CrowdStrike Holdings, Inc. (CRWD) Earnings Call Transcript & Summary

Good day, ladies and gentlemen, and thank you for standing by. Welcome to the CrowdStrike Holdings, Inc. Annual Meeting. At this time, I would like to turn the conference over to Mr. George Kurtz. Sir, please begin.

Good afternoon, everyone, and welcome to CrowdStrike's 2020 Annual Meeting of Stockholders, our first as a public company. I'm George Kurtz, President, CEO and member of the Board of Directors of CrowdStrike. I'll be acting as Chair of today's meeting. Let me begin by saying we hope you and your families are safe and healthy during these difficult times. We are pleased to be conducting today's meeting as an audio webcast and are happy you could join us today. As a reminder, this meeting is being recorded. The meeting will now come to order. I'll begin with a few introductions. We believe the following members of the CrowdStrike Board of Directors are in attendance on this webcast: Gerhard Watzinger, Chairman of the Board, Audit Committee member and Nominating and Corporate Governance Committee member; Roxanne Austin, Audit Committee Chair; Cary Davis, Compensation Committee member; Sameer Gandhi, Compensation Committee Chair; Denis O'Leary, Nominating and Corporate Governance Committee Chair; and Joseph Sexton, Compensation Committee and Nominating and Corporate Governance Committee member. Also joining me from CrowdStrike's management team today are: Cathleen Anderson, our General Counsel, who will conduct the official portion of today's meeting; Burt Podbere, our Chief Financial Officer, who will act as Secretary of the meeting and record the minutes; and Maria Riley from CrowdStrike Investor Relations team. Anurag Saha from PricewaterhouseCoopers, CrowdStrike's independent registered public accounting firm, is also in attendance. Finally, [ Kathy Wheadon ] from Broadridge Financial Solutions is participating on this webcast and will act as the inspector of election for the meeting. She has signed an oath of office, which will be filed with the minutes of this meeting. I will now turn the meeting over to Cathleen.

Thank you, George, and welcome, everyone. This meeting is being held in accordance with CrowdStrike's bylaws and Delaware law. A copy of the rules of conduct that govern today's meeting can be found in the Meeting Materials section of the web portal for today's virtual meeting. We ask that you abide by these rules in order to facilitate an orderly meeting. During the official portion of today's meeting, we will address the matters described in the company's proxy statement dated May 22, 2020. We'll open the polls and then each proposal to be voted on will be presented in the order set forth in the proxy statement. We'll answer any questions related to the proposals, after which stockholders will be prompted to submit their vote. If you have not already voted and wish to vote during the meeting, you may submit your vote online at any time while the polls remain open, although we will defer voting as part of our agenda until all of the proposals have been presented. Then the polls will be closed, the votes tabulated, and the preliminary results will be announced. We'll then adjourn the official portion of the meeting. We will hold a question-and-answer session after we complete the official portion of the meeting. You must be logged into the meeting portal as a stockholder to submit a question. Stockholders can enter questions at any point during this webcast through the online portal using the text box on your screen. And if you have a question, we encourage you to submit it now. Questions must conform to the guidelines set forth in the rules of conduct in order to be addressed. Thank you in advance for your cooperation. I have an affidavit of distribution from Joanne Vogel of Broadridge Financial Solutions, which is acting as CrowdStrike's mailing agent for this meeting. The affidavit certifies that notice of this meeting has been duly given and that a proxy statement or Notice of Internet Availability of Proxy Materials has been mailed to every stockholder of record as of the close of business on May 11, 2020, the record date for the meeting. A list of the stockholders of record as of the record date is available for this meeting. [ Ms. Wheadon ] has reported that a majority of the total voting power of all shares outstanding and entitled to vote are present online or by proxy at this meeting, thereby constituting a quorum. With a quorum being present, this meeting is declared open to proceed with the official business of this meeting. It is now 12:04 p.m. Pacific Time, and the polls are now open. If you have already submitted a proxy card, voted by telephone or voted through the Internet and you do not wish to change your vote, you do not need to vote again at today's meeting. Your vote will be cast as you previously instructed. If you have already voted and wish to change your vote or if you have not yet voted and you wish to cast a vote now, you may vote online during this meeting while the polls are open. You must be logged into the meeting as a stockholder in order to cast your vote online. Again, I want to emphasize that it is not necessary to vote if you have previously voted and do not wish to change your vote. Submission of a new vote during the meeting will revoke any prior votes that you have submitted. Moving to the proposals. At today's meeting, we are considering 2 proposals for stockholder approval. The first proposal on the agenda is the election of directors. Denis O'Leary, Joseph Sexton and Godfrey Sullivan have each been nominated for election as a Class I Director to serve for a 3-year term expiring at the 2023 Annual Meeting of Stockholders or until his successor is duly elected and qualified, or his earlier death, resignation or removal. The only persons who have been properly nominated are these nominees. The vote required to elect the Class I directors is a plurality of the votes cast, which means that the 3 individuals nominated for election to the Board of Directors receiving the highest number of for votes will be elected. Stockholders do not have the right to cumulate their votes in the election of directors. The Board of Directors unanimously recommends that stockholders vote for the election of all the nominees. The second proposal on the agenda is the ratification of the selection of PricewaterhouseCoopers LLP as CrowdStrike's independent registered public accounting firm for the fiscal year ending January 31, 2021. The vote required to approve this proposal is a majority of the votes cast on the matter. The Board of Directors unanimously recommends that stockholders vote for Proposal #2. These 2 proposals are the only matters to be voted on at this meeting. As a reminder, if you have any questions about either of the proposals, please enter them online through the meeting portal now. Maria, do we have any questions about the proposals?

No, there are no questions at this time.

Thank you, Maria. We will now move to voting. If any stockholders would like to vote online, please cast your vote now. As a reminder, it is not necessary to vote if you have previously voted and do not wish to change your vote. I will now pause while the votes are collected. [Voting]

It is now approximately 12:07 p.m. Pacific Time, and I declare that the polls closed. No further proxies or votes and no changes or revocations will be accepted. I will now ask the inspector of election to read the preliminary voting results.

Thank you, Cathleen. The preliminary results are as follows: each of the 3 nominees has been elected as a Class I Director, and the proposal to ratify the selection of PricewaterhouseCoopers LLP as CrowdStrike's independent registered public accounting firm for the fiscal year ending January 31, 2021 has been approved.

Thank you, [ Kathy ]. These are the results of the voting based on the inspector of election's preliminary report, while we do not expect a change in the outcome, the final vote count may vary from the preliminary report following final examination of the proxies and ballots. The final results of voting, including any votes recorded during this meeting, will be set forth in a final report of the inspector of election and will be included in the minutes of the meeting. The final results will also be reported in a current report on Form 8-K to be filed with the SEC within 4 business days of this meeting. This concludes the official business of the meeting, and the official portion of the meeting is adjourned. I will now turn the meeting over to Maria Riley from Investor Relations.

Thank you, Cathleen. Before I turn the meeting back to George for closing remarks, I'll ask our stockholders once again to submit any questions through the meeting portal. While we will do our best to address all questions received, we may not be able to address each of them due to time constraints. We will address any duplicative questions simultaneously and may omit any subsequent repetitive questions. We also will not answer questions which do not conform to the rules of conduct for this meeting. As a reminder, our responses today may include forward-looking statements regarding future growth, future events and the future financial performance of the company. Actual events and results may differ materially from our expectations. We refer you to our SEC filings for a discussion of risk factors that could cause our actual results to differ materially from those discussed today. We make these statements as of today, July 6, 2020, and disclaim any duty to update them. While we are waiting for questions, I'll now turn the meeting back to George for closing remarks.

Thank you, Maria. As many of you on this webcast may know, we released our first quarter of fiscal 2021 financial results on June 2. You may have -- you may access those materials, including a replay of the conference call, on CrowdStrike's website under the Investor Relations section. I would like to take this opportunity to highlight a few points we covered on June 2 financial results conference call. CrowdStrike delivered an exceptional first quarter with results that exceeded our expectations. For the quarter, we achieved 88% ARR growth, 85% revenue growth and 105% subscription customer growth year-over-year. We also drove substantial operating leverage, reduced GAAP operating loss and achieved non-GAAP operating profitability for the first time in company history. Our strong performance demonstrates our ability to execute at peak levels and protect our customers, even in light of a global crisis. Overall, I could not be more pleased and inspired by the superior execution and dedication to our customers by every CrowdStriker. Cybersecurity is mission-critical. In addition to effective and superior cybersecurity, CIOs and CISOs are looking for a strategic partner to help them easily accommodate a remote workforce, simplify their operations, bridge the security skills gap and reduce cost. With 11 modules and 11 app store partners, CrowdStrike offers unparalleled opportunities for customers to consolidate agents and reduce costs. Strong secular trends have driven our growth, including a growing threat landscape, a favorable competitive dynamic, the proliferation of cloud workloads, digital transformation within organizations and an increasing remote workforce. With our cloud-native platform and single-agent architecture that was designed from the start to stop breaches as well as drive superior outcomes and immediate value for customers, we believe CrowdStrike is positioned to emerge as a structural winner of the security cloud category and fundamental endpoint platform of the future. I will now take questions from our stockholders. Maria, do we have any questions?