gaap net income guidance assumes one hundred and twenty nine million dollars in interest income and we expect interest expense to remain consistent with f y twenty three and lastly as implied in our guides we expect weighted average diluted share county increase less than two percent in fiscal twenty twenty four for the first quarter of athletes twenty for we expect total revenue to be in the range of six hundred and seventy four point nine to six hundred and seventy eight point two million dollars reflecting a year over year growth rate of thirty eight thirty nine percent with subscription revenue been dominant driver of growth we expect non gaap income from operations to be in the range of a hundred and seven point one to a hundred and nine point five million dollars and non gaap net income attributable to crowds right to be in the range of one hundred and twenty one point one two one hundred and twenty three point five million dollars
spk_5: we expect diluted by got net income per share attributable to crowds right to be in range of fifty cents the fifty one sense utilizing a weighted average share count of two hundred and forty one million shares on a daily basis
spk_27: for the full fiscal year twenty twenty four we currently expect total revenue to be in the range of two thousand nine hundred and fifty five point one to three thousand and fourteen point eight million dollars reflecting a growth rate of thirty two to thirty five percent over the prior fiscal year
spk_5: non gaap income from operations as expected to be between four hundred and seventy four point zero and five hundred and eighteen point seven million dollars we expect fiscal twenty twenty four non gaap net income attributed to crouch like to be between five hundred and thirty five point nine and five hundred eight point seven million dollars
spk_8: utilizing two hundred and forty three million weighted average shares either databases
spk_2: we expect non gaap net income for share attributable to project the be in the range of two dollars and twenty one or two two dollars and thirty nine cents we look forward to sharing additional details about our business on our next investor women are scheduled for april for georgia and i will now take your questions thank you as a reminder to ask a question you will need to press star one one on your telephone you are to limit yourself to one question then return to the queue for you stand by while we compile the q and a roster
spk_0: our first question come from the line of sakic clear a barclays your question please it
spk_6: a good afternoon guys thanks for taking my question here and
spk_2: charge maybe for you with anything hey george and maybe maybe i'll older guy like actually you are very helpful customer example their of that of that microsoft switch out you know a number of certainly wouldn't indicated that curious if you can just talk about the general competitive environment particularly with respect to microsoft and how if at all that competitive backdrop is impacting industry pricing sure i think faggot ah are a fps remain consistent i'm certainly you've seen what we've been able to do in the smb market i think we've been very focused on that where we have run some promotions which is where we designed to the promotion to be wrong but i think when you look at a competitive positioning
spk_0: just as an example you know i i deceived mater and point security market sure they pointed out where seventeen point seven percent and we gain three point eight percentage points which is more share game and any other venues including outpacing microsoft and were customers are really telling us that microsoft good enough security not good enough and
spk_6: you know we've been winning because of our coverage across multiple operating system the complexity of microsoft six console in fact yesterday alone they had six signature updates and in general i like on the three season glassware catastrophe they're doing our incident response engagement at the majority of the systems that are breached are using defend yourself when you wrap all that together we feel good about
spk_2: arc and of conditioning and again from a pricing perspective a fps have remained consistent thank you i next question
spk_7: comes from the line of sterling audi of moffat natanson please go ahead sterling
spk_0: that thanks hi guys go by question actually is on george what it has fun with as and be a martyr if you can can i go away or deeper in terms of what you're doing to drive the deserts back and that's one area that we'd seen yeah from sluggishness out of vendors
spk_3: you know what are you going to drive the velocity and that's it that's an how much durability you think that kids yet
spk_2: but we're really excited about that segment as i mentioned we hired that daniel bernard ah with a genuine is now achieve business officer and a big part of his remit not only channel and partnerships is the as and be market you saw the partnership with dell were excited about that as and
spk_7: with a partner for the and point peace ah in their in their market and then when we think about falcon go it really is is a very lightweight bundle that is a perfect for at the the be market the as and be self wingo down market we've got some updates that we've done in our ecommerce engine to make it even more frictionless
spk_2: to acquire customers and yeah we've been great adoption ah in those markets and you know it's not only delivering what we believe is the best technology by making it also the best go to market motion with our partnerships and channel so i'm we continue to focus on that yeah we're still nearly any of our f and be journey ah but again customers are wanting this be other telling the likes of del ah that they want our technology which is why we were select by the and up yeah more to go by early innings and and very favorable the us and be mark thank you ah next question comes from the line of joe this may have to ask your question please joel
spk_0: take your ticket my questions and congrats mike on that promotion bert for you just if he had a very tough cop this quarter and you caught out be eight figure a net new a or expansion just like a get anywhere color on any larger deal for contributed a quarter and obviously this is a big or no quarter how those trended as well
spk_3: that would be really helpful thank you
spk_0: i'd your bf we were really pleased with him being able to felony for your deal into an existing clients
spk_2: i think in general we were really happy with the overall mix of our million dollar plus feels as well as rfmd so overall just the really well balanced order and we're really happy with that result
spk_8: thank you are next question
spk_2: come from the line of met hedberg the of rb see your question please met
spk_0: break i for taking my question of george a lot of great year and metrics at the immersion prada growth is is particularly exciting an identity really sticks out the us from what you said what we've been hearing a best forty years from now which working product will look back at having the biggest incremental impact on campus for twenty four in life while we continue our be excited about identity as you called out a church a big business for us it's one of those modules that super easy to turn on is tremendous amount of competitive differentiation between what we have in a single agent and how it actually works vs our competitors
spk_2: or including the like and microsoft so we feel really good about that and then i called out large scale i think that it out to have one of the largest financial institutions in the world adopt or technology bow have a the understand the scale ability and was able to do and sub second search results were credible excited about that you know and and even as surface which is sad enterprise tax service management has been one of our fastest growing serve early adopter module and of your post acquisition so a you know by and it when you look at sort of the kind of emerging business putting cloud great opportunities there are fantastic growth and i think it really showcases the power of the platform thank you are next question come from the line of rob owings of piper sandler please go ahead rob
spk_8: thank you for think my questions building on math question a little bit are using those emerging modules
spk_2: as the to buy the spear you see new customer acquisition at this point you can you give us some color with regard to that thanks
spk_3: sure at when we think about how a customer can come into the crowd strike family it's certainly you know the traditional way as been on the and point your core modules of a vdr things that nature but when you look at something like i'm a surface it's so easy to get up and running just you know you can get a trial
spk_0: are you can use a hot install anything and we see customers coming in in various ways lighting the a large scale as it is another good example i'm you know someone might have a need for the collection of data skill and you know looking at the cost and expensive the current them and looking at this and saying hey can we get something that's you know
spk_9: faster better cheaper and a my answer that way and then even when you think about our cloud offering we are plenty of customers that actually come to us in the cloud first before they actually deploy of on their internal network sell i think we've got enough modules and coverage and breath in the environment in the in the marketplace that customers can get us in various ways depending on whether needs are
spk_10: our
spk_28: thank you i next question becomes from the line of answering the wins keep of wells fargo please go ahead and answer
spk_9: okay great thank you are great quarter i nice recovery from quarter despite not being a real change in the macro ah i just got a question on the dell our partnership so i thought those millions thing i learned is that it will help you reach or smb customers i lived a large enterprise but you give us any more color around
spk_11: we have a partnership a work in any sort of framework for how you're thinking about as relief your fiscal twenty four guidance
spk_3: sure let me take the yeah the first part of that though i think about what we're doing with dell will be on the box so you can check the button and will be shipped on the box as you buy you know a dell computer
spk_12: we'll actually del will have the ability to actually sell subscriptions to customers they they cover ninety six percent of the fortune five hundred so large and small customers
spk_3: in smb bundle so they actually have a device as a service which is really interesting and that's a subscription service they have will be part of that and and part of their man service they actually are selected as the drive their demand answers on the employers' side so there's various go to market motions with them what you're really excited about and again i think it is it showcases you know our technology leadership in the market and the customer ah
spk_0: the biggest customers been clamoring for this technology citadel get a break you want to talk about the outlook to or thanks george like that the partnership is just getting started so we have not factor that into our guidance you as with any new alliance it does take time around but we're excited to be reengage with though
spk_13: thank you are next question comes on a line of tagliani a bank of america please go ahead die did you say palliative is a perfect guy it okay sorry i didn't hear my name
spk_14: on
spk_13: i have a few questions
spk_2: gross my so you've beaten revenues are great numbers but gross margin was down and he did this kind of not the above not much about expectations so is the pricing environment generating did you have to give ah by profession in order to grow faster or is it the impact of microsoft is any thing about fighting and and a difference between the beat on revenues and and margin
spk_8: ah maybe of fact with us
spk_2: who are so first on gross margin it's not but really about pricing i think you know we expected to fluctuate poorer quarter and as i said on the prepared remarks we expected to increase of the one percent in que one but there are few things that are impacting gross margin in of in the short term which will pay dividends and the long term one is where continue going to invest in our dataset and as we continue to do that that is going to impact or gross margin again in the short term but long term that's what we believe is the right strategy and second with her acquisition of fumio it's not been fully synchronize so in that does happen you know that i'll take some pressure off of of our cogs are those two things your the are really from other drivers on the coffin and i think as we continue to move into que en and beyond will be looking for more of that cost optimization and i feel strongly employee believe in our long term model which talked about our subscription gross margin going up the you know he to perfect fit
spk_0: thank you i next question comes from a line oh hamza father walla a morgan stanley your question please hamster
spk_2: they are good afternoon they give or take my question
spk_6: george he talked about ai being loving you in cyber security auditors love focus on of these days from customers key talk about how your quipping yourself those are handled it growing threat or on a i and how being on the and point is you that strategic real the attack this growing opportunity and breath sure thanks and dabble with a about a i will we really are one of the pioneers ah in a i from a security perspective week we started the company
spk_3: leveraging big data a i to be able to identify threats is never been seen before and prevent against those we continue to build out our ai capabilities across all our different modules with the massive data and telemetry that we collect every week
spk_16: this is mind boggling we can use that to continually train and learn and are i can continues to get smarter as we put more data into the system so when we think about stopping breaches the tip of the spear really is the endpoint the workloads
spk_3: that's where the adversaries are are targeting that's where the focused on feeling data encrypting and breaking in and and doing damage and i think you know when you look at our technology lead in this area we've proven or africa see through various testing outlets we continue to get ah incredible scores and at the end it a day it's really about the brand promises stopping bridges and a i as a massive part of what we're able to do tab
spk_0: implemented how we stopped as breaches and it does represent a competitive advantage and mode for us thank you
spk_17: or next question come from the line and brian essex of jp morgan your question please brian
spk_1: hi good afternoon at thank you for taking the question i guess hurt for you
spk_18: would like to begin with it in terms of the letters easy for mark and expansion appreciate appreciated comic carry the you had on accelerator hired and twenty twenty two and it sounded like the moderation and twenty twenty three that you've already get free cash flow morgan with about thirty percent on operating margin to about sixteen
spk_12: as we kind of model out and find you know model the next few years actually think about the lever the you have a better operating probability cashflow what should the spread between the to be
spk_3: and house we think of an odyssey you use consistently been conservative but this this one understand
spk_2: how you're thinking about the spend versus growth and privatization given that excessively thing so far with the martin expansion thank you they're great question so number one more gonna continue our vows approach to supporting our rapid growth added at you know even are greater scale with probability i think about going to be a fighter and i think we've done a great job in being able to manage that growth not at all costs but with a realize bottom i mean operating in a magic number about one and a rule of eighty one on a free casual basis or baffled class and and we're excited about being able to continue the monitor that watch that look i think we posted record offer to get coming due for an f y twenty three growing up or a margin you know to sixty percent of the year
spk_8: i think that you know what we talked about last quarter with respect to are hiring our priest firing me we'd be taken a really us approach about moderating the piece of hiring for the fear and i think that it goes to get home watching how and who were hiring or with an increased i making sure we're hiring the best
spk_0: and up us that really matters and we're going to get there without that we want to get by doing
spk_19: thank you or next question comes from a line of gabriella borgias of goldman sachs your line is open gabrielle
spk_2: good afternoon thank you for unless the a few their rate of change question on the punchline environment last three he gave to sit on the taking a loving percent monica quiet stop looking for a quantitative update our lunch and qualitative away either for my fault wait for me charged more insurance and customers
spk_29: employing a suspended and plane and twenty twenty three wrestled maybe what they were expecting money as well thank you
spk_8: a gary oh it's great to hear your voice overs
spk_2: your the of the take longer to to close the square
spk_0: we did v that and we do anticipate to see you know a lot of headwind continue throughout next year and for us as we think about next year if can see our thoughts are consistent with what we said last were i'll turn over to george yes a i'm in terms of modernizing there
spk_19: by the security stack i think that's run center or there isn't a cia oh that am talk it it doesn't want to consolidate their hodgepodge of technology out there are and again that goes beyond just ah
spk_20: i just and point right in terms of the things that we often a capabilities in the outcome and if you just think about the and point market itself as we talked about the i did you numbers were seventy point seven percent there's a lot more to go right is still a massive massive amount of legacy technology that's out there and again customers are looking to really pick up a modern platform and consolidator spend so the you know it it it's been something that customers or not
spk_3: it looking to to just stick with what they haven't breaches are not getting any any better the getting worse a threat as he would be more sophisticated and it's going to require better protection
spk_2: ah with a better outcome
spk_3: thank you are next question comes from a line of brian the colleague of stevens your question please brian
spk_12: hi thanks for taking my question so i'm curious on the x the are from if you've seen an acceleration and x the or adoption since you've entered his dog and inside xdr and new pricing strategy their last i'm wondering if you've you can i share what the average error or a as p
spk_0: uplift as look like for from those customers that have implemented next to our strategy
spk_21: yes you're so am i a we haven't given that level of information out specific xdr so i i can't comment on that below we think about xdr i think as an industry still nearly any some work at were of course one the pioneer the vdr we've extended that out into xdr were third party a great
spk_22: since ah
spk_0: i think we've got some incredible partners that we're now flowing data into the crowd right platform and be able to make ah advanced decisions on whether something is good or bad across multiple platforms including crowd strike and it's been well received so far but still nearly any i just that that know we are theme great early traction
spk_12: thank you ah next question comes from the line of a tie kidron of oppenheimer your line is open a tie
spk_3: ah thanks guys and nice quarter i'm i'm hoping to get more color get be because it's a very big opportunity for you done and with the goal bundles you're doing how after very good start there or maybe the point of reference can you tell how much of of your of enjoy our are concentrated in got out here how do you how much you think where do you think i can go with in a year's time and and also bird specifically are under dollar retention rate mom i can't imagine that the expansion opportunity with those type of customers is similar to that it opened up
spk_0: i'm a so i don't think about the impact of goes off of the growing mix of the type of customers
spk_23: on the dollar ah ah dollar based retention rates
spk_5: the legwork we're really excited about or fm be face george talked about or than another are coming on board we think we've got you know great products for them to come in and to expand on with not just limited to or enterprise although certainly be on the are is going to be driven by or enterprise customers
spk_24: know for debate and with has another think about next year i think we're going to see in a slightly more net new a are are coming from you know expansion deal than net new air are coming from you logos i think that we've got this incredible base of twenty three thousand subscription customers today and we can certainly continue to add more modules for their security faq and continue to delight them so that we are how we think about the at the flips
spk_2: thank you are a question comes on the line of patrick causal of scotiabank your line is open is patrick hey this article is from from scotiabank my questions about the net cash you got about two billion of that cash on
spk_8: the balance sheet we saw crm he so what day and just last week snowflake announced by back programs do thing that's something that you guys might consider on a good would basis to limit dilution in color tween twenty three and beyond
spk_0: kellogg we will evaluate every quarter you know that proposition
spk_2: i think that that's just the a quarter by quarter decision that will will come up with we do look at it
spk_0: we do look at what's happening in the environment there are many backer that we're going to decide whether we were going to do something like that too will be really on a quarterback or basis where we would you be evaluation
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