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March 22, 2019
George Kurtz
Chief Executive Officer
CrowdStrike Holdings, Inc.
150 Mathilda Place, Suite 300
Sunnyvale, CA 94086
Re: CrowdStrike Holdings, Inc.
Draft Registration Statement on Form S-1
Submitted February 25, 2019
CIK No. 0001535527
Dear Mr. Kurtz:
We have reviewed your draft registration statement and have the
following comments. In
some of our comments, we may ask you to provide us with information so we may
better
understand your disclosure.
Please respond to this letter by providing the requested information and
either submitting
an amended draft registration statement or publicly filing your registration
statement on
EDGAR. If you do not believe our comments apply to your facts and circumstances
or do not
believe an amendment is appropriate, please tell us why in your response.
After reviewing the information you provide in response to these comments
and your
amended draft registration statement or filed registration statement, we may
have additional
comments.
Draft Registration Statement on Form S-1 submitted February 25, 2019
Prospectus Summary, page 1
1. Please revise your prospectus summary to clarify that your executive
officers, directors
and current 5% or more stockholders and their respective affiliates have
substantial
control over you, beneficially owning more than 73% of your common stock
outstanding
on an as-converted basis. Please also clarify in your summary that your
three principal
stockholders and their affiliates, in aggregate, beneficially own over
62% of your common
stock outstanding on an as-converted basis.
2. On pages 7 and 8, you indicate that you believe your directly
addressable opportunity in
the Managed Security Services segment to be $4.4 billion in 2019 and is
expected to reach
$5.1 billion in 2021. Please disclose the basis for these estimates,
including material
George Kurtz
FirstName LastNameGeorge Kurtz
CrowdStrike Holdings, Inc.
Comapany2019
March 22, NameCrowdStrike Holdings, Inc.
March 22, 2019 Page 2
Page 2
FirstName LastName
assumptions, and clarify why your Managed Security Services directly
addressable
opportunity is smaller than the industry report data you provided on
page 7. Further,
please clarify here or on page 60 whether you believe the market and
industry data is
reasonable.
Management's Discussion and Analysis of Financial Condition and Results of
Operations
Key Metrics, page 78
3. You indicate on page 78 that you expect to increase the number of your
small and
medium-sized business customers. Your growth strategy involves both
acquiring new
customers and further penetrating existing customers through your
land-and-expand
strategy. Please clarify how you define small and medium-sized
customers and consider
stratifying your customer base to indicate the portion of customers
that are small and
medium size as part of your Subscription Customers key metric table.
Results of Operations
Nine Months Ended October 31, 2017 and 2018
Revenue, page 87
4. Your disclosure indicates that the growth in subscription revenue for
the nine months
ended October 31, 2018, a 144% increase, was primarily attributable to
the increase in
your subscription customer base. We further note your disclosure on
page 83 that
subscription revenue is driven primarily by the number of subscription
customers, the
number of endpoints per customer, and the number of cloud modules
included in the
subscription. In addition, we note your Dollar-Based Retention Rates
table on page 76
and your Cloud Module Adoption table on page 77. Given the growth rate
presented in
each of these tables, it appears that your revenue growth is also
attributable to increases in
revenue from existing customers. Please revise your disclosures to
separately quantify the
amount of the increase that is from existing customers and from new
customers. Your
disclosures should also quantify the underlying drivers that are
increasing existing
customer sales such as disclosing the amount that is attributable to
an increase in the
number of endpoints and the number of cloud modules. Refer to Section
III.D of SEC
Release No. 33-6835. Similar concerns apply to your Revenue
disclosures for the fiscal
years ended January 31, 2017 and 2018 on page 92.
Our Solution, page 113
5. Your disclosure indicates that you recently launched the CrowdStrike
Store which
introduces a unified Security Cloud ecosystem of trusted partners and
applications to your
customers. Tell us if you receive a commission or similar fee if a
customer purchases an
application from the CrowdStrike Store. Tell us and disclose, if
material, your revenue
recognition policy for this revenue stream.
Management
George Kurtz
FirstName LastNameGeorge Kurtz
CrowdStrike Holdings, Inc.
Comapany2019
March 22, NameCrowdStrike Holdings, Inc.
March 22, 2019 Page 3
Page 3
FirstName LastName
Board of Directors, page 133
6. Warburg Pincus will have the right to proportionately designate a
number of directors as
compared to the number of shares it holds if it beneficially owns a
minimum of 5% of the
total shares of common stock outstanding. Warburg Pincus and its
affiliates currently
beneficially owns approximately 30.8% of the total common stock
outstanding on an as-
converted basis and has designated two current board members, Messrs.
Davis and Landy,
to the current board of nine directors. Please clarify the beneficial
ownership percentages
that Warburg Pincus must hold to have the right to designate 2 or 3
directors before the
next annual meeting.
7. In section 2(g) of your Stockholders Agreement, Exhibit 4.1, certain
investors have board
observer rights, including CapitalG, an affiliate of Google LLC and a
principal
stockholder. Please describe your board observer rights and identify
anyone designated as
a board observer pursuant to this provision of your Stockholders
Agreement.
Stockholders Agreement, page 152
8. While certain provisions of the Stockholders Agreement will expire
upon the close of the
IPO, the Stockholders Agreement provides detailed provisions of how
the board, its
committees, and board observers were nominated and appointed. To the
extent current
board members or committee members were appointed pursuant to the
Stockholders
Agreement, please clarify this in your registration statement.
9. Please expand your description of the Stockholders Agreement to
discuss material
provisions that will survive the close of your IPO, such as the
composition of the board,
the board committees, and use of names provisions.
Notes to Consolidated Financial Statements
Note 13. Geographic Information , page F-51
10. Please clarify if any foreign countries individually represented 10%
or more of revenue in
the periods presented. Refer to ASC 280-10-50-41.a.
General
11. Please supplementally provide us with copies of all written
communications, as defined in
Rule 405 under the Securities Act, that you, or anyone authorized to
do so on your behalf,
present to potential investors in reliance on Section 5(d) of the
Securities Act, whether or
not they retain copies of the communications.
12. If you intend to use graphics in your prospectus, other than those
already provided, please
submit such materials to the staff on a supplemental basis and provide
any support for any
claims contained therein. Please refer to Question 101.02 of our
Compliance and
Disclosure Interpretations relating to Securities Act Forms available
on our website.
George Kurtz
CrowdStrike Holdings, Inc.
March 22, 2019
Page 4
You may contact Ryan Rohn, Staff Accountant, at (202) 551-3739 or
Stephen Krikorian,
Accounting Branch Chief, at (202) 551-3488 if you have questions regarding
comments on the
financial statements and related matters. Please contact Edwin Kim,Staff
Attorney, at (202) 551-
3297 or Barbara C. Jacobs, Assistant Director, at (202) 551-3735 with any other
questions.
Sincerely,
FirstName LastNameGeorge Kurtz Division of
Corporation Finance
Office of
Information Technologies
Comapany NameCrowdStrike Holdings, Inc.
and Services
March 22, 2019 Page 4
cc: Alan Denenberg, Esq.
FirstName LastName