Crowdstrike Holdings Inc at Stifel Cross Sector Insight Conference (Virtual) Transcript

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

Question: Gur Yehudah Talpaz - Stifel, Nicolaus & Company, Incorporated, Research Division - Analyst : Of course. Yes. So the way I like to kick these things off typically is just, honestly, with a high-level overview. But here, I want to do things a little bit differently. When you look at the story today, George, you've defined the story as the security cloud. And what I'd love to kind of dig into is for you to sort of explain what that ultimately means, how you view the CrowdStrike story today and how do you view it in relation to other technology stories out there?

Question: Gur Yehudah Talpaz - Stifel, Nicolaus & Company, Incorporated, Research Division - Analyst : So there's a lot to cover here, and I still want to stay a little bit high level here. But if you look back, you've been public for just about a year now, just a few days short. It's funny. When I look out at the names out there, I think you've been among the most tested names as far as recent IPOs and you've been immensely successful. When you think about just the ingredient and the recipe for that success, what do you attribute it to? What do you think has been kind of the key components despite all the challenges that have kind of been out there whether macro or otherwise?

Question: Gur Yehudah Talpaz - Stifel, Nicolaus & Company, Incorporated, Research Division - Analyst : Let's dwell on that point a little bit here, right? If you go back a year, endpoint or broader workload protection would have been called one of the most competitive markets out there. Many players, you go back to Black Hat 3 years ago, and I think 1/3 of the vendors on the floor could be classified as endpoint vendors. You look at it today, it's vastly different. A lot of players have bowed out, a lot have been acquired. And we don't see their names as prevalent as they once were. Why do you think that's the case? What has ultimately changed here over the past few quarters?

Question: Gur Yehudah Talpaz - Stifel, Nicolaus & Company, Incorporated, Research Division - Analyst : That's interesting. I want to double-click on that point a little bit further. I think one of the most [interesting] concepts around the story is defensibility. A lot of people still look out there and say it's still a competitive space. I don't understand why this is so hard to replicate. When you think about the combination of the cloud back-end and the agent, how difficult is it for, let's say, another player to come in there and do what you do?

Question: Gur Yehudah Talpaz - Stifel, Nicolaus & Company, Incorporated, Research Division - Analyst : So it's interesting. I want to drill in a bit further into that, both in terms of just scale and in terms of margin. When you look at the underlying back-end, you've grown the amount of data ingested and the amount of events ingested by a significant amount every single year -- [you sort of] go from less than 1 trillion events per week to over 3 trillion per week right now. At the same time, the gross margin has always scaled. When you look out there, do you see an upward threshold to what you can ingest from an event workload type of perspective? And then secondarily for you, Burt, when you think about that, how have you been able to also scale the gross margin as you've been able to ingest all that data at the same time?

Question: Gur Yehudah Talpaz - Stifel, Nicolaus & Company, Incorporated, Research Division - Analyst : That's helpful. And just speaking to module adoption, I think one of the most interesting metrics that you gave on the last call was the adopting of the Falcon Discover module, traditionally an IP-based tool. It seems like you're having a lot of success selling outside of the security realm. And it seems like that's coming at a time when people are perhaps reevaluating a lot of their strategy, given the concerns and just the nature of everything that's happening as far as more remote workers, et cetera. When you look out there, where have you been able to kind of break down barriers and find success in pushing to other areas of the market like IT with a Discover module? And where do you sort of see that going on a go-forward basis?

Question: Gur Yehudah Talpaz - Stifel, Nicolaus & Company, Incorporated, Research Division - Analyst : It makes sense. And maybe just exploring it a little bit further. It's funny, when you look out there, a lot of stories throw the term platform around pretty loosely, yet I think in your case, it's actually -- it's very applicable and very relevant. When you look at the reasons for success around multiproduct adoption, how important is being frictionless in that dynamic? And when you look at appetite for multiproduct dynamic -- for multiproduct adoption, has it shifted in the environment that we're in today?

Question: Gur Yehudah Talpaz - Stifel, Nicolaus & Company, Incorporated, Research Division - Analyst : And Burt, just to elaborate on that, are you finding that you're able to actually land bigger as well as customers buying more modules at initial sale?

Question: Gur Yehudah Talpaz - Stifel, Nicolaus & Company, Incorporated, Research Division - Analyst : It makes sense. And I want to touch on TAM a little bit, but I want to drill into a concept, and you touched on this in the beginning, which is the idea of workload protection, not just endpoint security. And what I want to sort of better understand is how you can ultimately serve customers, whether it's in the cloud and IoT, on mobile, et cetera, and like we have to think about the workload protection approach as opposed to just thinking about institutional EPP in our sense? without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies. JUNE 10, 2020 / 5:20PM, CRWD.OQ - Crowdstrike Holdings Inc at Stifel Cross Sector Insight Conference (Virtual)

Question: Gur Yehudah Talpaz - Stifel, Nicolaus & Company, Incorporated, Research Division - Analyst : So let's explore that part a little bit further, right? You're talking -- I think when investors think about digital transformation, they think about long disruptive multiyear projects that have a high initial cost and essentially a long tail to boost ROI, but something that will pay off in the long term. You guys have been able to [work on] transformational projects at a pretty rapid time frame. One, I think can you explain how that's the case? And then two, how do you think about the appetite for projects like that in the current environment that we're in?

Question: Gur Yehudah Talpaz - Stifel, Nicolaus & Company, Incorporated, Research Division - Analyst : So it's interesting, right? I want to touch on another point, another metric you gave on the last quarterly call was the growth in deals sourced from AWS. That's been growing at a really rapid rate, I believe [75%] sequentially. When you look out there, I think there's a pretty broad debate about what the right architecture for securing AWS is. I think you've found a lot success with host-based security and host-based approach. Why is that without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies. JUNE 10, 2020 / 5:20PM, CRWD.OQ - Crowdstrike Holdings Inc at Stifel Cross Sector Insight Conference (Virtual) the case? Why are you finding success right now in cloud environments like AWS versus others that I think are still pretty heavily in the [financial outcome] mode still?

Question: Gur Yehudah Talpaz - Stifel, Nicolaus & Company, Incorporated, Research Division - Analyst : It makes a lot of sense. And Burt, I wanted to include you in the conversation. There's this topic that I want to touch on with you. One is net retention. When you look out there and you held that above 120% for a very long time, what's the confidence threshold in sustaining that even as you land larger? That's part 1. I'll continue with part 2 in a bit.

Question: Gur Yehudah Talpaz - Stifel, Nicolaus & Company, Incorporated, Research Division - Analyst : It makes sense, and then I think a common question I get right on the story, just think about the inputs that have gone into your updated thoughts around your FY '21 guide.

Question: Gur Yehudah Talpaz - Stifel, Nicolaus & Company, Incorporated, Research Division - Analyst : That's super helpful. I know we're bumping up against time here. But I wanted to get one more in front of you. I think one thing we think a lot about is the potential to push into relevant adjacencies. When you look out there, it seems like there's a lot of places you can take in the platform as far as potential new workload that you can address, either directly or through the CrowdStrike store. When you think about where you want to take things, you're pushing to things like host-based firewall management. When we look forward, what areas look relevant to you, and what could be interesting for you guys as we kind of think about the evolution of the story?

Question: Gur Yehudah Talpaz - Stifel, Nicolaus & Company, Incorporated, Research Division - Analyst : Awesome. And I think with that, we're just at about time. So I want to thank both of you for joining me today. Thanks very much. Appreciate it and looking forward to catching up in the near future.