CrowdStrike Holdings Inc at Morgan Stanley Technology, Media & Telecom Conference Transcript

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

Question: Keith Weiss - Morgan Stanley & Co LLC. - Analyst : Got it. I want to touch on the July outage. Mainly because I think it was a great example of how to well react to an incident. You guys were very transparent. You were very proactive with the end customers, and what we've heard from your customers, what we've heard from your partners, was it actually engendered more confidence in the relationship with the CrowdStrike, the partnership with CrowdStrike. Everyone's going to have incidents, but it's how you react to them. What was the learnings from the CrowdStrike side of the equation?

Question: Keith Weiss - Morgan Stanley & Co LLC. - Analyst : Okay. One of the ways that you sort of foster that partnership with your customers was customer commitment packages. Can you walk us through some of the impact -- the near-term impact on the top line that CCP has, and then the opportunity to drive better growth longer term as the CCP impacts start to roll off.

Question: Keith Weiss - Morgan Stanley & Co LLC. - Analyst : Got it. So all in the pursuit of making it easier for your customers to adopt a broader sort of portion of the portfolio, this is just a near-term instantiation of a longer-term initiative that you guys have within Falcon Flex?

Question: Keith Weiss - Morgan Stanley & Co LLC. - Analyst : Got it. And then just from an investor perspective and understanding those impacts, you wrapped it up in Q4, how should we think about the dynamic of when that headwind starts to turn to a tailwind?

Question: Keith Weiss - Morgan Stanley & Co LLC. - Analyst : Got it. I want to go to maybe a little bit of a higher level and when we think about Falcon Flex sort of taking away the frictions for customers to adopt a broader part of your portfolio, it speaks to a sort of a broader trend of consolidation of kind of more functionality to vendors and it speaks to sort of that the data sort of platform versus best of breed and where does sort of CrowdStrike fall out on that? Like what's the right balance in

Question: Keith Weiss - Morgan Stanley & Co LLC. - Analyst : Got it. And maybe you could give us sort of an update on kind of how far we've come with Falcon Flex adoption. Any kind of sense you could give us in terms of what percentage of ARR or how penetrated that has become into the customer base?

Question: Keith Weiss - Morgan Stanley & Co LLC. - Analyst : Got it. And how should investors think about the cash flow conversion impacts of kind of moving to this more flexible payment terms that come along with Falcon Flex?

Question: Keith Weiss - Morgan Stanley & Co LLC. - Analyst : Got it. I want to switch gears a little bit, sort of talking about some technology. I would lose my license as a software analyst if I didn't start talking about generative AI pretty quickly. How do you see generative AI changing kind of the cybersecurity landscape, both in terms of what's going on in the threat environment, but also the tools it gives you to better address those threats?

Question: Keith Weiss - Morgan Stanley & Co LLC. - Analyst : Got it. So that starts to go after what had been one of the real constraints within cybersecurity, is enough security analyst to be able to handle all the volume to be able to respond. So Charlotte AI, you're basically massively improving the productivity of the security analysts and trying to get at that fundamental shortage.

Question: Keith Weiss - Morgan Stanley & Co LLC. - Analyst : Got it. When I think about generative AI and sort of the -- we're seeing -- I think we're about to come into sort of a proliferation of new use cases, new applications that are being driven by the expansion of the capabilities of generative AI, so to your point, creates more surface area to be protected. You described the endpoint is the beachfront real estate within cybersecurity. Why is that? Why is the endpoint so important? And how does that help CrowdStrike in this broader AI conversation?

Question: Keith Weiss - Morgan Stanley & Co LLC. - Analyst : Got it. So the data becomes the connective tissue through the entire portfolio.

Question: Keith Weiss - Morgan Stanley & Co LLC. - Analyst : I want to step through the portfolio and starting kind of where you guys started in terms of endpoint protection. CrowdStrike came into the marketplace and fundamentally disrupted how we're doing endpoint protection with that cloud-based EDR. How much runway is left from sort of the older endpoint protection systems to EDR? Is that still an opportunity for you? Is there still legacy replacements left to go in that core part of the business?

Question: Keith Weiss - Morgan Stanley & Co LLC. - Analyst : Got it. So the push into small businesses, is that Falcon Go?

Question: Keith Weiss - Morgan Stanley & Co LLC. - Analyst : Got it. How does the go-to-market have to shift to address those smaller customers? Because it's a much different kind of selling process for a large enterprise, different set of requirements versus what a small, midsized business would be thinking about. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MARCH 06, 2025 / 3:45PM, CRWD.OQ - CrowdStrike Holdings Inc at Morgan Stanley Technology, Media & Telecom Conference

Question: Keith Weiss - Morgan Stanley & Co LLC. - Analyst : Unfortunately, I'm the one doing the AV in our household, and none of it works.

Question: Keith Weiss - Morgan Stanley & Co LLC. - Analyst : Can you talk to us about Falcon Complete? It's been gaining traction over the past couple of years. What's the economic value for the end-customer from Falcon Complete?

Question: Keith Weiss - Morgan Stanley & Co LLC. - Analyst : Got it. We talked a little bit about best-of-platform before. It's a question that I get a lot from investors and our bankers. Every company calls themselves a platform company. How do you differentiate what the real platforms are from just kind of point solutions trying to fluff themselves up, if you will. My kind of point of view is you look at the results, you look at whether they're able to sell in adjacent categories. And that's been, from my perspective, one of the most impressive parts of the CrowdStrike story, is how you've been able to ramp up new product additions. You have over -- $1.3 billion in ARR, growing 50% from products beyond that core within endpoint protection. And you've done it without having to discount aggressively. It's not like you're just giving the product away. So what's been the secret sauce for CrowdStrike in proving out that platform and being able to go into these adjacencies so effectively?

Question: Keith Weiss - Morgan Stanley & Co LLC. - Analyst : Got it. I want to click into a couple of those. Starting with the public cloud. Public cloud ARR surpassed $600 million this quarter. It's grown 45%. What's the opportunity there as we see kind of the market consolidating to fewer vendors? And how does CrowdStrike differentiate to sort of ensure your continued success in that market?

Question: Keith Weiss - Morgan Stanley & Co LLC. - Analyst : Got it. I think the largest emerging module, identity protection, identity protection from what we're seeing is continuing to become more and more important within that security architecture. Why does it fit so well into the CrowdStrike portfolio? What's the affinity between sort of the endpoint protection and the identity side of the equation?

Question: Keith Weiss - Morgan Stanley & Co LLC. - Analyst : Got it. The last product I want to sort of dig into, LogScale, the next-generation SIEM solution from CrowdStrike. Surpassed $330 million in ARR in Q4, growing 115%. Why is now kind of the right time for kind of SIEM and bringing in the next-generation SIEM? We've been talking about security analytics for decades now. Is there a technology kind of evolution? Is there a better way of us kind of addressing this problem that's enabling you to come and displace this existing marketplace?

Question: Keith Weiss - Morgan Stanley & Co LLC. - Analyst : Got it. There's only about ONE minute left. I want to wrap this all up. I'm a big free cash flow guy. I like good free cash flow stories. You guys have been a great free cash flow story. There's investments that you're making today, investments in go-to-market, there's been investments in terms of stuff like CCPs, I would look at as an investment. But you guys have a lot of conviction of free cash flow margin exiting this year back at 27% and have room on a go-forward basis. Can you help us kind of construct that almost mechanical argument of why free cash flow margins are going to improve into the back half of the year? What gives you confidence in that forecast?

Question: Keith Weiss - Morgan Stanley & Co LLC. - Analyst : Outstanding. Really exciting times at CrowdStrike. Continues to be a really dynamic story. Thank you so much for coming and joining, talking to us about it.