Q1 2025 Summary
Published Jan 10, 2025, 5:10 PM UTC- Strong Customer Demand for Next-Gen SIEM Offering: CrowdStrike's Next-Gen SIEM is experiencing a "massive opportunity" as customers seek to replace legacy solutions like Splunk and QRadar. With 80-85% of SIEM data coming from endpoints, having this capability natively built into CrowdStrike's platform provides significant advantages and "gives us data gravity".
- Successful Platform Consolidation Strategy Driving Growth: Customers are consolidating their security spend with CrowdStrike to reduce costs and simplify their security stack. The FalconFlex program is a "game changer" that accelerates platform adoption by allowing customers to buy what they want, when they want it, thereby reducing procurement friction.
- Confidence in Achieving $10 Billion ARR Target: CrowdStrike reaffirms its $10 billion ARR target within 5-7 years, driven by growth in cloud security, identity protection, and Next-Gen SIEM markets. The company expects significant contributions from cloud security ($2.5-$3 billion), identity protection ($1-$1.5 billion), and Next-Gen SIEM ($1-$1.5 billion).
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$10 Billion ARR Target
Q: What will drive faster attainment of the $10B ARR target?
A: CEO George Kurtz emphasized that consolidating customers onto the CrowdStrike platform, particularly through offerings like FalconFlex, will accelerate progress towards the $10 billion ARR target. He highlighted massive opportunities in Next-Gen SIEM, data protection, and Falcon for IT as key growth drivers. CFO Burt Podbere added that they expect cloud security to contribute $2.5 to $3 billion, identity protection $1 to $1.5 billion, and Next-Gen SIEM $1 to $1.5 billion towards the ARR goal within that time frame. -
Stock-Based Compensation and Pricing
Q: Why did stock-based compensation increase, and how is pricing evolving with platform sales?
A: CFO Burt Podbere explained that stock-based compensation increased by 40%, but emphasized they focus on dilution, aiming for around 3% for the year, which is within expectations. Regarding pricing, he stated that the pricing environment remains consistent for CrowdStrike. As they offer more bundled solutions through their platform, customers consolidate spending with CrowdStrike, but this does not necessarily mean that pricing for individual components is coming down. -
SIEM Offering and Competition
Q: How is CrowdStrike's SIEM solution performing against legacy vendors like Splunk and QRadar?
A: CEO George Kurtz noted they've seen more movement in the SIEM market in the last year than in the previous ten years. He emphasized that 80–85% of the data that goes into a SIEM comes from endpoints, and since CrowdStrike captures this data, they have a significant advantage. With all customers enabled for Next-Gen SIEM, many dissatisfied with current vendors are reaching out, presenting a massive opportunity to disrupt an antiquated space. -
AWS Partnership and Cloud Security
Q: How is the relationship with AWS expanding, particularly around cloud security?
A: George Kurtz highlighted that the AWS win reflects the technological advantages of CrowdStrike's cloud offerings, covering everything from code to cloud. AWS is seeking the best cloud technology, and CrowdStrike believes they have it. The deal with AWS was also a FalconFlex agreement, indicating customers' desire to do more with CrowdStrike. -
Charlotte AI and Customer AI Journey
Q: Does Charlotte AI accelerate customers' Generative AI journey?
A: George Kurtz stated that Charlotte AI helps customers by reducing their operational workload, turning hours of work into minutes. It leverages the collective wisdom and knowledge CrowdStrike has developed and drives automation through Falcon Fusion. This results in faster time to production for customers' AI applications, effectively speeding up their GenAI journey. -
Generative AI Projects and Security Plans
Q: How do customers' Generative AI projects impact their security plans and budgets?
A: George Kurtz observed that the proliferation of new hardware for generative AI workloads presents a huge opportunity for CrowdStrike. These workloads need to be secured, and CrowdStrike's cloud workload protection adapts to protect both classic cloud workloads and those running AI models. Customers recognize the importance of securing AI workloads, which could accelerate security spending in this area. -
Public Sector Opportunities
Q: How is CrowdStrike engaging with federal agencies looking to broaden their security vendors?
A: George Kurtz mentioned they continue to maintain and gain momentum in the federal market, with buying cycles occurring mostly in the third quarter. Challenges faced by organizations outside the public sector also affect the government, and with additional cybersecurity budgets, CrowdStrike sees meaningful opportunities. -
Spending Reticence and Macro Environment
Q: What is causing customers' reticence to spend in the current environment?
A: George Kurtz acknowledged it's still a challenging macro environment, but customers are looking to consolidate and save money with CrowdStrike. By offering the right technology and solving critical use cases, CrowdStrike is capturing share of wallet from other vendors despite market challenges. -
Go-to-Market with Emerging Products
Q: How often does CrowdStrike lead with individual emerging solutions versus the platform?
A: George Kurtz explained that while they generally lead with the platform, they focus on solving specific customer use cases. Customers may come seeking better solutions for their SIEM or cloud security, and CrowdStrike can address those needs while promoting the value of the full platform. -
Consistency and Future Strategies
Q: Are there other levers to pull to continue impressive performance if the backdrop remains challenging?
A: George Kurtz emphasized their focus on consistency and delivering value to customers. Initiatives like FalconFlex result from listening to customers and reducing friction in the procurement cycle. By taking care of the customer, they believe "the rest takes care of itself".