CrowdStrike Holdings, Inc. Class A Common Stock Citi’s 2026 Global TMT Conference
Review the key takeaways and the transcript of this earnings call.
- CrowdStrike reported its best quarter in company history in Q2, with record net new ARR of $333 million, 51% year-over-year growth, non-GAAP profitability, and record free cash flow.
- Product growth was strong across next-gen SIEM, cloud, next-gen identity, AIDR, exposure management, and the Flex license, which accounted for nearly 40% of ARR mix and drove the top 10 deals by value in the quarter.
- The company highlighted its Flex go-to-market license as an elegant solution benefiting economic buyers, vendors, and procurement, with over 2,900 customers and significant uplift in ARR upon adoption.
- CrowdStrike’s Falcon conference had record-breaking attendance and was a major pipeline generator, featuring new product announcements including AI Guardian and SafeMind.
- Exposure management is rapidly growing and approaching $300 million ARR, with plans to disclose more metrics soon.
- The company’s professional services business represents about 5% of revenue and serves as a strategic lead generation tool for cross-selling products.
- CrowdStrike sees Microsoft as its biggest competitor but maintains strong partnerships with frontier AI labs like Anthropic and NVIDIA, positioning itself as a security enabler for AI adoption.
- The July 2024 outage was a pivotal event that increased customer engagement and accelerated AI adoption, which CrowdStrike is well positioned to secure.
- CrowdStrike uses AI internally across sales, DevOps, R&D, legal, and finance to drive efficiency and accelerate operations, including closing books in one day.
- Gross margin is currently 81% with a long-term target of 82-85%, supported by public and private cloud optimization and AI-driven efficiencies.
- Updated medium-term financial targets moved $10 billion ARR from fiscal 2031 to 2030 and $20 billion ARR from fiscal 2036 to 2035.
- The company is focused on acquiring great technology and people in M&A, requiring seamless integration with its agent technology, and has a robust pipeline managed by a dedicated corporate development team.
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Transcript
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I'll give folks a couple of minutes here to settle in, but good afternoon to everyone joining us here and folks joining and tuning in on the webcast. My name is Fatima Boolani. I jointly head up our software equity research franchise here at Citi, and I am so privileged and delighted to be able to put a capstone on Citi's 2026 Global TMT Conference on day 3 with a keynote session with the CFO of CrowdStrike, Burt Podbere. Thank you so much for being here.
Fatima, always a pleasure. Thanks for having me.
Burt, I want to start our conversation off with a statement. It has never been a more exciting or important, or consequential time to be a cybersecurity company. With that in mind, to set the tone of our discussion and our dialogue, can you give us a state of the union on the business, on the financials, on the overall strategy, and specifically, the key messages that you want to really hammer home post your second fiscal quarter results and on the back of your annual user and partner conference, Fal.Con, last week?
Yeah, thanks. Hi, everybody. Great to be here, and I love talking about the Claude Mythos moment. The Claude Mythos moment happened back in April, and there was a lot of activity around that, a lot of things that came out of that. You had good stuff, not such good stuff. But for us, it was a defining moment with respect to, hey, conversations are happening faster than they ever have happened before, and then they turned it into ARR for Q2. Q2 results were sensational, Fatima. It was our best quarter in company history. Whether it was net new ARR, non-GAAP profitability, we had a record Q2 free cash flow quarter. The numbers backed up the comments that the Claude Mythos moment for us was real, and it was more than just conversations, but it was ARR. Then you went into products.
We had great product growth across the board. Next-Gen SIEM, Cloud, Next-Gen Identity. You had AIDR, which was great. You had Exposure Management, on and on and on. Flex, which is our go-to-market license, which is the most elegant license I think not only security, but software has ever seen, did really, really well. It was one of those moments where you're getting data and you're saying, "Wow, this data is super impressive with Flex." The top 10 deals of the quarter by deal value were all Flex deals, not non-Flex deals. We were excited about that. Then you mentioned Falcon. Falcon was us coming out and saying, "Hey, we can be super innovative as well. We don't have to be a startup." We came out with some stuff, whether it was SafeMind or Guardian. Whatever it was, it was really, really well-received.
Then, of course, I have to add my two cents, and I pulled in some long-term targets, $10 billion and $20 billion. I pulled those in. I think all that combined led for a really, really good Fal.Con. So, that's the state of the union, and hopefully that resonates with everybody here.
Burt, Fal.Con was clearly eventful from a product announcement and a financial and target model expectations update. We'll come back to that because there's a lot of layers of those onions to peel. But Fal.Con last week, record-breaking attendance for you. It is your biggest pipeline generator for the business. Interestingly, this year, the timing of the event clearly transpired and potentially even benefited from this post-Claude Mythos moment and the Hugging Face incidents that we continue to hear about in the headlines in the news. I want to ask you, Burt, you see and speak to a lot of customers at these events. What was clear? What was the most distinct thread in your Chief Information Security Officer and buyer conversations this year at Fal.Con versus years prior?
Yeah. Well, certainly it was about protecting the agents. Protecting these AI agents, and customers were after three things, really. They said, "Look, with these agents that are coming out, we need visibility. We need control. We need to control what and when these agents go out. We need guardrails around this. We need audit. It's got to be auditable. All this stuff that's going out, we need to understand what's going on with the reporting. We're getting questions from regulators, et cetera, et cetera." I'll throw in a fourth, cost. We need to be able to control the cost of this stuff. So, those are the four things that the folks in security were talking to us about. By the way, they were talking to us about it before the conference. We have offsites with the management team.
About 50 of us go somewhere and we figure out what we are going to do for the next 10 years. But on this particular offsite, which happened just after Mythos, we had a CIO from a Fortune 50, and they were on a screen like this. There are 50 of us there, like this room here, but smaller. 50 of us, and he was on the Zoom, and you saw the panic in his eyes. He is like, "My CEO wants AI deployed everywhere, and I am scared to death that we are going to be putting out these agents, and we are not only going to be opening the back door, we are going to be opening the front door for the adversaries.
Help us." We went through what I just went through all of you folks, in terms of what he was looking for and then we worked collaboratively with him and his team to put out Guardian and we couldn't be more pleased. So the CIOs and CISOs, that was the main theme that they were kind of focused on. "Help us." Which is very different from the past where we are prospecting, we are going out to look for customers. Customers are coming to us, prospects are coming to us, going, "Well, we have a real need and we think you can help us, so please pick up the phone and let's talk." And we did more of that than almost anything else we have ever done.
Burt, one of the lines of conversations and consistent conversations and debate, frankly, that I have interfaced with investors on is this notion of, well, the environment, the cyber attack landscape has never been more pernicious. It has never been as demanding. It has never been as sophisticated, ever, even in prior computing cycles. So, the question and the debate is, well, in the post-Mythos moment and these Hugging Face in the headlines, why aren't we necessarily seeing massive budgetary explosion? Now, certainly we saw some of the tinges of that in your second fiscal quarter. But how would you allay concerns or sort of emphasize to investors that maybe the Mythos moment isn't a moment, it's actually an era of sustainably and durably capturing more growth and budget.
So really the pain point is why didn't we see a budgetary explosion immediately after these events like we maybe saw in the past?
Yeah, it is a great question, Fatima. First of all, I am driving to your conference and I am listening to the radio and there is some guy talking about AI doom, and I am kind of listening to this going, "Okay, well, he is not all wrong." But then there are companies like us who can help stop and prevent the doom. What does that all mean? You think about the landscape and the threat landscape. Look, years ago, the number one threat actor were these nation-state attacks. They would hire 1,000 people, they would put them in a bunker 65 feet below the ground, and they would come up with all these sophisticated ways to disrupt companies, attack companies, change election results, all of this kind of stuff. Today, it is now in somebody's living room.
These attacks can be generated in somebody's living room with all these agents that are as sophisticated as anybody that we have ever seen before. We are in this really kind of strange period where people are figuring out how to use these things mostly for good, but some for bad. For the bad, what has really happened is, number one, it is not just the volume of attacks that have gone through the roof. Speed. The speed of these attacks has never been faster. You have seen the sophistication. It has never been more creative in terms of how to attack somebody and steal their prized possessions. You are seeing all that combined and the threat landscape is just exploded in terms of the surface of attack, and you need companies like us to help plug the dam.
Fortunately for us, we feel that sometimes it is better to be lucky than good. We have talked a little bit about that, and what do I mean by that is that AI is consumed at the endpoint, and last I checked, we really know how to run an endpoint business. It really came to us, and the great news is we are prepared. We are prepared. We launched a battle-tested product called Falcon Guardian that actually prevents the breach on these agents that people are building faster than you can drink your coffee. It is incredible what we are seeing in the space. Look, I actually think that we are in the greatest transformation of technology the world has ever seen. I have been in security a long time, I have been in software a long time. I have never seen anything like this.
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