CrowdStrike Holdings, Inc.

Hello and welcome to CrowdStrike's Fiscal Fourth Quarter 2026 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 Andy Nowinski, Vice President of Investor Relations and Strategic Finance. Andy, please go ahead. Thank you.

Good afternoon, and thank you for your participation today. With me on the call are George Kirch, 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 2027 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 annual and quarterly 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 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, Andy, and thank you all for joining CrowdStrike's Q4 FY26 earnings call. I couldn't be more pleased with our results. AI is driving elevated demand for the Falcon platform and is a key accelerant for our business. At the same time, AI is weaponizing adversaries to attack with increased speed, sophistication, and precision. We're seeing this play out in real time in the Middle East as emboldened adversaries fuel nation state activity. FY26 was CrowdStrike's best year yet, capped by a blockbuster Q4 where we set new records across the business. Summarizing our results, One all-time record net new ARR of $331 million for the quarter, which grew 47% year-over-year, coming in well ahead of our expectations. For the year, we delivered $1.01 billion in net new ARR of 25% year-over-year, our first year delivering over $1 billion of net new ARR. Two, ending ARR of $5.25 billion, crossing the $5 billion milestone, which accelerated to 24% growth year over year. CrowdStrike is the fastest and only pure play cybersecurity software company to achieve this milestone. Three, record free cash flow of $376 million for the quarter, or 29% of revenue. And for the year, we delivered record free cash flow of $1.24 billion, or 26% of revenue. Four, all-time record operating income of $326 million for the quarter, or 25% of revenue. This is the third consecutive quarter of record operating income For the year, we delivered $1.05 billion of operating income, exceeding the billion-dollar operating income milestone for the first time. Five, record net new ARR from cloud, next-gen identity, and next-gen SIM collectively. Ending ARR for these solutions collectively grew more than 45% year over year. Amidst today's AI backdrop, our endpoint business accelerated for the second consecutive quarter. Six, dollar-based net retention of 115% and gross retention of 97%, showcasing best-in-class durability and stickiness, which leads to my final point. Seven, we delivered $1.69 billion in ending ARR from accounts that have adopted the Falcon Flex subscription model, growing more than 120% year-over-year, turbocharging our land and expand motion. Our Q4 and FY2026 execution showcases CrowdStrike's leadership in every theater, every segment, and every route to market. In our third consecutive quarter of net new ARR acceleration, the voice of the market is clear. CrowdStrike is durable, mission-critical infrastructure for both securing AI and accelerating global AI adoption. We find ourselves in one of the most defining times in the history of modern technology. AI has gone from dreamworks to reality, now increasingly in production across the enterprise. From CrowdStrike's founding, we've been building AI innovation for cybersecurity. Yet the pace of AI innovation is broadly misunderstood. Novel discoveries are often interpreted as the death knells of existing categories. The market is questioning enterprise software's role in an agentic world. It's in moments like these where opportunity is created. In the same way that we anticipated the cloud revolution, we pioneered and built for the agentic revolution. Here's what I see unfolding in the market. we see the AI revolution creating two disparate groups of software companies. Group one, those who are now existentially vulnerable. These are historically nice to have technologies that are productivity features and point products geared to legacy pricing models. Group two, those who will thrive. These are mission critical, trusted infrastructure technologies necessary for global continuity with deep IP. These technologies are net data creators producing novel, fresh and proprietary data that doesn't exist elsewhere. Data that is fuel for the agentic business outcomes. In these companies, proprietary data is just one part of the advantage. The other is trusted enterprise architectural superiority, which drives stickiness, adoption, and scale. Here's why CrowdStrike is winning and how AI is driving even more competitive success for us. One, our competitive moat is becoming an opportunity ocean. Falcon is a vertically integrated net data creator and third-party data aggregator. We generate real-time data that no one else has from customer environments and our world-class threat intelligence. What Frontier AI Labs cannot do, we've been doing for over a decade. Cyber-reinforced learning from human feedback, or RLHF, at scale. Our MDR analysts, threat hunters, and incident responders produce expert-labeled data as a byproduct of operations. These labels don't come from internet text. They come from stopping real breaches in real time. ThreatGraph correlates more than a trillion security events per day across approximately 2 trillion vertices, analyzing 15 plus petabytes of data. Structured, queryable, security signals at scale no one can replicate. Frontier models can augment security, summarize alerts, draft queries, speed up triage. That's extremely valuable, but stopping breaches requires sensors, real-time telemetry, continuous expert validation, and enforcement. A closed-loop system, not a text model. As our technology evolves, our data improves. As our data improves, our platform evolves. As our experts validate outcomes, our AI agents get better. This is a flywheel and network effect that no one else has in cybersecurity at our size and scale, and it's how we stand behind our brand promise of stopping breaches. This dynamic is not cyclical. It is structural. Two, we win because Falcon is purpose-built for securing AI at every layer. The layers of the new AI stack are the attack surface of the future, and Falcon can secure all of them. AI must be secured at every level, including, one, GPU foundation, partnering with NVIDIA, AMD, Intel, and others to secure AI at the source. Two, hardware and infrastructure OEMs, securing AI factories such as Dell, HPE, and Supermicro, and novel AI operating systems such as Vast Data. Three, neoclouds and hyperscalers, securing where AI happens in the cloud across AWS, OCI, GCP, Azure, and inference disruptors such as CoreWeave, Nebius, and Caruso. Four, token factories, securing the use of frontier model creators like Anthropic, OpenAI, and Google Gemini. And five, AI applications and agents, securing AI native software and the agentic workforce. Not only do we secure the use of each of these companies' products, but we also secure nearly all of the companies themselves. We secure the world's AI future by securing the world's AI leaders. And three, we win because efficacy and precision matter more than ever. In cybersecurity, you simply cannot have a hallucination. You can't prompt twice. It's first time final. It's the difference between thwarting an adversary or experiencing a breach. Cybersecurity is a unique paradigm. Success for us and our customer is, did we stop a breach? We win because cybersecurity needs to be faster and more deterministic than ever before, and we uniquely deliver superior outcomes. Argentic SOC and AI technologies are transforming security. CrowdStrike's AI innovation is setting new adoption standards on the journey to delivering security AGI. Charlotte is our flagship agent, and now we have 10 other agents representing specific security skills and roles within security teams. Between Charlotte and our other agents, we can already see the mobilization of security's agentic workforce working hand in hand with human security professionals. Coming back to Charlotte, our agentic SOC workforce built from multiple models, allowing us to optimize from the latest and greatest LLMs. We couple industry innovation with our own AI expertise, training and models from security's richest data source, Falcon adversary, threat and security analyst training data. We saw Charlotte usage soar more than 6X year over year as ARR more than tripled. A thematic win was in a leading cloud software provider in an eight-figure Reflex transaction. The Reflex expanded the adoption of NextGen SIM and Charlotte. Their 30-day use of Charlotte tells a compelling story, achieving a 3x faster mean time to respond. Using the power of our domain-specific AI, Charlotte accelerates, streamlines, and democratizes security outcomes. Technology innovation is just one part of our success. Our results are also driven by our go-to-market innovation, creating the revolutionary Falcon Flex subscription model, which we now see mimicked across cybersecurity. The model transformed our discussions with customers to demand planning based on risk, data, attack surface, and overall platform capabilities. Let me share our Q4 Falcon Flex performance within the now $1.69 billion ending ARR cohort of Flex account value, growing greater than 120% year over year. We now have more than 1,600 customers who have adopted Falcon Flex and added more than 350 Flex customers in Q4. That amounts to nearly four new Falcon Flex customers each day of the quarter. The average Flex customers ending ARR is greater than $1 million. The proof of Falcon adoption success is in the Reflex. Customers are using what they buy and expanding their Flex commitments. More than 380 Flex accounts have already Reflexed, representing more than 23% of the Flex customer base, up from 5% in Q1. The average ARR lift after a reflex is 26% happening on average within seven months. And the platform adoption grows even further from there. We're now tracking the number of customers who are repeat reflexers. Nearly 100 customers have reflex multiple times. The multiple time reflex cohort now represents approximately 6% of total flex customers and over a quarter of all reflex customers. Our multiple time reflexers on average have an ARR lift of an additional 48% from their initial Flex subscription. In summary, Falcon Flex unlocks never seen before adoption for customers. Flex is now how we go to market. A key win includes a major enterprise software player that started with using one module, threat intelligence, and spending low six figures. Through Falcon Flex, this customer is now using 25 modules and spending $86 million in total Flex contract value with us. Flex is creating its own flywheel. Demand drives use, use drives more demand. Flex is the stage on which our platform solutions shine. Collectively, our next-gen identity, cloud and next-gen SIEM businesses grew more than 45% year-over-year, reaching more than $1.9 billion and ending ARR. Our next-gen identity business ended FY26 with more than $520 million of ending ARR, growing more than 34% year-on-year, a double-digit acceleration versus two quarters ago. Key drivers include our privileged account security solution, which grew more than 170% sequentially. Falcon Shield and the ARR grew more than 300% year over year, more than 5X since our acquisition of Adaptive Shield, as customers protect the rapidly growing agentic SaaS attack surface. Our ability to secure both human and agentic identities wherever they exist is rapidly turning CrowdStrike into our customer's identity secure control plane. A key identity win, an iconic department store selecting CrowdStrike over an SMB point product and a seven-figure deal driven by the ease of use of our ITDR and PAM solutions in a flex consolidation. While our next-gen identity business had an excellent quarter, we're most excited for what's ahead. We recently closed the acquisition of Signal AI. This is SG&L, bringing the power of zero-standing privilege for all identities to the Falcon platform. With Signal AI, CrowdStrike is delivering high fidelity, context-driven, real-time authorization to the market, enabling our customers to rapidly reduce their identity attack surface, even as they rapidly expand the number of identities within their organization. We're moving access from static point-in-time to real-time and redefining zero-trust. Access should be always on, granular, and dynamic. But we're not stopping there. Our recent acquisition of Seraphic turns any browser into a secure enterprise browser without impacting user behavior. The browser has become the front door for AI applications, and Seraphic meets human and non-human users where they are and where they're going, agentic browsers for real-time visibility and protection. Turning to our cloud business, where net new ARR growth accelerated for the second consecutive quarter and ending ARR grew more than 35% year over year. For the first time, our cloud business exceeded $800 million in ending ARR as our customers look to us to secure the infrastructure powering their AI future. Our unique ability to operate in runtime at scale continues to set us apart from the rest of the market. A key win in our cloud business was with a major enterprise data platform company who deployed Falcon Cloud Security in an eight-figure total deal value flex. After extensive testing, this account ripped out their existing provider for our runtime protection first approach, realizing the integrated benefits of CSPM, CIEM, CDR, and Overwatch threat hunting, which resulted in a 90% reduction in mean time to detect and respond for their cloud environment. Turning to our next-gen SIM business, where we delivered a record quarter, our next-gen SIM business grew over 75% year-over-year, delivering ending ARR of more than $585 million. NextGen SIM has proven itself a scaled market disruptor where our performance and cost advantages set us apart from legacy competitors. At the same time, our launch of agentic security workflows is powering the cybersecurity operating system of the future. With Falcom Onum, we're enabling our customers to connect data sources quickly and efficiently, resonating with both security and IT teams. A key win in the quarter was with a Fortune 500 retailer, highlighting our strength and momentum in the next-gen SIM space. In this seven-figure deal, we replaced the legacy SIM and its attached point product data pipeline. Falcon's fully native data pipeline and an expected 80% faster query performance was a game changer in helping this customer build out their agentic SOC. Rounding out our product portfolio, I want to touch on our endpoint and other AI-specific businesses. Amidst the backdrop of accelerating AI proliferation, our endpoint business accelerated for the second consecutive quarter. The endpoint is rapidly becoming the epicenter of AI usage, driven by the growth of technologies ranging from MCP servers to coding tools to localized LLMs. AI is the fastest growing attack surface on the endpoint. As of Q4, our sensors detected more than 1,800 distinct AI applications running on enterprise devices, representing nearly 160 million unique application instances across our customer base. And with the acquisition of Seraphic, we now give our customers even more control over their knowledge workers' usage of AI tools. Lastly, I want to touch on our recently launched AIDR offering. In just a short time, AIDR has become one of our most in-demand products, growing more than 5x versus last quarter, despite having only been available for a few weeks. AI adoption is moving faster than can be controlled, and our AI DR offering gives customers immediate visibility into their employees' usage of AI tools, including the specific models being used, as well as detections into potentially malicious or non-compliant usage. bringing model scanning, visibility, guardrails, and detections to AI usage positions CrowdStrike as a catalyst for enterprise AI adoption. Concluding the discussion on our platform solutions, Seeing is Believing, please reference our investor deck, which now includes a link to product demo videos showcasing AI innovation across the Falcon platform. Our partner go-to-market delivered beyond expectations this past year. We saw growing practices across EY, Accenture, Deloitte, HCL, WePro, KPMG, and Infosys taking shape focused on next-gen SIEM migrations. Our MSSP business also continues to grow at a rapid pace. In just over three years, we've gone from a sub-$100 million MSSP business to more than $1.3 billion spanning market-leading partners like Kroll, Pax8, and NinjaOne. Finally, our hyperscaler leadership continues to differentiate CrowdTrack from every other cybersecurity player. This past year alone, we did nearly $1.5 billion of total contract value on the AWS marketplace, growing nearly 50% year over year. Then, a few weeks ago, Satya Nadella and I spoke to CrowdStrike's go-to-market team together. We are now open for business on the Microsoft Marketplace, and customers can use their Microsoft Azure consumption commitment dollars on Falcon. This is a watershed moment reflecting a clear evolution of how our companies see each other and how Microsoft and CrowdStrike are working together to make the world a safer place. In summary, we didn't just have a great partner year, we built an ecosystem to win the next decade. Closing my remarks today, I'm proud of the team and our partners for executing a terrific FY26. Here are my key takeaways as I look at the business today and into the future. First, CrowdStrike is an AI adoption accelerator. Our customers are safely and securely using more than 1,800 distinct AI applications on their endpoints, which would not be possible without CrowdStrike. Second, AI use necessitates AI security. Every enterprise deploying AI needs an independent protection layer for visibility, compliance, and enforcement. As AI adoption grows, CrowdStrike becomes even more of a necessity to these organizations. And third, our data moat creates a structural advantage. Delivering cybersecurity at scale requires more than a prompt. It requires expert label telemetry from our global sensors, MDR analysts, and elite incident responders. It is a structural advantage no LLM provider can replicate. In addition, agentic cybersecurity requires inline prevention as well as real-time remediation. Since the founding of CrowdStrike, we created an AI-native platform. Enterprises have trusted us to help them safely navigate market transitions like digital transformation and cloud migration. The AI revolution is now upon us, and just like prior market transitions, adoption of AI will be secured by CrowdStrike. Thank you for your trust. I'll now turn the call over to Bert Podbear, CrowdStrike CFO.