Case 1:24-cv-00857-RP Document 1 Filed 07/30/24 Page 1 of 29
`
`UNITED STATES DISTRICT COURT
`WESTERN DISTRICT OF TEXAS
`AUSTIN DIVISION
`
`PLYMOUTH COUNTY RETIREMENT
`ASSOCIATION, Individually and on Behalf of All
`Others Similarly Situated,
`
`Civil Action No. 24-cv-857
`
`Plaintiff,
`
`v.
`
`CROWDSTRIKE HOLDINGS, INC., GEORGE
`KURTZ, and BURT W. PODBERE,
`
`Defendants.
`
`CLASS ACTION
`
`DEMAND FOR JURY TRIAL
`
`CLASS ACTION COMPLAINT FOR VIOLATIONS
`OF THE FEDERAL SECURITIES LAW
`
`

`

`Case 1:24-cv-00857-RP Document 1 Filed 07/30/24 Page 2 of 29
`
`I.
`
`INTRODUCTION
`
`Plaintiff Plymouth County Retirement Association (“Plaintiff”), individually and on behalf
`
`of all others similarly situated, allege the following based upon personal knowledge as to Plaintiff’s
`
`own acts and upon information and belief as to all other matters based on the investigation
`
`conducted by and through counsel, which included, among other things, a review of the public
`
`U.S. Securities and Exchange Commission (“SEC”) filings of CrowdStrike Holdings, Inc.
`
`(“CrowdStrike” or the “Company”), Company press releases, conference call transcripts, investor
`
`presentations, analyst and media reports, and other public reports and information regarding the
`
`Company. Plaintiff believes that substantial additional evidentiary support exists for the
`
`allegations set forth herein, which evidence will be developed after a reasonable opportunity for
`
`discovery.
`
`II.
`
`NATURE OF THE ACTION
`
`1.
`
`This is a federal securities class action on behalf of a class of all persons and entities
`
`who purchased or otherwise acquired CrowdStrike Class A common stock between November 29,
`
`2023 and July 29, 2024, inclusive (the “Class Period”), seeking to pursue remedies under Sections
`
`10(b) and 20(a) of the Securities Exchange Act of 1934 (the “Exchange Act”), and SEC Rule 10b-
`
`5, promulgated thereunder.
`
`2.
`
`CrowdStrike, headquartered in Austin, Texas, is a global cybersecurity company
`
`that provides software that helps prevent data breaches. CrowdStrike’s customers are major
`
`corporations across several industries including airlines, banks, hospitals, and telecommunications
`
`providers as well as government entities. CrowdStrike’s main product is the Falcon software
`
`platform, which purportedly uses artificial intelligence and machine learning technologies to
`
`detect, prevent, and respond to security breach threats. The Falcon software is embedded in the
`
`computers of CrowdStrike’s customers and requires constant updates.
`
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`Case 1:24-cv-00857-RP Document 1 Filed 07/30/24 Page 3 of 29
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`3.
`
`Throughout the Class Period, Defendants (defined herein) repeatedly touted the
`
`efficacy of the Falcon platform while assuring investors that CrowdStrike’s technology was
`
`“validated, tested, and certified.” This complaint alleges that these statements were false and
`
`misleading because Defendants had failed to disclose that: (1) CrowdStrike had instituted deficient
`
`controls in its procedure for updating Falcon and was not properly testing updates to Falcon before
`
`rolling them out to customers; (2) this inadequate software testing created a substantial risk that an
`
`update to Falcon could cause major outages for a significant number of the Company’s customers;
`
`and (3) such outages could pose, and in fact ultimately created, substantial reputational harm and
`
`legal risk to CrowdStrike. As a result of these materially false and misleading statements and
`
`omissions, CrowdStrike stock traded at artificially high prices during the Class Period.
`
`4.
`
`Beginning on July 19, 2024, investors learned about critical issues with
`
`CrowdStrike’s technology when a single update pushed by CrowdStrike caused outages for
`
`millions of users of Microsoft Windows devices worldwide, including financial institutions,
`
`government entities, and corporations (the “CrowdStrike Outage”). Further, CrowdStrike
`
`disclosed that the outages had left users vulnerable to potential hacking threats. On this news,
`
`shares of CrowdStrike fell $38.09, or 11%, to close at $304.96 on July 19, 2024
`
`5.
`
`Then, on July 22, 2024, the fallout of the CrowdStrike outage was further revealed
`
`as Congress called on Defendant Kurtz to testify regarding the crisis and the Company’s stock
`
`rating was downgraded by analysts such as Guggenheim and BTIG. On this news, shares of
`
`CrowdStrike fell $41.05, or 13.5%, to close at $263.91 on July 22, 2024.
`
`6.
`
`Investors continued to learn about the legal risk Defendants had concealed on July
`
`29, 2024, as news outlets reported that Delta Air Lines had hired prominent attorney David Boies
`
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`Case 1:24-cv-00857-RP Document 1 Filed 07/30/24 Page 4 of 29
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`to seek damages from the Company following the CrowdStrike Outage. On this news, shares of
`
`CrowdStrike fell $25.16, or 10%, to close at $233.65 on July 30, 2024.
`
`7.
`
`These stock declines following the disclosure of Defendants’ fraud caused
`
`substantial damages to the Company’s investors.
`
`8.
`
`Since the CrowdStrike Outage, public commentary from cybersecurity experts has
`
`provided evidence that CrowdStrike was taking insufficient precautions regarding such updates,
`
`including running insufficient tests.
`
`III.
`
`JURISDICTION AND VENUE
`
`9.
`
`The claims asserted herein arise under and pursuant to Sections 10(b) and 20(a) of
`
`the Exchange Act, 15 U.S.C. §§ 78j(b) and 78t(a), and Rule 10b-5 promulgated thereunder by the
`
`SEC, 17 C.F.R. § 240.10b-5.
`
`10.
`
`This Court has jurisdiction over the subject matter of this action under 28 U.S.C. §
`
`1331 and Section 27 of the Exchange Act, 15 U.S.C. § 78aa.
`
`11.
`
`Venue is proper in this District under Section 27 of the Exchange Act, 15 U.S.C. §
`
`78aa, and 28 U.S.C. § 1391(b), because CrowdStrike is headquartered in this District, and because
`
`many of the acts and conduct that constitute the violations of law complained of herein, including
`
`the dissemination to the public of materially false and misleading information, occurred in this
`
`District.
`
`12.
`
`In connection with the acts alleged in this complaint, Defendants, directly or
`
`indirectly, used the means and instrumentalities of interstate commerce, including, but not limited
`
`to, the mails, interstate telephone communications, and the facilities of the national securities
`
`markets.
`
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`Case 1:24-cv-00857-RP Document 1 Filed 07/30/24 Page 5 of 29
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`IV.
`
`PARTIES
`
`13.
`
`As indicated on the Certification attached herewith, Plaintiff purchased shares of
`
`CrowdStrike stock during the Class Period and suffered damages as a result of the violations of
`
`the federal securities laws alleged herein.
`
`14.
`
`Defendant CrowdStrike is incorporated in Delaware and headquartered in Austin,
`
`Texas. CrowdStrike common stock trades on the NASDAQ under the ticker symbol “CRWD.”
`
`15.
`
`Defendant George Kurtz was the chief executive officer and President of
`
`CrowdStrike at all relevant times.
`
`16.
`
`Defendant Burt W. Podbere was the chief financial officer of CrowdStrike at all
`
`relevant times.
`
`17.
`
`Defendants Kurtz and Podbere are collectively referred to as the “Individual
`
`Defendants.” The Individual Defendants, because of their positions with the Company, possessed
`
`the power and authority to control the contents of CrowdStrike’s reports to the SEC, press releases,
`
`and presentations to securities analysts, money and portfolio managers, and institutional investors,
`
`i.e., the market. Each Individual Defendant was provided with copies of the Company’s reports
`
`alleged herein to be misleading prior to, or shortly after, their issuance and had the ability and
`
`opportunity to prevent their issuance or cause them to be corrected. Because of their positions and
`
`access to material non-public information available to them, each of the Individual Defendants
`
`knew that the adverse facts specified herein had not been disclosed to, and/or were being concealed
`
`from, the public, and that the positive representations that were being made were then materially
`
`false and/or misleading.
`
`18.
`
`CrowdStrike and the Individual Defendants are collectively referred to herein as
`
`“Defendants.”
`
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`Case 1:24-cv-00857-RP Document 1 Filed 07/30/24 Page 6 of 29
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`CrowdStrike is liable for the acts of the Individual Defendants, and its employees
`19.
`under the doctrine of respondeat superior and common law principles of agency as all the wrongful
`acts complained of herein were carried out within the scope of their employment with
`authorization.
`The scienter of the Individual Defendants, and other employees and agents of the
`20.
`Company are similarly imputed to CrowdStrike under respondeat superior and agency principles.
`
`V.
`
`COMPANY BACKGROUND
`
`21.
`
`Founded in 2011, CrowdStrike is incorporated in Delaware and headquartered in
`
`Austin, Texas. CrowdStrike is a global cybersecurity company that provides software that helps
`
`prevent data breaches. CrowdStrike’s customers are major corporations across several industries
`
`including airlines, banks, hospitals, and telecommunications providers as well as government
`
`entities.
`
`22.
`
`CrowdStrike’s main product is the Falcon software platform, which purportedly
`
`uses artificial intelligence and machine learning technologies to detect, prevent, and respond to
`
`security breach threats. CrowdStrike claims that the key to the Company’s technological and
`
`business advantages is that Falcon can keep pace with cybersecurity threats through rapid
`
`innovation. CrowdStrike claims this platform constantly gathers data and analyzes cybersecurity
`
`events to “create actionable data, identify shifts in adversary tactics, and automatically prevent
`
`threats in real-time across our customer base.” CrowdStrike further claims its platform is
`
`“continuously improv[ing],” to “keep customers ahead of changing adversary tactics.”
`
`23.
`
`The Falcon software is embedded in the computers of CrowdStrike’s customers and
`
`requires constant updates. CrowdStrike updates its Falcon platform in at least two ways. First,
`
`there are “Sensor Content” updates that directly update Falcon’s sensor. Second, there are “Rapid
`
`Response Content” updates that update how those sensors behave in trying to detect threats.
`
`5
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`Case 1:24-cv-00857-RP Document 1 Filed 07/30/24 Page 7 of 29
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`VI. MATERIAL MISREPRESENTATIONS AND OMISSIONS DURING THE CLASS
`PERIOD
`
`24.
`
`The Class Period begins on November 29, 2023, the day after CrowdStrike
`
`announced its financial results for the third quarter of fiscal year 2024.1 In connection with the
`
`release of these results, Defendants participated in a related earnings call with analysts and
`
`investors. On that call, Defendant Kurtz touted Falcon, claiming it “has made cybersecurity easy
`
`and effective for small businesses to the world’s largest enterprises” and that the “drumbeat of
`
`innovation was loud and clear with multiple releases and announcements showcasing CrowdStrike
`
`as the XDR leader, including the Falcon platform Raptor release.” Defendant Kurtz claimed that
`
`“from hygiene to patching, Falcon for IT lets customers consolidate multiple use cases and replace
`
`legacy products with our single-agent architecture,” and touted the Company’s “new Falcon Data
`
`Protection module that liberates customers from legacy [data loss prevention] products with
`
`modern, frictionless data security.”
`
`25.
`
`Also on November 29, 2023, the Company filed with the SEC a Form 10-Q
`
`reporting the Company’s financial and operational results for the third quarter of fiscal year 2024
`
`ended October 31, 2023 (the “Q3 2024 10-Q”).
`
`26.
`
`The Q3 2024 10-Q identified risk factors to the Company’s business, including:
`
`If our solutions fail or are perceived to fail to detect or prevent
`incidents or have or are perceived to have defects, errors, or
`vulnerabilities, our brand and reputation would be harmed, which
`would adversely affect our business and results of operations.
`
`Real or perceived defects, errors or vulnerabilities in our Falcon
`platform and cloud modules, the failure of our platform to detect or
`prevent incidents, including advanced and newly developed attacks,
`misconfiguration of our solutions, or the failure of customers to take
`action on attacks identified by our platform could harm our
`
`
`1 CrowdStrike’s fiscal year ends on January 31 each year.
`
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`Case 1:24-cv-00857-RP Document 1 Filed 07/30/24 Page 8 of 29
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`reputation and adversely affect our business, financial position and
`results of operations.
`
`. . .
`
`We rely on third-party data centers, such as Amazon Web Services,
`and our own colocation data centers to host and operate our
`Falcon platform, and any disruption of or interference with our
`use of these facilities may negatively affect our ability to maintain
`the performance and reliability of our Falcon platform which
`could cause our business to suffer.
`
`Our customers depend on the continuous availability of our Falcon
`platform. We currently host our Falcon platform and serve our
`customers using a mix of third-party data centers, primarily Amazon
`Web Services, Inc., or AWS, and our data centers, hosted in
`colocation facilities. Consequently, we may be subject to service
`disruptions as well as failures to provide adequate support for
`reasons that are outside of our direct control. We have experienced,
`and expect that in the future we may experience interruptions, delays
`and outages in service and availability from time to time due to a
`variety of factors, including infrastructure changes, human or
`software errors, website hosting disruptions and capacity
`constraints.
`
`The following factors, many of which are beyond our control, can
`affect the delivery, availability, and the performance of our Falcon
`platform:
`
`. . .
`
`• errors, defects or performance problems in our software,
`including third-party software incorporated in our software;
`
`•
`
`•
`
`•
`
`improper deployment or configuration of our solutions;
`
`the failure of our redundancy systems, in the event of a service
`disruption at one of our data centers, to provide failover to other
`data centers in our data center network; and
`
`the failure of our disaster recovery and business continuity
`arrangements.
`
`The adverse effects of any service interruptions on our reputation,
`results of operations, and
`financial condition may be
`disproportionately heightened due to the nature of our business and
`the fact that our customers have a low tolerance for interruptions of
`any duration. Interruptions or failures in our service delivery could
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`Case 1:24-cv-00857-RP Document 1 Filed 07/30/24 Page 9 of 29
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`result in a cyberattack or other security threat to one of our
`customers during such periods of
`interruption or failure.
`Additionally, interruptions or failures in our service could cause
`customers to terminate their subscriptions with us, adversely affect
`our renewal rates, and harm our ability to attract new customers.
`Our business would also be harmed if our customers believe that a
`cloud-based SaaS-delivered endpoint security solution is unreliable.
`While we do not consider them to have been material, we have
`experienced, and may in the future experience, service interruptions
`and other performance problems due to a variety of factors. The
`occurrence of any of these factors, or if we are unable to rapidly and
`cost-effectively fix such errors or other problems that may be
`identified, could damage our reputation, negatively affect our
`relationship with our customers or otherwise harm our business,
`results of operations and financial condition.
`
`(emphasis in original).
`
`27.
`
`Appended as an exhibit to the Q3 2024 10-Q were signed certifications pursuant to
`
`the Sarbanes-Oxley Act of 2002 (“SOX”), wherein the Individual Defendants certified that “[t]he
`
`[Q3 2024 10-Q] fully complies with the requirements of Section 13(a) or 15(d) of the [Exchange
`
`Act]” and that the “information contained in the [Q3 2024 10-Q] fairly presents, in all material
`
`respects, the financial condition and results of operations of [the Company].”
`
`28.
`
`Then, on March 5, 2024, the Company announced its financial results for its fiscal
`
`year 2024 ended January 31, 2024. As part of these results, Defendants participated in a related
`
`earnings call the same day. On that call, Defendant Kurtz again touted Falcon, claiming it “is
`
`validated, tested and certified.” Defendant Kurtz also highlighted CrowdStrike’s “execution and
`
`discipline across the business.”
`
`29.
`
`Then, on March 7, 2024, the Company filed with the SEC a Form 10-K reporting
`
`the Company’s financial and operational results for the fiscal year 2024 ended January 31, 2024
`
`(the “2024 10-K”).
`
`8
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`Case 1:24-cv-00857-RP Document 1 Filed 07/30/24 Page 10 of 29
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`30.
`
`The 2024 10-K stated:
`
`We offer our customers compelling business value that includes
`ease of adoption, rapid time-to-value, superior efficacy rates in
`detecting threats and preventing breaches, and reduced total cost of
`ownership by consolidating legacy, siloed, and multi-agent security
`products in a single solution. We also allow thinly-stretched
`security organizations to automate previously manual tasks, freeing
`them to focus on their most important objectives. With the Falcon
`platform, organizations can transform how they combat threats,
`transforming from slow, manual, and reactionary to fast, automated,
`and predictive, while gaining visibility across the threat lifecycle.
`
`Key benefits of our approach and the CrowdStrike Falcon platform
`include:
`
`. . .
`
`•High Efficacy, Low False Positives: The vast telemetry of the
`Security Cloud and the best practices employed in continually
`training our AI models results in industry-leading efficacy rates and
`low false positives.
`
`•Consolidation of Siloed Products: Integrating and maintaining
`numerous security products creates blind spots that attackers can
`exploit, is costly to maintain and negatively impacts user
`performance. Our cloud-native platform approach gives customers
`a unified approach to address their most critical areas of risk
`seamlessly. We empower customers to rapidly deploy and scale
`industry leading technologies across endpoint detection and
`response (“EDR”) and Extended Detection and Response (“XDR”),
`Identity Threat Protection, Threat
`Intelligence, Exposure
`Management, Cloud Security, Application Security Posture
`Management, Next-Generation SIEM
`and Modern Log
`Management, and IT Automation from a single platform.
`
`•Reducing Agent Bloat: Our single intelligent lightweight agent
`enables frictionless deployment of our platform at scale, enabling
`customers to rapidly adopt our technology across any type of
`workload running on a variety of endpoints. The agent is non-
`intrusive to the end user, requires no reboots and continues to protect
`the endpoint and track activity even when offline. Through our
`single lightweight agent approach, customers can adopt multiple
`platform modules to address their critical areas of risk without
`burdening the endpoint with multiple agents. Legacy approaches
`often require multiple agents as they layer on new capabilities. This
`can severely impact user performance and create barriers to security.
`
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`Case 1:24-cv-00857-RP Document 1 Filed 07/30/24 Page 11 of 29
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`•Rapid Time to Value: Our cloud-native platform was built to
`rapidly scale industry leading protection across the entire enterprise,
`eliminating lengthy implementation periods and professional
`services engagements that next-gen and legacy competitors may
`require. Our single agent, collect once and re-use many times
`approach enables us to activate new modules in real time.
`
`•Elite Security Teams as a Force Multiplier: As adversaries continue
`to employ sophisticated malwareless attacks that exploit user
`credentials and identities, automation and autonomous security are
`no longer sufficient on their own. Stopping today’s sophisticated
`attacks requires a combination of powerful automation and elite
`threat hunting. Falcon Complete provides a comprehensive
`monitoring, management, response, and remediation solution to our
`customers and is designed to bring enterprise level security to
`companies that may lack enterprise level resources.
`
`CrowdStrike Falcon OverWatch, part of CrowdStrike Counter
`Adversary Operations, combines world-class human intelligence
`from our elite security experts with the power of the Falcon
`platform. OverWatch is a force multiplier that extends the
`capabilities and improves the productivity of our customers’
`security teams. Because our world-class team can see attacks across
`our entire customer base, their expertise is enhanced by their
`constant visibility into the threat landscape. Additionally, the
`insights of our OverWatch team can then be leveraged by the Falcon
`platform to further enhance its autonomous capabilities, creating a
`positive feedback loop for our customers.
`
`•Alleviating the Skills Shortage through Automation: CrowdStrike
`automates manual tasks to free security teams to focus on their most
`important job – stopping the breach. Our Falcon Fusion capability
`automates workflows to reduce the need to switch between different
`security tools and tasks, while our Falcon Insight XDR module
`provides a unified solution that enables security teams to rapidly and
`efficiently identify, hunt, and eliminate threats across multiple
`security domains using first and third party datasets.
`
`•Lower Total Cost of Ownership: Our cloud-native platform
`eliminates our customers’ need for initial or ongoing purchases of
`hardware and does not require their personnel to configure,
`implement or integrate disparate point products. Additionally, our
`comprehensive platform reduces overall personnel costs associated
`with ongoing maintenance, as well as the need for software patches
`and upgrades for separate products.
`
`. . .
`
`10
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`Case 1:24-cv-00857-RP Document 1 Filed 07/30/24 Page 12 of 29
`
`Our research and development organizations are responsible for the
`design, architecture, operation and quality of our cloud native
`Falcon platform. In addition, the research and development
`organizations work closely with our customer success teams to
`promote customer satisfaction.
`
`Our success is a result of our continuous drive for innovation. Our
`internal team of security experts, researchers, intelligence analysts,
`and threat hunters continuously analyzes the evolving global threat
`landscape to develop products that defend against today’s most
`sophisticated and stealthy attacks and report on emerging security
`issues. We invest substantial resources in research and development
`to enhance our Falcon platform, and develop new cloud modules,
`features and functionality. We believe timely development of new,
`and enhancement of our existing products, services, and features is
`essential to maintaining our competitive position. We work closely
`with our customers and channel partners to gain valuable insight into
`their security management practices to assist us in designing new
`cloud modules and features that extend the capability of our
`platform. Our technical staff monitors and tests our software on a
`regular basis, and we also make our Falcon platform available for
`third-party validation. We also maintain a regular release process to
`update and enhance our existing solutions. In addition, we engage
`security consulting firms to perform periodic vulnerability analysis
`of our solutions.
`
`. . .
`
`Our cybersecurity risk management program, which includes data
`privacy, product security, and information security, is designed to
`align with our industry’s best practices.
`
`(emphasis in original).
`
`31.
`
`The 2024 10-K also identified risk factors to the Company’s business, including:
`
`If our solutions fail or are perceived to fail to detect or prevent
`incidents or have or are perceived to have defects, errors, or
`vulnerabilities, our brand and reputation would be harmed, which
`would adversely affect our business and results of operations.
`
`Real or perceived defects, errors or vulnerabilities in our Falcon
`platform and cloud modules, the failure of our platform to detect or
`prevent incidents, including advanced and newly developed attacks,
`misconfiguration of our solutions, or the failure of customers to take
`action on attacks identified by our platform could harm our
`
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`Case 1:24-cv-00857-RP Document 1 Filed 07/30/24 Page 13 of 29
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`reputation and adversely affect our business, financial position and
`results of operations.
`
`. . .
`
`We rely on third-party data centers, such as Amazon Web Services,
`and our own colocation data centers to host and operate our
`Falcon platform, and any disruption of or interference with our
`use of these facilities may negatively affect our ability to maintain
`the performance and reliability of our Falcon platform which
`could cause our business to suffer.
`
`Our customers depend on the continuous availability of our Falcon
`platform. We currently host our Falcon platform and serve our
`customers using a mix of third-party data centers, primarily Amazon
`Web Services, Inc., or AWS, and our data centers, hosted in
`colocation facilities. Consequently, we may be subject to service
`disruptions as well as failures to provide adequate support for
`reasons that are outside of our direct control. We have experienced,
`and expect that in the future we may experience interruptions, delays
`and outages in service and availability from time to time due to a
`variety of factors, including infrastructure changes, human or
`software errors, website hosting disruptions and capacity
`constraints.
`
`The following factors, many of which are beyond our control, can
`affect the delivery, availability, and the performance of our Falcon
`platform:
`
`. . .
`
`• errors, defects or performance problems in our software,
`including third-party software incorporated in our software;
`
`•
`
`•
`
`•
`
`improper deployment or configuration of our solutions;
`
`the failure of our redundancy systems, in the event of a service
`disruption at one of our data centers, to provide failover to other
`data centers in our data center network; and
`
`the failure of our disaster recovery and business continuity
`arrangements.
`
`The adverse effects of any service interruptions on our reputation,
`results of operations, and
`financial condition may be
`disproportionately heightened due to the nature of our business and
`the fact that our customers have a low tolerance for interruptions of
`any duration. Interruptions or failures in our service delivery could
`
`12
`
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`Case 1:24-cv-00857-RP Document 1 Filed 07/30/24 Page 14 of 29
`
`result in a cyberattack or other security threat to one of our
`customers during such periods of
`interruption or failure.
`Additionally, interruptions or failures in our service could cause
`customers to terminate their subscriptions with us, adversely affect
`our renewal rates, and harm our ability to attract new customers. Our
`business would also be harmed if our customers believe that a cloud-
`based SaaS-delivered endpoint security solution is unreliable. While
`we do not consider them to have been material, we have
`experienced, and may in the future experience, service interruptions
`and other performance problems due to a variety of factors. The
`occurrence of any of these factors, or if we are unable to rapidly and
`cost-effectively fix such errors or other problems that may be
`identified, could damage our reputation, negatively affect our
`relationship with our customers or otherwise harm our business,
`results of operations and financial condition.
`
`(emphasis in original).
`
`32.
`
`Appended as an exhibit to the 2024 10-K were signed certifications pursuant to
`
`SOX, wherein the Individual Defendants certified that “[t]he [2024 10-K] fully complies with the
`
`requirements of Section 13(a) or 15(d) of the [Exchange Act]” and that the“information contained
`
`in the [2024 10-K] fairly presents, in all material respects, the financial condition and results of
`
`operations of [the Company].”
`
`33.
`
`Also on March 7, 2024, Defendant Kurtz spoke at the Morgan Stanley Technology,
`
`Media & Telecom Conference. During that conference, he claimed it was “friction-free to deploy
`
`[CrowdStrike’s product].”
`
`34.
`
`Then, on June 5, 2024, the Company filed with the SEC a Form 10-Q reporting the
`
`Company’s financial and operational results for the first quarter of fiscal year 2025 ended April
`
`30, 2024 (the “Q1 2025 10-Q”).
`
`35.
`
`The Q1 2025 10-Q identified risk factors to the Company’s business, including:
`
`If our solutions fail or are perceived to fail to detect or prevent
`incidents or have or are perceived to have defects, errors, or
`vulnerabilities, our brand and reputation would be harmed, which
`would adversely affect our business and results of operations.
`
`13
`
`

`

`Case 1:24-cv-00857-RP Document 1 Filed 07/30/24 Page 15 of 29
`
`Real or perceived defects, errors or vulnerabilities in our Falcon
`platform and cloud modules, the failure of our platform to detect or
`prevent incidents, including advanced and newly developed attacks,
`misconfiguration of our solutions, or the failure of customers to take
`action on attacks identified by our platform could harm our
`reputation and adversely affect our business, financial position and
`results of operations.
`
`. . .
`
`We rely on third-party data centers, such as Amazon Web Services,
`and our own colocation data centers to host and operate our
`Falcon platform, and any disruption of or interference with our
`use of these facilities may negatively affect our ability to maintain
`the performance and reliability of our Falcon platform which
`could cause our business to suffer.
`
`Our customers depend on the continuous availability of our Falcon
`platform. We currently host our Falcon platform and serve our
`customers using a mix of third-party data centers, primarily Amazon
`Web Services, Inc., or AWS, and our data centers, hosted in
`colocation facilities. Consequently, we may be subject to service
`disruptions as well as failures to provide adequate support for
`reasons that are outside of our direct control. We have experienced,
`and expect that in the future we may experience interruptions, delays
`and outages in service and availability from time to time due to a
`variety of factors, including infrastructure changes, human or
`software errors, website hosting disruptions and capacity
`constraints.
`
`The following factors, many of which are beyond our control, can
`affect the delivery, availability, and the performance of our Falcon
`platform:
`
`. . .
`
`• errors, defects or performance problems in our software,
`including third-party software incorporated in our software;
`
`•
`
`•
`
`•
`
`improper deployment or configuration of our solutions;
`
`the failure of our redundancy systems, in the event of a service
`disruption at one of our data centers, to provide failover to other
`data centers in our data center network; and
`
`the failure of our disaster recovery and business continuity
`arrangements.
`
`14
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`Case 1:24-cv-00857-RP Document 1 Filed 07/30/24 Page 16 of 29
`
`The adverse effects of any service interruptions on our reputation,
`results of operations, and
`financial condition may be
`disproportionately heightened due to the nature of our business and
`the fact that our customers have a low tolerance for interruptions of
`any duration. Interruptions or failures in our service delivery could
`result in a cyberattack or other security threat to one of our
`customers during such periods of
`interruption or failure.
`Additionally, interruptions or failures in our service could cause
`customers to terminate their subscriptions with us, adversely affect
`our renewal rates, and harm our ability to attract new customers.
`Our business would also be harmed if our customers believe that a
`cloud-based SaaS-delivered endpoint security solution is unreliable.
`While we do not consider them to have been material, we have
`experienced, and may in the future experience, service interruptions
`and other performance problems due to a variety of factors. The
`occurrence of any of these factors, or if we are unable to rapidly and
`cost-effectively fix such errors or other problems that may be
`identified, could damage our reputation, negatively affect our
`relationship with our customers or otherwise harm our business,
`results of o