CrowdStrike Holdings, Inc.

Thank you for standing by, and welcome to CrowdStrike Holdings' third quarter fiscal year 2024 earnings 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. To remove yourself from the question queue, you may press star 1-1 again. I would now like to hand the call over to VP of Investor Relations, Maria Riley. Please go ahead.

Good afternoon, and thank you for your participation today. With me on the call are George Kurtz, President and Chief Executive Officer and co-founder of CrowdStrike, and Bert Podbear, Chief Financial Officer. Before we get started, I would like to note that certain statements made during this conference call that are not historical facts including those regarding our future plans, objectives, growth, including projections, and expected performance, including our outlook for the fourth quarter and fiscal year 2024, and any assumptions for fiscal periods beyond that are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements represent our outlook only as of the date of this call. While we believe any forward-looking statements we make are reasonable, actual results could differ materially because the statements are based on current expectations and are subject to risks and uncertainties. We do not undertake and expressly disclaim any obligation to update or alter our forward-looking statements, whether as a result of new information, future events, or otherwise. Further information on these and other factors that could affect the company's financial results is included in the filings we make with the SEC from time to time, including the section titled Risk Factors in the company's quarterly and annual 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 the reconciliation schedule showing GAAP versus non-GAAP results is currently available in our earnings press release, which may be found on our investor relations website at ir.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 would like to begin my remarks today by expressing gratitude to our customers who proudly trust CrowdStrike as their cybersecurity platform consolidator for the AI era. Gratitude to our partners who win with CrowdStrike, taking our joint customers on Falcon platform transformation journeys from device to cloud to identity to data and beyond. And to our team for their passionate dedication to our mission, stopping breaches, fighting adversaries, and delivering the very best cybersecurity outcomes. Moving on to Q3, despite a challenging macro environment and geopolitical tension, I am extremely proud of the resilience of our business and that we delivered a record Q3. CrowdStrike surpassed the $3 billion ARR milestone with an ending ARR of $3.15 billion growing 35% year over year. CrowdStrike is the fastest and only pure play cybersecurity software vendor in history to achieve this milestone. In Q3, we delivered double digit net new ARR acceleration at scale, powered by customer demand for the depth and breadth of CrowdStrike's AI native XDR platform. Terrific execution exemplified by rising win rates against our competitors, and acceleration in our cloud security and identity businesses, as well as a record quarter in our large-scale next-gen SIN business. Our standout top-line performance came in tandem with P&L discipline as our profitability soared to record heights. Q3 was indeed a quarter of records. Let me share several of our financial highlights. Record net new ARR of $223 million, representing 13% year-over-year growth from acceleration in new and expansion business. Record non-GAAP subscription growth margin. Record GAAP and non-GAAP operating profitability. Record free cash flow of $239 million, representing 30% free cash flow margin and achieving free cash flow rule of 66 up from 63 last quarter. Bert will share more color on our financials and platform adoption stats following my remarks. This was a standout quarter and places us well on the path to $10 billion in ARR that we outlined in our latest investor briefing. The market continues to validate CrowdStrike's widening leadership position, while others scale back R&D We are increasing our investments as innovation is the lifeblood of our company. We continue to make meaningful investments in go-to-market and profitable growth. To this end, we received multiple industry awards and accolades over the course of this quarter. Across industry analyst firms, CrowdStrike is consistently top rated. In Q3, CrowdStrike was awarded a perfect 100% across protection, visibility, and analytic detections in MITRE's latest attack testing in industry first, recognized as Gartner customer choice and one of the highest rated in their latest peer insights voice of the customer for EPP report. Named a leader in the Forrester way for endpoint security and positioned as a leader in the IDC vulnerability management market scape, our leadership position is translating into record demand for our exposure management solution in its first quarter on the market. Our market presence and open platform approach to XDR is a uniting force in cybersecurity. In Q3, we hosted Falcon, our flagship customer and ecosystem event with more than 4,000 attendees and 70 sponsors. This was fast followed by our Falcon on the road series where we have already hosted Falcon Tokyo and Falcon Sao Paulo with thousands in attendance. The drumbeat of innovation was loud and clear with multiple releases and announcements showcasing CrowdStrike as the XDR leader, including the Falcon Platform Raptor release, which standardizes all of our customers on log scale. This builds our platform data gravity, coupling native Falcon data with third-party data ingest, further enabling our customers to realize SIEM and XDR use cases on Falcon. Falcon for IT, a new module to unify IT and tech ops. From hygiene to patching, Falcon for IT lets customers consolidate multiple use cases and replace legacy products with our single agent architecture. Our new Falcon data protection module that liberates customers from legacy DLP products with modern frictionless data security, which prevents data exfiltration. Falcon Foundry, a no-code application development solution enabling both customers and technology partners to build directly on Falcon, Foundry epitomizes the true definition of a platform offering limitless apps. We announced the acquisition of Bionic, bringing application security posture management to the Falcon Cloud Security Suite. Falcon Cloud Security is the industry's most comprehensive and innovative cloud security offering with integrated agent and agentless CFPM, CIEM, CWP, and now ASPM. We released the beta and pricing for Charlotte AI, our AI-powered SOC analyst, which was incredibly well-received. CrowdStrike's generative AI, leveraging multiple foundational models, can turn hours of work into minutes while democratizing cybersecurity, unlocking value, and adoption across the entire breadth of the Falcon platform. Enthusiasm for Falcon for IT, our automation and hygiene module for IT teams, is exciting to witness because it is something so intuitive that our customers want. Like data protection, Falcon for IT solves a clear and long-neglected pain point where customers are forced to rely on multiple legacy products that have long outstayed their welcome. Customers are eager to consolidate their agent estate while reducing cost and complexity. Falcon for IT illustrates the power of CrowdStrike's single platform approach. We have the real estate and data foundation to solve ever-evolving use cases, delighting our customers while disrupting vendors that have failed to evolve. The resounding takeaway from my customer engagements at Falcon and throughout the quarter is that CrowdStrike is the right choice for CISOs, CIOs, executive teams, and boards. Here's why. Our build-by-design, single-platform architecture requires no integration, no stitching, and no platformization. Our unified cloud-native platform and critical beachfront real estate within the customer state naturally creates cybersecurity data gravity, solving for today's challenges while preparing for the unknowns of tomorrow. Organizations are looking for a trusted cybersecurity consolidator CrowdStrike is cybersecurity's AI consolidator, liberating organizations from a litany of increasingly ineffective legacy tools, multiple agents, point products, and fragmented pseudo platforms. Illustrating this point, deals with eight or more modules increase 78% year over year in the quarter. This is what consolidation looks like. And third, stopping the breach matters more today than ever. Adversaries continue to evolve. moving faster and increasing their use of dark AI, turning AI into a weapon for evil. At the same time, legislative and SEC regulatory oversight pressures boards and executives to prioritize cybersecurity. With these three takeaways in mind, let's start by expanding on the first, why CrowdStrike is the definitive single security platform. Multiple fragmented platforms, consoles, and data silos force customers to focus on integrating, not security outcomes. Our relentless focus on innovation and commitment to a single, built-by-design platform creates cybersecurity's source of truth. Built on this platform foundation are cloud, identity, and lock-scale next-gen SYN products are examples of IPO-worthy hypergrowth businesses. Let's take a look at our momentum in cloud security. Growth accelerated in the quarter, and we're entering Q4 with a record pipeline. Noteworthy wins in the quarter included an eight-figure total deal value with a new Falcon customer in the hospitality vertical, where we now secure their vast multi-cloud estate as part of a broader Microsoft replacement. A seven-figure cloud security expansion with one of the largest enterprise SaaS providers, where we replaced multiple existing point products with Falcon cloud securities. a seven-figure cloud security expansion with a major apparel brand where we replaced a firewall hardware vendor's cloud security with our unified Falcon cloud security offering. CrowdStrike has one of the largest and fastest-growing cloud security businesses by ARR and customer count. The number of customers we protect in the public cloud has increased 45% from last year as we rapidly replaced other cloud security vendors in the ecosystems. Point product API-based CSPMs have emerged as the easiest to replace as the market rapidly adopts our consolidated view that together, agent and agentless security stops the breach. Combined with our recently completed Bionic acquisition, we're the only vendor offering ASPM, CSPM, BWP, and CIM under a single BNAP umbrella. Moving to identity threat protection, where we delivered a record quarter More and more companies are investing in protection from the growing number of identity-based attacks, with highly visible breaches prominently covered in the news over the past few months. Identity threat protection wins in the quarter included an eight-figure total deal value win in the federal government, where Falcon Identity landed as the identity security solution of choice, and multiple seven-figure wins across diverse verticals, including financial services, consumer packaged goods, and manufacturing, to name a few. We see a long runway for guiding organizations on their zero-trust transformation with our identity threat protection, given a rapidly growing threat vector, a largely untapped market where most organizations aren't protected, and our frictionless, unified architecture that secures identity across devices, clouds, domain controllers, and Active Directory. CrossFit pioneered the identity threat protection category we are unmatched in the market as the only company with a single agent solution for both on-prem and cloud environments moving to lock scale our lock scale next-gen thin business achieved new records in q3 surpassing the 100 million dollar arr milestone the combination of search speeds data gravity and cost efficiencies all integrated within the falcon platform sets lock scale miles apart from its competitors however It is the future of this business that really excites me. Our large-scale next-gen SIM opportunity is supercharged by pervasive discontent with legacy SIMs, recent M&A activity, and CrowdStrike's growing position as cybersecurity's platformer record. We have seen a significant and pronounced increase in interest among customers looking to leapfrog their expensive, cumbersome, and slow legacy SIMs. Our next-gen SIM offering is the right technology in the right place at the right time to benefit from market dynamics and the scale of CrowdStrike. Q3 wins include a seven-figure expansion in a major consumer staples company, selected large scale to ingest data from third parties, correlate alerts, and benefit from long-term data retention. A seven-figure financial services new customer land where CrowdStrike was called in to stop a breach. With the desire to operationalize their high-fidelity security data without compromising on cost, Falcon LogScale was an easy choice to replace the incumbent Microsoft. A seven-figure new logo land in a business process outsourcing firm that had decided it was time to replace their antiquated SIM with LogScale while also adopting the Falcon platform for XDR, identity, and cloud security. Our advancement into the next-gen SIM market is accelerated by the Raptor release, which brings LockScale to the forefront of the Falcon platform experience. With Raptor, we've made it significantly easier for customers to build their security and data lake efforts on top of LockScale next-gen SIM across our native first-party data and that of any third-party product. Our single-platform approach evolves and broadens the aperture of cybersecurity. CrowdStrike is cybersecurity's AI consolidator, liberating organizations from legacy AV, subpar EDRs, and a hodgepodge of hygiene, compliance, vulnerability, device management tools, costly and clunky SIMs, and a confusing alphabet soup of immature CloudPoint products. This lengthy list of costly point products can be left behind, saving tens of millions annually for businesses. Most importantly, stopping the breach matters more today than ever before. Adversaries don't discriminate, no matter the industry vertical, the geography, or the business side, stopping the breach is non-negotiable. The business disruption and financial losses from breaches are growing. Coming corners on security is one of the most costly choices a business can make. The cost associated with cleaning up a breach can exceed $100 million. Our seminal cybersecurity platform innovation, as well as threat intelligence and service expertise, delivers the best security outcomes. This is why we win. Stopping the breach is the security outcome that Crown Strike delivers. This makes our business incredibly durable in diverse economic cycles. We are a business necessity. A win this quarter exemplifying our unmatched capabilities is a large multinational who was using legacy EDR until they were breached. They called CrowdStrike, and we quickly remediated the breach. Seeing the power of the Falcon platform, this customer purchased Falcon Complete, Identity Complete, and Lockscale NextGen SIM for hundreds of thousands of workloads. Helping this large multinational in their time of need showcases CrowdStrike's differentiation. Our AI trained on cybersecurity's richest data set drives the industry's most comprehensive protection and automation. We couple the right technology platform with cybersecurity's best and brightest incident responders and the expertise that comes from curating the industry's leading threat intelligence. The need for stopping breaches is not just an enterprise concern. The problem is just as pronounced in the SMB market, especially the S of SMB, where businesses remain stuck on legacy, signature-based AV, oftentimes not knowing that better exists for them. Falcon Go is fit for purpose, delivering big protection for their small business. With our latest release of Falcon Go, we delivered a whole new user experience, creating the easy button for cybersecurity, removing the need for CrowdStrike users to have cyber or IT skills. The new console is intuitive and pre-configured for immediate SMB success. We're always looking to remove the friction from the customer experience. And this new release makes Falcon Go as easy as one click to accelerate customer adoption. Falcon Go is a major step for SMB cybersecurity, and we are now investing in go-to-market. We launched sales of Falcon Go on Amazon Business, a marketplace where over 6 million SMBs purchase everything for their businesses. With Falcon Go, our mission of stopping breaches extends to businesses of all sizes, large and small. Our go-to-market is propelled by our partner ecosystem. Partners bring CrowdStrike into new accounts and drive platform adoption in existing customers. Year-to-date, 62% of all our new logo wins were partner sourced. The efficacy and success of our channel-led growth was reported by Canalys, the channel's leading industry analyst firm, in their most recent cybersecurity research. Canalys reported CrowdStrike's endpoint market share as number one ahead of Microsoft. In addition, the research highlights CrowdStrike as the fastest-growing cybersecurity vendor in the channel, ahead of Microsoft and Palo Alto networks, among others. We are setting new records. We announced surpassing $1 billion in AWS Marketplace sales. Being the first and fastest cybersecurity vendor to reach this milestone exemplifies CrowdStrike's leadership position as the cloud's cybersecurity platform of choice. And our AWS momentum is not slowing. This past quarter was a CrowdStrike record AWS marketplace quarter. Our global systems integrator alliance partners are increasingly engaging with us across the entire Falcon platform. For example, EY built a 150-person strong and growing global log scale next-gen SIEM practice based on the demand they are seeing for SIEM transformation and our technological superiority. In addition, EY refers their clients to CrowdStrike for incident response engagement and secure digital transformation projects. To date, we have done over $160 million in business with EY across 24 countries. In closing, in a challenging macroeconomic environment which impacted even the largest cybersecurity vendors, we delivered a record Q3, accelerating double-digit net new ARR growth, record-free cash flow, and record profitability. Surpassing $3 billion of ARR as the fastest and only AAA cybersecurity software vendor in history to achieve this milestone validates CrowdStrike's market leadership. Our Q4 setup is strong with a record pipeline, and the competitive gap between CrowdStrike and other players in the market continues to widen. I'm excited about the path we are on and the progress we are making to $10 billion in ARR. Today's cyber environment is exactly why I built CrowdStrike. The adversary is moving faster, and the rise of dark AI significantly increases attacker sophistication. Falcon has made cybersecurity easy and effective for small businesses to the world's largest enterprises. Simply put, CrowdStrike is cybersecurity's platform consolidator of choice. The platform is winning at scale. Our customers are looking to Falcon for more. more workloads, more use cases, and more security outcomes. CrowdStrike remains unrelenting in our focus and promise, stopping the breach. With that, we have a busy and exciting Q4 ahead of us, and I will now turn it over to Bert for commentary on our financial performance.