We're delighted to have Burt Podbere, the CFO of CrowdStrike for over eight years, and more importantly, I believe you have a doctorate in gross margins. So thank you.
It certainly feels that way.
Thank you for joining us. Maybe just starting there, what is it about the CrowdStrike financial model that makes it so unique that you can do what you're doing with gross margins? 'Cause you're certainly in rarefied air as it relates to SaaS companies.
Thanks, Joe. First, it's great to be here. Thanks for doing this with me. And you're right, gross margin, I feel like I have a postdoc in gross margin. I got to CrowdStrike, it was well below 50%, let's say, and that was back in 2015. And I think even back then, I saw the trajectory of the company, I saw a lot of goodness. Gross margin was a challenge, and I said, "Okay, how are we gonna change this?" And, you know, George, the CEO, kind of walked me through it, and the key takeaway, big picture, we'll get into some details later, but big picture, it was our ability to collect data once and reuse it many times. So basically today we have 27 different modules that you can buy.
After you buy the first module, every module thereafter has very limited incremental cost. So it starts there. And then from there, it's about, okay, how do we think about, cost optimization, on the infrastructure side, you know, private, public cloud, you know, how do we optimize both of those? And then it's about scale. How do we make sure that whatever we do on the cost side, we can replicate, duplicate, and do it at scale? You know, the data that we have today is a lot different than the data we had, you know, eight years ago. And the last thing I'll say on that particular question is, I think I'm the only CFO in the valley that actually invites my DevOps team to my monthly closed meeting with 35 of my favorite accounts that work for me.
Literally, we spend 15-20 minutes just on COGS. We'd look at their roadmap, I ask them pointed questions about the roadmap: What do you need? How can we get there faster? Those kind of things. And so that's how, you know, I think about gross margin, you know, every single day. And so that, that's the framework.
One piece of, I don't want to call it pushback, but what we've gotten from investors following your Falcon is, you know, why give the 82%-85%? Does that embed execution risk? So maybe just talk about, you know, your visibility in driving gross margins to 82%-85%, 'cause it was far surpassing everybody's expectations.
Yeah, look, it really starts with the things that I just talked about, plus the fact that for two years, we've been investing in infrastructure, our own private cloud, and we're starting to see the fruits of those investments. For those who have been following the company for about two years, our subscription non-GAAP margin was in the mid-70%s. Then we started to see that lift a few quarters ago. Now we're, you know, around that 80% mark, and that was only kind of the beginning of seeing the fruits of those investments. So I felt it was the right thing to do to showcase how we think about gross margin, how important it is to us, and more importantly, how we can actually continue to do what we've been doing for quite some time.
A topic that's always on investors' minds is just macro, particularly given your ramp in the second half, Net New ARR. You know, how have your conversations with customers been? How are they thinking about their 2024 budgets, and what are you seeing in the market more broadly?
So demand is definitely there. We're seeing budgets still being, you know, tight. There are certain areas where we're seeing, budgets shifting from IT to security, which is, which is great, or, you know, having a broader impact for us. Having said that, deals are still taking quite a bit of time to consummate. Deal scrutiny is there. Obviously, the CFOs of the world, including myself, have taken a different role in today's world. More scrutiny, more approvals means longer cycle times, which isn't necessarily a bad thing, and for us, it's actually a pretty good thing because the deals are bigger and we're consolidating more. And then the company, and certainly my sales team, is leveraging my relationships with some of the CFOs to kind of walk them through the ROI.
So still a very tough environment with respect to the macro, but the demand environment is right there. And look, it's evidenced in the news, right? Pick an industry, gaming, right? We've all seen what's been happening in the news. The attacks are becoming more prolific. Dark AI has creeped into our world, and so the demand for cyber protection is greater than it's ever been.
Since you mentioned the buzzword of the year, AI, you know, how do you think about AI and Gen AI's impact on both the cyber industry as well as the CrowdStrike platform?
Yeah, so AI is here. I think it's one of those moments in time when you're seeing something that's going to disrupt, like the internet, it's gonna disrupt kind of workflows. There are a lot of people that I meet with, and that all of you meet with, that use generative AI to help in their day-to-day coding or whatever it is, right? And then for CrowdStrike, we've been an AI company since the beginning. However, generative AI for the last kind of three years, and generative AI for us, you know, really can do a few things. Internally, obviously, we use generative AI, we're able to do things and workflows faster, better, stronger. And then for customers, we announced that we've got something called Charlotte AI. And Charlotte, you know, basically does a few things.
One, it enables quicker uptake on some of our modules, and we've priced it at a point where it's very attractive compared to, let's say, Copilot, for example. And for us, if you take a look at a couple of our modules, I think this founder had, and CEO George Kurtz had a great vision that he can combine modules with AI. So we have something called Foundry. Falcon Foundry is a tool that is a no-code tool that allows folks to develop their own apps or modules on our platform. And so if you think about combining that with Charlotte, the first thing you could do with Charlotte is ask Charlotte, "Okay, what should we build? What would make the most sense for us?" Charlotte will give you an answer. And the next gen would be, "Okay, Charlotte, build it for us." That's huge, right?
That's gonna save time, money, effort. That's not here today, to ask Charlotte to build you the apps, but you can see where we're going. And that, for larger companies, is really exciting. And so I get excited about Charlotte AI. We use it internally. And it just makes the platform even more sticky. And for us, we've invested in it, and I'm excited about it. Customer feedback has been exciting, and it'll be ready in Q1 of next year.
Yeah, maybe just drilling a little bit more into that, how has the customer feedback been? And just any thoughts on pricing so far? I know you mentioned that it's, you know, priced more attractively than Copilot.
It's a great question. I'll elaborate a little more on pricing. Look, we came out, we priced it at $20 per endpoint per year, and then you can plus some query packs, that type of stuff. But we're still nascent. We're still gonna take in data, customer feedback, to kind of really fulfill what the customers need, and at the price point that makes a lot of sense. You know, Copilot, it is expensive. It was an eye-opener for a lot of the world, but it does work. And we think that Charlotte is just that next gen, so the folks that we have it, the customers that we have it in beta, are actually giving us feedback. They want it more. They want more of it, and they want it now.
So like everything that we do at CrowdStrike, we're not gonna release it until it's quite ready. But right now it's, as I said, targeted for Q1 of next year.
What are the implications of Charlotte on gross margins?
Yeah, so, that'll be neutral for us. You know, obviously, the earlier days, and we're still figuring it out. The number is small, so it really won't impact gross margin. But over time, as Charlotte really picks up, that'll be neutral to the gross margin. And we track that really closely.
And then how should we think about it being a driver to top line? Like, is that a fiscal 2025 event, given it's coming out next year? And then, is there the potential for it to actually drive outsized growth, just given the net retention, right? Like, I saw a live demo, and it recommends other module screens. Like, this is great. Like, it seems like you're gonna have to disclose a nine, 10, 11 or the next, like, of module adoption.
It's like a self-licking ice cream cone, right? It's like, "Oh, yeah, ask Charlotte, it'll tell you to buy more." But yeah, so, I think that, you know, they're gonna- Charlotte's gonna contribute next year. How much? Time will tell. I do think that, at some point, Charlotte will meaningfully add to Net New. Obviously, on the base, we have a pretty big base, so it's not gonna move the needle on the base that much. But on Net New in a quarter, I can see that coming. As much as next year, you know, we're gonna start to see the pickup. Again, it's more about getting customers familiar with it, using it, trying it, and then getting excited about it with the, what I just described, the application that you can build your own. She can do it for you.
Once that starts to kick in, then I can see that it'd be meaningfully added to the Net New ARR.
Who are the companies that are testing this in preview? Because, you know, I see AI as kind of the great tech democratizer for, you know, SMBs and MSSPs. So in a way, I would imagine this helps you moving down market, but I'm just kind of curious, is this more of an enterprise adoption first, or do you think the MSSPs are the ones that are gonna lean into this the hardest?
I think across the board, I think everybody's gonna be using it and like it. Certainly, I see the application for SMB, right? SMB, to win an SMB, you gotta keep it really simple, you gotta automate, you gotta use technology, and that'll win. And I'm not saying large enterprise, that's not the case, but a large enterprise, the deal cycles are longer, there's more involved. You know, you're gonna have interaction with the sales team, the SE teams, even someone like me, you know, on the larger deals. But SMB, it's kind of flight this thing, take out the friction, use automation, use AI, use Generative AI. Those are the things that are gonna win in SMB.
You gave an incredible $10 billion ARR target, and I think over the last year, you really solidified yourself as a true security platform, moving beyond endpoint. But rarely do companies handle that baton from product 1 to product 2, 3, 4 smoothly, but you have. So I guess what has enabled that, that transition so far, and how should we think about that transition going forward?
Yeah, that's hard. But it goes back to consolidation and true platform, right? So we have one agent, and we have one console. So today, there are, you know, I believe there are no other cyber companies that can boast that. And that enables us to, you know, create seamlessly other applications that a company can adopt very quickly and get value right out of the gate, and that's hard to do. Taking the integration away from, you know, the client, that is massive in terms of adoption. So to go to that next act, let's call it, you know, we gave a highlight of an illustrative view of how to get to 10. And, you know, we, we went in different directions.
Started with product and we talked about all the products that we have in our platform and where each one of them can go. You know, it starts from the stuff that we started out with, AV, detection, and some of our OverWatch, and we went into some of the other products, and then we went to some of the newer ones. You know, cloud, identity, LogScale, which is a Next-Gen SIEM, and we kind of gave an illustration of how big each one of those can be. Each one of those alone today, arguably can be an IPO for us, right? Cloud, we gave some numbers on, in that $300 million range, growing at 7% range, not this quarter, but the quarter before, and we said it was accelerating this quarter. Identity, right in that $200 million range, growing at 200%.
This is not this quarter that we announced, but the quarter before, accelerating. And LogScale, that thing is out there to disrupt the SIEM market and, you know, the recent transactions that have taken place have really, you know, put a focus on that for us. It's a good business for us. We talked about the fact that it's over $100 million in ending ARR. These are good, good facts that gives us a lot of confidence in, you know, that illustrative view of $10 billion. And then go-to-market. It's not just all about having the best tech out there and the best product offering, it's about go-to-market and your partners. And some are in this room, and working collaboratively and getting deeper with them, and that's working. I think our partner group, especially our top-tier partners, are stronger than ever.
And whether it's the traditional partners like an Optiv, or it's, you know, something like a Dell, or we just announced something with, you know, for downmarket Pax8, whatever it is, you know. I feel that we've never been in a better position with our partners, and the ability to go deeper with our top partners, that matters. And partners are willing to do with us. So, I'm excited about both the tech and I'm excited about the go-to-market routes, to get to, you know, that illustrative view of $10 billion.
Is Endpoint still the tip of the spear, or are you landing with some of these other products? 'Cause, like, it's clear the cross-selling motion is working, but I'm just curious, are you landing with some of these other newer modules: cloud, identity, LogScale?
It's a great question. The good news is, is that we are a platform company, and I think finally, companies are recognizing that that statement is actually true. A lot of people claim it, but as I said, you know, the one agent, the one console, multiple different use cases, that truly is a platform . And I think that, you've seen, as you've talked about the adoption rates and multiple, multiple modules by customers, all of them have gone up, whether it's five, six, or seven, modules that a customer will adopt, all of them have been up in Q3, and that just goes to the cross-sell, it goes to the, the platform play. And the good news is, with our customers, it could start with Next-Gen AV, it could start with LogScale, it could start with identity.
They've all all of those and cloud, all of them have started with one of them, right? And, you know, each quarter could be different, and each customer could be different. I'm really excited about. I'll be honest with you, I'm really excited out of all of those, I mean, the technical people in this room will know more than me about, you know, how they use each of those things, but cloud is really important to me. We've invested a lot in cloud. We just bought a company called Bionic, which secures the applications in the cloud.
I just think that at some point, the cloud number that we've given out, which talks to the, the number of modules deployed in the cloud, you know, we gave out the last one around 300 million, that could be the majority of our Net New ARR in a given quarter. Not today, not tomorrow, but some point in the future. Today, that cloud TAM is roughly around $12 billion. FY 2028, it's looking like $31 billion. Those are big numbers.
It's almost like you saw my script here for going to cloud next.
Sorry.
No, it's but, like, so cloud no one disputes the cloud is a massive market, but it also kind of feels like the wild west. You hear about pricing, competitive displacement. So, you know, what is the secret sauce for CrowdStrike in cloud? Like, obviously, you've got the platform, but I imagine there's an area or two that you're the most differentiated in.
Yeah, this is a great dovetail question. I think for us, the big picture strategy, Joe, was, hey, we said we can be that cloud company that has both the agent and a non-agent technology working together seamlessly. So what's the difference, right? So the agent is what we've built our company on. It's a lightweight, single-purposed agent that collects the data, and it's a smart agent, it's a filtering the agent, and that's the one that collects the data and delivers it to our Threat Graph, which is the brains of our operation. That is our cloud workload protection. That is detection, that is protection, that is what drives who we are today. The agentless piece is an interesting piece. That's the one that talks to compliance and reporting. Both of them are important.
Many, you know, many folks have tried to do it and have not been successful at it. Some folks have tried to partner to do it. They were of an agent company, and they wanted to partner with an agentless, or they were an agentless company trying to partner with an agent company. And partnerships are hard when you're trying to do it at the core level of tech, and none of that has worked. So it starts there. We felt that, you know, we're the only one out there that was able to do it successfully. And then, if you drill down into the CWP, Cloud Workload Protection. So we started off with protecting the infrastructure. That's how our CWP technology worked. Then we bought this company called Bionic.
Think of the infrastructure piece as the house, and then we bought this company, Bionic, which protects the application. Think of that as the chairs, the fridge, whatever else that's in the house. So we think that those two pieces are the two biggest pieces for the cloud. There are others, right? But those two are the foundational pieces of the technology that you need to win in cloud. And, you know, we think that we've got the step up on everybody else in those two.
Is there any sense of composition between those numbers roughly today, or maybe just those that you said are most important or the largest? And then how you think about gross margins for cloud security.
Look, first, I'll start with the second part of the question, which is, you've seen how our cloud has grown, and it's no surprise that our margin has grown with it. That's number one. Number two is obviously the breakout between, you know, let's call it, infrastructure or, you know, CWP for infrastructure versus CWP and apps. Well, we just bought the app piece, and, it's pretty small, right? But we think that, you know, that has a big opportunity for us, right? Obviously, that's why we, we bought it. And I think that when we're talking to customers today, there are obviously customers like, for example, a Zoom, that, if they're doing a platform buy, which is us, and you're looking at the SKUs that are within that, a lot of it's gonna be cloud.
And so there'll be companies like that where that will be the dominant piece of the purchase. There'll be others that, you know, the traditional, you know, endpoint protection, AV, that'll be the dominant piece. So the good news is, we're servicing both ends of the spectrum and everything in between. So that's how we think about it.
Awesome. Maybe moving to, you know, the other baton of growth, LogScale. You know, that slide you showed had pretty ambitious targets. I think it's 10x-15x future ARR.
Yep
You know, where does the confidence for that come from? Is that displacing, you know, Splunk and legacy vendors, is that moving more into observability? Like, how should we think about the growth context there?
I love that question. So when we bought a company called Humio a few years ago, it was to really go after the complete and utter dissatisfaction of customers that have SIEM technology. And we said, "Hey, look, we can do it better, cheaper, faster, stronger. We can buy something that's index free." So the speed in terms of which we get back queries is going to be, you know, at petabyte speed versus, you know, the legacy SIEM vendors. That's why we bought it. It had some other applications like XDR. And then fast forward, hey, we're over $100 million, like we talked about, and there was that big acquisition in the space, right? And we think that's what I call it, a gift, right?
I call these things gifts. That's gonna take a long time to integrate. There's gonna be a lot of disruption. We've already had a lot of customers that are coming to us saying, "Hey, look, we don't want to be part of that group. We want to be part of, you know, a cybersecurity company." And we've had resumes. A lot of folks who are part of the acquired company want to come join us. And we're saying: Okay, come on board. So we've hired a bunch. Customers are excited to be part of the team, and that's to answer your question about are people starting with, you know, LogScale or cloud, whatever. There's a lot coming with, you know, LogScale. So excited about, you know, what's happened in the space.
You know, we don't plan for those things. That kind of was a, you know, a nice surprise for us.
Another upside catalyst has really been identity, and we're, I think, we just became customers there recently. Jerry said this morning, so big fans. But just, you know, what is the secret sauce there? Is that displacing the Oktas of the world, or what is the niche that's serving, and how big can that market be?
Again, another good question, Joe. So the way I think about it is there are three real kind of technologies for identity. The first is to create the identity, and that's Microsoft. The second is to manage the identity. That's the Oktas, the Pings, of the world. And then there's the third, to secure that. So the good news is, we don't overlap with Microsoft on that. We don't overlap with the Oktas or Pings, we partner. And what we do that there's really nobody there doing today from an identity standpoint is Zero Trust, right? So for us, what does that mean? That means if you, Joe, are trying to get into some of Jerry's files, you can't. We know, and we'll stop it. And so we'll see the lateral movement, and we'll be able to prevent it.
Jerry would have other applications that I'm sure he'll tell us about that he finds when he uses the technology. But that's been a biggie for us. So when we think about adversaries and what they're using today and what they're going after, identity is 80% of those instances today. 80%. So when we think about, you know, the big three, you know, today, the three legs of the stool that hold up, you know, security companies or security companies like us. One is next generation antivirus, two is detection, and three is identity. And the good news is, we have it, and there's no one out there really today that has that in the way that we're able to combine it with our platform.
The good news is that acquisition, I think internally, is the poster child for how to do an M&A. We saw a need, we saw a company, and we said, "Hey, look, the culture is the right culture," and we were able to contract a deal. The tech is great. We took a couple years to make sure that it was able to go onto. Well, the diligence said we were able to combine that agent into ours, 'cause we still only have one agent, and it took time to do that. And the team, I'm happy to report that the two co-founders of the company called Preempt, which was our identity, are still with us, and they're doing meaningful roles in the company.
So the knowledge, obviously, that we gained and the IP is there, but now all the stuff that was in their heads or the things that they wanted to do is still with us. So that is a great marker for whether a M&A transaction worked. As everybody knows in this room, not all M&A transactions worked or work. That one, for us, was a big success story.
You guys have had so much success in the enterprise, and a growth opportunity as you're moving down market. You know, what is the key to unlocking the SMB mid-market, technology-wise? You know, how do you think about the unit economics?
Yeah. So, obviously, it's volume. It's interesting, the smaller the company, the better the margin, right? 'Cause you're getting less discount for volume. So that's how that works, just from an economics standpoint. We released something called Falcon Go, which is something for the SMB. It's kinda, if you will, a skinny down version of our Prevent technology. It's really easy to, you know, get it up and running, and for the SMBs who don't necessarily have—forget about security people, even IT people. So that's been a big... you know, we took a lot of feedback. We feel that's gonna be a big win for us. The second one, which is already a big win for us, is something called our Falcon Complete.
So this is where we monitor, manage, for you, the technology. And today, that's a massive driver for SMB, mid-market, and enterprise. On enterprise, Amazon is a customer for Complete, all the way down to a mom and pop that would have Complete. From a mom-and-pop perspective, if you think about the economics, it's dramatic, right? So if you're a mom and pop, and you barely have an IT person, and you're gonna wanna hire a security person, take a city like New York, San Francisco, all in, it's gonna cost you, I don't know, $400,000. All in. With Complete, it'll be a 1/10 of that, and you get the best in the world in terms of people who know how to run the Falcon technology. And so it becomes very, very attractive.
So when you think about Complete for the SMB, that's a win. That's a propellant for growth in the SMB. And then Complete, it's not just the original, modules that we laid out with Complete, but we've added identity to it. And you can see where we're going with how we're thinking about Complete. And so that is a big driver for growth for the SMB space. As a matter of fact, my entire corporate sales team, so those are the folks that, you know, are dealing with, let's say, 2,500 endpoints or less, they start with that. The first thing out of their mouth in terms of what they're trying to sell to customers is Complete.
And they can either go up or down in terms of what's in the Complete or if they're not going with Complete, or they start their journey with something other than Complete, and then go to Complete. Part of our success is taking out friction on the sales process side, so we have something called trial to pay. So a trial to pay is what it sounds like. So a customer can come onto our website, try the technology, press the big red button, buy it. The good news is, with us, we know who it is, and we're tethered to the customer, so we know who bought it. And they could have bought, let's say, AV. Well, then an inside, or we call it a corporate salesperson, would then be able to call them up and say, "Hey, Mr. or Mrs. Customer, we see that you bought AV.
Let me tell you about Complete. And so you can see how the upsell motion works”, and it's worked really well. And we've taken deals that wouldn't seem very much, maybe $8,000-$9,000, and turned those into $50,000, $60,000, $70,000 because they went from one product or two products to Complete. So that's how we think about SMB and our, and our opportunity there.
That's interesting about the packaging. I guess you've gone from three products in 2016, I think, or three modules, to 27, or maybe it's higher at this.
27, that's the number.
27. Okay, I lost count. But how do you think about the comfortability of your salesforce to sell that, right? 'Cause that's a lot broader of a knowledge base and sometimes a broader of a customer who you're talking to at the company base.
Yeah. So it's a great question. So we're trying to take a page out of, I think, the greatest company on the planet for bundling and packaging and software that we've ever seen, which is Microsoft, and figure out, you know, how to, you know, bundle it in such a way that it makes it easier for not only our own sales team, but for our partner's sales team as well. So my goal, at the end of the day, if I know that a partner has their salesforce or their sales engineers who can be at the same level as mine, I've won. I've won. Some are, some I have some work to do. How do you do it?
It's through training, keeping it simple, trying to make it so that it rolls off the tongue from a salesperson or a sales engineer perspective, so that the customer can absorb it quickly. The key, as you guys know, from a sales perspective, is listen to the customer, absorb it quickly, and have a really quick response to meet that need. Not try and sell something that the customer doesn't want, but selling what the customer wants. Over time, you can sell the customer more, especially with a real platform like CrowdStrike. So that's our goal, is to keep it really simple for the SMB, making sure that they really understand it, and all of our customers. Making sure they understand it, but it has to start with our own sales team.
So we spend a lot of time on training, and we do have some groups that are specialized. So, you know, every company, not every company, a lot of companies in software, not only in security, they'll have what's known as an overlay team. So a new product comes out, or you bought a new product, you generally have an overlay team who really understands that product out of the gate, and they'll work with the sales team for a year, or two years, or three years, or whatever it is, and then it just goes back into the, the foundation of the core. But in that sense, you've got experts who know that specific type of technology, like identity. And so that, to me, is a motion that works really well.
What happens is, those folks who are in that technology are then educating the broader base, sales force, which has worked for us.
Endpoint has always been extremely competitive, but it kind of feels like the rhetoric has died down a little bit this year, I guess. What, what are you seeing competitively in the markets? How has pricing been? And then, you know, maybe you could also add in just you guys versus Microsoft as well, if I could.
Man, that narrative has really kind of quieted down, right? The Microsoft narrative. So for us, let's actually just start with Microsoft, right? That is our biggest competitor. Microsoft, again, has done a great job on the packaging and pricing, and they've been at it for, what, 40 years. So for us, for Microsoft, it starts with the crisis of trust, which has really taken hold, right? So back in, what was it?
July, Microsoft came out and said, "Hey, we know that some adversaries have breached 25 companies or enterprises, and they did it through their Outlook accounts." Well, then fast-forward to September, the State Department came out and said, "Yeah, Microsoft did that, and we had tens of thousands of emails being breached with sensitive information on it." CIOs and CSOs, they looked at it then said, "Uh-huh, the federal government's getting breached by Microsoft. You know, what's preventing us from getting breached?" So there is this crisis of trust, and then it goes back to the tech. You know, Microsoft tech, it's 2004-year-old tech. It's legacy tech. Has it gotten better over the years? For sure. Has it been at the same pace as the adversaries in terms of sophistication? No, no chance.
So it's this notion of the crisis of trust, coupled with inferior tech, coupled with pricing. So we call it gotcha pricing. "Hey, here's your E5 license. Hey, Defender's free." Nothing's free. You know Defender, they got 10 modules, you got a whole bunch of people. It's complicated, it's not great in a heterogeneous environment, and you kind of need a different type of software to calculate what your true bill is and that's a problem. And if you were at our Falcon, and we put a gentleman on stage to talk about just anything, and he zoomed in on Microsoft and the challenges he has with their pricing. He was really irate, and we didn't do anything.
We just put him on stage, and he went off, and he went through it, and he actually hired a forensic accountant to go figure it out and was so frustrated, he said, "I'm done." It's a true story.
I think we have a minute and a half left. So just, you know, as you think through, obviously, you're giving nothing officially for fiscal 2025, but just, you know, where are the biggest investment areas, you know, how do we think about hiring? And then on the flip side, maybe in the product portfolio, where are the areas that have the most potential for upside?
Okay, let's start with the last one first, product portfolio. Really excited about the following: cloud, we've talked about it, the acquisition. Data security, really excited about that. Legacy DLP is a joke, and we feel that we've got the right technology to completely disrupt that market, analogous to what we did in AV. LogScale or Next-Gen SIEM, we think this is completely ripe for disruption, given also what happened in the marketplace. We got a gift, let's go take advantage of the gift. It's already a real business for us, on $100 million. Let's go, right? We also think that, you know, when I think about this Charlotte AI, I think this thing is gonna have a lot of legs.
I don't know how meaningful next year the Net New ARR will be, but this is going to be something that's going to really, really matter for CrowdStrike. So that's on the technology side. Hiring side, you know, we told the world that we're gonna slow down our pace of hiring. Last year, we did. We think there's an opportunity to now increase the pace a little bit. You know, we're seeing some volume of resumes coming from, you know, companies that were acquired. We're seeing a lot of folks that are saying, "Okay, the consolidation is actually working." You know, the shiny new star of a private company that's touting crazy multiples, and it's gonna change the world, well, guess what? They're not.
Maybe you want to go to a company like CrowdStrike that has a tremendous amount of upside from a career perspective, and if they believe in terms of where we're going, what we're doing, you know, upside and potentially, how they think about, you know, the markets, which no one has a crystal ball, but... So, you know, we are gonna hire more. At the end of the day, everybody has seen our margins, right? Let me be super clear. We are gonna do everything in our power to grow as fast and as much as we possibly can next year. Having said that, it's going to be always with an eye to the bottom. By the way, it's really, really hard to bring in great engineers. It takes time. We go through a rigorous process.
And so, as much as I want to bring in the engineers as fast as I can, I have limitations, capacity limitations, but make no mistake about it, I am going to fund it. I am funding it. Go hire now. I'm actually opening up recs for next year now, 'cause I want to get the folks in, 'cause we think we've got this opportunity to take advantage of the markets, because of the consolidation play. We don't think that the market, global market, and broader market is gonna get any better. That's our assumption. Whether it does or not, I don't know, but the assumption is it's not, but we feel that we've got a competitive edge because of our true platform play.
Awesome. Burt, always a pleasure. Thank you.
Joe, thank you. Pleasure. Thanks.