- CrowdStrike CEO Says Market Embracing AI-Driven Security Platform For Consolidation
By Michael Novinson (MichaelNovinson)
CrowdStrike has extended its tentacles well beyond its heritage in endpoint security, doubling its year-over-year deal count in adjacent technologies such as cloud, identity and SIEM.
CEO George Kurtz said clients have rapidly consolidated their cybersecurity operations on CrowdStrike’s Falcon platform to achieve faster response times and significant cost savings. Kurtz said customers recognize US$6 in cost savings for every dollar invested into Falcon technology thanks to the company’s unique architecture, which compresses alert-to-resolution times from days to hours and minutes.
“The Falcon platform’s differentiated architecture creates a technological competitive moat around our ability to be cybersecurity’s premier platform consolidator,” Kurtz told investors Tuesday. “This is something you can acquire or fix later. You must build it right from the start.”
A Fortune 100 healthcare firm switching from Microsoft to Austin, Texas-based CrowdStrike following a breach at the Seattle-area software and public cloud giant enjoyed a 75 per cent reduction in its agent footprint and a 700 per cent improvement in mean time to detect and respond, taking average alert triage times from four-plus hours down to minutes, according to Kurtz.
“We win because we scratched the consolidation itch, delivering the compliance necessities without anything new to deploy and manage,” Kurtz said. “People want to consolidate with us. People want to actually go to one single platform, one single agent, one single console.”
What’s Leading Customers, Partners to CrowdStrike
Kurtz called out a Middle Eastern power provider that consolidated five security vendors into one using Falcon as well as a Japanese multinational that eliminated multiple legacy security vendor by expanding its Falcon adoption. Meanwhile, MSSP eSentire migrated hundreds of customers – and nearly 500,000 endpoints – from Broadcom-owned Carbon Black to CrowdStrike.
“Partners are coming to us to migrate their customers off legacy and substandard point products as well as multi-platform vendors,” Kurtz said.
CrowdStrike’s new Falcon Flex licensing model has generated more than US$500 million in deal value in the three quarters since its introduction, which Kurtz said has further consolidated and simplified customer security while expanding the company’s market share. Debuting Falcon Flex has accelerated the volume of adoption by giving organizations the financial flexibility to purchase more Falcon modules, Kurtz said.
Kurtz said market demand is growing for CrowdStrike’s SIEM offering due to both market consolidation affecting legacy SIEM vendors and the product’s native integration into the Falcon platform. Last month, LogRhythm and Exabeam agreed to merge, Palo Alto Networks agreed to buy IBM’s QRadar SaaS assets for at least US$500 million, and Cisco closed its US$28 billion acquisition of Splunk in March.
“More happened in the SIEM market over the past few months than in decades,” Kurtz said. “In the wake of this consolidation, the demand environment is ripe. Each of these consolidation moves creates immediate opportunity zones.”
CrowdStrike was not among the 22 vendors featured in last month’s Gartner Magic Quadrant for SIEM due to not meeting the functional requirements, which include assets in areas such as federated search, search functionality, data lake platform integration storage, long-term data storage and reporting, threat intelligence, user behavior and analytics, and security orchestration, automation and response.
Profitability Skyrockets for CrowdStrike
Category Quarter Ended April 30, 2024 Quarter Ended April 30, 2023 % Change
Total Revenue $921M $692.6M 33%
Subscription Revenue $872.2M $651.2M 33.9%
Professional Services Revenue $48.9M $41.4M 18%
Net Income $42.8M $0.49M 8721%
Earnings Per Diluted Share $0.17 -$0.00 N/A
Non-GAAP Net Income $231.7M $136.4M 169.9%
Non-GAAP Earnings Per Share $0.93 $0.57 63.2%
Source: CrowdStrike
CrowdStrike’s revenue of US$921 million in the quarter ended April 30 crushed Seeking Alpha’s sales estimate of US$904.8 million. Meanwhile, the company’s non-GAAP earnings of US$0.93 per share beat Seeking Alpha’s non-GAAP estimate of US$0.89 per share.
The company’s stock skyrocketed $20.62 – 6.75 per cent – to US$326.20 per share in after-hours trading, which is the highest CrowdStrike’s stock has traded since May 13. Earnings were announced after the market closed Tuesday.
For the fiscal quarter ending July 31, CrowdStrike expects non-GAAP net income of US$245.7 million to US$247.8 million, or US$0.98 to US$0.99 per share, on revenue of between US$958.3 million and US$961.2 million. That compares to analyst expectations of earnings of US$0.91 per share on revenue on US$956.8 million, according to Seeking Alpha.
