John DiFucci: Thank you. George, it’s impressive to really see the consistency of your team at scale here. But I’m just curious, how did traction continue into the end of the October quarter and then again into — we’re almost through November, relative to the October period. And the reason I’m asking this is that, we’ve generally heard of a fade in business activity through October across the industry, not necessarily with you, I mean, actually we didn’t hear with you, but across most others. And it’s actually sort of shown up in results of some of your security peers. So, I’m just wondering, maybe — what are you seeing. What did you see into the end of the quarter? And what are you seeing at the beginning of the January period?
George Kurtz: Yeah, we certainly had a strong October. I think, as I said in my prepared remarks, the macro environment is still challenging. I mean, make no mistake about that. Deals take longer, a lot more scrutiny, a lot of sign offs, and there’s a lot more work that goes into these larger enterprise deals. Getting deals done even like Falcon Flex, which are more enterprise-like in their nature, takes time. So, we had a great October, but in general, buyers are still cautious. And I think the fact that we’re able to provide a real platform play that allows them to consolidate in other technologies and ultimately save money accrues values to us, but it certainly takes a lot of time and effort to get the deal over the goal line. But the team did a great job and October was strong for us.
Operator: Thank you. Our next question comes from the line of Tal Liani of Bank of America.
Tal Liani: Hi, guys. The first question is Bionic contribution, you said was de minimis. Can you define what de minimis for net new — the contribution to net new ARR? And then, quarter was phenomenal, but I do see some weakness across the board of cyber companies with billings. In your case, it was down about 2%. I also see some weakness in deferred revenues. How do I reconcile what I see with billings, with deferred, with the underlying drivers that are very strong and your strong execution? Why is — why are we seeing weakness not just with you, maybe with the entire space, but why are we seeing weakness with billings across the board? Thanks.
Burt Podbere: Thanks, Tal. Good question. I’m going to start with billings. Yeah, you’re correct. For us specifically, we don’t manage the business to billings and we feel that ARR gives you the absolute best proxy to revenue and we felt that that’s the right metric, as you know, since we went public, to give you more transparency into the health of our business. And that’s the metric that really guides you on health. With respect to billings ourselves, I mean, we think about billings similar to probably most of you out there, is that billings, typically for hardware companies, use that when they don’t disclose any sort of bookings metric, and that’s not us, right. We think that billings has certain things that just are not as relevant as a metric like ARR.
You’re comparing a balance sheet item to a P&L item. For us, the P&L is going to dictate the health of the business. So for us, you know, billings obviously is going to be impacted by duration and there are many things that go into that. And remember also that when you think about on a year-on-year basis, we’re still up on billings. And I think that’s the one thing that you want to take away. For us, when we think about how we want to continue to be transparent, ARR really gives you that notion of where we’re going and how we’re doing. And I think that that’s the focus. And it has been, by the way, since we went public, even as a private company, that’s the one that we manage the business to, that’s how we look at how to give out quotas to our reps, et cetera, et cetera.
So for us, that’s not going to change. And I hope that answers that question.
Operator: Thank you. Our next question comes from the line of Adam Borg of Stifel.
Adam Borg: Awesome. Thanks so much for taking the question. Maybe just for George on CNAPP, it’s obviously great to hear the traction. As we look ahead, should we still view this more of an upsell opportunity to existing customers or what needs to happen for this to be more of a tip of spear to drive net new logos? Thanks so much.
Maria Riley: I’m sorry, would you mind repeating your question?
Adam Borg: Great, can you hear me okay now?
Maria Riley: Yeah, I can — we can hear you now.
Adam Borg: Great. Sorry about that. Maybe just on CNAPP, it’s great to see the continued traction there. And as the market matures, should we view this as more of an upsell opportunity or what needs to happen for this to be more of a tip of spear to drive net new logos?
George Kurtz: Yeah, it’s really a bright star for us when you look at our CNAPP capabilities of cloud workload protection, CSPM, CIEM, ASPM now with Bionic. We really have, I think one of the most complete cloud security offerings in the industry, and we’re winning deals with it. We’re leading, in many cases, particularly forward-leaning cloud companies that we’re selling to. If you look at the latest threat environment and what’s happening and how identities are being abused and two-factor authentication systems being bypassed, those sort of things, it’s important to have a full suite of cloud protection. And I think this is sort of the awakening time for that industry and that companies can’t just say, hey, we’ve got something from a cloud provider or we’re going to go at it alone.
I remember many, many, many years ago, companies didn’t run antivirus, right? And you would say that’s silly. Today, everybody runs an antivirus-type technology. It wasn’t so silly 30, 35-plus years ago. And I think this is kind of the inflection point in the cloud world, where you’re going to have multiple levels of protection, both agent and agentless. And the fact that we’ve been able to harmonize those two together and deliver a very robust agentless technology combined with the best cloud workload protection in the industry gives us a real advantage.
Operator: Thank you. Our next question comes from the line of Mike Walkley of Canaccord Genuity.
Michael Walkley: Great. Thanks. George, you touched on the new release of Falcon Go to better target SMB customers with more concise packaging. Can you just give us some color on how this segment of your business is trending, as some of your competitors have called out soft SMB spending due to the macro? And also, just how is this new release helping address pain points for these smaller customers? It seems like you’re starting to accelerate win rates in this segment.
George Kurtz: Well, we saw a very strong SMB segment. We’ve done a lot of work, A, starting with our partners like Pax8 and others, Dell, in that market. So meeting the customers, where they like to buy is really, really important. And then, coming up with a very innovative and easy-to-use technology designed for the SMB, our latest release of Falcon Go is literally one-click install. And the feedback that we’ve gotten from customers are like, “Wow, this is the easiest thing I’ve seen. It just works.” And I think you’re going to see even more broad adoption because we’ve made it so easy to install. You don’t have to be an IT professional. And then, we’ve got our partner network that are building services around it. So they’re able to generate dollars.
We’re able to sell our product through their channels where they meet the customers. And I think we’ve taken a very innovative and effective approach in our partnering strategy. This is something that we’ve really worked on over the last year, 18 months, and we’re bearing the fruit of it right now.
Operator: Thank you. Our next question comes from the line of Gray Powell of BTIG.
