CrowdStrike Holdings, Inc. (NASDAQ:CRWD) Q3 2024 Earnings Call Transcript

CrowdStrike Holdings, Inc. (NASDAQ:CRWD) Q3 2024 Earnings Call Transcript November 28, 2023

CrowdStrike Holdings, Inc. beats earnings expectations. Reported EPS is $0.82, expectations were $0.74.

Operator: Thank you for standing by, and welcome to CrowdStrike Holdings Third Quarter Fiscal Year 2024 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. [Operator Instructions] I would now like to hand the call over to VP of Investor Relations, Maria Riley. Please go ahead.

Maria Riley: Good afternoon, and thank you for your participation today. With me on the call are George Kurtz, President and Chief Executive Officer and Co-Founder of CrowdStrike; and Burt Podbere, Chief Financial Officer. Before we get started, I would like to note that certain statements made during this conference call that are not historical facts, including those regarding our future plans, objectives, growth including projections, and expected performance, including our outlook for the fourth quarter and fiscal year 2024, and any assumptions for fiscal periods beyond that are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements represent our outlook only as of the date of this call.

While we believe any forward-looking statements we make are reasonable, actual results could differ materially because the statements are based on current expectations and are subject to risks and uncertainties. We do not undertake and expressly disclaim any obligation to update or alter our forward-looking statements, whether as a result of new information, future events or otherwise. Further information on these and other factors that could protect the company’s financial results is included in the filings we make with the SEC from time to time, including the section titled Risk Factors in the company’s quarterly and annual reports. Additionally, unless otherwise stated, excluding revenue, all financial measures disclosed on this call will be non-GAAP.

A discussion of why we use non-GAAP financial measures and a reconciliation schedule showing GAAP versus non-GAAP results is currently available in our earnings press release, which may be found on our Investor Relations website at ir.crowdstrike.com or on our Form 8-K filed with the SEC today. With that, I will now turn the call over to George.

George Kurtz: Thank you, Maria, and thank you all for joining us today. I would like to begin my remarks today by expressing gratitude to our customers, who proudly trust CrowdStrike as their cyber security platform consolidator for the AI era; gratitude to our partners who win with CrowdStrike, taking our joint customers on Falcon Platform transformation journeys from device to cloud, to identity, to data and beyond; and to our team for their passion and dedication to our mission, stopping breaches, finding adversaries, and delivering the very best cyber security outcomes. Moving onto Q3. Despite a challenging macro environment and geopolitical tension, I am extremely proud of the resilience of our business and that we delivered a record Q3.

CrowdStrike surpassed the $3 billion ARR milestone with an ending ARR of $3.15 billion, growing 35% year-over-year. CrowdStrike is the fastest and only pure-play cyber security software vendor in history to achieve this milestone. In Q3, we delivered double-digit net new ARR acceleration at scale, powered by customer demand for the depth and breadth of CrowdStrike’s AI native XDR platform, terrific execution exemplified by rising win rate against our competitors, and acceleration in our cloud security and identity businesses, as well as a record quarter in our LogScale Next-gen SIEM business. Our standout top-line performance came in tandem with P&L discipline as our profitability soared to record heights. Q3 was indeed a quarter of records.

Let me share several of our financial highlights. Record net new ARR of $223 million, representing a 13% year-over-year growth from acceleration in new and expansion business; record non-GAAP subscription gross margin; record GAAP and non-GAAP operating profitability; record free cash flow of $239 million, representing 30% free cash flow margin and achieving free cash flow Rule of 66, up from 63 last quarter. Burt will share more color on our financials and platform adoption stats, following my remarks. This was a standout quarter and places us well on the path to $10 billion in ARR that we outlined in our latest investor briefing. The market continues to validate CrowdStrike’s widening leadership position. While others scaled back R&D, we are increasing our investments as innovation is the lifeblood of our company.

We continue to make meaningful investments in go-to-market and profitable growth. To this end, we received multiple industry awards and accolades over the course of this quarter. Across industry analyst firms, CrowdStrike is consistently top-rated. In Q3, CrowdStrike was awarded a perfect 100% across protection, visibility and analytics detections in MITRE’s latest ATT&CK testing in industry-first; recognized as Gartner Customers’ Choice and one of the highest-rated in their latest Peer Insights Voice of the Customer for EPP report; named a Leader in the Forrester Wave for Endpoint Security; and positioned as a leader in the IDC Vulnerability Management MarketScape. Our leadership position is translating into record demand for our Exposure Management solution in its first quarter on the market.

Our market presence in open platform approach to XDR is a uniting force in cyber security. In Q3, we hosted Fal.Con, our flagship customer and ecosystem event with more than 4,000 attendees and 70 sponsors. This was fast followed by our Fal.Con On the Road series, where we have already hosted Fal.Con Tokyo and Fal.Con Sao Paulo with thousands in attendance. The drumbeat of innovation was loud and clear with multiple releases and announcements showcasing CrowdStrike as the XDR leader, including the Falcon Platform Raptor release, which standardizes all of our customers on LogScale. This builds our platform data gravity, coupling native Falcon data with third-party data ingest, further enabling our customers to realize SIEM and XDR use cases on Falcon.

Falcon for IT, a new module to unify IT and SecOps. From hygiene to patching, Falcon for IT lets customers consolidate multiple use cases and replace legacy products with our single-agent architecture. Our new Falcon data protection module that liberates customers from legacy DLP products with modern frictionless data security, which prevents data exfiltration. Falcon Foundry, a no-code application development solution, enabling both customers and technology partners to build directly on Falcon. Foundry epitomizes the true definition of a platform offering limitless apps. We announced the acquisition of Bionic, bringing application security posture management to the Falcon Cloud Security Suite. Falcon Cloud Security is the industry’s most comprehensive and innovative cloud security offering, with integrated agent and agentless CSPM, CIEM, CWP, and now, ASPM.

We released the beta and pricing for Charlotte AI, our AI-powered [stock] (ph) analyst, which was incredibly well received. CrowdStrike’s generative AI leveraging multiple foundational models can turn hours of work into minutes, while democratizing cybersecurity, unlocking value, and adoption across the entire breadth of the Falcon platform. Enthusiasm for Falcon for IT, our automation and hygiene module for IT teams, is exciting to witness because it is something so intuitive that our customers want. Like data protection, Falcon for IT saw a clear and long-neglected pain point, where customers are forced to rely on multiple legacy products that have long outstayed their welcome. Customers are eager to consolidate their agent estate while reducing cost and complexity.

Falcon for IT illustrates the power of CrowdStrike’s single-platform approach. We have the real estate and data foundation to solve ever-evolving use cases, delighting our customers, while disrupting vendors that have failed to evolve. The resounding takeaway from my customer engagements at Fal.Con and throughout the quarter is that CrowdStrike is the right choice for CISOs, CIOs, executive teams and Boards. Here’s why? Our build-by-design, single-platform architecture requires no integration, no stitching, and no platformization. Our unified cloud-native platform and critical beachfront real estate within the customer estate naturally create cybersecurity data gravity, solving for today’s challenges, while preparing for the unknowns of tomorrow.

Organizations are looking for a trusted cybersecurity consolidator. CrowdStrike is cybersecurity’s AI consolidator, liberating organizations from a litany of increasingly ineffective legacy tools, multiple agents, point products, and fragmented pseudo platforms. Illustrating this point, deals with eight or more modules increased 78% year-over-year in the quarter. This is what consolidation looks like. And third, stopping the breach matters more today than ever. Adversaries continue to evolve, moving faster and increasing their use of dark AI, turning AI into a weapon for evil. At the same time, legislative and SEC regulatory oversight pressures Boards and Executives to prioritize cybersecurity. With these three takeaways in mind, let’s start by expanding on the first.

Why CrowdStrike is the definitive single security platform? Multiple fragmented platforms, consoles, and data silos force customers to focus on integrating, not security outcomes. Our relentless focus on innovation and commitment to a single built-by-design platform creates cybersecurity’s source of truth. Built on this platform foundation, our cloud identity and LogScale next-gen SIEM products are examples of IPO-worthy hypergrowth businesses. Let’s take a look at our momentum in cloud security. Growth accelerated in the quarter and we’re entering Q4 with a record pipeline. Noteworthy wins in the quarter included: an eight-figure total deal value with a new Falcon customer in the hospitality vertical, where we now secure their vast multi-cloud estate as part of a broader Microsoft replacement; a seven-figure cloud security expansion with one of the largest enterprise SaaS providers, where we replaced multiple existing point products with Falcon Cloud Security; a seven-figure cloud security expansion with a major apparel brand, where we replaced a firewall hardware vendor’s cloud security with our unified Falcon Cloud Security offering.

CrowdStrike has one of the largest and fastest-growing cloud security businesses by ARR and customer count. The number of customers we protect in the public cloud has increased 45% from last year as we rapidly replace other cloud security vendors in the ecosystem. Point product API-based CSPMs have emerged as the easiest to replace, as the market rapidly adopts our consolidated view that together agent and agentless security stops the breach. Combined with our recently completed Bionic acquisition, we’re the only vendor offering ASPM, CSPM, CWP and CIEM under a single CNAPP umbrella. Moving to Identity Threat Protection, where we delivered a record quarter. More and more companies are investing in protection from the growing number of identity-based attacks with highly visible breaches prominently covered in the news over the past few months.

Identity Threat Protection wins in the quarter included: an eight-figure total deal value win in the federal government, where Falcon Identity landed as the identity security solution of choice; and multiple seven-figure wins across diverse verticals, including financial services, consumer packaged goods and manufacturing to name a few. We see a long runway for guiding organizations on their zero-trust transformations with our Identity Threat Protection, given a rapidly growing threat vector, a largely untapped market where most organizations aren’t protected, and our frictionless unified architecture that secures identity across devices, clouds, domain controllers, and active directory. CrowdStrike pioneered the Identity Threat Protection category, and we are unmatched in the market as the only company with a single-agent solution for both on-prem and cloud environments.

Moving to LogScale. Our LogScale next-gen SIEM business achieved new records in Q3, surpassing the $100 million ARR milestone. The combination of search speeds, data gravity, and cost efficiencies, all integrated within the Falcon Platform, sets LogScale miles apart from its competitors. However, it is the future of this business that really excites us. Our LogScale next-gen SIEM opportunity is supercharged by pervasive discontent with legacy SIEMs, recent M&A activity, and CrowdStrike’s growing position as cybersecurity’s platform of record. We have seen a significant and pronounced increase in interest among customers looking to leapfrog their expensive, cumbersome, and slow legacy SIEM. Our next-gen SIEM offering is the right technology in the right place, at the right time to benefit from market dynamics and the scale of CrowdStrike.

Q3 wins include: a seven-figure expansion in a major consumer staples company, selected LogScale to ingest data from third parties, correlate alerts and benefit from long-term data retention; a seven-figure financial services, new customer land, where CrowdStrike was called in to stop a breach, with the desire to operationalize their high-fidelity security data without compromising on cost, Falcon LogScale was an easy choice to replace the incumbent Microsoft; a seven-figure new logo land in a business process outsourcing firm that had decided it was time to replace their antiquated SIEM with LogScale, while also adopting the Falcon Platform for XDR, Identity and Cloud Security. Our advancement into the next-gen SIEM market is accelerated by the Raptor release, which brings LogScale to the forefront of the Falcon Platform experience.

With Raptor, we’ve made it significantly easier for customers to build their security and data lake efforts on top of LogScale next-gen SIEM across our native first-party data and that of any third-party product. Our single-platform approach evolves and broadens the aperture of cybersecurity. CrowdStrike is cybersecurity’s AI consolidator, liberating organizations from legacy AV, subpar EDRs, and a hodgepodge of hygiene, compliance, vulnerability, device management tools, costly and clunky SIEMs, and a confusing alphabet soup of immature cloud point products. This lengthy list of costly point products can be left behind, saving tens of millions annually for businesses. Most importantly, stopping the breach matters more today than ever before.

Adversaries don’t discriminate, no matter the industry vertical, the geography, or the business size, stopping the breach is non-negotiable. The business disruption and financial losses from breaches are growing. [Cutting corners] (ph) on security is one of the most costly choices a business can make. The cost associated with cleaning up a breach can exceed $100 million. Our seminal cybersecurity platform innovation, as well as threat intelligence and service expertise, delivers the best security outcomes. This is why we win. Stopping the breach is the security outcome that CrowdStrike delivers. This makes our business incredibly durable in diverse economic cycles. We are a business necessity. A win this quarter exemplifying our unmatched capabilities is a large multinational, who was using legacy EDR until they were breached.

They called CrowdStrike and we quickly remediated the breach. Seeing the power of the Falcon platform, this customer purchased Falcon Complete, Identity Complete, and LogScale next-gen SIEM for hundreds of thousands of workloads. Helping this large multinational in their time of need showcases CrowdStrike’s differentiation. Our AI trained on cybersecurity’s richest data set drives the industry’s most comprehensive protection and automation. We couple the right technology platform with cybersecurity’s best and brightest incident responders and the expertise that comes from curating the industry’s leading threat intelligence. The need for stopping breaches is not just an enterprise concern. The problem is just as pronounced in the SMB market, especially the S of SMB, where businesses remain stuck on legacy signature-based AV, oftentimes not knowing that better exists for them.

Falcon Go is fit for purpose, delivering big protection for their small business. With our latest release of Falcon Go, we deliver a whole new user experience, creating the easy button for cybersecurity, removing the need for CrowdStrike users to have cyber or IT skills. The new console is intuitive and pre-configured for immediate SMB success. We’re always looking to remove the friction from the customer experience, and this new release makes Falcon Go as easy as one-click to accelerate customer adoption. Falcon Go is a major step for SMB cybersecurity, and we are now investing in go-to-market. We launched sales of Falcon Go on Amazon Business, a marketplace where over 6 million SMBs purchase everything for their businesses. With Falcon Go, our mission of stopping breaches extends to businesses of all sizes, large and small.

Our go-to-market is propelled by our partner ecosystem. Partners bring CrowdStrike into new accounts and drive platform adoption in existing customers. Year-to-date, 62% of all our new logo wins were partner-sourced. The efficacy and success of our channel-led growth was reported by Canalys, the channel’s leading industry analyst firm, in their most recent cybersecurity research. Canalys reported CrowdStrike’s endpoint market share as number one, ahead of Microsoft. In addition, the research highlights CrowdStrike as the fastest-growing cybersecurity vendor in the channel ahead of Microsoft and Palo Alto networks, among others. We are setting new records. We announced surpassing $1 billion in AWS Marketplace sales. Being the first and fastest cybersecurity vendor to reach this milestone exemplifies CrowdStrike’s leadership position as the cloud’s cybersecurity platform of choice.

And our AWS momentum is not slowing. This past quarter was a CrowdStrike record AWS marketplace quarter. Our global systems integrator alliance partners are increasingly engaging with us across the entire Falcon platform. For example, EY built a 150-person strong and growing global LogScale next-gen SIEM practice, based on the demand they are seeing for SIEM transformation and our technological superiority. In addition, EY refers their clients to CrowdStrike for incident response engagements and secure digital transformation projects. To date, we have done over $160 million in business with EY across 24 countries. In closing, in a challenging macroeconomic environment, which impacted even the largest cybersecurity vendors, we delivered a record Q3, accelerating double-digit net new ARR growth, record free cash flow, and record profitability.

Surpassing $3 billion of ARR as the fastest and only pure-play cybersecurity software vendor in history to achieve this milestone validates CrowdStrike’s market leadership. Our Q4 setup is strong with a record pipeline, and the competitive gap between CrowdStrike and other players in the market continues to widen. I’m excited about the path we are on and the progress we are making to $10 billion in ARR. Today’s cyber environment is exactly why I built CrowdStrike. The adversary is moving faster and the rise of dark AI significantly increases attacker sophistication. Falcon has made cybersecurity easy and effective for small businesses to the world’s largest enterprises. Simply put, CrowdStrike is cybersecurity’s platform consolidator of choice.

The platform is winning at scale. Our customers are looking to Falcon for more, more workloads, more use cases and more security outcomes. CrowdStrike remains unrelenting in our focus and promise, stopping the breach. With that, we have a busy and exciting Q4 ahead of us. And I will now turn it over to Burt for commentary on our financial performance.

Burt Podbere: Thank you, George, and good afternoon, everyone. As a quick reminder, unless otherwise noted, all numbers except revenue mentioned during my remarks today are non-GAAP. Additionally, the results we are reporting today include the acquisition of Bionic, which closed during the quarter and was de minimis to revenue and ARR. Outstanding execution from the CrowdStrike team resulted in a record third quarter, despite a continued challenging macro environment. Financial highlights in the quarter included: an acceleration in net new ARR growth, driving ending ARR well above the $3 billion milestone; 96% year-over-year growth in operating income and record operating margin; record net income, which more than doubled year-over-year; record GAAP profitability for the third consecutive quarter; and record free cash flow.

In the third quarter, we achieved record net new ARR of $223.1 million, with year-over-year growth accelerating to 13%. Demand in the quarter was broad-based, as we expanded our leadership across the market from large enterprises to small businesses. New customer acquisition, strong expansion business within existing customers and a record quarter with the U.S. federal government contributed to the acceleration in net new ARR growth and ending ARR reached $3.15 billion, up 35% year-over-year. We continue to be very pleased with our platform strategy as subscription customers with five or more, six or more and seven or more modules now represent 63%, 42% and 26% of subscription customers, respectively. Our gross retention rate remained high and our dollar-based net retention rate was slightly below our benchmark in Q3, as the mix of net new ARR from new customers has remained above our expectations and we continue to land bigger deals.

Moving to the P&L. Total revenue grew 35% over Q3 of last year to reach $786.0 million. Subscription revenue grew 34% over Q3 of last year to reach $733.5 million. Professional services revenue was a record $52.6 million, representing 57% year-over-year growth. The geographic mix of third quarter revenue consisted of approximately 69% from the U.S., 15% from Europe, Middle East and Africa, 10% from the Asia-Pacific region, and 6% from other markets. Our investments in data center and workload optimization that we outlined in our Fal.Con Investor Briefing in September continued to bear fruit, resulting in record subscription gross margin performance above 80% in the third quarter. Total non-GAAP operating expenses in the third quarter were $436.1 million, or 55% of revenue, versus $348.6 million last year, or 60% of revenue.

Q3 sales and marketing and R&D expenses grew 23% and 31% year-over-year, respectively. We continue to invest aggressively in innovation and growth, while exceeding our profitability expectations. Third quarter non-GAAP operating income grew 96% year-over-year to reach a record $175.7 million and operating margin increased by 7 percentage points year-over-year to reach a record 22%. As we outlined during our Fal.Con Investor Briefing in September, we have once again raised our target model, which now calls for subscription gross margin of 82% to 85%, operating margin of 28% to 32%, and free cash flow margin of 34% to 38%. We expect to achieve our new target model within the next three to five years, as we also flight the company to reach $10 billion of ARR over the next five to seven years.

Non-GAAP net income attributable to CrowdStrike in Q3 grew to a record $199.2 million or $0.82 on a diluted per share basis, each more than doubling year-over-year. Our weighted average common shares used to calculate third quarter non-GAAP EPS attributed to CrowdStrike was on a diluted basis and totaled approximately 244 million shares. We ended the third quarter with a strong balance sheet. Cash and cash equivalents and short-term investments totaled $3.17 billion and reflects the $238.7 million payment, net of cash acquired for the acquisition of Bionic. Cash flow from operations was a Q3 record of $273.5 million. Free cash flow reached a record $239.0 million or 30% of revenue, achieving a Rule of 66 on a free cash flow basis. Moving to our outlook.

As George outlined, strong demand for the Falcon platform is driving our pipeline to new heights. However, the macro environment remains challenging with continued increased budget scrutiny, and as a result, we are not expecting to see the typical Q4 budget flush. Balancing these factors, we are maintaining our net new ARR assumptions, which call for in-line to modestly up net new ARR for the full year and double digit year-over-year net new ARR growth in the second half. As our guidance reflects, we are raising our full year revenue and profitability expectations for the year. Additionally, we are maintaining our target of 30% free cash flow margin for the full fiscal year. More specifically, for the fourth quarter of FY ’24, we expect total revenue to be in the range of $836.6 million to $840.0 million, reflecting a year-over-year growth rate of 31% to 32%.

We expect non-GAAP income from operations to be in the range of $186.5 million to $189.0 million, and non-GAAP net income attributable to CrowdStrike to be in the range of $199.6 million to $202.1 million. We expect diluted non GAAP net income per share attributable to CrowdStrike to be approximately $0.81 to $0.82, utilizing a weighted average share count of 245 million shares on a diluted basis. For the full fiscal year 2024, we currently expect total revenue to be in the range of $3,046.8 million to $3,050.2 million, reflecting a growth rate of 36% over the prior fiscal year. Non-GAAP income from operations is expected to be between $633.6 million and $636.2 million. We expect fiscal 2024 non-GAAP net income attributable to CrowdStrike to be between $715.2 million and $717.7 million.

Utilizing 243 million weighted average shares on a diluted basis, we expect non-GAAP net income per share attributable to CrowdStrike to be in the range of $2.95 to $2.96. George and I will now take your questions.

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Q&A Session

Operator: Thank you. [Operator Instructions] Our first question comes from the line of Saket Kalia of Barclays.

Saket Kalia: Okay, great. Hey, guys, thanks for taking my question here, and great to see the net new ARR return to growth in the quarter. George, maybe for you, a lot of great stuff in your prepared remarks to run through, but maybe I’ll just stick to one question here. You’ve talked about how the legacy SIEM market is starting to feel kind of like the legacy AV market did. And of course, we’ve recently seen some M&A in that market. It’s probably too early, but maybe the question is, what are prospective SIEM customers saying to you about LogScale and their willingness to explore other solutions besides their traditional SIEM? Does that make sense?

George Kurtz: It does, yeah. It’s a great question. So, when I look at the market today and I compare that to when I started CrowdStrike in 2011 and really talking to customers in 2012 and 2013 about replacing their legacy AV, it feels like it’s the same conversation, just with a different context of replacing their legacy SIEM. What I found, and I tend to like businesses and markets where this is in play, is where the incumbents are entrenched, but have a high degree of dissatisfaction, where the technology is legacy and where the complexity is just high of patching all this stuff together. And in talking to customers, they want better, faster, cheaper, and they want something that works at cloud scale. If you look at what we’ve done with LogScale, it’s a much more modern version of a SIEM, a next-gen SIEM.

We got ahead of the curve a couple of years ago when we bought Humio, which is now LogScale, we’ve now integrated into our platform, and it’s extended out our XDR technology and it allows us to do log and SIEM in the same platform. So, from our perspective, the feedback that we’ve gotten not only from customers but partners like EY, who are building practices around this, this is a massive opportunity for CrowdStrike, and now is the right time for us, given the level of dissatisfaction M&A in the environment and the customer’s willingness to look for a much better solution, which also gives us data gravity in the platform.

Saket Kalia: Makes a lot of sense. Thanks, guys.

Operator: Thank you. Our next question, please standby, comes from the line of Joel Fishbein of Truist.

Joel Fishbein: Thanks for taking my question, and a good quarter on the net new ARR side. George, another question along Saket’s lines, but around the comments you made with regard to data protection. The same could be said about the legacy DLP market. And as you know, I would say that’s even longer in the tooth than some of the SIEM market players out there. Love to hear how you are — you didn’t talk about it like you did cloud security, identity protection, LogScale, et cetera. How far are we in that displacement market? And how big do you think they are? And what’s the competitive dynamics there would be really helpful. Thank you.

George Kurtz: Sure. Well, we actually showed our data protection technology at Fal.Con a couple of months ago. We’re actively working with some of the largest enterprises in the world to make sure that we account for all their requirements and their ability to actually move off their legacy DLP product. There’s not one customer that I’ve talked to that says they like their DLP product, period. And in today’s environment, with data in motion, particularly through cloud services, the ability to actually be able to track from endpoint through cloud where data moves, what type of data is out there, leveraging our AI to understand, is it something that should be moving in certain places is going to be incredibly important. And the way we look at it is the same way we looked at legacy AV.

There’s a better way to reimagine DLP into Falcon Data Protection, and we’re very, very close to being able to release that as we continue to put the fine touches on what customers are looking for and what they’re willing to write a check for. So stay tuned, but another massive market opportunity for us.

Operator: Thank you. Our next question comes from the line of Rob Owens of Piper Sandler.

Rob Owens: Great. Good afternoon. George, I guess staying on theme here with these extensible adjacencies, maybe you can touch on Falcon for IT. What early response has been since, I guess, showing it at your recent user conference and where you see the opportunity on that front?

George Kurtz: Well, coming out of Falcon, I would say that was the number one requested feedback item across all the great announcements that we had. I think it’s so overdue in the technology space to be able to unify IT and security. Sometimes the technology isn’t the harder part, it’s the org structure. So, having a single agent that both security and IT can use, a home for IT, I think is very important. We’re actually working with large customers right now, gathering their feedback, and then we’ll look to have a product out probably in Q1. But so far the feedback has been amazing in terms of what we’ve already delivered, and now we’re capturing additional capabilities for our first release. So, I think that one has a lot of legs to it, and certainly opens up a massive TAM opportunity for us in IT, well beyond anything in security, given the agent cloud architecture that we built. We’ve got the real estate and we plan to monetize it.

Operator: Thank you. Our next question comes from the line of Matthew Hedberg of RBC.

Matthew Hedberg: Great, thanks for taking my question. Burt, I’ve got one for you. Obviously, you didn’t comment on fiscal ’25. I believe at this point last year, you did give a couple of breadcrumbs on how to think about ARR. I’m curious as we as we sort of sharpen our pencils on ’25, are there any guidepost or things that we should think about whether its growth or profitability?

Burt Podbere: Hey, Matt. Great question. So for us, we are always looking to maximize our growth while at the same time paying attention to the bottom-line. So that’s never changed. We are absolutely going to continue to invest in innovation. We got — we announced so much at our last Fal.Con. We’ve got a lot of momentum. We’re going to continue to invest to continue that momentum. But also at the same time, we recognize that we want to make sure that we’re a very well-run company and people are seeing the output of that certainly on this quarter and we don’t plan on changing that at all for next year.

Operator: Thank you. Our next question comes from the line of John DiFucci of Guggenheim.