CrowdStrike Holdings, Inc.

Hello and welcome to the CrowdStrike Fiscal Second Quarter 2024 Results Conference Call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 1 on your telephone. You will then hear an automated message advising that your hand has been raised. Please be advised that today's conference is being recorded. It is now my pleasure to introduce Vice President of Investor Relations, Maria Riley.

Good afternoon, and thank you for your participation today. With me on the call are George Kurtz, President and Chief Executive Officer and co-founder of CrowdStrike, and Bert Podbear, Chief Financial Officer. Before we get started, I would like to note that certain statements made during this conference call that are not historical facts including those regarding our future plans, objectives, growth, and expected performance, including our outlook for the third quarter and fiscal year 2024, and any assumptions for fiscal periods beyond that, are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements represent our outlook only as of the date of this call. While we believe any forward-looking statements we make are reasonable, actual results could differ materially because the statements are based on current expectations and are subject to risk and uncertainty. We do not undertake and expressly disclaim any obligation to update or alter our forward-looking statements, whether as a result of new information, future events, or otherwise. Further information on these and other factors that could affect the company's financial results is included in the filings we make with the SEC from time to time, including the section titled Risk Factors in the company's quarterly and annual report. Additionally, unless otherwise stated, excluding revenue, all financial measures disclosed on this call will be non-GAAP. A discussion of why we use non-GAAP financial measures in a reconciliation schedule showing GAAP versus non-GAAP results is currently available in our earnings press release. which may be found on our investor relations website at ir.crowdstrike.com or on our form 8K filed with the SEC today. With that, I will now turn the call over to George.

Thank you, Maria, and thank you all for joining us today. I am pleased to report that in the second quarter, we exceeded our guidance across both top and bottom line metrics, delivering strong, durable growth at scale, incredible leverage, and operating within our target model on every metric. Even with a challenging macro backdrop, we delivered an impressive quarter highlighting CrowdStrike's structural competitive moat, making Falcon the definitive cybersecurity platform for the cloud era. Financial highlights for the quarter include ending ARR of $2.9 billion, up 37% year over year, with record contribution from cloud security Identity Protection, and LogScale NextGen SIM, together surpassing $500 million in ARR. Record non-GAAP operating margin of 21.3%. Record non-GAAP net income, which grew 109% year over year. GAAP profitability for the second consecutive quarter. Record Q2 free cash flow of $188.7 million. and an over 80% year-over-year increase in deals involving eight or more Falcon platform modules. Our commitment to operational excellence and the utilization of AI within our platform and across our entire organization is driving enviable leverage in our financial results, even as we aggressively invest in fueling growth. As Bert will discuss, we are raising our revenue outlook for the year and bringing in our timeline to sustainably achieve our non-GAAP target operating model. We now expect to exit Q4 within our target non-GAAP operating margin model and to remain within our target model on an annual basis starting in FY25. In an increasingly digital cloud-defined world, cybersecurity is becoming more important than ever. The FCC's recently enacted cybersecurity disclosure requirements substantiate the growing gravity of cybersecurity threats, elevating the category from an operational concern to an urgent board level and CXO spend priority. At CrowdStrike, we continue to build cybersecurity's platform of choice, offering a simple and powerful promise. We stop breaches. Heading into the second half of the year, We see increased momentum in the business driven by record levels of new logo and upsell pipeline, record deal registrations from our market-leading partner ecosystem, and record levels of customers proudly trusting CrowdStrike to be their long-term security platform consolidator of choice. We are also observing substantial changes in the competitive landscape, uniquely benefiting CrowdStrike With the business momentum we see and competitive market dynamics, we believe our second half performance will yield double digit net new ARR growth. Working in cybersecurity for the past 30 years, I have recognized and created tectonic shifts in this industry, and we are in the midst of one right now. Organizations need better, faster, and more cost effective protection for a digital society. Organizations need seamless, not stitched together automation to break down legacy data silos. Organizations need lower TCO and more efficient ROI driven investment. The competitive battlefield of cybersecurity today reflects these realities separating the wheat from the chaff. Those who have platforms versus those with point products masquerading as platform stories. What was a market littered with dozens of companies is quickly consolidating to several vendors. Smaller, narrower point product companies are being left behind. These companies are quickly going the way of legacy AV, already in the hands or looking for the safe hands of strategic or private equity buyers. Point product, single feature cloud security companies are learning the hard way that platforms built by design win at scale. Today's competitive landscape solidifies CrowdStrike's leadership position and turns what were once competitors into immediate share donors. CrowdStrike is purpose-built for this market. We have the technology innovation, mission-driven team, and sizable scale to lead cybersecurity platform consolidation. Shifting from competitive market dynamics to CrowdStrike, here are the reasons I see us winning in the second half and beyond. The Falcon platform enables real consolidation with best-of-breed outcomes, and we are flighting XDR transformations across cloud security, identity protection, and log-scale next-gen SIM. Each of these three platform solutions are high-growth, sizable businesses. Each are examples of IPO-worthy companies in their own right, and each are seamlessly integrated components of the Falcon platform. Let me first provide commentary on CrowdStrike as cybersecurity's consolidator, and then I'll follow up with updates on our cloud identity and next-gen SIM Falcon platform businesses. The Falcon platform has not only become the standard for delivering AI-powered cybersecurity, it has become the foundational cybersecurity platform for our customers. Our revolutionary cloud-native architecture consists of an AI-powered data platform and lightweight sensor form factor which remains the easiest and fastest to deploy with no reboots. Our form factor was made for the digital anywhere enterprise, not bound by operating system or hardware defined network perimeters. CrowdStrike has the visibility to detect and prevent attacks and the workflow integrations and automation to remediate. We have the prime enterprise real estate on devices and multi-cloud workloads to automate and consolidate cybersecurity. Customer after customer I met with at the Black Hat Security Conference wants to anchor their cybersecurity on the Falcon platform. These customers see us as their core partner in their security journey. With consolidation being a hot topic, let's talk about what security outcomes really mean. Stopping the breach. This is the most important outcome. Companies need vendors who are trusted partners that can understand, prevent, and respond to threat actors to stop breaches. CrowdStrike is uniquely positioned to stop breaches with our technology, threat intelligence, and services. Saving time. Delivering everything in a single modern console coupled with generative AI reduces dwell time and makes cybersecurity faster and easier. Saving money. With most enterprises still buying north of 60 cybersecurity point products, there's too much cybersecurity shelfware. Individual products require learning and maintenance, building integrations, and higher staffing costs. Eliminating the time managing, integrating, updating, and operating superfluous tools represents real savings regarding product, people, process, and cost. And finally, doing more. CrowdStrike Falcon unlocks new capabilities for organizations, such as deploying their first code to cloud security, identity protection, exposure management attack surface reduction next gen sim and more all in one integrated platform the breadth of native falcon capabilities in our prime real estate within the enterprise and smb technology stack is our advantage and creates significant customer expansion paths our open xdr platform the ability to take in first party and third party data is quickly becoming the enterprise data destination. We see data gravity for the management of cybersecurity, but also broader observability use cases as a competitive moat for CrowdStrike. Customers gain greater value with every module they adopt, reducing agents, security gaps, complexity, and cost, enabling them to transform and consolidate their security stack with the Falcon platform. Let me share several recent new customer wins that speak to this. First is a major auto manufacturer that tried but failed to consolidate their security on Microsoft E5. This company's security team quickly realized Microsoft's complexity, multiple consoles, lack of integration, misdetections, and complex deployments hampered their ability to defend themselves and consolidate. This customer is now consolidating on the Falcon platform with Falcon Complete for Endpoint identity, and cloud. Now with a single agent, single user interface, and single platform, they have complete visibility across their endpoints, cloud, and identities, and the ability to stop threats in real time. By moving from expensive Microsoft E5 to CrowdStrike, organizations can save 50% plus per user per year on Microsoft licensing costs, adding up to millions of dollars of savings. Another seven-figure consolidation win was with a leading residential construction manufacturer who took their Falcon Complete subscription to the next level. Beyond the endpoint, this customer purchased Falcon Cloud Security, Identity Protection, LogScale, and Falcon Surface, our external attack surface management offering. Falcon has become the platform of consolidation and trust for this enterprise, reducing spend with three other vendors by more than 60%, and wholly eliminating multiple vendors from their stack. Consolidation is not only fueling bigger new logo lands, but also increased platform adoption, especially in the areas of cloud security, identity protection, and lock scale, which in aggregate contribute well over half a billion dollars in ending ARR. Financial services, technology, retail, and manufacturing industry verticals continue to demonstrate strong demand with large deal sizes. In Q2, we closed over 80% more deals involving eight or more modules than a year ago as customers increasingly looked to CrowdStrike to consolidate their security stack. Let me now discuss our momentum in the platform areas of cloud identity and log scale next gen SIM, where we are setting new records. Let's start with cloud security. where net new ARR growth accelerated meaningfully and reached a new record during the quarter. Ending ARR for Falcon modules deployed in a public cloud grew to $296 million, up 70% year over year, larger than almost every single vendor in cloud security today. Driving this inflection is our focused innovation on Falcon Cloud Security, our CNAP suite offering, which unifies agent and agentless cloud native security capabilities into a single offering, providing immediate time to value across all major cloud environments. Net new ARR growth for Falcon Cloud Security accelerated to 70% quarter over quarter. We have made it easier for customers to consume Falcon Cloud Security with a single SKU, and customers are rapidly standardizing on CrowdStrike as their cloud security platform of choice. Customers are eager to move away from multiple point product vendors to Falcon's unified best of breed platform. We added many new capabilities to our CNAP offering, including infrastructure as code, side scanning, and attack path analysis, creating the most comprehensive CNAP solution on the market. Combined with Falcon Surface, our external attack surface monitoring solution that we acquired last year, we now provide a complete outside-in and inside-out view of a customer's security posture. This past quarter, we executed a go-to-market emphasis on cloud security, hosting a virtual cloud security summit with over 12,500 security and DevOps participants, followed by cloud-focused partner and sales plays. Our integrated cloud suite, easy management, and lower TCO value propositions are resonating at scale. We closed a record number of cloud customer wins in Q2, including multiple seven-figure cloud expansions with Fortune 500 customers, together in excess of $20 million in deal value. An iconic Fortune 50 retailer prioritized a full, not phased, Falcon cloud security purchase of $5 million in deal value, choosing CrowdStrike over a point product cloud security scanner and displacing their firewall vendor. Additionally, a major Fortune 500 manufacturer sought product superiority and a single platform approach, replacing Wiz with Falcon Cloud Security. Other cloud wins include New Lance with financial, technology, media, and healthcare companies, as well as public sector accounts. Finally, I want to highlight a cloud expansion with a Fortune 1000 retail brand facing increasing costs from their incumbent cloud security vendor, and struggling with limited visibility over their cloud assets. This customer launched an initiative to unify their security stack and remove gaps between traditional endpoint cloud runtime security and posture management. CrowdStrike is the only vendor that met these requirements and a unified platform and helped them drive down their overall operational costs. The cloud security market opportunity is massive and growing rapidly. with the potential to reach $18 billion in calendar year 2026. Cloud exploitation by adversaries increased 95% year over year. And the only way to stop threats in real time is with a fully fledged agent and agentless cloud suite like Falcon. Only CrowdStrike delivers a fully integrated CNAP solution that unifies cloud workload protection, cloud security posture management, cloud infrastructure entitlement management, threat intelligence, and threat hunting in one platform across hybrid and multi-cloud environments. Our leadership in cloud security was recognized in Frost and Sullivan's recently published 2023 Frost Radar Cloud Workload Protection Platform Report based on our impressive CWPP business growth, our comprehensive cloud visibility, and our unrivaled cloud detection and response services. Identity protection also stands out with over $200 million in ending ARR, up 194% year over year. Identity-based attacks represented 62% of all interactive intrusions we observed in the last 12 months. CrowdStrike Falcon Identity Protection delivers the best protection against identity attacks, recently winning the CRN Tech Innovator Award as the best solution on the market. The identity protection adoption rate for new customers grew more than 100% year over year, and the total number of deals tied to identity increased 200%. Highlighting this in Q2 is a financial services firm that initially turned to CrowdStrike for incident response following a breach where an attacker used legitimate credentials to bypass the company's existing security products and remained undetected for a week. Following remediation by CrowdStrike incident responders, This customer consolidated on the Falcon platform, adopting Falcon Complete, Falcon Identity Complete, and Falcon Cloud Security Complete, displacing and consolidating four vendors in the process, Microsoft, Sentinel-1, Arctic Wolf, and Sophos. Moving to LogScale. Net new ARR from LogScale NextGen SIM reached a new record as customers increasingly adopt the solution to solve multiple use cases. The number of customers using LockScale grew more than 3x year over year. LockScale ending ARR grew over 200% year over year and is quickly approaching the $100 million ARR milestone, which we expect to achieve in Q3. A Fortune 500 manufacturing company expanded on the Falcon platform with a nearly $4 million deal value LockScale purchase after becoming frustrated with their legacy SIM vendor due to its increasingly prohibitive cost, complex licensing, and poor forced on-prem to cloud migration experience. Given large scales on parallel speed and flexibility and cost-effective licensing model, this customer is now leveraging the Falcon platform to transition away from legacy SIM, supercharging the speed of both their observability and security use cases. Falcon is a platform that brings the benefits of generative AI to life for every SOC, CISO, CXO, and enterprise. We do it with proprietary threat data, and we do it with industry-leading AI expertise. Charlotte AI is the engine powering our portfolio of generative AI capabilities across the platform, utilizing CrowdStrike's high fidelity data advantage. Charlotte AI helps Falcon users of all skill levels to do more in the platform by automating workflows, which fuels module adoption and reduces the mean time to detect and respond. The net benefit to customers from our pioneering use of AI in a single platform is faster results, better security outcomes, and lower overall costs, ushering in a new era of machine speed security. We showcased Charlotte AI earlier this month at Black Hat where we're the only vendor of consequence to showcase a live, not PowerPoint, demo of generative AI in action. Public reception was fantastic and we will release Charlotte AI pricing at Falcon. Moving to partners, 64% of new customers from large enterprises to SMBs were sourced from our partners in the quarter. Our industry leading partner ecosystem is embracing the broader Falcon platform building long-term differentiated businesses with CrowdStrike. CrowdStrike is AWS's largest cybersecurity go-to market partner. And we recently won their ISV Partner of the Year award, validating our cloud security category leadership, commitment to innovation and go-to-market success, particularly in cloud security. Finally, the initial momentum we are building through our partnership with Dell is exciting, delivering eight figures in deal value in just a few months. As we highlighted previously, our resale agreement with Dell hit the market in Q1, delivering in-quarter new deals in every major geography region. In the second quarter, we went live with attached device sales globally and rapidly achieved industry-leading device attach rates. Demand in our markets has remained resilient, and even as we continue to operate in a time of macro uncertainty and increased deal scrutiny, our win rates remain high. The momentum we are building with consolidation deals specifically tied to cloud security, identity protection, next gen SIM, and increased partner engagement is driving our pipeline to record levels. Additionally, Falcon, our annual customer conference, is our biggest selling event of the year. And this year, registration is already up 80% from last year. The Falcon ecosystem will be on full display with over 70 technology go-to-market partner sponsors in attendance. I would like to invite our investors and analysts to join us at Falcon. Similar to last year, in conjunction with the event, we will hold an investor briefing featuring conversations with customers and partners. This year's briefing will also include a financial discussion led by our CFO, Bert Podbear. Please note the customer sessions will not be available on the webcast, so please join us in person. And with that, I will turn the call over to Bert to discuss our financial results.