CRWD Q2 conference call notes

Overall impressions

The conference call really emphasized secure workloads over endpoint security solutions. It seems they want to change the narrative to being the best workload proctection solution on the market.

Sales seem usually effective for CrowdStrike. They mentioned ‘unit economics’ a lot this call and detailed that upsells and new accounts get the same sales commissions. I gather they are laser focused on execution from the sales side and talk about all the CIOs they speak with. They talked a lot about closing deals easily.

Press release

  • net new ARR for the Q was over 100M exceeding previous record
  • favorable competitive environment and strong secular tailwinds
  • revenue 199M, 84%+ YoY
  • subscription revenue 184M, 89%+ YoY
  • subscription gross margin 76% compared with 74% year ago
  • GAAP loss 14 cents, non-GAAP gain 3 cents
  • cash flow 55M, previous year -6M
  • free cash flow 32M compared with -29M year ago
  • cash 1.06B
  • added 969 net new subscriptions to 7,230 91%+ YoY
  • 57% customers with 4+ modules, 39% with 5+ modules
  • zero trust security solution with four partners: CrowdStrike, NetSkope, Okta & Proofpoint
  • guidance, Q3 210-215M revenue, FY 809-826M revenue

Conference call, prepard remarks
George Kurtz - CEO

  • exceptional quarter
  • record sales pipeline
  • 2nd largest deal ever, done all remotely
  • ahead of pre-covid growth goals
  • strong partner engagement and goals
  • both enterprise & SMB performing well in multiple industries
  • DBNRR exceeded 120%+
  • endpoint is new security perimeter
  • themes from customers and prospects: cyber security mission critial, attacks accelerating
  • 154%+ in distinct intrusions since last year
  • sharp increase in e-crimes, more than double in same period last year
  • CIOs view a security breach in more severe terms than in pre-covid
  • choosing CrowdStrike for visability and protection to workloads, zero trust architecture, end-point security is foundational element
  • CIOs looking forward
  • Falcon platform cloud native, does not require a reboot, customers can protect their workloads at scale
  • quantity and quality of data collected is key to analyze threats in real-time
  • all data is stored in one place and displayed through the Threat Graph
  • streaming telemetry to the cloud, fundamental advantage over competitors that store data locally at the endpoint
  • Threat Graph allows dynamic scale
  • collect data only once and then reuse, technology and business advantage, strong gross margin performance
  • protecting workloads going to the cloud is a priority for CIOs
  • Falcon built in the cloud, one platform for all workloads
  • protects workloads accross all environments and containers running in private and public clouds
  • single agent with a unified user interface
  • 1 billion unique container instances protected daily
  • strong momentum with DevOps & Security teams
  • Zoom, surge in popularity resulted in bad actors looking to exploit
  • Zoom partnered with Crowd to protect Linux workloads
  • financial services company adverse to cloud, all legacy, forced to transfrom security architecture
  • wanted to gain visibility to endpoints, free from hodgepodge legacy systems and move to unified platform
  • speed of deployment and time to value critical factors for sales
  • “velocity of sales motion”
  • same financial company recognized superior technology, closed this deal in 8 weeks from proof of value to closing (purchase order)
  • Leading airline willing to change security for something that just works
  • Nextgen competitors had iffective and cheaper solutions
  • Leading US hospital replaced 4 incumbent vendors, initiative to move to cloud and use virutal desktops, looking for suite of solutions
  • Other vendors cannot speak to results of their product
  • example of new customer using 6 modules
  • security transformation is fundamental to digitial transformation with cloud native platform
  • expanding leadership in security cloud

Bert Podbere - CFO

  • growth in ARR was broad based, strong new additions, strong expansion business
  • oversized deal was for low 8 figures
  • professional services revenue was up 40%+ YoY, remains critical part of business (for upsells)
  • record demand for professional services and a number of sales from engagements
  • gave some really strange metric about $2.73 per $1 spent
  • 71% revenue US, 14% EMEA, 9% APAC, 6% other
  • ramping data centers will impact margins
  • magic number of 1.3, record for them
  • strong operating leverage in the Q
  • increasing investments in go to market strategy
  • increased expectations for the full year, including positive earnings for the year
  • Q3 expecting 68-72% revenue growth
  • strong free cash flow


  • post covid prospects look good, companies cannot keep system behind their own perimeter anymore
  • companies work from anywhere, moving to cloud, reducing costs, better outcomes
  • each new module adds more TAM, with current modules see 30B+ TAM
  • view now more of workload protection, mobile, IOT, emphemeral workflows (containers)
  • massive opportunity with 5G phones
  • more moduels = more TAM
  • aggressively invest in business, unit economics remain strong, room to invest
  • strong position to attract talent, not taking the foot off the gas
  • security transformation happening before doing digital transformation, to get legacy systems into the cloud
  • cloud native workflows have been underprotected, nothing was there protecting them, greenfield opportunity
  • protect over 1 billion containers daily that come and go
  • great reputation and tech helping sales
  • doubling down on cloud workflows
  • very pleased with module adoption, increase of customers using Discover and Spotlight
  • profitability after every new module added, every new module adds to the bottom line, all modules are profitable
  • new expansion/upsell brings customers seemlessly into the platform, driving more profitability into the business
  • still seeing strong adoption/sales through AWS, no comparable solution
  • metered billing and integrated in AWS store, super easy for customers to use and be billed appropriately
  • tech not in pre-deploy devops cycle, but runs underneath containers so that it is seemless for devs to deploy
  • devs don’t have to worry about putting another agent in the container, unlike competitors
  • oversized deal helped revenue this quarter, accelaration of the deterioration of the perimeter (more attacks)
  • ease of deployment and management is selling point
  • competitive environment good
  • winning net new logs and upsells/cross-sells at very robust levels
  • paying sales team equally for upsells and new ARR
  • unique customer base
  • sales team works with client team which drives unit economics
  • success across different ‘swin lanes’, strong unit economics
  • marketing plans have been successful, good ROI
  • having the platform sell itself
  • refining the go to market, always looking at the cost of sales and how to make efficient as possible
  • a lot of success in the SMB market, strong enterprise growth, velocity of SMB sales is picking up
  • frictionless go to market strategy, favorable competitive market
  • getting one module sold, has good conversion to multiple modules
  • go to market effeciency on the partnership with Okta and other 2 companies, no shares economics yet, seems early stages still
  • driving zero trust initiatives like with Okta, very well recieved by customers
  • upsells on mobile protection
  • companies buying laptops helps growth, these devices need protection
  • increase in all cloud workloads
  • thoughts on Microsoft: still signature based legacy anti-virus, lots of poor tech mixed with acquisitions, agent that only works on Windows, so many security flaws with Windows systems, Microsoft had 11,000 issues/patches in May/June alone
  • Microsoft is complex with multiple consoles and harder to operationalize
  • metered billings but also some traditional longer contracts
  • didn’t break out any numbers of workloads versus endpoint solutions even when asked
  • opportunity in cloud is just scratching the surface
  • endpoint Platform as a Service, very valuable beach front property analogy
  • 14 strategic partners, looking to monetize in future years
  • focus on solving problems for customers and making the product sticky

Final thoughts
It is nice to see them talking about greenfield opportunities and the competitive advantages they have. They make it sound like they aren’t even trying to really monetize yet.

I get the impression they have some of the best sales and marketing in the SaaS space. There was almost zero negative language in the call, I don’t think any ‘headwinds’ were mentioned.

The ‘just works’ factor seems to be similar to Zoom, in that the software sells itself.