CrowdStrike

12/27/2024

History

CrowdStrike, a leading cybersecurity company, was established by George Kurtz, Dmitri Alperovitch, and Gregg Marston in 2011. The founders envisioned a company that would provide proactive and predictive solutions to combat the evolving landscape of cyber threats. CrowdStrike's Falcon platform, which uses AI and machine learning to detect and prevent threats in real-time, is at the heart of its offerings.

Key milestones in CrowdStrike's history include:

2011: CrowdStrike is founded by the three co-founders.

2012: The company launches its first product, Falcon Host, a cloud-delivered endpoint protection platform.

2013: CrowdStrike gains recognition for its advanced threat intelligence capabilities and is named a Visionary in Gartner's Magic Quadrant for Endpoint Protection Platforms.

2014: The launch of Falcon Intelligence, a threat intelligence subscription service.

2015: CrowdStrike raises $100 million in Series C funding.

2016: Recognized as a Leader in the Gartner Magic Quadrant for Endpoint Protection Platforms for the first time.

2017: Introduces Falcon Overwatch, a managed threat hunting service.

2018: Launches Falcon X, a threat intelligence platform.

2019: CrowdStrike goes public with a successful IPO, raising over $600 million.

2020: Releases Falcon Horizon, a cloud security posture management solution.

In July 2024, a faulty CrowdStrike software update triggered a global computer outage, disrupting computer systems across various sectors. Despite this setback, CrowdStrike continues to be a leader in the cybersecurity industry, with a commitment to staying ahead of evolving threats.

CrowdStrike has achieved several significant milestones since its inception:

Initial Public Offering (IPO): In June 2019, CrowdStrike went public, raising $612 million and achieving a market capitalization of $11.4 billion.

Major Incident Response: CrowdStrike has been involved in investigating several high-profile cyber incidents, including the Sony Pictures hack in 2014 and the Democratic National Committee (DNC) breach in 2016.

Partnerships and Alliances: CrowdStrike has formed strategic partnerships with major technology companies, including Amazon Web Services (AWS), Google Cloud, and VMware, enhancing its ability to provide comprehensive security solutions.

12/27/2024

CrowdStrike Business

Go-To-Market Strategy

CrowdStrike sells subscriptions to its Falcon platform and cloud modules across various industries. The primary sales channel is through a direct sales team, segmented by customer size, supported by a network of channel partners. The company employs a "land-and-expand" strategy, where customers start with a few modules and expand over time. The sales team also identifies opportunities for free trials of additional modules to drive further adoption. The Falcon platform's flexibility allows it to cater to organizations of all sizes without modification. Most customers purchase one-year subscriptions, priced per endpoint and module, with revenue recognized ratably over the subscription term. Professional services, priced on a time and materials basis, also contribute to revenue and serve as a cross-selling opportunity for subscriptions.

Certain Factors Affecting Our Performance

Several factors influence CrowdStrike's performance:

Adoption of Solutions: Success depends on the market's shift from on-premise legacy products to cloud-based SaaS solutions.
New Customer Acquisition: Growth relies on attracting new customers. Incident response and proactive services help drive new customer acquisitions.
Customer Retention and Sales: Increasing revenue involves retaining existing customers and expanding their subscriptions.
Investment in Growth: Significant investments in sales, marketing, and technology are necessary to capitalize on market opportunities. This includes ongoing R&D and potential acquisitions to enhance the Falcon platform.
July 19 Incident: A content configuration update caused system crashes, leading to legal and administrative expenses. This incident has affected sales cycles and customer purchasing decisions, with potential long-term impacts on key metrics and revenue.

Dollar-Based Net Retention Rate

CrowdStrike's DBNRR (Dollar-Based Net Retention Rate) was 115% as of October 31, 2024. This metric can fluctuate due to large customer contracts and ongoing increased contraction associated with customer commitment packages, which may reduce the DBNRR in subsequent periods.

CrowdStrike Components Operations

Revenue

CrowdStrike's revenue is primarily derived from two sources:

Subscription Revenue: This includes fees for the Falcon platform and additional cloud modules. Subscription revenue is driven by the number of customers, endpoints per customer, and cloud modules included in the subscription. Revenue is recognized ratably over the term of the agreement, typically one to three years. Most customers are billed upfront, leading to significant deferred revenue.
Professional Services Revenue: This includes incident response, proactive services, forensic and malware analysis, and attribution analysis. These services are generally sold separately from subscriptions and are available through hourly rate, fixed fee contracts, one-time engagements, and retainer-based agreements. Revenue is recognized as services are performed.

Cost of Revenue

The cost of revenue is divided into two categories:

Subscription Cost of Revenue: This includes costs related to hosting the Falcon platform in data centers, amortization of capitalized internal-use software, employee-related costs (salaries, bonuses, stock-based compensation, benefits), software license fees, property and equipment depreciation, amortization of acquired intangibles, and allocated facilities and administrative costs. As the customer base grows, these costs increase due to higher cloud hosting costs and incremental costs for storing additional data.
Professional Services Cost of Revenue: This includes employee-related costs (salaries, bonuses, stock-based compensation), consulting expenses, and allocated facilities and administrative costs.

12/12/2024