Mimecast (MIME) 2 Nov 212022 Q2 Earnings call transcript

Good morning and welcome to Mimecast's Earnings Call for the Fiscal Second Quarter of 2022. I'm Robert Sanders, Director of Investor Relations. With me on the call this morning are Peter Bauer, our Co-Founder, Chairman and CEO; and Rafe Brown, our CFO. Today's conference call is being broadcast live. A replay of this call will be available after the live call has ended.

statements the events company. forward-looking financial the make of performance will regarding and future future We materially the These pandemic. and uncertainties the cause differ ongoing uncertainties statements related that those forward-looking are security the could actual subject to our impact results incident risks of statements, including forward-looking to recent risks from and in and to COVID-XX global contained in actual consider today's statements We risk cause differ important and to release this in could the results caution the from on those you that factors to forward-looking press call. defined These are Commission. Mimecast's factors XX-Q risk Form filed the further Exchange in and most Securities recent with

substitute During this our GAAP or A measures. intended the financial are Investor obligation for superior reconciliation make call, can non-GAAP results. we not or date be of is statements future XX, We statements be forward-looking non-GAAP believe found in that of on XXXX. to a Any release, we new representation these of reasons we non-GAAP a which no will is this in to the be Relations GAAP section information isolation this of measures assumptions as call of undertake information to included for, our are November to and based The today update reasonable non-GAAP press our in website. and of measures both to These as date. considered GAAP present or the today's result from, events.

over the I'd Now, like turn to Peter Peter? call Bauer. to

all our progress I'll and healthy. then I'll the Rafe from some and we joining also I threat as our believe as you and and mission touch families and strategy. Mimecast the on your on are takeaways for everyone critical safe services with thanks executing us. detail morning will results. quarter and financial why landscape Good are begin hope

in North drove the constant an $XXX.X $XX,XXX, approximately metrics, execution We UK. currency. favorable XX% America all million which especially in generated quarter underscoring high-end up guidance revenues, and our to this average and in XX% results in is security our prior strong is exceeded increase constant We over the year the demand, Our order of ranges across currency. value year-over-year in which

was increase this a will that by AOV in in in call. smaller partially detail reduction impacted Now Rafe in later discuss the customers

up the increased last we year. services Additionally, of customer from that's per X.X, to number X.X

from with We increase drove in a XXX% delivered we XX% of more in net segment. note, QX. percentage quarter, gains also strong in X,XXX rate up another retention than seats our customers XXX% enterprise Of or the revenue coming to the the of from enterprise in continuing

Now c) speak against to create our channel these all easier strategy: to expand as execution in engagements platform use footprint and three-pronged automate we the to partners. strong and our our a) sell multiproduct results enterprise growth and with stronger even customers b) market, our SMB

Let some execution me this quarter. provide examples that of

seats email logistics A telecom services, against protect seats included added email services ensure that and understand company a exploit one across zones provided had the and in Zone our ensuring targeted XX,XXX U.S. prospects the X,XXX offerings. and U.S. company And our purchased this And Browser with has across customer with large three protection products X,XXX average of seriously. services additional And purchased our newer suite bought sending as customer based And continuity services. And retention by training, And systems of that XX,XXX X and in offering too risk the that services one attacks and employees, they quick a recent been DMARC on Firstly, excellent eight plus with We're a email order are care there them comprehensive DMARC can goods customers the three you zones and Zone internal job we X Analyzer hospitals in Mimecast our organizations. secure you consistent in in relying have proud the problems We're protection of protect, bought seats seek XX,XXX XX,XXX organization three very in zones, are also email their the in employees building that protection organizations hospital leading know, safe. with company and last training important Zone total, two, And gateway, a a services, awareness there no file U.S. based Zone one, more to systems. joined with UK-based XX,XXX added taking seven value, X, downtime. in and protection our X exploit seats to brand resilience six clinical and and organization with across teams very enhanced an against brand with these clear additional eight research industry internal and to protection with four rates. ransomware X,XXX gateway X, they in are increases seats. in trust targeted keep help solve Analyzer. and our one company our see all pleased the in also as purchased number doing these with it's Then in U.S. customers awareness X. Zone Isolation, and one secure protect, our Mimecast, Zone cyber with services enhance per CyberGraph continuity threat threat consumer this including archiving.

customers. adding on Now, product this engagement saw with XXX side, particularly strong new the we quarter, training awareness

our we changing today. the face that on organizations ever As educate of scope attacks offering, the expand we

retention program new results. API observed customers, further and organizations Logic, Humio, a offerings win relationships. differentiate among threat allow automation stronger security well collaborations leverage to existing and competitors incorporate helped even us as Alliance our CrowdStrike new into from drive and our ecosystem. deepen security have company. Our These who to partners customers as We Integrations Mimecast Netskope, integrations. intelligence broader continues collaborations API Sumo with Exabeam, and their include capabilities Notable

these inadequately Now rates cyber defend data at prepared to are is crime remain breaches many than occurring and against attacks. ever costly more companies record and

cloud, As trends security environments advantage holistic strategy continues, towards to and X.X of integrated mitigating hybrid transition of companies offerings in And continue Email the adopt work Security suite utmost remote customers our these meaningful and shift overall remains importance. and digital risks. a gives the

shared threats. technologies designed improve needs to recent example, customers' Now, of we AI and our innovations for identify evolving to our graph learning our around mitigate and And nature driven CyberGraph, to And and work to is and continue to to platform prospects address evolving were attended security social expand conference, an security phishing XXX the proud XXXX machine targeted partners, the customers, cyber help advanced recommendations messaging attacks. and host most and minimize over risk recently and we where highly awareness. impersonation channel who organizations virtual increase beyond and compliance we Mimecast's

enable XXXX. footprint a cyber and an from pledged Mimecast's role as security, to XDR company member offsets. committed and near-term detection of industry to scope net on quarter approach the innovators and entire an renewable is goal the protect response and to zero exciting The carbon goals, this the become carbon emissions like to cyber a to Another Recall attacks, the third-party emissions open themselves inclusive energy Mimecast's certified to fully and be we'll framework. the was against also out by one and provide Alliance efforts collaborative to development I'd intrusions. zero our alliance and offsetting founding and ESG the our fiscal of is operational partnership is we've update of leading our towards two In a progress extended essential growing meet net number of which XDR to foster XDR, organizations with Alliance breaches certificates an year, commitment. zero all

United we data conducting Germany, And of materiality needs energy remote employee the to travel. a announced the our employees and further over allows centers our it I reducing will carbon several to assessment work States. related our that, XXX% model Currently, operate with And we're intensity opportunities renewably full Additionally, a hybrid for in Rafe. footprint. UK, finally, the that turn identify we and to Canada, further baseline reduce to powered

high flow I'm and Thank EBITDA XXXX. for quarter adjusted fiscal of you, we end that our Peter. cash second to exceeded the the of revenue, pleased for free guidance report

additional results an generated foreign fees. improvement a four year uptake and of Our terms. performance by an the improving for retention excellent in was of ending at last fees over quarter customer crosssell tailwind, quarter, customer positively rates, improvement $XXX.X XX% $X.X one-time XXX% over by In our quarter to dollar we impacted constant August, base, represents the currency Net million, period metric Adjusting rate professional XX, in the million providing XX%. was currency trailing we guidance products retention growth driven data our this second quarter. of off revenue building second the services year quarter our migration revenue quarter, September for of absolute which revenue in this prior Note stood noted early archived that that fluctuations from $XXX,XXX. since prior currency in bookings strong and the

Looking and XXX% where at product its as saw price-based we based components, upsell upsell. improved strength to as seat well upsell in both

saw improved quarter second side, training, product DMARC Downsell X% four churn solutions. strong CyberGraph our for and period. the a On the in interest the awareness to and

service I want on bit customer with a AOV a to turn particular metrics, managed new change detail provider or MSP. I Before a net count and to of provide

a former MSP's As their affiliate. result transferred a base of to this of customer was business, a a portion dollar reorganization of low

with $XXX,XXX removed As total value a count. of less result customer been have X,XXX customers annual contract than from total our a

XXX the added in we net new customers second customers, these Excluding quarter.

count XX, As our September of XX,XXX at stands customers. total approximately customer

MSP's at by FX in value the $XX,XXX, base XXth constant order of currency jumped of over average action small prior Given year itself to terms. customers. AOV up customers, the this approximately increased our XX% Calculated AOV particular rates, this October very

important organizations. as in achieving to the shifted strategy. seats growth our as To increasingly has metric our We and less contract and important count an low XXX number our count many ago less one with that of as our metric end values typically revenue customer consider annual across been MSP changes order customers, becoming the happened net they order value base customer larger approximately particular is would per change, new increased expansion prior in impressive from this in the having average year of approximately values helped a well constant currency improvement average XX% X.X customer still services up to This by average $XX,XXX, order added our our This consider toward metrics recommend progress our over investors values. new as average of Excluding customers fundamental count that customer in employees. terms, is was increase. within to the seat than isolation have to reminder X.X evaluating focus as changes when both among customer our base year

second year. our XXX gross Turning back points we we quarter, prior quarter of representing same financial of XX% to basis prior recognized In second quarter margin, of the $XX.X to improvement. improvements continue basis an totaled statements, EBITDA from up million, Adjusted the a for XX.X% to XX.X% quarter adjusted compared margin the EBITDA margins. see in in point the non-GAAP gross the a the year, XXX

line. Now turning to the bottom

for $XX.X or based million, outstanding. quarter income second $XX.X revenue, million GAAP weighted operating the prior diluted improvement per quarter of year. or from XX.X% profit million shares an on non-GAAP Our fully points average of basis of the We've diluted share of $XX was reported $X.XX the for XXX profit second net

in Our GAAP $XXX,XXX. included totaled quarter, the $X.X discrete million a benefit second tax of windfall expense stock which

our We million. to expense continue full $X.X year GAAP be approximately expect tax to

net share. per non-GAAP income million, Our $X.XX for $XX.X was quarter or diluted the

for consistent we discussed totaled we rate long-term a expense to with rate the to $X.X million tax non-GAAP and the non-GAAP change last non-GAAP the is methodology throughout year. the whereby XX%, our tax quarter, which Our tax quarter booked or

flow. cash to Turning

$XXX or cash of sheet. free operating balance million, had million. totaled of cash our the of cash revenue, stands quarter debt, revenue. balance Second of the Net $XXX September And cash as flow for $XX.X $XX.X XX.X% on million flow XX.X% at million of quarter, or current totaled Mimecast XX,

Let turn to me now guidance.

fiscal and million, XX% $XXX.X XXXX, terms. currency between expected of XX% million to quarter be constant $XXX.X third revenue the For to is growth or in

includes the which third and million, resulting mid-point guidance at basis on of is and EBITDA compared impact $XX QX million, expected at $XX to the the adjusted U.S. of the up prior XX, mid-point Free flow cash be reflects between estimated million $X.X Adjusted which the reflects of is margin million Our million cash last from of to XXX $XX an expected points exchange to the margin flow of year. as positive a third between XX.X%, XX.X%. for is and EBITDA dollar for quarter free the year. XXXX, based rates $XX quarter be of October from weakening an

estimated Turning to million is currency the revenue in million Adding $XXX.X full $XXX.X positively XXXX guidance XXXX XX% $XXX.X between million effect in in Fiscal year. to guidance and an by for $XX.X exchange at this August are growth constant The foreign to the mid-point. the fiscal compared was impacting the details, expected in provided the to year. be terms. fiscal prior rate or prior XX% fluctuations rates million

being overachievement our mid-point to the moving our by in the of by a of raise impacted QX dollar total increase terms in is business August This are positively million with year since of $X constant coupled risen mid-point we $XX.X rates currency Our million in full $XXX.X terms. continuing in in of by strength of resulting is of up from mid-point us full of the $XX.X to leading call, million exchange million guidance used seeing a $XX.X foreign tailwind in $XXX.X mid-point guidance absolute a our million. that year our has million

year. costs fiscal for in-person the and We $XXX.X and between at $XX to guidance. million of up margin over this raising the full an reflect our adjusted Despite EBITDA associated points the improvement our XX.X%, travel guidance would from anticipated million prior EBITDA XXXX which of million, mid-point with of events remainder return the basis guidance XXX are adjusted year, mid-point of the year at represents $XXX.X prior our

raising fiscal reflecting business's At free cash million, is To the represents prior also the guidance of half XXXX improvement margin mid-point this full our improvement flow million revenue XX% free range $XXX.X the cash year to we're point first the basis a of guidance. performance of pleased the a with very are conclude, $XXX.X flow for guidance. of over year. year. XXX the over to This We million prior mid-point, $X at our

benefit XXXX. Given is that guidance turn the revenue year for for full And again – good significant back of ratably, half our the our year some our full results year to demonstrated remarks. performance our the I'll with in approximately it recognized XX% of fiscal raising to revenue as a Peter first of closing by revenue provides that,

subscription highly business our integrated business and Well, unique model efficient At thanks, XX% revenue. Rafe. Mimecast, platform a with a where we offer fully of durable is recurring

we're Mimecast We to I'd retention up proud that, companies call operator, with your high to mission. dedication and the like trusted to our take mission industry And for service relentless leading margins, be to and could have critical the gross a we entire their efforts leading provider team questions. open and world. around the to thank

Barclays. first Instructions] question Saket comes from line Thank Our the with Kalia you. of [Operator

line Your open. is

Thanks for Okay, here. great. guys. morning you? Hi, taking good are questions my How

Well, thanks, Saket.

Saket. Thanks,

to count. just maybe Rafe, customer on Hey, start the you with

said you removed. what think there were I X,XXX basically was, customers were that

about you X,XXX I just sort customers. a deeper bit net into were sort have go change? customers Or into customer XXX little just that churned? And that to actually maybe mean, But of real dig level the being is how was of adjusted? adds those one deeper mechanics count MSP apples so, of the that apples can

do reorganization came it really and years customers back that. real in these so it their one-off but Yes. is particular But this They on this you're did where to a relationships had is in side. situation happy reorganization with do in goes up with XXX the did this they us of just business them net the MSP. they a part excuse reorganization, instance, like spot from, three net that have at count. provider. relationship former nothing – I'm a affiliate, And with we takeaway customer to was because we that their customers. And ended of transferring of did a a We don't drop of the three looking And one new me of our out this – fact, to on the with our this have because affiliate. different former And that.

or for of very out. gone it. a guess you we'll backdrop the of about, couple bit bit for on Lots maybe update has of can now security stick little little since talk competitive sort got but private Okay, on Microsoft competitive backdrop arguably of more I Can you talk bit a a start follow-up us portfolio with quarters general. a out little clear. the to my about coming noise – in to you. Peter, That's maybe just

give bit a and an quarter? Just us the in in little seen quarter the you've you update on Thanks. what what backdrop competitive saw or of the

Saket. thanks, Yes, Yes.

from think, large and those I account quarter out we had call heard remarks. several So, wins prepared me successful standpoint you the competitive a very a in

very suspects. that very, those have think of clear the with usual would been some in competition I

that. that And over through feel strong our the come And so as really we past we that good as think about success products has year well execution. real in innovation

valid think, Security customers Security pervasive all solutions strategy. sell mindset a given X.X to of Email mindset a perimeter security us X.X zones to a we from historically that ability that our email of a messaging three what more in strategy our described much moving the been to has across differentiation relative strong has and the I and Email

XXX good. business So portion a all and risk onto mitigation we and to security around from comes for yet have significant quarter. layered third-party of solution Once resilience good customers not a feel so Office added again, our that, that us a

guys. helpful. Thanks Very

Saket. Thanks

Thank you.

Colliers. line next comes from with the of Our question Catharine Trebnick

Your line is open.

my quarter. Excellent taking for question. you Thank

your I are. with to new led any had and has last has the – you changes where MIME in been Revenue Officer onboarding deal left, months remember do people. have you've and slots management Chief So severance changed those six

with bit business little bit a performing. the little you channel the you. in then Thank more and a on that's are where color and how So that on SLED

Hi, Catharine. the I'll sector – efforts. public our start this on off

Ready those full to Criminal around the a same really North off. authority As of certification we've requirements seen sense heightened where for that security. you're build achieved states It's level need America They extra the particular we aware, a operate getting FedRAMP governments, immediate long time. Justice state. in They good last the things – is federal it we progress been takes quite staff. in we those have Really that good Those and called infrastructure. have status, support project and a out has quarter

because harvesting service call outside is type even the ourselves great a sector public have there, that immediate as And of them lot benefit out to that continue demand a a course, from organizations we So some federal there of pursue for as wins protection side. to we're then, we frequently service of Again, out the need. are they looking give cloud U.S. such we where provider to the

the I'll changes. Yes, in great. on team the of dive Catharine, some – on

new who So we've Leger, just to five the about joined recall, months CMO got Bernd us a business, in ago.

betting So Bernd's the about think in and very excited I company. building And he contribution weld we're his up. is team into

change to setup innovation work of executive we three created new result innovation bring a organizations David about who integrated months a Technology company, the change Chief accelerate for that where of engineering ago product doing together. structure and those an And us continuing our but as us that has joined in and is was around integrate recall the been also I Raissipour, and we to the into second And The which David drive next the several think years organization, Officer. both was in a for structural Product company. better really

exploit platform calls that really with yet coming I of exciting CyberGraph, a offerings, we're advancements learning, some looking we'll of we've product are think data within and things engineering around our ways the but energy the artificial of some you announced, share seeing we're that us and inside the I and in intelligence, of the think organization. creating not what to some like machine in lot

well. in Chief two then And join feel end brings of Revenue the a Obviously, We executives. area. the really Boston wish him opportunity. left our as that to Officer about good change those is new startup at you we mentioned I something So September us think

from candidate for And scale searching billion door to we're experience beyond it experience $X scaled think has to CRO. billion, in as significant as at of new so, million markets an $X international sort And we find opportunity a the organization. brings I the and up knocking that move really a of on us $XXX a and

Catharine. And experience so, talent we're excited and to sourcing with that kind be Thanks, of record. track

Yes, thank you.

Thank you.

with Our next comes the Markets. Hedberg Capital line Matt from question of RBC

Your open. line is

for Bergstrom between and say way to improvements here. It's in the our Seeing think nice the and Hi. Thanks really balance for Is upsell questions. seats? Hedberg. Dan taking upsell, there pricing additional strength Matt a about

seeing both there back the We good that strength we even to our on downsell. customer you'll COVID hiring had really that invest they saw the companies And lot are to relationships, the great year a Yes. went of keep make Clearly, following recall in out sides sure equation. of downturn. customers we could of that is one we're last if benefits lengths

the in And last our that so people as seeing helps over but environment that a all lot coupled out just investment we're invest in piece great where come the house of of even high side continued strong where The upsell – because story. it to fueled quarters. we're think well that couple to year products, to of continued I really product during of innovation. profile product we last of of COVID, it's with midst a these side it to we're And really was validate back, has see us of there very drive attacks the and the is are – an

million, a $X more business what looking talked in from maybe $XXX you you that about billion Great. answering Revenue Officer the questions, and you as scale and for $X you're go And general to little market a Chief on the maybe beyond. billion, then this to on Peter, look Catharine's million in from but touched $XXX just level

gain in. that a frankly, just I a Continental big Mimecast things that in experiential think, is something started Continental the I expertise It's Look, great. market. Europe, we're excited getting it's think one massive opportunities is company. that there to And Europe for an three Yes, we're

is to so, And scale there. a there up real opportunity

I continue secondly, opportunities moving want that channel can product. those the not particularly to multi-vendor bringing that work on to services as partners we're there's where kind markets very platform and around we of on with value to partners develop frequently build think there our intersects are opportunities done relationships, channel with we've well capitalize up and our even increasingly right for a partners to strategy think, partnerships, before. And greater are XDR while provide deliver channel and I And an our channel, opportunity, to channel of that more on API to course with strategies our channel solution to customers. our

excited that. So, about we're

piece phase be, I of look also scale, the operationally third I gain think we that a next from. bit would there's as think quite can at we that that

view, think that aspects candidate. I'm operational new of more from scaling platform a scientific created to expertise thus looking area an enablement the an I us point sales organization on record the track of looking some an area in lead and far is forward definitely help sort some at of build great we've and operations the of for So that that in

Really, great. Thanks, Peter.

Thank you.

with question Goldman Our Brian line Essex Sachs. comes of next from the

open. Your line is

your you for is the that going two us kind go that and on higher thank noted side, penetrated update are and morning Good fees these had on One you of Could maybe how then perhaps and XXX? What think, the Office Office you. Thank Rafe question. give migrations for better – What's taking XXX seeing the improvement. we're are customer an some the changing? penetration. base, particularly how's you we market? market penetration with – data a on now environment – up that and that in migration Peter, you I changing? you question How's you're prepared economic now environment up his And remarks. just I I you particularly as Great. had guess migration seeing

great. that's Yes,

of there a hybrid that or have, another. be hybrid larger on-premise and can what want configuration way mean that organizations, is is mean configurations one frequently hybrid prepared that XXX. our on they they thirds for our I of see used new combinations but point to specific of are evolving within your We also the you shared and Office mean – we of our Suite XXX. a environments, to exchange configurations don't two for by think XXX – while, realm And tenancies some base multiple of and proportion that's tenancies. coming It XXX. numbers significant like. the we've And at can face that around And of in So provide fairly and combinations probably numbers XXX alternative sort activities a think with I to mail to base when because us the our on companies Office Office like frequently XXX, on already business I sits it's look G percentage and I M&A think larger Office constantly

mail And and a mitigate setup so help them can valuable. the having security risk on partner really infrastructure across heterogeneous cyber us side, like it quite is a

that you everything Brian So, or does have… covers

Yes.

function you more onto is Or the with customers your on this follow on the on, that. are I of is And – of a adding base new just guess I XXX seeing the this coming – you Are is synchronization in seeing XXX? in an kind of activity Office that I and you're seeing going guess, think acceleration are maybe back frequently installed migrations? more platform migrate? – a that coming you

on combined risk the before historically once migration preparation looks I migration, resilience time. and about to mitigation, look, and And they're spoken in Office of additional XXX business time for over post that at has mix project migration need think, I security. both for sourcing naturally saw shifted – and that we've the the a layered that. they then recognize At

selecting obviously and already as customers greater a been add to successful for during then it in a moving XXX, was and deal and some Microsoft to proportion – more of back and preparation over great time of on in their deployment. years, So – to that is going it XXX us has more and

Thank it. much. That's helpful. Got very you

Thank you.

Our comes Koenig line of SMBC. Steve with next the from question

open. Your line is

Thanks This on is Owen guys. Hi, Steve. quarter. questions. the Congrats for the on Haworth for great taking

to So, the enterprise mid see see XX% with here? of, customers. Kind hit Peter, that segment do like the you well segment where that we've do it's great Where now seems XX%. the large up mark. settling wondering offering long-term? It sure we in go I'm the from get that both and to is your resonating

Owen question. Yes, an thanks. interesting such It's

it expect to we think to grow. continue I

the in opportunity which considerable to SMB the grow. sector a two have we However, and continues mid-market or commercial

constant is of segmentation sort pie, you there the the like. pressure revenue of So, within if

And that as considerable so, to we that I invest customers momentum. and large enterprise we and segment build continue service enterprise capabilities think, a opportunity, to our in growth to see

think more I shared out. directionally playing we've but how see that specifically quite So we don't

and outcome. strategy, delivering us. to would the validation no, that see I commercial That's commercial and But Yes, that platform buy as say it on byproducts market focused well. I really think pleased with We continue helps of just mid our we're – it's space and bigger our of customers a grow is, and – differentiated I growing great that, the to one think accounts the value.

I Thank great And kind anything how of expansion like know the or sure, article share new can't you can't changed that anything I it, Thank buyout in from affect do out the that'd if mean, to there's decision-making? saw but reports drive comment wondering article, your second I net on great. you this the sure second that. earlier the week as business? Also as you. the one, I'm Has don't publicly if can anything you these potential real you mean, well. Yes, journal question I'm everyone – on ability guys. be M&A. – I'm share customer

Yes.

journey can those not I in the and time. see business, And Mimecast. marketplace the on space. is comment that customers in and right. think rumors the of of people surprised We're focused all But on as think competing you're of really email the taking really the that and care security rumors growth indicative I our care continuing importance value the running we're our speculation

we tried we distracted to read. be what yes, So, not by

Thank you.

Jefferies. with Phil the line from comes Brent question next Our of

is Your open. line

Hi, guys.

and few expect well. talk put for two accelerated in reason I comps? just Rafe, GOs growth guidance? and currency to we on guess revenue simplistically, provide quarters when quarters; have then guidance And on into Brent. little lot through You as the I maybe constant recovery. parter. for can the a shaped two currency the embedded Thanks. into have work U Joe easier next decline just of You've you of constant the this of Any question. a you have Thanks a could color straight takes what's hard bit puts a

the imagine. add little about happy able full as to just those on in I as business, be just prepared happy to and guidance. would with has to ratably XX% we year has impact One allowed goes no, upticks remarks, along, clearly half almost year Like noted revenue kind a very you the that move really thing the the with of our out deliver way recognize to to has – it approximately QX – how us that. the the of first Yes, as played great recognized revenue nice even it the

the of And after just of rather able parts really of next America all – advantage year part great So, take coming we we've been XX% unsettled. that to we've and that, that your to but back guidance, then first despite our lost initial North of gave of stages when remember world to change of if in different year COVID, the – getting question, of business the bounce pandemic. of the was UK. starts out scope first are And progresses, where of your half there are that as had the the – we're narrow, we still

business. up because are lockdown. they're the we ratable coming wood a that our have tighter Our that think just I to just now delighted And opportunities become still of colleagues lot while of But opens out of numbers the goes year start new as lot a the chop Australian of nature on, of there. to because

guys. Thanks

you. Thank

the comes Baird. line Ruykhaver question with of next Jonathan Our from

Your line is open.

good Hi, morning.

historically? like more transformative Email the relative tuck-in which call, been deals look But really when obviously strategy at about you So, you look what you traditional to, color sizeable that Email possible, And more if might Security. technology opportunities company's And let's serving the mean, to feel are been might what Peter, markets boundaries areas there done of I'm had just curious, justify X.X on has I'd those strategy, beyond pushing any you've a historically of specifically to relative revisit M&A. small M&A I the complementary larger M&A like?

Yes, thanks, Jonathan.

reference and wide the email to context to for is that think, good aperture a us deliver for add in you'll Email the security solutions strategy to incorporate us really adjacencies created X.X to a how some space. of value I terms Security So, it's of

the obviously and expertise the us domain to security and is email for is direction a have able is One – around. mitigation risk be the areas. of we in add that collaboration on few activity think beyond kind to happening core I direction capabilities there messaging

interested we're the in that. So areas like

given have and a customers of I have that and types threat and deployments we base platform, our the considerable exposure really the think segments of also diversity as landscape, across industries. size the we customer of such to – global the

we're ways data And date. really in that security of customers make our integrations to strengthen of And so, some to interested we overall and value an that their seen can we've to useful out playing more terms in system that infrastructure.

in So, we're areas make like we and expand some contribution can of intelligence we in interested which those threat kind the utilization. data in that of intelligent ways

orientated building the part last in I as point company our then out what's acquisitions. the succession formula, this or as of platform of technology think and been we longest talent a you the organic at the years and So was look of history five six historical

opportunities there company and technology there. And to – interesting to grow the to some interesting and were there We platform. some continue scout grow is things out explore our

do be in strategy company, far have a customers getting think done other value terms ahead As so we've terms might too and not keeping a that in larger optionality that that also some of we've But bigger much very with on. we in of things to what to than the described I historically and bit themes. skis little of our

Yes.

very think, And this follow-up, for one know just helpful, Peter. that's a Rafe, I you. is quick You

one-time fees. Any some PS Just some contribution? and archive migration quantify that to you mentioned way contribution from fees

run in ratably I – rate. of was up recognized – the just Yes. sources. our XX% a our It more about how picked There above million It about was a typical quarter half revenue talking from rate. we relatively comes small run our than

worth perhaps those particularly worth particularly just low types it's was felt quarter was that year think of year-over-year on fees. – I last calling because it a comparison of out I

the quarter the pick quarter rate So, growth stood up that. It observers would of by careful out.

huge, I nothing but So worth it was noting. thought

appreciate I the color. guys. Thanks

you. Thank

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you change I if did the revenue that discussed? MSP from it, impact but So guys the annual apologies missed disclosed you

it actually were $XXX,XXX, less customers. quite approximately, – than was It small those really Yes. was so

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geographies be of or driving acceleration the moving which you then forward? about kind here. still And are Okay. thinking just from a would kind of mean, where products product they and from mean, biggest I most I'm upsell I kind further to your be perspective, a recovery from the key to modules in of you expect are of struggling regions seeing similarly, revenue perspective, drivers a which key curious And

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some And And take to of work a so, there's going time then spectrum. that's a bit out. to

hope through in But the gives that once I get to they think, well Australia that through but green the and bounces fairly there's they here. of that future. did holidays a summer that out some lockdown go them considering, grow light

there XXX now in lot And within now customers some days of existing we adding but at in opportunity. is early then X,XXX see in a DMARC for base just approaching XX% base were sort really the another saturation example, obviously great again of product to X,XXX and opportunities customers on targeted customers that were quarter. of on a good a penetration we with but IEP, their product – stack, new us, conversations with little when penetration that I we're to pleased for really tick areas we pretty big protection, X,XXX training of the weigh in at delighted, about see something continued for in driving adding think the up the awareness that's and to with bit total threat is TDP customers.

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Just product. as real pricing into and that fed they beneficial, Q&A, somewhat up seat I pricing. the I the and first was as you, I but of think as layer to that there an almost had the – the upsell when commentary was product further about it clean and in how you help earlier sounded those parse questioner like far uptake it know guess, Can dynamics that and I upsell? the And the strength dynamic three revisited dynamic, count asked out some regarding into as was the contribution from count there well seat know

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deck, good where when going investor things for on look you about that customers But there that you talk want our So, out we when can I or are multiple our product through current in for which the there. kind we feel you lay to – byproduct. can underscore get of everybody side, do a

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to course, by very versus So mix seat The quarter, us rough upsell split but both that. product the really expansion. that's by in I of around helping that That's driven between just was been mean price It's important drive driven to quarter upsell varies, figures. XX:XX. and

those guys grow then the alongside reminder in helpful. channel MSPs ensure revenue and that channel from here, but That's And MSPs question, today? how in you're And to talk I continuing investments you much and can if are generating to could, as partners? other just the specifically a one you maybe to

strategy, so and We particular how that third-prong through great third leg that about on is our modernizing three-pronged through our a organization, that, but as relationships, as talked on bunch question. efficiency processes, the drive a to continue grow well in through a as focused of Yes, that's side. we, of channel systems, really an our

of partners on easier easier But of focusing through, frankly, – some transact it that. of builds in making channel the respect. really a on from get that us efforts a We're number with So, easier upsell, to friction we've our that to put the us a making up to launched system over in quote, focused easier to time. for everything all

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to – and team that cash quote the kind project finance IT working on the our they're all broader fits in are that team So of together.

that or technology at channel the the form majority whether in do how it's go growth. fashion business end build to that to the way efficient, ones is actually a but through there's organization the focus comes we or day, resellers. we our MSPs market the accelerate an of big And So get real distributors one and we on and the help using of

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your Yes. quarter. it of for to XX%. up there XX% cost targets Thank continues Day what's XXXX tick up that – now, long-term timeframe currency Is to the growth growth in you Investor year-over-year. awesome Can February the to rate to returning context put almost that of actually? on and of XX% that still you And The table? now you're

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solid to X%, include on effects all? a the also rate on the downside or Does at congrats that small, sequentially on it First is number impact too or churn down just the on dollar X% change that the that from impact the on execution. really that. that Rafe, went first just didn't MSP congratulations so

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really So and side. that's downsell what's churn the helping on us

follow meaningfully you for I assuming initial is the Okay, that a your deal and and market, very quite land velocity changing guys well has improved Peter, am front, as size also am I also answer. great. Thanks pretty which the the company expand assuming of move bit. that on continues up on are the then deals to executing

and your land dynamics the larger has fast can insight assuming and end there focus new else. logo organization view hiring as just expansion sales overall sales the that can kind as this towards are expand of any of you as lands you everybody If how for on your some – you're direct how customers? just greater for am to deals sales But maybe you is providing has on incentive people give I like changing changed? such. structure And shift that into us

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and resonate offer threats we as sophisticated a that these approach to with within with capabilities dealing zones the of strategic and each so each And threats. the them these zone

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we so, solutions. those base large that have in customers are And do the now adopting

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you. Okay, Thank great.

now the remarks. for in I'm queue. closing further you. turn no back Thank over Bauer call showing the questions will I to Peter

FY with Folks, about in results. time. XX our and thanks to QX interest XXXX We your our our days joining results appreciate in for sharing quarterly forward earnings we you look business, again

your this for Thank you and today's Ladies call. participation. gentlemen, concludes conference

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