Operator: Thank you. One moment please for our next question. And our next question comes from the line of Gregg Moskowitz with Mizuho.
Gregg Moskowitz: Okay. Thank you for taking the question. George, obviously, it’s extremely early as it remains — as it relates rather to the arc of generative AI. But you did mention in your prepared remarks that you plan to release Charlotte AI pricing at Fal.Con. Presumably, that means there will be some form of discrete monetization for Charlotte. We haven’t really seen that though from other cybersecurity vendors as yet. So when it comes to your data and the application of your AI tech, maybe just help us understand kind of why you think you’ll be able to not just deliver incremental value to your customers but monetize it as well? Thanks.
George Kurtz: Sure. Well, when you look at outcomes, as I mentioned, one of them is doing more with less. And in security, there’s upwards of probably a 3 million person gap and the ability to actually hire security folks. And as I mentioned, when we launched Charlotte AI in public preview is the fact that it really — it really is a virtual analyst, a SOC analyst, which are super expensive and hard to maintain. So for our purposes, when we look at the total value to a customer, if we can create more virtual analysts, just as an example that takes eight hours of work and compress it into 10 minutes. We think there’s real value to that, which is why we’ll have pricing around it, which we’re going to deliver at Fal.Con. And even from what we’ve shown recently in one of the security conferences, it’s real.
It’s out there. People liked it. They want it and it’s differentiated from others that were just showing PowerPoint. So we’re really excited about it. Obviously, it’s early innings. But if we can show real value in creating these virtual analysts around Charlotte AI, we think customers are going to pay for that.
Operator: Thank you. One moment please for our next question. And our next question comes from the line of Gabriela Borges with Goldman Sachs.
Gabriela Borges: Good afternoon. Thank you. Burt, I’m looking to better understand the impact that macro may be having on the upsell and downsell component of NRR. Are you seeing customers coming up for newer contracts, trying to optimize the number of endpoints they have and the number of employees that they have? Is that causing pressure on NRR? And if it is, when do you think that headwind might abate?
Burt Podbere: Hey, Gabriela. So first, I think we talked about why we were giving guidance the way we did. We did talk about the 10% headwinds for the first half, we came in better than that. We talked about coming in flat to slightly up for the second half over last year. And I think at the end of the day, we’re still in a tough macro. We believe all the things that George talked about, we’re very adamant that we feel that we’re going to be able to achieve those things. Having said that, you have to remember that still, as I said earlier on this call, deals are taking longer to close, there’s more scrutiny on the P&Ls and so we have to overcome those things to be able to really overcome what — anything that we would put out there. And for us, I think that we have a great opportunity to do so. And it’s so long as we continue to stay the course, invest where we need to invest, take a prudent approach, I think we’re going to be in good shape.
Gabriela Borges: Thank you.
Operator: Thank you. One moment please for our next question. Our next question comes from the line of Patrick Colville with Scotiabank.
Patrick Colville: Hey, thank you for taking my question. And this one is for Burt. I mean you gave us lots of juicy metrics. And I guess I just want to get some clarifications. Can you give us the emerging products number, so we can kind of triage what we had previously versus kind of what you’re giving us now? And then I guess the second part of my question is in reference to your comments about fiscal ’25 operating margin being in line with the target model. Can you just remind us what the target model is that you’re referencing?
Burt Podbere: Yeah. So first, on the emerging products, we thought it would be better to give you full numbers on our businesses that are meaningful, that are taking flight. So we won’t be going back to anything that we used to call emerging products. With respect to our target model for FY ’25 and hitting those targets, the last one that we were talking about was certainly the operating margin. We said we were going to be between the 20% and 22% plus, and we actually hit that one. That was the last one of several that we gave out from subscription gross margin to F&M to G&A to R&D. We also gave out free cash. And for the year, we’re still talking about that 30% to 32% plus.
Operator: Thank you. One moment please. And our next question comes from the line of Yi Fu Lee with Cantor Fitzgerald.
Yi Fu Lee: Congrats on the strong set of results. This is Yi in for Jonathan Ruykhaver. Just one question around CNAPP. Obviously, CrowdStrike is building CNAPP around endpoint. I was wondering if maybe, George, you could share any benefits of doing this versus other vendors that building it off, like, let’s say, a Zero Trust Exchange? That is from us.
George Kurtz: Yeah. So when we think about our Cloud business, and I went into some detail on this. It’s both agent and agentless so, right? It’s not just around the cloud workload protection, but it’s also around the cloud security posture management and everything really from code to cloud. And we’ve added tremendous capabilities, which I’ve called out in the earnings script as well in terms of our ability to instrument and flight containers and understand if insecure code is being put into the CICD pipeline, et cetera. So we’ve always been strong in the agent world. And what we’re finding is that customers are looking at agentless and moving to our solution because it combines the best of both worlds, agent and agentless, together in one single SKU.
And we had tremendous success last quarter. We’ve got a dedicated sales team on cloud, and customers are seeing the benefits of an integrated platform with Falcon. So we’ll continue down that path. And again, we continue to build out its capabilities and win new business there.
Operator: Thank you. One moment please. Our next question comes from the line of Trevor Walsh with JMP Securities.
Trevor Walsh: Great. Thanks for taking my question. George, maybe just to follow up on that last response around CNAPP. What’s the appetite for customers to or at least start to look at combining CNAPP capabilities with XDR or at least kind of bridging the two together as far as kind of all the — just another point of telemetry from cloud kind of feeding into that XDR outlook? And where do you see it either happening — what’s the kind of current state and where do you see it going? Thanks.
