6 ms·

CrowdStrike S-1

64 points by itsovermyhead 7y ago

WestCoastJustin 7y ago
Anyone know why this is so popular and getting upvoted?
- cwperkins 7y ago
  It's a filing for CrowdStrike to go public. They open their books for the public to view. HN is a very entrepreneurial board and we applaud any Silicon Valley company going public.
  - moandcompany 7y ago
    What might be more interesting is that CrowdStrike is not really a Silcon Valley company, but has Silicon Valley investors, including Google Capital. Crowdstrike is headquartered in Irvine, California (Orange County), and a large number of its engineering teams are actually remote/distributed.
- thiago_fm 7y ago
  Because it's yet another very unprofitable company's IPO... with a potential "profit window" in 10 centuries, when flying cars are a reality, robots take over the earth etc. And all of this doesn't matter because the US has injected so much money with QE and so on the economy that even an American kid's 10 year old lemonade shop is worth a few billions.
  - ignoramous 7y ago
    Are such IPOs any indicator of economic downturn to come?
    - eganist 7y ago
      A whole vat of them in one year? Yeah, probably. Means they likely foresee difficulties securing public investment beyond the near term if they don't IPO ASAP. Also means I'm not buying into any of them until the market slams, which I think is a common theme among many buyers considering the ever-intensifying downtrend in IPO day-1 closing price dips.
    - filoleg 7y ago
      If that was the case, then the parent would have already been on their way to open a $10bil valued lemonade stand, instead of posting about it.
- diminoten 7y ago
  Just to add, the relative lack of comments here is related to the density of information presented here relative to the age of the submission (so people haven't gotten through it yet).
- daxorid 7y ago
  HN has quite a few infosec professionals who have obtained a fair bit of swag and gotten reasonably drunk on CrowdStrike investors' dime at various security conference booths/events/parties. The SG&A line item in their financials is relevant to their interests. Specifically, their sales/swag/booze operation cost over twice as much as their R&D operations ( $172MM vs $84MM in 2018 ). Or, to put it another way, getting CISOs sauced outside the Moscone is twice as important to them as actually producing the software for their blinky boxes. If they can pull another $300MM from retail in an IPO, our blood alcohol content will be secured at cons for another two years, assuming they continue to burn $140MM annually.
  - tptacek 7y ago
    It is extraordinarily silly to suggest that "swag" and "booze" are serious contributors to Crowdstrike's SG&A expenses, considering that SG&A covers their entire sales and marketing teams. SG&A exceeding R&D is not exactly an anomaly among enterprise tech companies. Oh, also? Crowdstrike sells endpoint software subscriptions, not "blinky boxes".
- techntoke 7y ago
  Because they are the ones who blamed Russia for the DNC hack: https://en.wikipedia.org/wiki/CrowdStrike#Russian_hacking_investigations https://en.wikipedia.org/wiki/CrowdStrike#Russian_hacking_in...
  - WestCoastJustin 7y ago
    Thank you. Makes much more sense now.
    - p0rkbelly 7y ago
      ...because they are a billion dollar tech startup, whose end product/widget is security. Why shouldn't it be here? ...Because it's not about Uber-for-X? Or chat? or food Delivery? ... But everything they do is every HN buzzword: ML/AI/BigData/ES/JSON/CLOUD. They are extreme users of tech and ingesting/processing more data in real-time than most of us can fathom.
- tptacek 7y ago
  The only thing most HN'ers know about Crowdstrike is that they were involved in the Russia hacking attribution in 2016-2017. But this is a major tech company S-1 --- Crowdstrike is one of the more important security product companies of the last few years --- and tech company S-1's generally get warm coverage on HN.
gadnuk 7y ago
"We have incurred net losses in all periods since our inception, and we may not achieve or maintain profitability in the future. We experienced net losses of $91.3 million, $135.5 million, $140.1 million for fiscal 2017, fiscal 2018, and fiscal 2019, respectively. As of January 31, 2019, we had an accumulated deficit of $519.1 million." Wow, I knew that they had great revenues and growth but this nugget is now becoming a common theme for all tech companies going IPO these days.
- tptacek 7y ago
  Yes, and usually for a pretty straightforward reason: these companies are investing substantial sums of money into buying market share, and, when they (a) win themselves a defensible position in the market and (b) generate enough revenue to prove the market to investors, they can cut back on those expenses and take profits. Meanwhile, investors are looking for growth and, more generally, future profits; nobody's all that interested in taking a Crowdstrike dividend this year. If a dollar in profits taken today is multiple dollars in future profits left on the table, you can see why a business would engineer its finances to plow every cent back into the business. Obviously, this plan can always go spectacularly wrong, but you can't just point to the strategy itself as evidence that will happen. You need an actual argument to back it up.
  - rossdavidh 7y ago
    It's always possible to make a semi-plausible argument that money will be made someday. Perhaps that's enough for an angel investor, maybe a VC, but by the time you IPO, you really ought to have demonstrated it. But, not lately.
    - tptacek 7y ago
      Isn't this essentially an argument that companies should deliberately slow their growth before an IPO just to demonstrate to skittish investors (all of whom either shouldn't be picking stocks of any sort, or are themselves professional money managers who can read an S1 and a 10K) that they can be profitable without collapsing? Profits are good, but inability to switch from growth mode to profit-taking mode is probably not the risk that should keep you from investing in Crowdstrike; the volatility of the market they're in and their exposure to technological changes is a much bigger concern. Crowdstrike isn't like Uber, where the dial from profitable to unprofitable is essentially the question about the business. They're an enterprise software company and the majority of their money goes to sales. We have something like 30 years of experience in how these kinds of companies operate and what's going to happen with their financial engineering. I'm not saying Crowdstrike isn't risky. They're crazy risky and I wouldn't invest personally! I'm just saying, it's easy to get companies like this confused with consumer-facing unicorn companies whose valuations are derived in part by subsidizing their customers. Crowdstrike is, if anything, infamous for the opposite thing (they're expensive).
cwkoss 7y ago
Crowdstrike seems very well-connected politically. The DNC chose to have them forensically examine their hacked servers to the exclusion of the FBI.
- tptacek 7y ago
  George Kurtz is not a Democrat. Crowdstrike is also a giant in this field. I assume the connection is, the DNC wanted to go with a safe, big name.
  - monocasa 7y ago
    Political connectedness exists on many spectrums other than the usual Red vs Blue. An interesting one you can see from the outside (that might not have anything to do here, it's just an example) is CIA vs NSA. You can see Nancy Pelosi's statements back that look like "we've always been at war with East Asia" and "we've never been at war with East Asia" wrt to the intelligence apparatus depending on which agency screwed up. And Dmitri Alperovitch seems to see the shadows of the Russian political establishment everywhere he looks, though, which makes Crowdstrike an... interesting choice for that work. Edit: added the top paragraph.
    - tptacek 7y ago
      All available evidence from credible sources seems to back up Crowdstrike's attribution. I'm sure you can find a countervailing argument or two from some credible source, but, to say the least, it does not look like Crowdstrike took a flyer on this. I don't think the Russia investigation has thing #1 to do with Crowdstrike's IPO or what their business is like, though. That's much simpler: EDR is the new antivirus, antivirus has historically been one of the most lucrative enterprise technology products (to say nothing of security products), and Crowdstrike has a commanding share of the EDR market.
      - monocasa 7y ago
        You also have a former UK ambassador saying "the DNC wasn't hacked. I was part of the process of exfiltrating the files from the DNC". And I think a general willingness to parrot establishment rhetoric is part of why they're as big as they are.
tmcw 7y ago
Is it unusual that on $313M ARR, the CEO’s yearly compensation, including options, is… $44.9M? CEO pay is 15% of total revenue?
- tptacek 7y ago
  Fun additional detail: As part of our sales and marketing activities, we sponsor a CrowdStrike-branded professional racing car, which our President and Chief Executive Officer drives in some races at no incremental cost to us and in lieu of us hiring a professional driver. As we do not pay any amounts to our President and Chief Executive Officer under these arrangements, it is not reflected in the above table.
  - chii 7y ago
    If I was an investor, I would say this is reckless.
    - tptacek 7y ago
      Lots of companies sponsor race cars, and Crowdstrike seems to have gotten a co-branding thing out of it (they're now the EDR product for some Formula One teams or something). It's about as reckless or not reckless as any other marketing expense. Unless you mean the potential for George to meet his fiery doom in an F1 car, in which case, yes, I agree.
      - cwkoss 7y ago
        F1 Teams hacking each other to gain advantage would make a great movie, I wonder if it has ever happened in real life.
- austenallred 7y ago
  Are you sure that's his annual compensation, or is that just a one-time options amount?
rossdavidh 7y ago
So, is someone who invested in a lot of may-never-be-profitable companies, suddenly needing their money back, whether it's the right time for an IPO or not?
hsnewman 7y ago
Anyone have experience using the product?
badrabbit 7y ago
For the uninitiated: Crowdstrike Falcon is basically the highest quality Endpoint Defense and Response product in the market. They are not fool proof but I would be extremely surprised if any untargeted malware infected a Crowdstrike enabled device. They are extremely popular in the market,it's pretty awesome the level of protection they give traditional businesses that don't have large security teams who can't readily adopt to attacker techniques. They've been spreading themselves a bit thin lately trying to to do things a bit outside of their domain. But as someone that finds it very easy to find fault and criticize, I find almost no bad things to say about their offering (aside from the price tag). Hope going public won't ruin them. Their threat intel is always a page turner too!
moandcompany 7y ago
As a former Crowdstrike engineering employee, congratulations to everyone that helped get the company get to where it is today. Super proud of you and our work together.

CrowdStrike S-1

64 points by itsovermyhead 7y ago

WestCoastJustin 7y ago

Anyone know why this is so popular and getting upvoted?

cwperkins 7y ago
It's a filing for CrowdStrike to go public. They open their books for the public to view. HN is a very entrepreneurial board and we applaud any Silicon Valley company going public.
- moandcompany 7y ago
  What might be more interesting is that CrowdStrike is not really a Silcon Valley company, but has Silicon Valley investors, including Google Capital. Crowdstrike is headquartered in Irvine, California (Orange County), and a large number of its engineering teams are actually remote/distributed.
thiago_fm 7y ago
Because it's yet another very unprofitable company's IPO... with a potential "profit window" in 10 centuries, when flying cars are a reality, robots take over the earth etc. And all of this doesn't matter because the US has injected so much money with QE and so on the economy that even an American kid's 10 year old lemonade shop is worth a few billions.
- ignoramous 7y ago
  Are such IPOs any indicator of economic downturn to come?
  - eganist 7y ago
    A whole vat of them in one year? Yeah, probably. Means they likely foresee difficulties securing public investment beyond the near term if they don't IPO ASAP. Also means I'm not buying into any of them until the market slams, which I think is a common theme among many buyers considering the ever-intensifying downtrend in IPO day-1 closing price dips.
  - filoleg 7y ago
    If that was the case, then the parent would have already been on their way to open a $10bil valued lemonade stand, instead of posting about it.
diminoten 7y ago
Just to add, the relative lack of comments here is related to the density of information presented here relative to the age of the submission (so people haven't gotten through it yet).
daxorid 7y ago
HN has quite a few infosec professionals who have obtained a fair bit of swag and gotten reasonably drunk on CrowdStrike investors' dime at various security conference booths/events/parties. The SG&A line item in their financials is relevant to their interests. Specifically, their sales/swag/booze operation cost over twice as much as their R&D operations ( $172MM vs $84MM in 2018 ). Or, to put it another way, getting CISOs sauced outside the Moscone is twice as important to them as actually producing the software for their blinky boxes. If they can pull another $300MM from retail in an IPO, our blood alcohol content will be secured at cons for another two years, assuming they continue to burn $140MM annually.
- tptacek 7y ago
  It is extraordinarily silly to suggest that "swag" and "booze" are serious contributors to Crowdstrike's SG&A expenses, considering that SG&A covers their entire sales and marketing teams. SG&A exceeding R&D is not exactly an anomaly among enterprise tech companies. Oh, also? Crowdstrike sells endpoint software subscriptions, not "blinky boxes".
techntoke 7y ago
Because they are the ones who blamed Russia for the DNC hack: https://en.wikipedia.org/wiki/CrowdStrike#Russian_hacking_investigations https://en.wikipedia.org/wiki/CrowdStrike#Russian_hacking_in...
- WestCoastJustin 7y ago
  Thank you. Makes much more sense now.
  - p0rkbelly 7y ago
    ...because they are a billion dollar tech startup, whose end product/widget is security. Why shouldn't it be here? ...Because it's not about Uber-for-X? Or chat? or food Delivery? ... But everything they do is every HN buzzword: ML/AI/BigData/ES/JSON/CLOUD. They are extreme users of tech and ingesting/processing more data in real-time than most of us can fathom.
tptacek 7y ago
The only thing most HN'ers know about Crowdstrike is that they were involved in the Russia hacking attribution in 2016-2017. But this is a major tech company S-1 --- Crowdstrike is one of the more important security product companies of the last few years --- and tech company S-1's generally get warm coverage on HN.

gadnuk 7y ago

"We have incurred net losses in all periods since our inception, and we may not achieve or maintain profitability in the future. We experienced net losses of $91.3 million, $135.5 million, $140.1 million for fiscal 2017, fiscal 2018, and fiscal 2019, respectively. As of January 31, 2019, we had an accumulated deficit of $519.1 million." Wow, I knew that they had great revenues and growth but this nugget is now becoming a common theme for all tech companies going IPO these days.

tptacek 7y ago
Yes, and usually for a pretty straightforward reason: these companies are investing substantial sums of money into buying market share, and, when they (a) win themselves a defensible position in the market and (b) generate enough revenue to prove the market to investors, they can cut back on those expenses and take profits. Meanwhile, investors are looking for growth and, more generally, future profits; nobody's all that interested in taking a Crowdstrike dividend this year. If a dollar in profits taken today is multiple dollars in future profits left on the table, you can see why a business would engineer its finances to plow every cent back into the business. Obviously, this plan can always go spectacularly wrong, but you can't just point to the strategy itself as evidence that will happen. You need an actual argument to back it up.
- rossdavidh 7y ago
  It's always possible to make a semi-plausible argument that money will be made someday. Perhaps that's enough for an angel investor, maybe a VC, but by the time you IPO, you really ought to have demonstrated it. But, not lately.
  - tptacek 7y ago
    Isn't this essentially an argument that companies should deliberately slow their growth before an IPO just to demonstrate to skittish investors (all of whom either shouldn't be picking stocks of any sort, or are themselves professional money managers who can read an S1 and a 10K) that they can be profitable without collapsing? Profits are good, but inability to switch from growth mode to profit-taking mode is probably not the risk that should keep you from investing in Crowdstrike; the volatility of the market they're in and their exposure to technological changes is a much bigger concern. Crowdstrike isn't like Uber, where the dial from profitable to unprofitable is essentially the question about the business. They're an enterprise software company and the majority of their money goes to sales. We have something like 30 years of experience in how these kinds of companies operate and what's going to happen with their financial engineering. I'm not saying Crowdstrike isn't risky. They're crazy risky and I wouldn't invest personally! I'm just saying, it's easy to get companies like this confused with consumer-facing unicorn companies whose valuations are derived in part by subsidizing their customers. Crowdstrike is, if anything, infamous for the opposite thing (they're expensive).

cwkoss 7y ago

Crowdstrike seems very well-connected politically. The DNC chose to have them forensically examine their hacked servers to the exclusion of the FBI.

tptacek 7y ago
George Kurtz is not a Democrat. Crowdstrike is also a giant in this field. I assume the connection is, the DNC wanted to go with a safe, big name.
- monocasa 7y ago
  Political connectedness exists on many spectrums other than the usual Red vs Blue. An interesting one you can see from the outside (that might not have anything to do here, it's just an example) is CIA vs NSA. You can see Nancy Pelosi's statements back that look like "we've always been at war with East Asia" and "we've never been at war with East Asia" wrt to the intelligence apparatus depending on which agency screwed up. And Dmitri Alperovitch seems to see the shadows of the Russian political establishment everywhere he looks, though, which makes Crowdstrike an... interesting choice for that work. Edit: added the top paragraph.
  - tptacek 7y ago
    All available evidence from credible sources seems to back up Crowdstrike's attribution. I'm sure you can find a countervailing argument or two from some credible source, but, to say the least, it does not look like Crowdstrike took a flyer on this. I don't think the Russia investigation has thing #1 to do with Crowdstrike's IPO or what their business is like, though. That's much simpler: EDR is the new antivirus, antivirus has historically been one of the most lucrative enterprise technology products (to say nothing of security products), and Crowdstrike has a commanding share of the EDR market.
    - monocasa 7y ago
      You also have a former UK ambassador saying "the DNC wasn't hacked. I was part of the process of exfiltrating the files from the DNC". And I think a general willingness to parrot establishment rhetoric is part of why they're as big as they are.

tmcw 7y ago

Is it unusual that on $313M ARR, the CEO’s yearly compensation, including options, is… $44.9M? CEO pay is 15% of total revenue?

tptacek 7y ago
Fun additional detail: As part of our sales and marketing activities, we sponsor a CrowdStrike-branded professional racing car, which our President and Chief Executive Officer drives in some races at no incremental cost to us and in lieu of us hiring a professional driver. As we do not pay any amounts to our President and Chief Executive Officer under these arrangements, it is not reflected in the above table.
- chii 7y ago
  If I was an investor, I would say this is reckless.
  - tptacek 7y ago
    Lots of companies sponsor race cars, and Crowdstrike seems to have gotten a co-branding thing out of it (they're now the EDR product for some Formula One teams or something). It's about as reckless or not reckless as any other marketing expense. Unless you mean the potential for George to meet his fiery doom in an F1 car, in which case, yes, I agree.
    - cwkoss 7y ago
      F1 Teams hacking each other to gain advantage would make a great movie, I wonder if it has ever happened in real life.
austenallred 7y ago
Are you sure that's his annual compensation, or is that just a one-time options amount?

rossdavidh 7y ago

So, is someone who invested in a lot of may-never-be-profitable companies, suddenly needing their money back, whether it's the right time for an IPO or not?

hsnewman 7y ago

Anyone have experience using the product?

badrabbit 7y ago

For the uninitiated: Crowdstrike Falcon is basically the highest quality Endpoint Defense and Response product in the market. They are not fool proof but I would be extremely surprised if any untargeted malware infected a Crowdstrike enabled device. They are extremely popular in the market,it's pretty awesome the level of protection they give traditional businesses that don't have large security teams who can't readily adopt to attacker techniques. They've been spreading themselves a bit thin lately trying to to do things a bit outside of their domain. But as someone that finds it very easy to find fault and criticize, I find almost no bad things to say about their offering (aside from the price tag). Hope going public won't ruin them. Their threat intel is always a page turner too!

moandcompany 7y ago

As a former Crowdstrike engineering employee, congratulations to everyone that helped get the company get to where it is today. Super proud of you and our work together.