CROWDSTRIKE HOLDINGS INC CLASS A

Pricing Strategies for Cybersecurity Products and Services

• Subscription Models

  • Falcon Flex: This subscription model has become a key mechanism for increasing customer adoption and retention. Accounts adopting Falcon Flex represent over $1.3 billion in total deal value.
  • Customers with Falcon Flex are incentivized to expand their subscriptions, typically taking on more than nine modules, which significantly increases their investment with CrowdStrike.

• Value-Based Pricing

  • The Falcon Flex model allows for preferred pricing for both current contracted modules and future modules. This pricing strategy aligns economic benefits with customer needs, effectively addressing cost concerns while enhancing customer value.
  • The model promotes platform consolidation, enabling customers to derive more value from their existing contracts, resulting in longer subscription durations.

• Industry-Specific Needs

  • Certain sectors, like healthcare, have seen heightened cybersecurity investments due to increased targeted attacks, leading to robust demand.
  • The healthcare industry saw record growth in Q3, reflecting the critical need for comprehensive cybersecurity solutions tailored to specific threats faced by providers.

Customer Dynamics

• Retention and Adoption
  • The more modules customers utilize, the stickier the platform becomes, enhancing overall customer retention. Notably, customers adopting Falcon Flex have demonstrated significant increases in their cybersecurity budgets and module adoption.
  • The response to CrowdStrike's resilience post-incident and its innovative use of the Falcon platform is contributing positively to customer retention rates.

Financial and Operational Trends

• The year-over-year revenue growth indicates robust market demand, with total revenue surpassing $1 billion for the first time in company history.
• Customer commitment packages have promoted investment in additional modules rather than simply extending existing contracts. This demonstrates a strategic focus on driving long-term engagement rather than short-term sales.

Overall, CrowdStrike's pricing strategies are effectively leveraging subscription models, value-based pricing, and responsiveness to industry-specific needs to navigate the evolving cybersecurity landscape, thereby enhancing customer trust and promoting sustained growth.