CrowdStrike Holdings Inc at Goldman Sachs Communications & Technology Conference Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Gabriela Borges - Goldman Sachs Group, Inc., Research Division - Analyst : So I wanted to start this conversation talking about the strategic importance of the real estate that you have on the endpoint. I remember with the founding of the company, with the core focus being on having a lightweight agent. There is a lot that you can do longer term with the types of data and the access that you have on the endpoint. I wanted to ask -- start off by asking, how do you think about the strategic importance of the endpoint evolving? And where do you think you can lean in over the longer term, not just on the security side, but perhaps even more broadly on the IT infrastructure and operations side?

Question: Gabriela Borges - Goldman Sachs Group, Inc., Research Division - Analyst : I would love to hear a little more about how you're thinking about some of those nonsecurity use cases longer term.

Question: Gabriela Borges - Goldman Sachs Group, Inc., Research Division - Analyst : So it leads into a little bit of a discussion on the proprietary nature of the data set that you have. And you made an interesting comment on the earnings call about how the data set for AI use cases isn't about simply having the most data. So give us a little more detail there. How do we think about the differentiation of the data set that you have relative to perhaps some of your endpoint peers or some of your security peers?

Question: Gabriela Borges - Goldman Sachs Group, Inc., Research Division - Analyst : So let's talk a little bit about the application within Charlotte. How do you take all of that training, that 10 years of data that you've built up, and then commercialize it into a product that customers find easily accessible and can actually move the needle for them in a way that they can trust?

Question: Gabriela Borges - Goldman Sachs Group, Inc., Research Division - Analyst : How much of what you're describing is part of the longer-term road map versus available that's part of what you're trialing today in Charlotte?

Question: Gabriela Borges - Goldman Sachs Group, Inc., Research Division - Analyst : So it leads nicely to a pricing strategy question. As an analyst, we can do math on time saved going to 10 minutes, automation, et cetera. What are some of the pricing philosophies or the pricing principles that you all are thinking of as you think about setting a price point for Charlotte at Fal.Con?

Question: Gabriela Borges - Goldman Sachs Group, Inc., Research Division - Analyst : So the broader question I have on pricing is we see this across different areas of the technology stack, where technologies that have been around for longer see price compression, and then you move the needle forward on innovation and you're able to capture more value from next-generation technologies. So as you think about CrowdStrike selling a platform, how do you think about the value you're capturing holistically across the Falcon Complete bundle? Are you seeing or do you think about pricing compression at technologies that have been around for a while and then offsetting that with TAM expansion at the high end? How do you think about pricing of the platform holistically?

Question: Gabriela Borges - Goldman Sachs Group, Inc., Research Division - Analyst : So I think at any given time of CrowdStrike's history, you could have taken a snapshot on the pricing environment and the competitive environment, and endpoint has been competitive for a long time. Are there any observations that you would call out about the pricing environment and the competitive environment today versus 5 years ago or 10 years ago? And then maybe it allows me to directly ask the question about Microsoft as a competitor.

Question: Gabriela Borges - Goldman Sachs Group, Inc., Research Division - Analyst : And the way that you're thinking about the evolution of the platform, how do you think about Microsoft as a competitor evolving alongside you?

Question: Gabriela Borges - Goldman Sachs Group, Inc., Research Division - Analyst : That's a fair comment. Okay. So I want to connect the dots between the strategic importance of the endpoint and identity and cloud and some of the other modules that you offer with customer willingness to invest today. Companies talked about deal cycles elongating, more budget scrutiny. Would love to hear a little bit about what you're hearing on the ground with regards to customer willingness to invest in the products that you sell.

Question: Gabriela Borges - Goldman Sachs Group, Inc., Research Division - Analyst : So you've got, and you very consistently have talked about the pipeline into the second half of the fiscal year, and your ability to ramp momentum with partnerships, consolidate spend, ramp sales reps. There are a number of internal factors that you have control over in the context of the macro. And so with all that said, help us get more comfortable, from the outside in, on the visibility that you have that lead the company to consistently talk about net new ARR growth in the back half. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 05, 2023 / 5:10PM, CRWD.OQ - CrowdStrike Holdings Inc at Goldman Sachs Communications & Technology Conference

Question: Gabriela Borges - Goldman Sachs Group, Inc., Research Division - Analyst : So you made an interesting comment on competition that crystallized your earlier comments, which is the competitive environment will be getting better in the back half. Would love to hear, is that a function of what you're seeing in the pipeline, some of the examples you have on the customer side of consolidation of spend? Why do you think the competitive environment is getting better?

Question: Gabriela Borges - Goldman Sachs Group, Inc., Research Division - Analyst : Is that a way of saying that win rates are going up? Can I frame it that directly?

Question: Gabriela Borges - Goldman Sachs Group, Inc., Research Division - Analyst : Fair enough. Okay. So I want to ask about your cloud business and the new statistics that you've disclosed, $300 million in ARR as defined by modules deployed in the public cloud. So there are a number of ways that you can think about security in the cloud. Your cloud business, how do we think about the mix between something like Cloud Workload Protection, where you're running an agent in a container, versus XDR modules deployed in the cloud? Help us understand the mix of that $300 million.

Question: Gabriela Borges - Goldman Sachs Group, Inc., Research Division - Analyst : Is there a piece of that cloud business that is lift and shift? Meaning, business that CrowdStrike previously wouldn't have classified in cloud where a customer is supporting workloads or supporting security functionality?

Question: Gabriela Borges - Goldman Sachs Group, Inc., Research Division - Analyst : Yes, that makes sense. And so if there is a multiplication impact, I imagine at the same time, it's not 1:1 in terms of TAM. Meaning, if you move an endpoint to the cloud, that doesn't mean you're paying CrowdStrike 10x more. And so how do we think about those 2 factors offsetting each other? In other words, how much does the cloud expand the CrowdStrike TAM, or how do you think about that? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 05, 2023 / 5:10PM, CRWD.OQ - CrowdStrike Holdings Inc at Goldman Sachs Communications & Technology Conference

Question: Gabriela Borges - Goldman Sachs Group, Inc., Research Division - Analyst : I want to pause for a moment and go to the audience. Any questions from the audience? Please.

Question: Gabriela Borges - Goldman Sachs Group, Inc., Research Division - Analyst : Any other questions from the audience? Please, in the back. Unidentified Analyst With the introduction of Charlotte AI and the shift from a dashboard user interface to a conversational user interface, with respect to the overlap of observability and security, like why doesn't that create a bigger jump ball in terms of your opportunities out there?

Question: Gabriela Borges - Goldman Sachs Group, Inc., Research Division - Analyst : So I'll end with 2 questions. The first is on the financial model and the company achieving its financial goals faster than I think you originally expected. What happens next? What is the ceiling on where EBIT margins can go over the long term?

Question: Gabriela Borges - Goldman Sachs Group, Inc., Research Division - Analyst : The second question I wanted to ask you is you have an amazing corporate development team that talks to a lot of start-ups. Help us separate some of the signal from the noise. When you meet with founders, what are the 1 or 2 questions that are top of mind for you to figure out whether they're building something real, and then whether they're a good fit for CrowdStrike? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 05, 2023 / 5:10PM, CRWD.OQ - CrowdStrike Holdings Inc at Goldman Sachs Communications & Technology Conference

Question: Gabriela Borges - Goldman Sachs Group, Inc., Research Division - Analyst : Thank you for your time. We appreciate all the insight.