We're seeing more cyber attacks this year 'than ever before,' CrowdStrike CEO says

CrowdStrike CEO George Kurtz joins Yahoo Finance’s Zack Guzman to discuss the biggest risks and security threats Americans are facing as many continue to work from home amid the coronavirus.

Video Transcript

ZACK GUZMAN: I'm digging into some of these companies that have benefited from the shift to working from home. Of course, a large threat as employees do that has been cyber security. And CrowdStrike has benefited from that. When you look at stock performance over the last few weeks here from the March bottom, that stock has nearly tripled when you look at that performance. Of course, the company also reported a stronger-than-expected first quarter.

And for more on all of this and the trends that we're seeing play out in the cyber security space, we are joined again by CrowdStrike CEO George Kurtz. Appreciate you taking the time to chat again, George.

GEORGE KURTZ: Thanks, Zack.

ZACK GUZMAN: I just wanted to start with what you guys reported last week. When you looked at the results there, as I said, much better than Wall Street was expecting. You also boosted guidance for the year, forecasting an adjusted loss of $0.08 to $0.05, versus your previous guidance of $0.14 to $0.10.

So what's really going on here? And how can you keep up that progress as you move forward through the year, as maybe businesses start to reopen?

GEORGE KURTZ: Well, when we look at security, I think what's clear is that the attacks haven't subsided. And we continue to see more attacks this year than we've ever seen before. And from a company perspective, security is really like shelter-- it's a must-have, right? You have to have it. It's a compliance need.

And what we've built I think is particularly well-suited for the work-from-home-- we call it work-from-anywhere-- environment, which is you've basically taken a network, turned it inside out, and said, OK, you know, 50,000, 100,000, 200,000 people per company in some of the large companies are working from home. And a cloud-based architecture like CrowdStrike is perfect for that environment. So we've been able to benefit from that. And I think it's a testament to the technology that we've built and the architecture that we've employed.

ZACK GUZMAN: Yeah, last time we had you on the show, before you reported your first-quarter results, you had talked about how you were conservative in your guidance for forward guidance here, when we look at trends in the future. When you guys improved your guidance here, as I noted, is that similarly just changing, maybe being less conservative on the guidance front? Or is it something else going on there that makes you more optimistic for what could happen in 2020?

GEORGE KURTZ: Well, I think just in general, we always try to be prudent. Our CFO Burt Podbere is one of the best in the business. And we're looking at our visibility into what we see.

Obviously Q2 is right in front of us, and you have the out quarters. I mean, I think it's one of those areas where there's lots of uncertainty in the environment. So really, we're just trying to be prudent about how we guide.

And I think, again, what we've been able to deliver in our last earnings release is a testament to how effective we've been in being able to sell the technology and still get to those buyers. Which again, that was-- when we last talked, that was sort of up in the air. Would we be able to get to them? Would Zoom work? Could we get to the right people? And the answer has been yes.

ZACK GUZMAN: Yeah, how optimistic, or how much have you seen maybe improvements stay in place? Because that was the question I presented to you back then. And also, I guess the other one would be whether or not businesses see this as something they would want to continue to spend on should there be a recession, now that we're officially in one?

What's your take on that in terms of maybe data you can give on the front of how sales have held up, even as we move into June here?

GEORGE KURTZ: Well, when we look at the sustainable trends, right, this work-from-anywhere is not going to go away. I can tell you a few things. One is we're not going to go back to the way we-- the way it was, right? So there is going to be a more of a hybrid type environment, where people are going to be at work, people are going to be working from home.

And when we think about work-from-anywhere as a trend, it's not-- it's not a one-time deal. It's part of digital transformation. And we've seen digital transformations project dramatically accelerate going forward, because people are looking at this and going OK, we've got to do things differently. They were scrambling early on to make sure they were up and running. And we've benefited from that from legacy players who couldn't get their architectures up and running.

And I think the biggest, obviously, item that we're focused on is this is a sustainable trend, not just something that you see one quarter.

ZACK GUZMAN: Yeah, and if that trend is intact-- I mean, obviously you highlight some of those legacy competitors here. But when you look at what CrowdStrike offers, what exactly does it do to kind of differentiate the services you're providing versus what other people are doing, and how that might benefit your guys' performance moving forward compared to theirs?

GEORGE KURTZ: Well, I think it's-- it kind of goes back to when I started the company, really wanting to be that Salesforce of security. Right, when you think about what we've built in the cloud architecture, it's very hard for other competitors to catch up with that.

There's a lot of [INAUDIBLE] out there, particularly the legacy, fossilized vendors. And their architecture, just it's not suitable to a cloud environment. In fact, if you told me a couple of months ago that there'd be a buying behavior because VPNs we're blowing up, because signature files were being pushed across a VPN, I wouldn't have believed you.

But we actually saw that, right? We saw the fact that people were trying to get their networks up and running, and then crushing their performance of their VPN, try to actually push out signature updates. Obviously we don't have any signature updates. But we go direct to the cloud.

And I think any of the cloud companies that are directly cloud connected and enabled have an advantage there, not just the security players. And we've seen that in the digital transformation process, people rapidly moving towards cloud providers and moving into cloud workloads, which we protect against as well.

ZACK GUZMAN: Lastly, before we let you go, you noted some of the security threats that we've seen since the coronavirus pandemic began. What have you seen in terms of maybe more attacks, different changes in tactics, and the way that you're able to defend against those? If that's expected to continue here in 2020, how has your team or your technology been adapted to maybe some of those changes?

GEORGE KURTZ: Sure. Well, it was one of those areas where we just immediately saw a spike, anything related to COVID-19, you know, when you think about Word documents and people clicking on the links. I mean, that is worldwide, right? It isn't just a geography. It isn't just a sector. It isn't just a city.

So we saw a dramatic increase in malware associated with that. We also have seen a dramatic increase in e-crime. And when we break down the adversary maps, we've got nation-state actors, we've got e-crime, and we've got hacktivism. I would say e-crime, and now even hacktivism, we've seen an uptick in those areas.

In particular, one group has something called the REvil ransomware, which actually will take a 20% cut of the ransomware that's distributed and successful. So it's really ransomware as a service, a platform as a service. Everybody is looking for subscription revenue, even the bad guys. And the threat environment continues to get worse.

ZACK GUZMAN: Yeah, I guess it catches on. If the good guys are doing it, you can't beat them. Join them, I guess. Adopt the model.

But very interesting stuff. And very interesting to see your company working on all this. Appreciate you coming back to chat with us again. Hopefully we'll be able to connect soon. George Kurtz, CEO of CrowdStrike, appreciate it.

GEORGE KURTZ: Thank you.