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Welcome to Asking for a Trend.  CrowdStrike reporting Q2 earnings just a few minutes ago, its first report since a software defect triggered a global Windows outage back in July. The company beating on both the top and bottom lines, but lowering its third quarter fully and full year guidance, and joining us now is Matt Hedberg, RBC Capital Markets managing director and head of Global TIMT research. Matt, it is good to see you. So let's talk about this print. I know you, you're a fan of CrowdStrike, um, and you got an outperform on the name. Stocks up about 3% here in the after hours. Give it, give us your take, Matt, on the results.

Sure, thanks for having me on. You know, I, I would say that there was a lot of obvious fear, uh, about the quarter following the outage. I, I think just in kind of skimming through the numbers, you noted, they beat both top and bottom line. I think overall, I would characterize the results as better than expected, better than feared. Um, you know, I think a lot will depend on the guide. They, they got it to, you know, kind of top and bottom line metrics in, in the press release, but, um, what we're looking for is additional commentary on, uh, ARR on the call. And, and I think that would be some of the biggest swing factors in, you know, how the stock trades.

And, Matt, I guess more specifically, what are you looking for within that? Like, what are your expectations? Do you think, how long do you expect this outage here to be an overhang for the stock going forward?

It's, I mean, that is the million dollar question. I, I think what I would like to hear is that churn is not an issue, which we don't think it is. We think that CrowdStrike still has best in class technology. Um, we're assuming, and we previously cut our ARR and revenue estimates based on what we presume to be higher levels of discounting, uh, to really keep customers happy and engaged through this whole obvious bad situation. Um, I, I've, I've, I've said before, I do think though that, you know, depending on how this is handled at the customer level, this could be in the company's rear view mirror later this year. Uh, and I think we looked at Q2 results as a bit of a clearing event in terms of trying to get investor expectations centered around what the second half impact will be to financials.

And why, why do you think that, Matt? Why, why do you think maybe, you know, near term, there's some bumps here, but long term, this company's be going to be just fine?

I, you know, I think the critical thing from my perspective was this, this was not a hack, no customer data was lost. It was obviously a horrible situation from an outage perspective. Um, but, uh, you know, the CrowdStrike's business is to secure devices from malicious attacks, uh, which didn't happen as a result of this. And so I do think as, as the customer, as, as CrowdStrike has been working really around the clock with customers to get them back up. And, and I think I've said before, I think ultimately, CrowdStrike, um, emerges from this as a stronger vendor, even better controls in place. Uh, but the fact that it wasn't a breach, it wasn't a hack, um, although the outage was bad, it, it, it's a different level in my mind, which is why I think this will sort of drift into the, into the background in the coming quarters.

Matt, what do you think's going to drive some of that future adoption? And, and when you take a look, you're evaluating this market opportunity that CrowdStrike has. Has that changed at all because of the outage or, or is it still the same in terms of that future growth and what that could look like for years to come?

It's a, it's another good question. We've long thought that CrowdStrike's in a really strong position to consolidate what is a very fragmented cybersecurity landscape. Um, you know, the company noted in their press release that some of their newer products like their next gen sim product, identity protection and cloud security are now over a billion dollars in ARR. That's a significant milestone, and really one of the hallmarks of why we like this company in that it's one code base, multiple modules, additional points of upsell. And while the outage, um, you know, puts them in a tough situation, we think in terms of offering some free or discounted modules, ultimately, we think customers will continue to consolidate spend on this platform, uh, given really the underlying architecture of, of, of the platform platform. Matt, you know this company so well. I'm also curious just to get

your take on the job you think, uh, CEO, George Kurtz has done and just managing, uh, the outage, Matt, and the fallout.

Listen, it was, it wasn't, um, it was a tough situation for anyone, and I think the company was as transparent as they could be. This is the first time that we'll talk really in more depth publicly. So I think a lot of people are going to be paying attention to George's words, um, you know, how he's talking about how customers are reacting. There's obviously been some large customers in the news, um, that have had some prolonged outage in the airline industry. And so I think a lot of people are really going to be paying attention to, um, you know, how he addresses this, the outage. But, you know, I think thus far, listen, they've been transparent with what they can be. Uh, I think they've really been, you know, trying to help customers through this difficult time. But I think a lot's going to be, you know, I think we're all going to be listening to pretty much every word that he says on, on the earnings call. And, and like I said, I think some of the swing factors in the stock will be how the CFO talks about, uh, annualized recurring revenue, which that's one of the main metrics that investors

are looking for, and I think we'll get a better sense of that on the, on the, on the prepared remarks.

All right. We got move after hours up just about 3 and a half percent. Matt, thanks so much for breaking down this report here for us.