CrowdStrike Reports Surging Adoption Of Identity, Cloud Security Tools
The product segments have now grown into the size of ‘IPO-worthy companies in their own right’ for CrowdStrike, CEO George Kurtz said Wednesday.
CrowdStrike products within increasingly critical segments such as identity protection and cloud security are seeing rapid adoption by customers and partners, and each of those businesses is now itself on par with the size of a public company, CrowdStrike Co-Founder and CEO George Kurtz said Wednesday.
Along with products for cloud security and identity protection, CrowdStrike’s Falcon LogScale — a tool for “next-gen” SIEM (security information and event management) — is also finding surging demand, Kurtz said during the company’s quarterly call with analysts.
“Each of these three platform solutions are high-growth, sizable businesses,” he said Wednesday. “Each are examples of IPO-worthy companies in their own right. And each are seamlessly integrated components of the Falcon platform.”
Kurtz made the comments as CrowdStrike reported results for the second quarter of its fiscal 2024, ended July 31, which beat Wall Street analyst estimates on both revenue and earnings even in spite of ongoing economic uncertainty. CrowdStrike’s stock price rose 1.4 percent in after-hours trading Wednesday to $151.25 a share.
The growth comes as the Austin, Texas-based cybersecurity giant pushes to accelerate the deployment of additional tools on its unified Falcon security platform — beyond its core endpoint security offering — to its partners and customers.
Stopping Identity-Based Threats
For CrowdStrike’s identity protection segment, annual recurring revenue has now surpassed $200 million, up 194 percent year-over-year, Kurtz said Wednesday.
Thanks in part to CrowdStrike’s success at stopping hackers on endpoints, identity-based attacks that aim to get around endpoint detection and response (EDR) are on the rise, said Adam Meyers, head of Counter Adversary Operations at CrowdStrike, in a recent interview with CRN. Currently, for many businesses, “identity threats are No. 1,” Meyers said.
In CrowdStrike’s recently released 2023 Threat Hunting Report, the company’s threat hunters found a nearly 6X increase, year-over-year, in intrusions that exploited a certain credential-based method known as Kerberoasting. The report also found that 62 percent of interactive intrusions included some abuse of valid, legitimate accounts.
Other Key Growth Areas
In CrowdStrike’s cloud security business, meanwhile, “net new ARR growth accelerated meaningfully and reached a new record during the quarter” by growing 70 percent quarter-over-quarter, Kurtz said Wednesday.
Overall, CrowdStrike’s ARR for Falcon modules that are deployed in public cloud environments is now $296 million, a 70-percent spike from a year ago and “larger than almost every single vendor in cloud security today,” he said.
As for Falcon LogScale, customer adoption has expanded by 3X while ARR has surged by 200 percent, year-over-year, he said. The next-gen SIEM offering “is quickly approaching the $100 million ARR milestone, which we expect to achieve in Q3,” Kurtz said.
Tying together CrowdStrike’s tools is its cloud-native platform architecture, which has proven increasingly appealing to customers that are looking to consolidate their cybersecurity vendors and products — while still getting best-of-breed capabilities that provide the best chance of preventing breaches, according to Kurtz.
CrowdStrike has also found that its “open XDR” (extended detection and response) approach is resonating with partners and customers, he said.
The XDR platform can correlate threats across tools thanks to its “ability to take in first-party and third-party data, [and it] is quickly becoming the enterprise data destination,” Kurtz said.
Overall for CrowdStrike’s fiscal Q2, revenue climbed 37 percent, year-over-year, to $731.6 million, the company reported. That surpassed analyst expectations for the quarter of $724.13 million.
On earnings, CrowdStrike reported non-GAAP net income of 74 cents per diluted share for its fiscal second quarter, well above the 56 cents per diluted share that had been expected by Wall Street.
When it comes to CrowdStrike’s work with partners, 64 percent of new customers across both enterprises and SMBs “were sourced from our partners in the quarter,” Kurtz said during the call with analysts Wednesday.
When asked by an analyst to offer further explanation for his growing confidence in CrowdStrike’s prospects looking ahead, Kurtz pointed to its channel partner collaborations, such as the recently inked partnership with cloud-focused distributor Pax8, as a key linchpin.
“We continue to grow that [partner initiative],” Kurtz said. “We’ve got tremendous focus on that internally.”
At security solutions and services powerhouse Optiv, No. 24 on CRN’s Solution Provider 500, the opportunities with CrowdStrike are sizable and growing, said Alan Mayer, senior vice president of partners, alliances and ecosystems at the Denver-based company.
In part, this is due to the fact that CrowdStrike offers such a wide array of tools alongside its “leadership position in XDR,” Mayer told CRN. “And so as we’ve built a comprehensive solution practice — which includes [endpoint detection and response] and cloud security and identity — we are able to really provide better solutions for our clients, and work very closely with CrowdStrike.”