Hi, it’s Roman from Partner Insight. Welcome to my weekly newsletter, where I deconstruct winning Cloud GTM strategies and the latest trends in the rapidly evolving world of cloud marketplaces.
Today we're spotlighting CrowdStrike's cloud marketplace and partnerships strategies and insights that led to their remarkable efficiency and success.
But before we dive in, 💡 a gentle reminder: Cohort 5 of our Cloud GTM Leader Course is starting on April 9th - it's your last chance to join us. Scroll below for more details and a special offer exclusive to our newsletter readers.
Now, let's dive in CrowdStrike's playbook.
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The Secret Behind CrowdStrike's Efficiency: Partnerships & Marketplaces
The biggest cloud marketplace success in the last years: CrowdStrike.
Their partner playbook is a must study. Here is a breakdown + 3 impressive, but less known partner stats.
3 Key Partner Stats:
CrowdStrike is Number 1 in SaaS Efficiency according to the BVP Cloud Index.
Partners source ~62% of the company’s new logos and an impressive 56% of Cloud ARR.
The “vast majority” of their AWS Cloud Marketplace business (which continues to accelerate after exceeding $1B) also transacts through resellers and SIs.
Let’s break them down.
#1 in Efficiency and Growth at Scale
CrowdStrike demonstrates remarkable growth and efficiency. Just weeks ago, they announced their stellar FY24:
$3.44B in ARR, with an impressive +34% Y/Y
Free cash flow - a record 33% of revenue
Net Revenue Retention ~120% - slightly lower than before but still excellent
Market Cap: $76.3B - Up 144% (!!!) in the last 12 months
In the world of the Rule of 40, CrowdStrike scores 67.
The Rule of 40 is a benchmark for successful SaaS businesses - the combined revenue growth rate and profit margin should equal or exceed 40%. In CrowdStrike's case, their combination of growth and FCF margins ranks number 1 in the BVP Cloud Index, which tracks the performance of leading SaaS companies.
How do they do that?
Partnership: A Top 5 Strategic Pillar
CrowdStrike, of course, has an incredible product and a great niche - cybersecurity, which has become even more critical with the explosion of AI.
But one of the secrets to their efficiency is that they have been a partner-first company. Moreover, CrowdStrike was among the first to recognize the potential of hyperscaler marketplaces.
Now they have effectively unified these two elements - channel partners and cloud marketplaces “for ease, speed, and end-customer value” in a powerful Go-To-Market strategy.
CrowdStrike considers partners among the 5 key pillars that will lead them to $10Bn in ARR.
“The right platform, solutions, and go-to-market make us the partner ecosystem's leading choice.” noted George Kurtz - Co-Founder and CEO.
The Majority of New Logos from Partners
In November ‘23, George Kurtz, highlighted that partners sourced the majority of new logos. He also stressed that CrowdStrike is the fastest-growing cybersecurity vendor in the channel.
“Partners bring CrowdStrike into new accounts and drive platform adoption in existing customers. Year to date, 62% of all our new logo wins were partner-sourced. The efficacy and success of our channel-led growth was reported by Canalys, the channel's leading industry analyst firm. In their most recent cybersecurity research, Canalys reported CrowdStrike's endpoint market share as No.1, ahead of Microsoft. In addition, the research highlights CrowdStrike as the fastest-growing cybersecurity vendor in the channel, ahead of Microsoft and Palo Alto Networks, among others. ”
AWS Marketplace Momentum: Beyond $1 Billion
In March ‘24, CEO explained that after surpassing $1Bn in AWS marketplace sales, their momentum is not only maintaining but actually accelerating.
“Our AWS Marketplace business continues to accelerate at scale, surpassing $1 billion in sales. The AWS Marketplace continues to be one of the fastest-growing routes to market.”
What’s perhaps less known but insightful is that CrowdStrike has successfully combined channel and marketplace efforts.
“vast majority of our Marketplace business also transacts through resellers and SIs where we've unified partners and cloud marketplaces for ease, speed, and end customer value” - explained CEO.
Cloud: Biggest TAM and Growth Driver
For CrowdStrike, cloud security is very strategic, being the fastest-growing category within their product portfolio. In 4Q24, this category grew nearly 200%, with a record Net New ARR. CrowdStrike also signed an 8-figure deal with a hyperscaler.
CrowdStrike also considers cloud their largest TAM and their number one priority going forward. Cloud Security's market potential is nearly equivalent to the size of other categories combined.
What’s interesting in Cloud the majority or 56% of CrowdStrike ARR is sourced (not influenced) by partners - a notable achievement.
Sources: company (slides 2Q23), my opinion.
Building Partner Program Momentum
The CEO shared that partners in their network are now creating services around CrowdStrike products and “generating dollars”. However, reaching this stage took time and effort.
“We're able to sell our product through their channels where they meet the customers. And I think we've taken a very innovative and effective approach in our partnering strategy, and this is something that we've really worked on over the last year or 18 months, and we're bearing the fruit of it right now.”
A quick look back at some of CrowdStrike's partnership initiatives from last year, which likely contributed to accelerating traction with partners:
In 2022, CrowdStrike established an Alliance Program Management Office. Michael Rogers, CrowdStrike's VP of Global Alliances, explained then:
“That team is focused on building out our next generation partner program - processes, it's ring fencing, but it's most importantly, identifying capabilities for partners to expand, to reduce friction and grow their business together with CrowdStrike”.
Around the same time, CrowdStrike launched Program Harmony:
Michael Rogers explained that this program were “taking the majority of the partner types and starting to look at it with the customer in the middle. Multiple partners can play a role on a journey to bringing a customer on board initially, to supporting that customer going forward. And they can all participate and be rewarded for their contribution to that opportunity.”
Today, CrowdStrike's exceptional growth and market efficiency underscore the pivotal role of partners and cloud marketplaces in scaling SaaS businesses. By sourcing >60% of new logos and 56% of their Cloud ARR through partners, CrowdStrike shows the potential of combining marketplace focus with channel partners, like SIs and resellers.
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