CrowdStrike Holdings, Inc. (CRWD) 2023 Jefferies Cybersecurity Summit Conference (Transcript)

CrowdStrike Holdings, Inc. (NASDAQ:CRWD) 2023 Jefferies Cybersecurity Summit Conference Call December 5, 2023 3:15 PM ET

Company Participants

Burt Podbere – Chief Financial Officer

Conference Call Participants

Joseph Gallo – Jefferies

Joseph Gallo

We’re delighted to have Burt Podbere, the CFO of CrowdStrike for over 8 years and more importantly, I believe you have a doctorate in gross margin. So…

Burt Podbere

It certainly feels that way.

Question-and-Answer Session

Q – Joseph Gallo

Thank you for joining us. Maybe just starting there. What is it about the CrowdStrike financial model that makes it so unique that you can do what you’re doing with gross margins, because you’re certainly in rarefied air as it relates to SaaS companies?

Burt Podbere

Thanks, Joe. First. It’s great to be here. Thanks for doing this with me. And you’re right. Gross margin, I feel appreciate I have a post doc in gross margin. When I got to CrowdStrike, it was well below 50%, let’s say and that was back in 2015. And I think even back then, I saw the trajectory of the company. I saw a lot of goodness. Gross margin was a challenge. And I said, okay, how are we going to change this? And George, the CEO, kind of walk me through it and the key takeaway, big picture, we’ll get into some details later. But big picture, it was our ability to collect data once and reuse it many times. .

So basically, today, we have 27 different modules that you can buy. After you buy the first module, every module thereafter has very limited incremental cost. So it starts there. And then from there, it’s about, okay, how do we think about cost optimization on the infrastructure side, private, public cloud, how do we enhance both of those. And then it’s about scale. How do we make sure that whatever we do on the cost side, we can replicate, duplicate and do it at scale. The data that we have today is a lot different than the data we had 8 years ago.

And the last thing I’ll say on that particular question is, I think I’m the only CFO in the valley that actually invites my DevOps team to my monthly close meeting with 35 of my favorite accountants that work for me. And literally, we literally spend 15 to 20 minutes just on COGS. We look at the road map. I asked them pointed questions about the road map. What do you need? How can we get there faster, those kind of things. And so that’s how I think about gross margin every single day. And so that’s the framework.

Joseph Gallo

One piece of, I don’t want to call it pushback but what we’ve gotten from investors following your Falcon is why give the 82 to 85. Does that embed execution risks? So maybe just talk about your visibility in driving gross margins to 82 to 85 because it was far surpassing everybody’s expectations?

Burt Podbere

Yes. Look, it really starts with the things that I just talked about, plus the fact that for 2 years, we’ve been investing in infrastructure, our own private cloud. And we’re starting to see the fruits of those investments. And for those who have been following the company for about 2 years, our subscription non-GAAP margin was in the mid-70s. And then we started to see that lift a few quarters ago around that 80% mark. And that was only kind of the beginning of seeing the fruits of those investments. And so I felt it was the right thing to do to showcase how we think about gross margin, how important it is to us and more importantly, how we can actually continue to do what we’ve been doing for quite some time.

Joseph Gallo

A topic that’s always on investors’ minds is just macro; particularly given your ramp in the second half, net new ARR. How have your conversations with customers been? How are they thinking about their ’24 budgets? And what are you seeing in the market more broadly?

Burt Podbere

So demand is definitely there. We’re seeing budgets still being tight. There are certain areas where we’re seeing budgets shifting from IT to security which is great or having a broader impact for us. Having said that, deals are still taking quite a bit of time to consummate. Deal scrutiny is there. Obviously, the CFOs of the world, including myself, have taken a different role in today’s world. More scrutiny, more approvals means longer cycle times which isn’t necessarily a bad thing. And for us, it’s actually a pretty good thing because the deals are bigger. And we’re consolidating more.

And then the company’s — the company and certainly my sales team is leveraging my relationships with some of the CFOs to kind of walk them through the ROI. And so still a very tough environment with respect to macro but the demand environment is right there. And look, it’s evidence in the news, right? Pick an industry, gaming, right? We’ve all seen what’s been happening in the news. The attacks are becoming more prolific. Dark AI has creeped into our world. And so the demand for cyber protection is greater than it’s ever been.

Joseph Gallo

Since you mentioned the buzzword of the year, AI. How do you think about AI and gen AI’s impact on both the cyber industry as well as the CrowdStrike platform?

Burt Podbere

Yes. So AI is here. I think it’s one of those moments in time when you’re seeing something that’s going to disrupt appreciate the Internet, it’s going to disrupt kind of workflows. There are a lot of people that I confront with and that all of you confront with that use generative AI to help in their day-to-day coding or whatever it is, right? And then for CrowdStrike, we’ve been an AI company since the beginning. However, generative AI for the last kind of 3 years. And generative AI for us really can do a few things. Internally, obviously, we use generative AI, we’re able to do things and workflows faster, better, stronger.

And then for customers, we announced that we’ve got something called Charlotte AI. And Charlotte, basically does a few things. One, it enables quicker uptake on some of our modules. And we’ve priced it at a point where it’s very attractive compared to, let’s say, Copilot, for example. And for us, if you take a look at a couple of our modules, I think this founder head and CEO, George Kurtz, had a great vision that he can combine modules with AI. So we have something called Foundry. Falcon Foundry is a tool that is a no code tool that allows folks to progress their own apps or modules on our platform.

And so if you think about combining that with Charlotte, the first thing you could do with Charlotte is ask Charlotte, okay, what should we build? What would make the most sense for us? Charlotte will give you an answer. And the next gen would be, okay, Charlotte, build it for us. That’s huge, right? That’s going to save time, money, effort. That’s not here today to ask Charlotte to build you the apps but you can see where we’re going. And that for larger companies is really exciting. And so I get excited about Charlotte AI. We use it internally. And it makes — it just makes the platform even more sticky. And for us, we’ve invested in it and I’m excited about it. Customer feedback has been exciting and it will be ready in Q1 of next year.

Joseph Gallo

Yes. Maybe just drilling a little bit more into that. How has the customer feedback been? And just any thoughts on pricing so far? I know you mentioned that it’s priced more attractively than Copilot.

Burt Podbere

It’s a great question. I’ll elaborate a little more on pricing. Look, we came out and we priced it at $20 per endpoint per year and then you can — plus some query packs, that type of stuff. But we’re still nascent. We’re still going to take in data, customer feedback to kind of really accomplish what the customers need and at the price point that makes a lot of sense. Copilot, it is expensive. It was an eye opener for a lot of the world but it does work. And we think that Charlotte is just that next gen. So the folks that we have it — the customers that we have in beta are actually giving us feedback. They want it more. They want more of it and they want it now. So appreciate everything that we do at CrowdStrike, we’re not going to release it until it’s quite ready. But right now, it’s, as I said, targeted for Q1 of next year.

Joseph Gallo

What are the implications of Charlotte on gross margins?

Burt Podbere

Yes. So that will be neutral for us. Obviously, the earlier days and we’re still figuring it out, it will be — the number is small so it really won’t impact gross margin. But over time, as Charlotte really picks up, that will be neutral to the gross margin. And we track that really closely.

Joseph Gallo

And then when — how should we think about it being a driver to top line? appreciate is that a fiscal ’25 event given it’s coming out next year? And then is there the potential for it to actually drive outsized growth just given the net retention, right? appreciate I saw a live demo and it recommends other modulations [ph] appreciate this is great. appreciate it seems appreciate you’re going to have to disclose a 9, 10, 11 or the next leg of module adoption.

Burt Podbere

It’s appreciate a self-licking ice cream cone, right? It’s appreciate ask Charlotte, it’ll tell you to buy more. But yes, so I think that they’re going to — Charlotte is going to contribute next year. How much, time will tell. I do think that at some point, Charlotte will meaningfully add to net new. Obviously, on the base, we have a pretty big base. So it’s not going to advance the needle on the base that much. But on net new in a quarter, I can see that coming. As much as next year, we’re going to start to see the pickup. Again, it’s more about getting customers familiar with it, using it, trying it and then getting excited about it with the — what I just described, the application that you can build your own. She can do it for you. Once that starts to kick in, then I can see that it’d be meaningfully added to a net new ARR.

Joseph Gallo

If we were the companies that are testing this in preview, because I see AI as kind of the great tech democratizer for SMBs and MSSPs. So in a way, I would visualize this helps you moving down the market. But I’m just kind of curious, is this more of an enterprise adoption first? Or do you think the MSSPs are the ones that are going to lean into this the hardest?

Burt Podbere

I think across the board, I think everybody is going to be using it and appreciate it. Certainly, I see the application for SMB, right? SMB — to win in SMB, you got to keep it really simple, you got to automate, you got to use technology and that will win. And I’m not saying large enterprise, it’s not the case but a large enterprise, the deal cycles are longer, there’s more involved. You’re going to have interaction with the sales team, the SE teams, even someone appreciate me on the larger deals. But SMB, it’s kind of flight this thing, take out the friction, use automation, use AI, use generative AI. Those are the things that are going to win in SMB.

Joseph Gallo

You gave an incredible $10 billion ARR target. And I think over the next — the last year, you really solidified yourself with a true security platform, moving beyond endpoint. But rarely do companies handle that baton from product 1 to product 2, 3, 4 smoothly but you have. So I guess what has enabled that transition so far? And how should we think about that transition going forward?

Burt Podbere

Yes, that’s hard. But it goes back to consolidation and a true platform, right? So we have one agent and we have one console. So today, there are — I believe there are no other cyber companies that can boast that. And that enables us to create seamlessly other applications that a company can adopt very quickly and get value right out of the gate. And that’s hard to do. Taking the integration away from the client, that is massive in terms of adoption. So to go to that next act, let’s call it, we gave a highlight of an illustrative view of how to get to 10. And we went in different directions. Started with product and we talked about all the products that we have in our platform and where each one of them can go.

It starts from the stuff that we started out with, AV detection and some of our Overwatch and we went into some of the other products. And then we went to some of the newer ones. Cloud, Identity, LogScale which is a next-gen SIEM. And we kind of gave an illustration of how big each one of those can be. Each one of those alone today arguably can be an IPO for us, right? Cloud; we gave some numbers on in that $300 million range, growing at 7% range, not this quarter but the quarter before and we said it was accelerating this quarter.

Identity, right in that $200 million range, growing at 200%. This is not this quarter that we announced but the quarter before accelerating. And LogScale; that thing is out there to disrupt the SIEM market and the recent transactions that have taken place have really put a focus on that for us. It’s a good business for us. We talked about the fact that it’s over $100 million in ending ARR. These are good facts that gives us a lot of confidence in that illustrative view of $10 billion.

And then go to market. It’s not just all about having the best tech out there and the best product offering, it’s about go-to-market and your partners. And some are in this room. And working collaboratively and getting deeper with them and that’s working. I think our partner group, especially our top-tier partners are stronger than ever. And whether it’s a traditional partners appreciate an Optiv or it’s something appreciate a Dell or we just announced something with — or down market, Pax8. Whatever it is, I feel that we’ve never been in a better position with our partners. And the ability to go deeper with our top partners, that matters. And partners are willing to deal with us. So I’m excited about both the tech and I’m excited about the go-to-market routes to get to that illustrative view of $10 billion.

Joseph Gallo

Is endpoint still the tip of the spear or are you landing with some of these other products? Because appreciate it’s clear the cross-selling motion is working. But I’m just curious, are you landing with some of these other newer modules, cloud, identity, LogScale?

Burt Podbere

It’s a great question. The good news is, is that we are a platform company. And I think finally, companies are recognizing that, that statement is actually true. A lot of people claim it. But as I said, the one agent, the one console, multiple different use cases, that truly is a platform. And I think that you’ve seen, as you’ve talked about, the adoption rates and multiple modules by customers, all of them have gone up, whether it’s 5, 6 or 7 modules that a customer will adopt, all of them have been up in Q3 and that just goes to the cross-sell. It goes to the platform play. And the good news is with our customers, it could start with next-gen AV. It could start with LogScale. It could start with identity. They’ve — all of those — and cloud, all of them have started with one of them, right? And each quarter could be different. And each customer could be different.

I’m really excited about — I’ll be honest with you, I’m really excited — out of all of those — I mean, the technical people in this room will know more than me about how they use each of those things. But cloud is really important to me. We’ve invested a lot in cloud. We just bought a company called Bionic which is — which secures the applications in the cloud. I just think that at some point, the cloud number that we’ve given out which talk to the number of modules deployed in the cloud, of — we gave out the last one around $300 million. That could be the majority of our net new ARR in a given quarter. Not today, not tomorrow but at some point in the future. Today, that cloud TAM is roughly around $12 billion. FY ’28, it’s looking appreciate $31 billion. Those are big numbers.

Joseph Gallo

It’s almost appreciate you saw my script here for going to cloud next…

Burt Podbere

Sorry.

Joseph Gallo

No. But no one disputes the cloud as a massive market but it also kind of feels appreciate the Wild West. You hear about pricing, competitive displacement. So what is the secret sauce for CrowdStrike in cloud? appreciate obviously, you’ve got the platform but I visualize there’s an area or two that you’re the most differentiated in.

Burt Podbere

Yes. This is a great dovetailed question. I think for us, the big picture strategy, Joe, was, hey, we said we can be that cloud company that has both the agent and non-agent technology, working together seamlessly. So what’s the difference, right? So the agent is what we’ve built our company on. It’s a lightweight, single-purpose agent that collects the data and it’s a smart agent. It’s a filtering agent. And that’s the one that collects the data and delivers it to our Threat Graph which is the brains of our operation. That is our cloud workload protection. That is detection, that is protection. That is what drives who we are today.

The agentless piece is an interesting piece. That’s the one that talks to compliance and reporting. Both of them are important. Many folks have tried to do it and have not been successful at it. Some folks have tried to partner to do it. They have an agent company they wanted to partner with an agentless. Or they were an agentless company trying to partner with an agent company. And partnerships are hard when you’re trying to do it at the core level of tech and none of that has worked. So it starts there. We felt that we’re the only one out there where — that was able to do it successfully.

And then if you drill down into the CWT — CWP, cloud workload protection. So we started off with protecting the infrastructure. That’s how our CWP technology worked. Then we bought this company called Bionic. I think of the infrastructure piece as the house and then we bought this company Bionic which protects the application. Think of that as the chairs, the fridge, whatever else that’s in house. So we think that those 2 pieces are the 2 biggest pieces for the cloud. There are others, right? But those 2 are the foundational pieces of technology that you need to win in cloud. And we think that we’ve got the step up on everybody else in those 2.

Joseph Gallo

Is there any sense of composition between those numbers roughly today or maybe just those that you said are most important or the largest? And then how you think about gross margins for cloud security?

Burt Podbere

Look, first, I’ll start with the second part of the question which is you’ve seen how our cloud has grown and it’s no surprise that our margin has grown with it. That’s number one. Number two is obviously the breakout between, let’s call it infrastructure or CWT for infrastructure versus CWP in apps, well, we just bought the app piece. And it’s pretty small, right? But we think that, that has a big opportunity for us, right? Obviously, that’s why we bought it. And I think that when we’re talking to customers today, there are obviously customers appreciate, for example, Azum [ph], that if they’re doing a platform buy which is us and you’re looking at the SKUs that are within that, a lot of it is going to be cloud. And so there will be companies appreciate that where that will be the dominant piece of the purchase. There’ll be others that the traditional endpoint protection AV, that will be the dominant piece. So the good news is we’re servicing both ends of the spectrum and everything in between. So that’s how we think about it.

Joseph Gallo

Maybe moving to the other baton of growth, LogScale. That slide you showed had pretty ambitious targets. I think it’s 10 to 15x future ARR. Where does the confidence for that come from? Is that displacing Splunk and legacy vendors? Is that moving more into observability? appreciate how should we think about the growth context there?

Burt Podbere

I love that question. So when we bought a company called Humio a few years ago, it was to really go after the complete and utter dissatisfaction of customers that have SIEM technology. And we said, hey, look, we can do it better, cheaper, faster, stronger. We can buy something that’s index free. So the speed in terms of which we get back queries is going to be at petabyte speed versus the legacy SIEM vendors, that’s why we bought it. It had some other applications appreciate XDR. And then fast forward, hey, we’re over $100 billion — sorry, $100 million appreciate we talked about. And there was that big acquisition in the space, right? And we think that’s a — that’s what I call a gift, right? I call these things gifts. That’s going to take a long time to blend. There’s going to be a lot of disruption. We’ve already had a lot of customers that are coming to us saying, hey, look, we don’t want to be part of that group. We want to be part of a cybersecurity company. And we’ve had resumes; a lot of folks who are part of the acquired company want to come combine us. And we’re saying, okay, come on board; so we hired a bunch.

Customers are excited to be part of the team. And that’s one of the — that’s the answer to your question about are people starting with LogScale or cloud or whatever. There’s a lot coming with LogScale. So excited about what’s happened in this space. We don’t strategize for those things. That kind of was a nice surprise for us.

Joseph Gallo

Another upside catalyst has really been Identity and we’re — I think we just became customers there recently, Jerry [ph] said this morning, so big fans. But just what is the secret sauce there? Is that displaying the Oktas of the world? Or what is the niche that’s serving? And how big can that market be?

Burt Podbere

Again, another good question, Joe. So the way I think about it is there are 3 real kind of technologies for identity. The first is to create the identity and that’s Microsoft. The second is to handle the identity. That’s the Oktas, the Pings of the world. And then there’s a third to ensure that. So the good news is we don’t overlap with Microsoft on that. We don’t overlap with the Oktas or Pings we partner. And what we do that there’s really nobody there doing today from an identity standpoint is Zero Trust, right?

So for us, what does that mean? That means if you, Joe, are trying to get into some of Jerry’s files, you can’t. We know and we’ll stop it. And so we’ll see the lateral movement and we’ll be able to impede that Jerry would have other applications that I’m sure he’ll tell us about that he finds when he uses the technology. But that’s been a biggie for us. So when we think about adversaries and what they’re using today and what they’re going after, identity is 80% of those instances today, 80%.

So when we think about the big 3 today, the 3 legs of the stool that hold up security companies, or security and everything else, one is next-generation antivirus, two is detection and three is identity. And the good news is we have it. And there’s no one out there really today that has that in the way that we’re able to combine it with our platform. The good news is that acquisition, I think, internally is the poster child for how to do M&A. We saw a need, we saw a company and we said, hey, look, the culture is the right culture and we were able to contract a deal.

The tech is great. We took a couple of years to make sure that it was able to go on to — well, the diligence said we were able to combine that agent into ours because we still only have one agent and it took time to do that. And the team. I’m happy to report that the 2 co-founders of the company called Pre-empt which was our identity, are still with us. And they’re doing meaningful roles in the company. So the knowledge, obviously, that we gained and the IP is there. But now all the stuff that was in their heads or the things that they want to do is still with us. So that is a great marker for whether an M&A transaction worked. As everybody knows in this room, not all M&A transactions worked or work. That one for us was a big success story.

Joseph Gallo

You guys have had so much success in the enterprise and a growth opportunity is you moving down market. What is the key to unlocking the SMB mid-market technology-wise? How do you think about the unit economics?

Burt Podbere

Yes. So obviously, it’s volume. It’s interesting. The smaller the company, the better the margin, right, because you’re getting less discount for volume. So that’s how that works just from an economic standpoint. We released something called Falcon Go which is something for the S in the SMB. It’s kind of, if you will, a skinny down version of our impede technology. It’s really easy to get it up and running and for the SMBs who don’t necessarily have — neglect about security people, even IT people. So that’s been a big — we took a lot of feedback that we feel that’s going to be a big win for us.

The second one which is already a big win for us, is something called our Falcon Complete. So this is where we monitor, handle for you the technology. And today, that’s a massive driver for SMB, mid-market and enterprise. On enterprise, Amazon is a customer for Complete. All the way down to a mom-and-pop that would have Complete.

From a mom-and-pop perspective, if you think about the economics, it’s dramatic, right? So if you’re a mom-and-pop and you barely have an IT person and you’re going to want to hire a security person, take a city appreciate New York, San Francisco, all in, it’s going to cost you, I don’t know, $400,000, all in. With Complete, it will be tenth of that. And you get the best in the world in terms of people who know how to run the Falcon technology. And so it becomes very, very attractive. So when you think about Complete for the SMB, that’s a win. That’s a propellant for growth in the SMB.

And then Complete, it’s not just the original modules that we laid out with Complete but we’ve added Identity to it. And you can see where we’re going with how we’re thinking about Complete. And so that is a big driver for growth for the SMB space. As a matter of fact, my entire corporate sales team. So those are the folks that are dealing with, let’s say, 2,500 endpoints or less, they start with that. The first thing out of their mouth in terms of what they’re trying to sell to customers is Complete. And they can either go up or down in terms of what’s in the Complete or if they’re not going with Complete. Or they start their journey with something other than Complete and then go to Complete.

Part of our success is taking out friction on the sales process side. So we have something called trial to pay. So a trial to pay is what it sounds appreciate. So a customer can come into our website, try the technology, press a big red button, buy it. The good news is with us, we know who it is and we’re tethered to the customer. So we know who bought it. And they could have bought let’s say, AV. Well, then an inside or we call it a corporate sales person would then be able to call them up and say, hey, Mr. or Mrs. Customer, we see that you bought AV. Let me tell you about Complete.

And so you can see how the upsell motion works. And it’s worked really well. And we’ve taken deals that are — wouldn’t seem very much, maybe 8,000, 9,000 and turn those into 50,000, 60,000, 70,000 because they went from 1 product or 2 products to Complete. So that’s how we think about SMB and our opportunity there.

Joseph Gallo

That’s interesting about the packaging. I guess you’ve gone from 3 products in 2016, 3 modules to 27 or maybe it’s higher…

Burt Podbere

27. That’s a number.

Joseph Gallo

I lost count but how do you about the comfortability of your sales force to sell that, right? Because that’s a lot broader of a knowledge base. And sometimes the broader of a customer who you’re talking to at the company base.

Burt Podbere

Yes. So it’s a great question. So we’re trying to take a page out of, I think, the greatest company on the planet for bundling and packaging and software that we’ve ever seen which is Microsoft and figure out how to bundle in such a way that it makes it easier for not only our own sales team but for our partner’s sales team as well. So my goal at the end of the day, I know that a partner has their sales force or their sales engineers who can be at the same level as mine, I’ve won. I’ve won. Some are, some have some work to do. How do you do it? It’s through training, keeping it simple, trying to make it so that it rolls off the tongue from a salesperson or a sales engineer perspective so that the customer can absorb it quickly.

The key, as you guys know, from a sales perspective, is listen to the customer, absorb it quickly and have a really quick response to confront that need, not try and sell something that the customer doesn’t want but selling what the customer wants. Over time, you can sell the customer more, especially with a real platform appreciate CrowdStrike. So that’s our goal is to keep it really simple for the SMB, making sure that they really grasp it and all of our customers. Making sure they grasp it but it has to start with our own sales team. So we spent a lot of time on training and we do have some groups that are specialized.

So every company — not every company, a lot of companies in software, not only in security, they’ll have what’s known as an overlay team. So a new product comes out, or you bought a new product, you generally have an overlay team who really understands that product out of the gate and they’ll work with the sales team for a year or 2 years or 3 years or whatever it is. And then it just goes back into the foundation of the core. But in that sense, you’ve got experts who know that specific type of technology appreciate Identity. And so that, to me, is a motion that works really well. And what happens is those folks who are in that technology are then educating the broader base sales force which has worked for us.

Joseph Gallo

Endpoint has always been extremely competitive. But it kind of feels appreciate the rhetoric has died down a little bit this year. I guess, what are you seeing competitively in the market? How has pricing been? And then maybe you could also add in just you guys versus Microsoft as well.

Burt Podbere

That narrative has really kind of quieted down, right, the Microsoft narrative. So for us, if we — let’s actually just start with Microsoft, right? That is our biggest competitor. Microsoft, again, has done a great job on the packaging and pricing and they’ve been at it for, what, 40 years. So for us — for Microsoft, it starts with the crisis of trust which has really taken hold, right? So back in, what was it, July, Microsoft came out and said, hey, we know that some have adversaries have reached 25 companies or enterprises and they did it through their Outlook accounts.

We’ll then fast forward to kind of September, the State Department came out and said, yes, Microsoft did that. And we had tens of thousands of e-mails being breached with sensitive information on it. CIOs and CISOs, they looked at it and then said, the federal government is getting breached by Microsoft, what’s preventing us from getting breached. So there is this crisis of trust.

And then it goes back to the tech. Microsoft tech, it’s 2004-year-old tech, it’s legacy tech. Has it gotten better over the years? For sure. Has it been at the same pace as the adversaries in terms of sophistication? No chance. So it’s this notion of the crisis of trust, coupled with inferior tech, coupled with pricing. So we call it gotcha pricing. Hey, here’s your E5 license. Hey, Defender is free. Nothing’s free. You know Defender. They got 10 modules. You’ve got a whole bunch of people. It’s complicated. It’s not great in a heterogeneous environment. And you kind of need a different type of software to compute what your true bill is. And that’s a problem.

And if you were you — were at our Falcon [ph] and we put a gentleman on stage to talk about just anything and he zoomed in on Microsoft and the challenges he has was their pricing. He was really irate. And we didn’t do anything. We just put him on stage. And he went off and he went through it and he actually hired a forensic accountant to go figure it out and was so frustrated and said, I’m done. That’s a true story.

Joseph Gallo

I think we have 1.5 minutes left. So just as you think through — obviously, you’re giving nothing officially for fiscal ’25 but just where are the biggest investment areas? How do we think about hiring? And then on the flip side, maybe in the product portfolio, where are the areas that have the most potential for upside?

Burt Podbere

Okay. Let’s start with the last one first, product portfolio. Really excited about the following: Cloud. We’ve talked about the acquisition. Data security, really excited about that. Legacy DLP is a joke and we feel that we’ve got the right technology to completely disrupt that market analogous to what we did in AV. LogScale, our next-gen SIEM, we think this is completely ripe for disruption given also what happened in the marketplace. We got a gift, let’s go take advantage of the gift. It’s already a real business for us on $100 million, let’s go, right? We also think that — when I think about this Charlotte AI, I think this thing is going to have a lot of legs. I don’t know how meaningful next year the net new ARR will be but this is going to be something that’s going to really, really matter for CrowdStrike. So that’s on the technology side.

Hiring side, we told the world that we’re going to slow down our pace of hiring. Last year, we did. We think there’s an opportunity to now enhance the pace a little bit. We’re seeing some volume of resumes coming from companies that were acquired. We’re seeing a lot of folks that are saying, okay, the consolidation is actually working, the shiny new star of a private company that’s touting crazy multiples and it’s going to change the world. Well, guess what, they’re not. Maybe you want to go to a company appreciate CrowdStrike that has a tremendous amount of upside from a career perspective and if they believe in terms of where we’re going, what we’re doing, upside and potentially how they think about the markets which no one has a crystal ball but — so we are going to hire more.

At the end of the day, everybody has seen our margins, right? Let me be super clear. We are going to do everything in our power to grow as fast and as much as we possibly can next year. Having said that, it’s going to be always with an eye to the bottom. By the way, it’s really, really hard to bring in great engineers. It takes time. We go through a rigorous process. And so as much as I want to bring in the engineers as fast as I can, I have limitations, capacity limitations. But make no mistake about it, I am going to fund it. I am funding it.

Go hire now. I’m actually opening up REx [ph] for next year now because I want to get the folks in because we think we’ve got this opportunity to take advantage of the markets because of the consolidation play. We don’t think that the market — global market and broader market is going to get any better. That’s our assumption. Whether it does or not, I don’t know. But the assumption is it’s not but we feel that we’ve got a competitive edge because of our true platform play.

Joseph Gallo

Awesome. Burt, always a pleasure. Thank you.

Burt Podbere

Joe, thank you. Pleasure. Thanks.