My Notes From CRWD Q1 2022 Earnings Call
Analyst Questions Followed By Remarks That May Be In Addition to Prepared Remarks by George Kurtz, CEO and Burt Podbere, CFO.
Analyst Questions
Q Lot of wins, understanding it’s early, what do customers say re: using 3rd party security?
A Customers are very willing to use CRWD’s services in corporate and cloud environments. Extremely
competitive product, adding drift protection, which is a boon to DevOpps teams. Generally it’s a
greenfield opportunity and don’t have to displace anyone since others cannot do it.
Q RE: Cloud, what are the pieces of the puzzle CRWD will provide, where will you partner and where
will others
A Network from actual workloads such as containers, have the ability to impact at runtime, ability to
understand EDR data, cloud security posture. What’s different about cloud vs. corporate (on prem),
it’s far more difficult to protect outside the on-prem. CRWD does both/protects both.
Q With over 11,000 customers, it looks like you’re able to 10X your customers and how do you plan to
expand and where?
A Tremendous system, frictionless, cross-sell and where they look to sell their next 10,000 customers
goes to a very efficient frictionless ecommerce platform where the platform is designed to sell
itself. Once they get them in the door, they can convert them with a credit card. Have expanded
their network with partners that help them scale sales.
Q When looking at net new 1,500 customers, are they mid size or enterprise? Please give this context.
A As new customers come on board, they’re deploying more and more modules. Where they see up-tick and
new logos, much of the velocity is coming from the SMB, and yet they’re capturing customers at both
the SMB and the enterprise level.
Q Partnership with ZS, they brought you into a financial deal and you brought them into an insurance
deal. What’s driving this?
A Customers are looking to replace their legacy systems. Both entities are incentivized to cross-sell
ZS and CRWD. They’re better together and it’s best for the customers as well as ZS and CRWD.
Q Net new ARR: Saw no seasonality from Q4 to Q1, indicating a different spending habit. Was this
a key driver that changed this?
A CFO thinks it’s more broad-based demand and trends for digital and security, but mainly goes back to
broad-based demand.
Q Talk about public sector and how big opportunity with federal government orders that have recently
been mandated.
A Got certifications ahead of time and expect it will carry forward with federal, state and local
government units. Most of these organizations simply don’t have the people to do this, and CRWD has
them and can do it for them.
Q With sale of Symantic and McAffee, what inning are you in re: taking revenue from legacy providers.
A Early innings. Maybe 2nd inning. Modern endpoint security magazine ranked CRWD #1 just today.
Q With the high visibility of cyber attacks, please discuss efficacy of your systems to handle the
attacks that have recently occurred.
A There’s a reason why CRWD is winning and it’s designed to catch breeches in 2nd chain if it’s missed
in the first chain.
Q Gardner noted growing competition with log management. How do you maintain differentiation given
those forces around commoditization.
A Threat graph continues to work well and Humeo will be excellent as well. Will be a key part of their
XDR. As Humeo gets integrated, they’ll be able to pull other data points into their logging. Feel
really good about Humeo and how it will be able to augment what they’re doing.
Q Cloud workload and 4, 5 or 6 –how much is that including Horizon?
A Cloudera has now tapped into it, and each company has a different path to the cloud. It’s really
about the platform play. Seeing great success in the last 2 quarters, and yet it’s only been out for
less than a year and it’s going great/feeling great about it’s future.
Q ARR in Q1 is up 68% y/y vs. 65% last year, how much of this is coming from existing vs. new product
modules?
A Core is certainly where most of their revenue comes in. That said, they’re seeing traction among
their newer modules. Owners see that replacing legacy vendors because CRWD comes in with greater
efficacy and greater ROI.
Q Impressive metrics. RPO billings increased 79%, which is larger than last year. Why is this so? Is
it larger, multi-year deals?
A Yes, customers want to lock into them and see CRWD as the platform of the future. Able to show that
CRWD is there to stay and will continue to invest in R&D. They sign longer term deals with CRWD, yet
they typically pay annually, rather than everything up front.
George Kurtz, CEO remarks that may be in addition to prepared remarks:
Customers are turning to CRWD for their trusted security platform. Subscription customers has now passed the 10,000 level. 11,424 entities are now CRWD customers.
Leadership is recognized by customers, Gardner and Forester = gold standard that is scaling rapidly and
Demand environment is robust with a runway that will sustain growth
Legacy software is not sufficient as a means of stopping security threats, as indicated by CRWD’s revenue growth.
CRWD now has 19 modules
Google partnership is going extremely well.
Falcon Horizon is the first security application to focus on behavioral.
Most recent achievement: Taking the leader position for leaders’ platform in the magic quadrant that outpaces next gen and legacy endpoint platforms.
Forester named CRWD as leader in both Forester Wave Q1 and external services report.
Leadership position in cyber security is gaining trust and credibility across senior management and corporate boards which is helping to drive sales and revenue.
ZS partnership is going extremely well and ZS just brought CRWD a new Fortune 100 organization and ZS is now a CRWD customer.
CRWD’s go to market strategy is executing well to deliver frictionless implementation and sales process.
In the last quarter, they doubled ARR.
Expanding Dev Opps to help keep customers safe.
Expansion of relationship with Cloudera, who has been a customer of CRWD for multiple years. Cloudera purchased 5 modules.
Another win is with a multi-national company who was using Microsoft and would have needed to wait a long time to deploy a patch that would address their security exposure.
Frustrated with need for continual upgrades, crashes, failure to re-boot and general difficulty to work with, another major organization was the reason that cited by another organization switched from their legacy vendor to CRWD.
Any company with an on-prem security system is not able to leverage the cloud for security.
CEO does not see another vendor with CRWD’s vision, platform, scale or ability to scale.
Burt Podbere (CFO) remarks that may be in addition to prepared remarks:
Humeo acquisition resulted in another 119 customers.
SaaS rule of 40 is in fact 80 at CRWD.
Record pipeline with great future of sales and revenue.
DBNRR exceeded 120%
Revenue growth in US grew 73%
Scaling their business efficiently is key to their success. Magic number is now 1.4, which says they should continue to invest in growing their business.
Optimistic about the future. Raising guidance for FY 22, expect seasonality to be less pronounced this year as compared to previous years.
Subscription revenue will be the biggest contributor to their growth in the future.
For full FY 22 expect revenue of $1,367 Million meaning 55%-65% revenue growth
Hope this is helpful information for everyone. Thank you to all of you who help to make this board the amazing, knowledge-rich sharing platform that it has become. Especially thanks to Saul for his selflessness, willingness to share his knowledge and for starting the board. Additionally, thank you for the board managers who thanklessly keep us passionate, kindred spirits in line and on subject. We are so fortunate to have this oasis of financial opportunity.
sjo