CrowdStrike Holdings, Inc.

Hello, and welcome to CrowdStrike's fourth quarter and fiscal year 2025 financial results conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, we will conduct a question and answer session. Please be advised that today's conference is being recorded. I would now like to hand the call over to Maria Riley, Vice President of Investor Relations. Maria, please go ahead.

Good afternoon, and thank you for your participation today. With me on the call are George Kurtz, Chief Executive Officer and 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 first quarter and fiscal year 2026, and any assumptions for fiscal periods beyond that, are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements represent our outlook only as of the date of this call. While we believe any forward-looking statements we make are reasonable, actual results could differ materially because the statements are based on current expectations and are subject to risks and uncertainties. We do not undertake and expressly disclaim any obligation to update or alter our forward-looking statements whether as a result of new information, future events, or otherwise. Further information on these and other factors that could affect the company's financial results is included in the filings we make with the SEC from time to time, including the section titled Risk Factors in the company's quarterly and annual reports. Additionally, unless otherwise stated, excluding revenue, all financial measures disclosed on this call will be non-GAAP. A discussion of why we use non-GAAP financial measures and 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 for our Q4 2025 earnings call. I'm extremely proud of the engagement we've had with customers, partners, prospects, and the market navigating a year that tested CrowdStrike. Q4 showcases the fruits of our labors, giving me strong conviction in our AI native single platform, excellent execution, and accelerating market opportunity. Q4 and FY 2025 highlights include Q4, net new ARR of $224 million, well ahead of our expectations, closing FY 2025 at $4.24 billion in ending ARR. FY 25, ending ARR for cloud security, identity protection, and next-gen SIM of over $1.3 billion, growing nearly 50% year over year. Gross dollar retention of 97% as customers remain firmly committed to the Falcon platform. Q4 free cash flow of $240 million. And for the full year, we delivered free cash flow of $1.07 billion or 27% of revenue, setting a new record and for the first time exceeding $1 billion in annual free cash flow. CrowdTrack is the first cybersecurity ISV to cross $1 billion in deal value on AWS Marketplace in a single calendar year, setting a new standard for ecosystem execution. And record and accelerating FY25 total contract value of $6 billion, the first and only pure play software cybersecurity company reported to achieve this metric, which increased 40% year on year, showcasing the scale and commitment of customers' long-term cybersecurity consolidation on the Falcon platform. Everyone loves a comeback story, and that's exactly what we've started experiencing in Q4 as we've closed out the year. The results tell our story. One, we've never been closer to our customers and partners with market-leading customer satisfaction levels. Two, we're playing best-in-class defense as well as offense with our Falcon Flex subscription model. And three, our innovation engine hasn't missed a beat. The Falcon platform has never been more market competitive, whether that's winning new logos or in third-party analyst research. We find ourselves placed at the epicenter of a rapidly evolving demand environment. A new administration, a new wave of technology and a new threat landscape necessitate all businesses to evolve their cybersecurity programs. Consolidation, cost reduction and automation are now the accepted enterprise and federal priorities. These priorities are accelerating the shift from ineffective, narrow or duplicative point products. I'd like to share AI specific trends on the broader demand environment and how these trends relate to CrowdStrike. First, AI experimentation is just starting to evolve into AI outcomes. Second, we're in the midst of a rapidly accelerating geopolitical AI armed race. And third, winning the AI war requires the very best data and battle-tested innovation engine. Commenting on the shift from AI experimentation to AI outcomes. We're still in the early but rapidly evolving innings of the AI revolution. Businesses and governments across the globe are looking for their AI investments to yield both improved efficiencies and novel outputs. At CrowdStrike, we're requiring every team and function to leverage the power of AI. We expect these investments to play critical top and bottom line roles on our path to $10 billion in ARR. In the broader market, businesses are equally grappling with how to secure their environments in this AI age. Here's my take on what this means. First, more AI everywhere means more data, more access, and more processes, services, and products requiring cybersecurity. The locales of AI adoption are either in cloud workloads or data centers or even on edge devices, all of which we are market leaders in securing with AI native technology that stops the breach. Second, more access to more third-party and in-house agentic applications and services requires rethinking identity and data protection. Who is accessing data and where is it traveling matters more now than ever before. And third, securing AI starts a broader enterprise data discussion. I'm seeing CISOs, CIOs, and CEOs going to the drawing board to reinvent their technology stack with AI-powered platforms of record for their next decade and beyond. And for security, it's even more pressing. For our customers, Falcon has quickly become their AI native SOC. Charlotte, our generative AI security analyst, is a SOC analyst best friend and already driving tangible AI outcomes. Charlotte AI detection triage accelerates SOC operations and threat response times. Across more than 100 Q4 Charlotte AI deals, customers are seeing outcomes, sharing feedback like what we've received, from a European financial services firm, which stated, Charlotte AI has been very useful for us. It's done summarization of activity on host and users in 10 to 15 seconds, which would have taken us 20 to 30 minutes to do manually. Returning to my second point on the geopolitical AI arms race, our threat intelligence practice sees nation state cybercraft proliferation at all time new highs. A new wave of nationalism and threat actors is creating adversary stockpiling akin to the Cold War era. In our recently released annual global threat report, we exposed China nexus adversaries escalating state-sponsored cyber operations by 150%, with targeted attacks in financial services, media, manufacturing, and industrial sectors soaring up to 300%. And with tools such as DeepSeek making AI access easier and cheaper, the pace and prevalence of adversary AI adoption is only accelerating. It is in this intensifying threat landscape that CrowdStrike and our threat intelligence expertise shines. Q4 was our largest threat intelligence quarter in company history. Governments and enterprises increasingly turned to CrowdStrike, especially in a competitive environment where M&A activity has subsumed many existing threat intelligence vendors. We're the market's leading threat intelligence authority, discovering and naming the adversaries to unite cyber defenders and stopping them. The democratization of destruction, AI in the hands of more adversaries, intensifies the market need for CrowdStrike. And lastly, my third point, CrowdStrike is manufacturing the instruments to win the AI war. We have the innovation engine and the security data to fuel it. Finally, in this AI fuel demand environment, the point product vendors and those that have failed to deliver open and native single platforms increasingly fall short. CrowdStrike is cybersecurity's AI native sock. Our greatest asset is our role as the creator of cybersecurity's richest data. We've curated this data set with millions of Falcon complete analyst annotations, making threat data contextualized and actionable. No one else has this. Our data is liquid gold for creating new agentic models for continuously improving protection. Falcon is purpose-built to win the AI war with market leading protection. As the first call for organizations large and small to stop the breach, we see where others fall short. We saw an uptick in incident response engagements in Q4. Thematically, these organizations were using a next-gen EDR vendors technology, where we saw one of our strongest competitive displacement quarters in a logistics software vendor, a national packaging and marketing firm, and security software provider, to name a few. Falcon's efficacy and rapid ease of deployment is why CrowdStrike is the first call to stop the breach. We've also innovated in devising the most effective model for customers to adopt the Falcon platform, Falcon Flex. Falcon Flex is a subscription model that enables customers to adopt the modules they want across their subscription term. This model deeply resonates with prospects and customers as well as our ecosystem partners. Following the Summers incident, we worked with impacted customers to offer them customer commitment packages, CCPs, largely in the form of additional product and Falcon Flex subscriptions. The CCP program was a Falcon Flex accelerant. In Q3, we shared accounts that adopted the Falcon Flex model, representing more than $1.3 billion of total deal value. In Q4 alone, we added over a billion dollars of total account flex deal value. With accounts that adopted Falcon Flex soaring to $2.5 billion in total deal value, growing 80% quarter over quarter and growing more than 10 times year over year. Our ability to close Falcon Flex deals at size and scale shows customers long-term commitment to CrowdStrike and was a key contributor to our TCV acceleration. This commitment is supported by action, deploying more Falcon modules and consolidating on the platform. With more than 60% of Falcon Flex deal value already deployed by customers to date, we are pleased with the deployment stats. Falcon Flex is a game changer, accelerating module adoption and making it easier and faster than ever before to consolidate on Falcon. With the summer now several quarters behind us, we're ending our customer commitment package program. The CCP program was an excellent proactive measure, which not only built our relationship with impacted customers, but also resulted in significant platform adoption. This uptake gives me confidence in our second half net new ARR reacceleration as products are deployed, one-time discounts drop off, and contracts are upsized and renewed. And one of the biggest beneficiaries of Falcon Flex is the accelerated adoption of our rapidly emerging platform solutions. In the past, we've discussed three core solutions, cloud, identity, and next-gen SIM. This quarter, I'd also like to provide an update on our exposure management business, which is displacing legacy vulnerability management products and has swiftly become a meaningful contributor to the business with line of sight to $300 million in ARR. Starting with cloud, our cloud security business delivered a strong Q4, growing more than 45% with ending ARR more than $600 million. The cloud is central to the AI revolution, providing the core infrastructure to enable enterprises to harness the power of AI across their businesses. Cloud security has never been more important. We're seeing two core trends emerge in the cloud security market. First, the core mechanism for protecting the cloud is runtime protection, where CrowdStrike is uniquely positioned to deliver the best and most comprehensive workload protection in the industry. We are the cloud runtime security vendor. While others are trying to catch up, CrowdStrike has delivered frictionless CWP for years, battle tested to stop cloud breaches. And second, the market for cloud security is rapidly consolidating, with customers looking for an integrated end-to-end platform where the sum of the parts is greater than the individual pieces. This is the promise on which Falcon Cloud Security delivers. By securing the entirety of the AI infrastructure from workload to LLM, CrowdStrike is enabling enterprises to harness the power of AI securely. A key win in the quarter was an eight figure Falcon Flex transaction for a major global financial services holding company, where we displaced a network security vendors, multi-platform cloud offering. CrowdStrike Financial Services made it even easier to go all in with Falcon, committing to a large multi-year deal. Too many consoles got in the way of seamless SOC operations. Falcon Cloud Security was far easier to manage in a single console and provided all the right security controls to stop cloud breaches. Moving on to our identity business, which grew to more than $370 million in ending ARR. Our identity business continues to benefit from several key trends, including the rapidly growing identity attack surface. In addition, our vision for the recently acquired adaptive shield business, now called Falcon Shield, secures identities everywhere, whether on-premises, in SaaS applications, or within hyperscaler infrastructure. A key identity win was a large state university hospital system that consolidated on Falcon in a seven-figure deal. The CISO secured independent budget for Falcon because of the operational superiority of our identity protection module. Specifically, this university had enough of a competitor's identity protection bolt-on product that produced too many false positives. Moving on to our next-gen SIM business, which grew more than 115% year-over-year, finishing the year at more than $330 million and ending ARR. Next-gen SIM is rapidly breaking out as a foundational cornerstone of the integrated Falcon platform, offering unmatched speed, scalability, and cost efficiency compared to legacy SIMs. We believe the coupling of Next Gen SIM alongside our native first party data and the agentic power of Charlotte AI gives CrowdStrike a unique advantage to continue leading the AI security revolution. This is why CrowdStrike is uniquely delivering the AI sock of the future today. A key seven-figure NextGen SIM win from the quarter was a major US airline, which also ranks as one of the top of global airlines by passengers carried. This airline selected CrowdStrike to replace Legacy AV in the fall and then turned to us to replace their Legacy Q Radar SIM. Falcon NextGen SIM's ease of use, incident workbench, and ease of data ingestion prevailed over a network security vendor and hyperscaler SIM. In total, our cloud identity and NextGen SIM businesses represent more than $1.3 billion in ending ARR, growing nearly 50% year over year. While each of these businesses can stand on their own, it's the combination of these technologies, when delivered together alongside the broader Falcon platform, that continues to propel CrowdStrike forward as the only true single platform on the market today. And finally, for the first time, I'm excited to discuss our exposure management business, which has quickly become a market disruptor. CrowdStrike Exposure Management offers both native vulnerability management for devices and applications coupled with integrated attack surface management. This enables features like attack path analysis and dramatically improved vulnerability prioritization. Our customers are already replacing legacy vulnerability management products at scale. Exposure management wins are easy module attaches to Falcon Flex deals, and we're closing them with regularity as we consolidate out legacy vulnerability management vendors. Representative wins include a large digital radio station, a multinational shipping line, and a large healthcare provider in Asia Pacific. Cybersecurity's leading partners see CrowdStrike as a generational opportunity. Our ecosystem is a key growth lever on our $10 billion ARR journey, already returning significant dividends. From a deal origination standpoint, partners source 60% of our new business in the fiscal year, validating our partner-first strategy and ecosystem investments. In particular, NextGen SIM has attracted the interest of the GSI community, given their experience configuring the SIMs of yesterday and the market opportunity to displace these legacy products. In addition, the Falcon Flex subscription model fits the GSI selling motion with incentives for customer flex utilization. Our GSI business neared the billion dollar milestone in FY25, growing north of 40% year over year. Leading GSIs like Accenture, Deloitte, EY, HCL, WePro, NTT, TCS, Infosys, and Cognizant are investing in their Falcon services practice, and I expect us to see continued growth from these partners this fiscal year. Our MSSP go-to-market continues to expand at a hyper-growth pace, addressing the needs of small to medium businesses who want their cybersecurity program fully managed. MSSP contributed nearly 15% of our new business in FY25, signifying a route to market which has quickly grown and scaled over the past two years. All of our go-to-market partners benefit from our deep investment and strategic focus on cloud marketplaces. We recently announced being the first cybersecurity ISV to achieve more than $1 billion in sales on the AWS marketplace in one calendar year. We also had a noteworthy year with Google Marketplace, where in our first year of partnership, we did over $150 million in deal value out of the gate. We've aligned our partner ecosystem around hyperscaler marketplaces where we see larger deal sizes and faster deal cycle times. In closing, we are cybersecurity's AI native agentic platform that stops the breach. Our innovation engine enables us to be a consolidating force for secure AI transformation. Our platform wins. Seven modules are each now individually over $300 million in ending ARR, demonstrating the power of our innovation in driving record adoption and Falcon's multi-act platform opportunity that continues to drive growth. And our go-to-market execution momentum is unprecedented. Businesses are speaking with their wallets, investing in CrowdStrike to secure their futures, Today, including our end customers and those of our MSSPs, CrowdStrike is trusted by more than 74,000 organizations as their cybersecurity platform of choice, growing more than 30% year over year. And in Q4 alone, we've closed new records in every total deal value segment. over 20 deals greater than $10 million, over 350 deals greater than $1 million, over 2,300 deals greater than $100,000. And that was all in Q4. The data tells me that customers trust CrowdStrike, partners trust CrowdStrike, and the market trusts CrowdStrike. I open with everyone loving a good comeback story. Ours was forged by the trust of our customers, the dedication of our team, and the loyalty of our partners. For that, I am truly grateful. One thing is certain in our AI evolving world, cybersecurity will be an increasingly essential ingredient for life in the AI era. And now more than ever, the world needs CrowdStrike. I'll now turn the call over to Bert Podbear, CrowdStrike's CFO.