Crowdstrike CEO seeing 'increased need of security as everyone works from home'

CrowdStrike Co-founder and CEO George Kurtz joins Yahoo Finance’s Zack Guzman and Brian Cheung to discuss the demands for his cybersecurity technology company, as more Americans are working from home during the coronavirus.

Video Transcript

ZACK GUZMAN: We've been looking at sectors and stocks that have been able to shake that trend. And one of those names is, of course, CrowdStrike, one of the leaders in cybersecurity space right now and one of those stocks newcomers, relatively, to the market as a publicly traded company. And it's been able to buck the trend, up about 20% when you look at it year-to-date.

And I want to bring on the CEO of that company. George Kurtz joins us now live via Google Hangout. George, thank you so much for joining us right now. You gave investors an update on your guys' last quarter, this fourth quarter, just about a week ago, noting a smaller than expected loss. And you guys also gave forward guidance for the new year that topped estimates as well.

So what are you seeing right now in the cybersecurity space, despite the fact the overall market continues to sell off? You guys are bucking that trend. Why do you think that is?

GEORGE KURTZ: Well, we're certainly bucking that trend. But obviously, I want to start out with just reflecting on how bad this situation is from a pandemic perspective. Our thoughts and prayers go out to the families that are affected.

Specifically with CrowdStrike, I think when you look at cybersecurity, we look at security itself in the corporate hierarchy of needs as shelter. It's something that you have to have. Despite what's going on in the world, it is a needed technology.

And it's needed because of two areas. One is business resilience. As you've seen in the past, there have been many companies that have been hit with ransomware that have literally been out for weeks on end. You also need it from a compliance perspective. And there are many organizations around the globe that have a compliance mandate that they have to be secure.

So when you put those two together, it's a fundamental need for most organizations. And obviously, in a time like we're seeing now, there's a lot of chaos. And the bad guys are not going to be sheltering in place.

ZACK GUZMAN: Well, that's kind of the disgusting piece of this too. And I'm glad you shared your hopes. We've been sharing our hopes and prayers for the families affected as well through all of this. But what's disgusting about it is you do have bad actors coming out when there is a time of need. You have a lot of stresses on networks when you're thinking about people working from home, hospitals dealing with a lot more data here as well.

So what have you seen in terms of attacks rising, stresses to networks, and how companies are trying to protect themselves at a time that you would hope you wouldn't see a spike in malicious activity, but we are seeing that play out?

GEORGE KURTZ: Well, yeah, there's two [AUDIO OUT].

So on the attacker side, we've seen an increase in phishing wars. Anything COVID related, most people are willing to click on. So we've seen malware being attached to COVID-related emails. And that could be anything from, hey, here's a cure, or here's something you can do to keep your family safe-- which obviously, there's a lot of people that are interested in that.

It could be anything from sort of the financial relief to COVID. Think about how many small businesses, how many people are out of work, how many people are impacted. So that obviously is a big element. And then also from corporations, as you have remote users at home, you know, fake emails that look like it's coming from the corporation basically guiding and updating employees on what's happening.

So you combine those together and it's an environment that's ripe for people wanting to click on emails and gain more information on it. So that's one thing in the threat environment.

Obviously on the next piece in terms of trends is everybody's working from home. We're all probably working from home now. And lots of the folks watching this are at home. And what we're seeing is obviously an increased need for security for all these home users. If you're using Google Hangouts or Zoom or Slack or whatever your collaboration is, you still need to protect those endpoints at home.

And you also are logging into the VPN, which is putting a lot of pressure on the VPN. And obviously, corporations don't want to infect their corporate networks from these home users. So given that CrowdStrike is a cloud-based endpoint protection platform, we've seen a tremendous amount of interest in protecting these home users. And we've been doing that for our customers, letting them just roll things out with burst capacity, and then we can catch up later. Big thing is, let's get them secure.

ZACK GUZMAN: Yeah, I mean, when you talk about-- I like the metaphor, that cybersecurity would be kind of, on a hierarchy of needs, the shelter for a human. It would be that for a company who is dealing with anything on the internet in today's world.

On your guys' last earnings call, you did give investors an update saying that even though you did beat analysts' expectations here for forward guidance, you did say that you already de-risked that number when you looked at your guidance because of coronavirus and the unknowns over how long this might last.

So how do you square that with the idea that this is something that could be quote unquote recession-proof, but you also did kind of take down your forward guidance at the same time? How do you square those things? And what kind of proof do you have that cybersecurity wouldn't necessarily be something that would take a dip if we do hit a recession here?

GEORGE KURTZ: Well, first, it's very fluid. And there's a lot of unknown unknowns, right? We certainly don't have a crystal ball. And we spent a lot of time with many inputs when we look at our guidance, coronavirus being one of them. And we believe we put out a prudent approach and de-risked the guidance for the year.

You know, obviously there's a lot of unknown unknowns. And you know, there's puts and takes. You can see acceleration in home use. You could potentially see deals being delayed. But I think overall, given what we know today, we were comfortable with what we put out. And it's an evolving and fluid situation.

But I think back to your point in terms of what people need and companies need, think about the health care workers. Think about the companies that are developing cures for this. They're highly attacked right now. There's many nation-state actors that are looking to understand, what is the US doing? How are they going to cure this? Do they have the technologies? Do they have a cure? And then obviously, from a health care perspective, you know, if a hospital gets hit with ransomware, it could be absolutely devastating in a time like this.

So we know there's going to be an accelerant in some areas. And obviously in some areas where you may have hospitality or airlines or what have you, they're going to need a little bit more time and help to get through this situation.

BRIAN CHEUNG: Hey, George. It's Brian Cheung here. Quick question about the federal government-- so I understand that you have some contracts, through the FedRAMP authorization, for example. So I'm just wondering what it looks like on that front. We did see that there was that HHS hack a few weeks ago. So from the government's side of things, what is the kind of cloud computing, and trying to actually secure that cloud computing to look like right now?

GEORGE KURTZ: Yeah, so we recently-- I wouldn't say "recently." 18 months, two years ago we got FedRAMP certified. So we've been able to conduct business with our Falcon Platform technology. And we've seen more than doubling year over year from last year to this year. So we're excited about the opportunity there.

And like any other organization, they're highly targeted. If you think about the health care organizations in the government, again, from a nation-state perspective, they're going to be highly targeted. What's the US response? What are they doing? How are they actually conducting their business? Are there cures? What's the next step? These are all interesting bits of information for nation-state actors.

And certainly, we see an increase in activity on our business in the federal space, as well as state and local governments. We have state and local governments that are dealing with the same issue where they have to have remote workers, they have to protect their systems and keep things up and running in this scary pandemic.

ZACK GUZMAN: All right, there you go. The latest from George Kurtz, CEO at CrowdStrike, as shares are again in the green on a down day. George, thank you so much for joining us. Appreciate it. Stay well, my friend.

GEORGE KURTZ: Thank you.