N-able (NABL) 10 May 232023 Q1 Earnings call transcript

Hello, and welcome to the N-able First Quarter 2023 Earnings Call. My name is Lauren, and I will be coordinating your call today. [Operator Instructions] I will now hand you over to your host, Griffin Gyr, Investor Relations lead, to begin. Please go ahead.

Thanks, operator, and welcome, everyone, to N-able’s first quarter 2023 earnings call. John and President CFO. are Tim CEO; today EVP O’Brien, me Pagliuca, and N-able’s and With

being our Following during prepared the There, release, question-and-answer is which line prepared you today’s for webcast our remarks, our to a call. session. we can also is This earnings at intended Relations remarks website Investor will find open simultaneously investors.n-able.com. on press call our supplement

opportunities, assumptions, a related to financial based our call are and expectations forward-looking These by including July no we outlook, Certain our of made our those market impact of law. undertake update number uncertainties, spin-off July are including during this transaction as spin-off on the environment XXXX. the statements in global statements and duty subject These also XXXX continued are of business. the required those currently following statements, statements business economic available concerning risks to our and our in completed on this information the to information and except

SEC Relations concerning in Additional highlighted uncertainties on with are and associated and SEC. our on risks Investor with the is Copies available the statements and our the earnings them filings website. release today’s these in or information

measures. and on financial measures earnings our our reconciliation Furthermore, financial financial when financial is we call. of to release measures, referring non-GAAP measures we refer call website. certain to discussed we various A Investor will Unless available discuss non-GAAP press non-GAAP the to today’s GAAP on otherwise specified, today’s will Relations in be

turn And to over will John. now I the call

all you thank joining and today. us Griffin, you, Thank for

is Demand takeaways: strong. clear with our for resonated results purpose-built QX solutions Our

executing and we is believe continues and differentiated, business for that to are deliver initiatives which profit. growth Our strategic customers. value drive durable our model, both And our we

or million, an adjusted expectations currency margin the adjusted of both $XX.X of approximately on year-over-year of with line, revenue QX and representing $XX.X EBITDA beat constant basis solidly top and bottom XX%. XX% our million growth We on a EBITDA

will market Our shortly, guidance driven becoming case reserve steady complexity small- are and are in And net MSP IT it to remains continues revenue MSP management tight and increase held raising market. challenged partners. Tim you tell IT revenue as cyber EBITDA And constant more we These tailwinds. currency technicians adjusted outsourced businesses dynamics are to escalating year. to SMEs insidious. in retention remains threats that healthy, for push the IT persistent the providers medium-sized hire labor by use The as such at XXX%. and our a

to Then by them attended and SME’s The and content, our helping Empower, their keynote the our underserved distributors from backup the is the scale tracks and MSPs long-term N-able IT SME data today, event stage needs across MSP at a an Earlier programming expert vendors Empower MSPs outsourcing the geared speakers I educational gave and their from of customer in MSPs, Prague to trend address towards conference event partners. globe. annual IT full of business. uniquely we restore some and on or grow a aimed and are spending the to delivering other positioned growth to model business the disaster. enterprise-grade secular With use software software cyberattack at manage of market, believe monitor IT against event of protect we in a SME and environments, cyberattacks benefit called

in a make informed keeping accelerating. that merely new but of MSPs innovation their their into During change differentiator competitive rate as the change, markets. to the survive and and rapid is turn by And must them of assurance customers audience the not equipped, reminded my pace keynote, I for technologists, to technologies uncertainty

right while change strategy ever, to and that business with the be MSPs than trusted are partners opportunities reminded adviser. become to technology massive. look and I small that and more focus, our And MSP Now constant, medium the businesses has

that deployed stressed digital continued also XX% are investments optional. demand SME to no and growing cloud native to cloud Gartner projections, growth. the is According partners new enable we workloads on ways. securing spending of will platforms longer XXXX, several address forecasting to in this market is be partners do managing to rising, and significant our by this are We demand. and our MSP making analysts in I the cloud

our in deliver the solutions we cloud. First,

allow with our delivered For dashboard our management from and N-central cloud. operating solutions, through example, and device several across MSP RMM scale one seamlessly N-sight, partners systems the

strengthening utilize MSPs cloud to Instances combined versus the cloud, of private solution, convenience Azure are this on further in investing disaster and we infrastructure the their that recovery-as-a-service directly benefit The of of scalability, geo cyber near-instant just allowing with redundance. resilience availability, Cove, cloud-first, benefits announced public offerings. a cloud-first multi-tenant for or protection-as-a-service restore, the our standardizing combining including efficient, approach continuity into partners recovery business For by we highly and data our with architecture Azure,

market the users, about on devices million approximately backup of from the end X.X XXXX. over layered security solution, the the front, quarter, also with in in traction first deployed unique up our X.X XXX,XXX gaining of cloud-based XXX As for And protected. cloud-based, million is was Microsoft our of quarter EDR offering first the

the solutions cloud. help our deliver manage Second, we that partners

manage a their User in automate licenses and partners and platform. Microsoft Cloud consolidated Azure XXX Hub Our to enables our

continue solutions demand committed management evolve We grows, to our capabilities is help cloud portfolio. to satisfy N-able cloud MSP for partners the demand. And SME’s providing the across need and that to our as our monitoring

way we technology. they Meeting beyond with partners today value they that at go Empower, the echoed

global Head success Nerds, one-on-one but have with hundreds a sessions our We relationship a begins. we not are sale MSP our does we when the to hours business. software end are To who in partners. we complete relationship few of month our programs, in our our It of a partner business, a dedicated not collectively and team partners. spend And name the partner just in

help work help them so We their with to partners efficient business with their technician this can is time. practices their events success. peer-to-peer And price, them focused because be materials automate addition, and our we them Empower, on success do In host them they and to our package like networking education. constantly in give MSP’s market our We we train best services. and

our margins. the our force. By grow are extension effectively a relationship to our This intertwined percent model. grow, MSPs critical an MSPs sales helps of adjusted penetrate enabling business which is Our component market, we of EBITDA efficiently us fragmented XX-plus SME profitable

meet N-able the We to of we choice purpose-built delivering sizes is point MSPs also to growing and needs of execute MSPs demand that in bar ahead of and to the in though that And technology the being guarantee by them raise world, partner for more of continue is the around we XXXX curve. will not favor earn all keep and committed healthy fans. to our success. our the believe does continue the solutions must alone trends

During key initiatives. Number spoke about operational and two, earnings wanted our one, protect the efficiency. manage number QX And call, on secure. for focus I three, everything. we areas And to our these strategic update year: Number share

the these they Apple first pure-play can value competition MSP’s lacked for quarter more of platform differentiator customer the with Apple-management in and of to ability felt us rolling our is management manage centered our we Linux Mac the expand integrated our believe of devices began first and which proposition deal one than from this offer management to powerful vendors. new We The quarter, Looking RMM In that is the capabilities initial capabilities product, new addition put flexibility to An they dashboard. existing for TAM manage-everything MSPs our conversation a out Windows, $XXX,XXX customization updates at initiative. our and example first automation, needed. side-by-side ARR. around strategic

to from legacy Cove could they and they RMM, the by were legacy the upgraded N-central money satisfy and antivirus. Cove impressed protection and offered were They could missing gain that both them EDR. their compared to conversation than showing by EDR After functionality to save realized what more turned switching

sale Our the we customer a and and N-central, EDR. sealed Cove capability of service completed deal

in see customer pleased traction in continued new RMM platforms. We’re to logos our

top market Companies growing solutions secure. in a On cybersecurity pressure ensure have progress seeing bad squarely our putting are in sophistication before we are the place of initiative, that, shift for evolving nice protected medium all MSPs must-have compliance A the We number enterprise. regulatory of providers have face on of business. data insurance of underwrite to this policy. also qualifying to area, SMEs focus regulatory must effectively from This, helped in small attacks, protect including our a security that the to and actors, they compliance driving adequately mandate second is standards. and growing from a sizes and has factors made with along focus

opportunity countries customers and partners attacks be They continents. software effectively across endpoints during meet we firsthand this that partners they launched did ensure recently past offering needs. message this quarter immediate events. X And security shows Managed antivirus a our from from security was EDR, We deployed that road we endpoint security our to saw them ongoing across market easily and the protect The MSP manage. the clear: and us their mitigation of need EDR conversion can and our monitoring including from to our X to malicious these help for protection, believe legacy is who offerings significant want

approach cloud we efficiency and image for regions providers service and offerings operational for last across capability to efficiency, Cove to Azure automation enterprise-grade growth. partners’ total data continue recovery-as-a-service And our elegant outpace standby through continue front, focus flexibly, the and data N-able’s our the On disaster new customers protection And to improve standardization. to our to our an utilize affordably. public revenue and their protection security area, multiple deliver is restore company

constant partners You of our suite. at fact, across XX-month layering XXX%. net success can trailing our which are dollar-based here And in product strong in the the remains our retention, see more evidence solutions currency

the standardize from tech early efficiency. for of to EDR example more the partners than past of first great its more relationship $XXX,XXX stack N-able in N-able products us our ARR we understood started deal in they an benefit After XXXX. The could operational their N-central seeking is how with year, product of One MSP working the signed using quarter. N-able with

Work. largest history, the we over mentioned a Managed us. a with standardize is minute this This happens company the year I important Global without is can the in Culture and that their to offer the this deals by a in award, the emphasize first was the EDR delighted recognition receive XXXX It of the for we quarter, second Best one U.S. in Work their In’s perfectly landed Notably, a were N-able Built of result, As to of value and solution to who N-ablites EDR Comparably included on tech across we Great a to from XX% partners Place represents deal the none effort In it row, we proposition business. globe. deal single were Places stack ago. of

ESG recently are We also inaugural forward note ESG our to the future. we discussing published proud look to report and efforts that in our

would circle back our I’ll With and over to call to that, for some Tim? I turn the financial outlook, Tim results to remarks. then discuss and like closing

to business trend multiple and the management revenue high end revenue joining Thank strong growth on aim business growth, thanks call aimed SME services N-able you, the profit strategy all guidance. of value our of delivered and IT of helped capturing secular cost performance. to all-weather EBITDA first the our results drives at you in managed in operate of continued spending We growth. and platform, our drive us adjusted for that disciplined of beating We all today. model and the our The John, overall the and an the vectors quarter, long-term

our review of the remainder financial quarter our let’s then outlook first XXXX. results discuss financial Now and for

year-over-year XX% The that year-over-year partners million, more revenue was basis. represent FX revenue approximately million, first discontinued Partners ago. constant on beat favorability basis. in representing guidance. the representing contributed a maintenance year-over-year growth with revenue, $XX,XXX versus $XX,XXX increase. perpetual Other a up XX% year approximately of ARR revenue the $XX.X million, QX the our to quarter ended from which constant with Subscription X% We of also contribute was currency a in was XX% primarily represents $X.X ARR, XX% total XX% or X,XXX XX% XX% our revenue from or of model, a ARR, $XXX,XXX over up or on our year-over-year. quarter currency growth $XX.X license now

net Looking revenue first quarter, on trailing XXX% at or constant is currency dollar-based XX-month calculated which the basis. net was for on a basis, retention a retention XXX%

GAAP and Turning margins. release. exclude on expenses the outlined stated, to profit in to basis that profit reconciliations otherwise the and press to all in items Note non-GAAP measures unless are non-GAAP references today’s a calculated provided and

XX.X% same period XXXX. First quarter gross margin the in in XX.X% was to compared

$X.XX driven approximately million, and profit of in loan was free We share, $XX.X bottom cost America. or cash quarter. was to approximately million $XX approximately beat outperformance EBITDA $XX.X XX% the of on quarter CapEx The average of the outside million was leverage net X.Xx. North with management line. the diluted per in representing earnings X.X% EBITDA benefit margin. the of strong weighted outstanding flow adjusted Approximately was and million revenue based representing approximately shares. million, of quarter First quarter of Unlevered an $XXX ended was principal the was of XXX cash revenue. balance Non-GAAP first million by XX% the our revenue $X.X approximately

Turning outlook. to our financial

$XXX total growth approximately expect XX% guidance revenue timing a on our million, price to the factors the second quarter For the constant of increases, approximately million revenue we’ve basis. or seen strength currency across XXXX, in growth The growth second we $XXX.X year-over-year which our constant the year-over-year in of the and increases representing range business expectations. XX% quarter of currency annual

representing in adjusted $XX.X EBITDA range $XX to to million, XX% expect margin. of XX% the approximately second We quarter million

the expect XX% basis. representing year growth and we a on XXXX, XX% revenue XX% raising million, now currency to or full are growth constant year-over-year to revenue million our $XXX of For XX% outlook to $XXX total

$XXX our approximately are full adjusted EBITDA representing and We million $XXX of year outlook also adjusted raising margin. expect now EBITDA XX% to million,

year which the we FX are $X.XX euro remainder of rates impact pound a $X.XX and exchange approximately of the updated of of on revenue year for assuming full the the rates, positive outlook. for million has foreign $X incremental for Regarding our

CapEx efficient adjusted and full we raise to Regarding to profit, approximately that cash the XX% revenue the is our be the full year. unlevered free reiterate We we year operational XXXX, line by and approximately also the bottom flow conversion for execution. the be total expect EBITDA X% will expect driven of revenue incremental the adjusted of for to impact for EBITDA

total We full and second XXX quarter weighted for year. approximately outstanding expect average of both the diluted million the shares

non-GAAP and the we for XX% quarter approximately tax full Finally, be rate in to second the expect our year.

turn it John will to for I remarks. Now over closing

constantly Thank believe regardless external circumstances our we, of we adapt positioned normal our you, And our that on the with industry. in The complexities, model ever-changing advantage take that nature market trends which partners, the of cyber of Tim. remains that echo, we critical to macro The new the as IT are demand along change, is have strategy strategy, MSP MSPs We exist the environment. well the observers and with we economic IT while infrastructure our must help right target. us challenges to right may confidence cycle. a the face healthy the component to the business give durable labor see, secular threats industry address

we aim of and investing grow are And teams are Tim and partners strategically laser-focused and curve, ourselves manage the as our protect we to to on able and everything, our profitability and executing growth. their operate efficiently. as and keeping secure ahead customers their deliver told efficiently businesses So technology you, both

you for And questions. ready with operator, we interest your Thank N-able. to all in take that, are

comes please Thank you. first Needham & question from ahead. [Operator Instructions] Mike, from go Mike Co. Our Cikos

and in constant off start you’re what could first, for see with QX of with XQ. to looking looking basis in taking currency the currency? just Can remarks Especially guys results us the about Thanks about, the environment? you a each with guys it on to guys that increases. more at front? talking give Or wanted say, and you the same traction the this the are increases, strong I price seen as that price know more just reflecting your thinking year? outlook a guidance, constant is are bit on hoping, be are at good as you annual guys. product Brien. you some as as takes for question, I had especially it’s timing do in well acceleration they the you to the you First, prepared it here here. clarity, sense, have been the current the the Hey, the looking how Cove And are provide comment a that let’s on Was little on of puts XX% tend especially for success the the well

Mike, in reviewing list give on of unwinding we and COVID of into of our This time pulled thanks portfolio. to bit at kind little And of over of had this for And and increases the or question. Tim. discounts other just year kind a color try regular cadence. take back out back through the gotten as the we a those get done March April step time I’ll price really prices the Historically, we’ve year year. last more price approach back X. pushed increases as how towards well that frame. combination our the is circumstances, We look each June across frame a to to

the year, price impact increase about then overall price that’s as for on a acute specifically. increases XX is environment the some And to from this to the QX QX seen timing months more of acutely inflationary – we more higher so more So done XX a the on due that we’ve bit or the over year now. than historically, we’ve the little past think

last the impact from increase for is size about year, year overall, price this X.X% the X%, year. versus there the So of a

inflationary the we’ve sense, coverages company out. I our increases these it some Got given the for it. across mean And seen environment. And pushing makes it too. thank you that price pulling of

question geared will. John, of The if towards I a but two-parter, second you guess, part more of a, is the

think you there Is But is guys goes a cybersecurity guys way is what unlocking. maturity resonate? the are more assume that seeing? and think think lot seeing generative about is Or messaging as if threats. and that this become they direction. do to see almost the really profile about traction on curve are how fair to there And I know consistent a now, it wanted light, you of continues separately, traction consistent Cove anything, remarks, if are your in on And cybersecurity because actually back you Gen that certain I side Cove, your starts your you it’s or the guys unpack is talking probably using guys I there, a MSPs to or that for lot SMEs again, AI they of that front First, of cross drumbeat then ensure there hype right currents? the obviously. be just to but And that you’re just you shed any but would your what product? adversary particular to customer navigate to have given these AI would need it pushes helpful? to any that to a around Gen AI advanced before MSPs could So on to more opening helping

Yes. Sure, Mike. How are unpack. a to you? This is John. lot Yes,

it Let’s step. do step by

necessarily is a to the on words, MSP. there true amount backup restore, require Number Overall, the which approach Delta for having just in two, So not the much the MSP it’s competitors. for both technology, change time of attack front, for our you’re is of on appliance is back-up It’s architecture. TCO one, less process to at much security the cloud-first, the Mike, because other of guys. our Therefore, us. the because the that for less. It’s vector Cove means, disruptive bad and the we not better storage a an the disruptive, or is time, with number only Cove, than looking and

hour solution. on spending are MSPs less the the all appeals – The time, less of better solution and it’s to of software So maturity spending less MSP. a levels

Okay.

Prague as recovery announce as Now in our the mentioned advancement we other in we a did in XXX with announced service. folks I Today, remarks, And what MSP in ecosystem. my disaster I’m prepared about today?

couple to conversations had of biased machines, an answers which X,XXX my a in days. MSP today, been virtual on have They the from about conversation Cove. be somewhat having are XXX I’ve Earlier will of so the And servers I Scotland. last and with

said a asked expect they now standby not for their I is disaster these of And on completely, image journey we continuity why for developing they MSPs. us and of recovery, are quarter So we’re dependent when of using will that offering. out continuing and recovery our were that are it get base. And I installed building more using Cove they that among on more a our about Cove standardization better that plan disaster he MSPs,

we those giving expecting across algorithm Cove MSPs or prepared the our success. twofold That a And So that they not for see a RMM traction our want with and Cove. you through then with with And now us, standardization disaster do is year, disaster better and Last recovery that XXX, be bunch are Cove of MSPs began footprint. everything standardization Cove. to globe. plant RMM. continue to the component in by One, have technology. that, of recovery, a now have the can I’m our a remarks, we with disruptive across get growth leading And now such big that’s can to been Office the flag covered and that in comfort can the can confidence MSPs our those because is be they the have that it’s is two, number the MSPs

that’s Cove. So on

regulatory prescription, hygiene speak, customers dictated and so bit story sure these the security, in that hot because Prague, or bit. to little cyber topic and a needing my right? now that’s a good in enterprises that medium compliance being I remarks. happening small, What’s about on their their have make verticals. they is more security of prepared to different to these layered are reasons, the customers And has all Look, MSPs about and more customers’ in another changed, big and is here talked this MSPs,

is be the their needing They security. are tailwind. that help What need sell to no me, to their a be MSP, big customers, is they means may that continues And now the MSPs excuse SME compliant. just to their that longer – – for

We’re are things seeing backup. making a need, of now that cloud-based MSPs MFA. have need their maintain that part better like SMEs the like Things that sure checklist retain logs, for to files, they EDR compliance

higher, hygiene has gotten the much it’s a tailwind. creating So bigger

really own it We MSPs. As And in a we from so the game scripting go and them them and the the relates to provide AI very our beginning. we to PowerShell scripting We We’ve how look, build help provide our all is game own automation automation of efficiency. and in name been and they do the own with and we use me. about automation, our and is help their what MSPs. it, also try automation, can automation our excuse game scripting and managers

in our we that offerings. products to in of push some So RPA machine today, of We ML, our security continue other learning particular in learning. at mail front. data look in science on We and and some machine use

the So part better and our to our leverage of a it’s continue MSPs. continue invest in there, lean we’ll serve to to DNA. and technology We’ll

color That’s sorry, called I on side. I’m earlier. Brien guess coffee wires, haven’t I great. I Tim had but think and I just enough one today, Thanks the you just crossing And O’Brien, my correction for John.

to over it turn We’ll that. for apologies colleagues... my So

Thank you.

next Blair. Jason, please Jason comes Our Ader go from ahead. from question William

Yes. Thank morning, you. Good guys.

manifesting anything of macro going macro Is is geographically customer the on how adds? right new there the to impact commentary affecting broader kind of business sense Just now. wanted of the on? Just it any Is expansion, in kind business. first on a get

on. thank great of map a of bias, question. recency it’s you bit and little Jason, for Hey, my the again heat Look, use going but what’s I’ll a

XX including far and North South countries, Here obviously, and from Africa. and the America, Zealand at as Prague, Canada, New U.S. we Australia and have as different MSPs away

customers security be bunch The bunch countries. adding inorganically. between mix a growth and are they growing healthy both services. of continents, sentiment the are protection. a algorithm adding organically new and heat adding of a MSPs where continues data honestly, map Their services So here Their is pretty And to different is and different is around consistent.

with protection outpace so And growth. aligns our security our we’re seeing continue overall really offerings to roughly Data that our where and bit.

so for overall, And the I’d high. MSP’s say, the is quite world demand

MSP headwinds lot where One labor optimization, for be even today of industries, that their what there in that’s slow me cybersecurity told or earlier UK, a or an they was Jason, that’s year some markets, last shortage in the in MSPs, related Unlike down. QX began might to other to things projects cloud opportunity. of

have an a So recurring usually second the half And And feeding managed ongoing strong. for slowed recurring but services. of the down, ground ‘XX. last first the the service and in now revenue year, the was good of projects being from in half project-based, they seen are uptick projects initiated those

I spoke they But is couple of different So that and uptick continue from to. XXXX. the recurring This slow. that that well. as now revenue to be in strong are demand MSPs The an project seeing to seems a

So the here some have in of days Prague. last that’s on of that couple floor been anecdotes over the the

wondering or know. just And or macros, if Okay. in don’t credit that’s new I there I know, guess terms what I was MSP starts I expansions don’t at was I is tightening. been obviously impacted, of getting M&A, the

at. the credit sound tightening for like seems material doesn’t it I impact getting should having be Just it’s was I that’s and SMB an you, but like on mean, what market just it

No.

Okay, sure.

MSPs it’s the side, we’re remains of the from What listening, slightly maintained. that debt the bit but as number we’re to conversations – seeing and far valuations the the is a of as some on not little material. deals the of deal quality slow M&A beginning are So hearing they

of provide MSPs are remember, And service Jason, an much that mission-critical. these having impact. like really not it’s So that the

shops as the not are are general, of these MSPs hypergrowth some So enterprises. These type And businesses not maybe or in they as over-levered, much are debt, using small, not that get right? medium hyper businesses. of

that. say, or they their our seeing seeing we’re I’m sure have impact not, by debt. and of they are demand. that if large, of So any they are type on not feeling I’d any But in variable demand type –

just is question on competitive Okay. some sure And is there. kind then there the cross I’m second Great. And currents of landscape.

just through, these the try some could both some entrants share gaining whether you momentum we’ve you talk think heard of and where newer on some players to than some up-and-coming us the to of then bigger incumbents, you especially from players. you’re If of relative the

for maybe so us. the picture paint just And

Sure. we’re seeing the or whether that improving of And and voice in forum of a about getting in ago, we’re market, our different our With seeing it numbers. rebrand we’re we year in – marketplace. a we’re share be did much of that Reddit it our Cove type definitely a

So acquisition definitely is our customer the rise. Cove on

taking definitely We’re both the vendors Jason, share backup focused on are some bigger vendors, from MSP. but that not recovery of players, MSP also disaster and traditional the market

winning we’re on and MSP-focused generalists. the fronts both And for backup. in So the that’s guys on

in endpoint EDR detection continues to roar. Our our

there – is end. we before, repackaged acquisition of our some with of X.X low but – low the at slowdown RMM, this players. There end market. two the On I seeing mentioned we customer in think to the ago, you N-sight. And a guys maybe we’re the on new We years new a over is to little point halves and bit your about

one. our three we bunch and workflows and did in brought – solutions we on improvements So into of a

reversal the with so work and and in done, repricing share winning the end. And the we’ve actually the immediate repackaging now pretty saw we a that low we’re and market

the we to end, high on do well continue And there.

offering. MSPs We We integrated because of approach. large quite depth because automation. win our security layered win of our the And our of of breadth and services well. platform we because win our N-central Our

there. I’d end to no continue strong market of RMM. see new we say the share news on So high results

continue we that gain We and continue share. progress to want make market make the to to

you. Thank Great. Okay.

Thank you.

go Markets. ahead. Our Matt, Matt Capital from Hedberg from next please question RBC comes

Good think, certainly strong comments Thanks the question obviously, the morning, I a is I on Thanks. you great Strong question. on and hear. demand John, guys. results, for environment, your guess, is guide. to for the Tim,

beat. even full than kind just – just great. at You – gave guide through after beat, other or I’m to full up say, of by raised maintaining revenue which are a confidence kind just the it that the you more range versus, more the QX curious, QX year you’d be full year and year of than sort of passing companies what But what take is

of the maybe little guide. process on of bit sort a Just the year on full thought comment

than combination it and market. And John strong on, the to that year is in about of assumed demand other to in script, is and on We’ve the absolutely, on we’ve I year for remainder FX that $X we environment One, is the things. a It’s did from it operational when impact touched is an the Matt. balance see that rates at FX due full the gave we our million guide. Yes, the of the outlook full the piece, touched the year that we’re perspective. environment original That higher two updated of the seeing the demand onset rates. continued

it. Got

as then is very these easier And Helpful. Thoughts durable on Okay. the sort of hiring, days? it profitability to obviously, – model how progresses. the well. trying great find this balance is year as profitable with, a are you talent obviously, is there And to growth this

more dev to We’ve R&D had in hiring say XX and and equation. we’ve XX of to say the would would spot more part I look success, ago. seen a I that that absolutely. – engineering improve invest in probably XXXX. the months as heavier throughout we was that more challenging in Yes, lean acutely

I And that touched the kind go focus P&L we environment into investment a we our as acutely and is part of have an from seen improved say our So hiring more the R&D would perspective. from where in on we’ve XXXX, is perspective. of

Got it. Thanks, guys.

Thank you.

ahead. Essex please JPMorgan. Brian from comes from go next Our Brian, question

Hi, stages, was guess any do and of products kind several Managed the out Managed interested start from have Managed see interested of the quarter nice I might to – results early that EDR expectations are you mix taking for incremental we question good be so. of I if attributed and to represent the could have adjacently And host to next new I what you the but of what for over and still percentage am in seeing revenue new for maybe you what wondering specifically, with EDR, over years? learn rolled past of revenue might sense terms quarter. obviously, kind or a that of morning it’s thank for EDR? or But maybe you the

line it’s days, early It’s don’t John. by to historically, really And is early a start definitely Managed This item. too EDR talking revenue as our right. about separate line. products out Brian. Thanks we Yes, break

We where and launched I think MDR. in good we customer, remarks the quarter, have traction. prepared getting anecdote we it and that one that last that been gave we up-sold was half of

for loop, we that to different too is for little are some time-consuming, might value expert MSPs there the an do managed technicians actually a or is human of that leverage great the a might such be able to have prop couple angles. feel why bit provide for their of adding one, in where Number good EDR too to complicated them, so right. layer, be this And they traction, so believe a and speak,

the month, efficiency and of their For that and helps team EBITDA, device a and can and overall profitability. it more couple go bucks service of their their per burden, overall add they per relieve now

folks, using again, today, So, play. efficiency business that and it’s couple different a their scale the in of They grow can for those can ways. it’s helpful. then an are folks now for go, And EDR they

response. So, and we those that time know market more some to might bit expert endpoint think can end they a manage that help gain the sophisticated, will then low detection little apprehensive of And the they bit outsourced leverage little are efficiencies. be for and it that a help this

adoption. that expect strong a be we will so this And

continue SentinelOne to offerings, of as couple a with things. we far different As on work

a a drive can – overall our we our more these and And the with many retention SKUs. offerings the XXXX, and that to vigilance excuse that help additional security better in our bring them is, number didn’t the bring more can help new will compare couple at with help we me, growth obviously that believe EDR Managed the better add The help got offerings, it disaster we faster we looking products market, other expand, just to to and XXXX, MSPs And layered net of in we right. recovery are MSPs algorithm, efficiency offering with with XXXX. and will growth is. We story market Cove and XXXX

to going Do get the a perspective? lot do you about a might Got it. – you you services there of that or might that not that, much this of is see I from indications from hiring are that think mean, may kind EDR digit forward a And of bit this like it – of of going anticipate headcount or be pressure little an margin front. margin forward, leverage really just and low-single out how do – you there? so have a do revenue percentage the of have impact you you initial is

portfolio overall So, But at the the it’s view. because margin a gross know little that clear, about driving others. from just look, in bit acronyms margin have we say than LTV. would the offerings to we lot look I certain of stronger have business. a this three-letter be And really And we

an way MSPs. SOC Manage a MSPs do we So, is we leveraging RRM. the in we we AI is And that our efficient to are to and and both, and this EDR and their drive SentinelOne what EDR integrate for their actually are we software, in their for is the service then attach. And leveraging scale then the solution

leverages. SentinelOne one offering endpoint that – why the So, that single And consuming a command layer that powerful level EDR can N-able EDR that endpoint little dashboard. the and And monitoring bit service through MSPs because technology in basically of then instill both the control our now MSPs add. that on love to in it’s glass, pane provide that’s extra MSPs and the that’s – because managed top of comfort. security and management And do they that we value control, SentinelOne with that

success. been think it’s currently million devices mentioned, how X.X over well we EDR we that as go the are that’s So, mix I have protected and And that’s we with to market being today. a and

getting like helpful. growing as expectations a expense. you maybe are to particularly like R&D, build looks But side, thinking pace How like kind we ongoing higher roadmap at revenue? out G&A. in just R&D on is the there, That’s It think expected an with OpEx And leverage – it. you how the are kind on anticipate I it’s might there? increase Got of to than respect of hiring? of How robust

sure. Yes,

for trust help of they help tell these products in And it. the buy are scale, built can Tim where and to that of And my the to that MSPs, years I managed if going more will our space, of they have growth, durable what actually and for would our They in trust type of of us. regardless overwhelmingly, lean aspiring They is for that consume we anniversary this love drive we they do and rule – approach, from and – I regardless will I space, them are years long-term brand. and So, it’s be that am business to invest in from country, grow. that’s the in, purpose-built XX-year just passed rule us now them it now, right, XX. to we them, coming where that market it

And our integrations or products like to our it’s market. for our enterprise-grade Cove password or whether is offering we management own through so mail more one do software, me, of with IP, the best offering or continue things can bringing

And lean see we do as opportunity. So, as R&D opportunity. see we we long will continue to the in the

our increased have Cove. R&D in spending We

R&D our increased spend have in We monitoring.

increased And via have and have management. those acquisition We internal believe we investment cloud will through in returns. and positive cloud

in R&D OpEx revenue get we bigger, as grow. get And and And our scale So, scale MSPs. for snowball get that areas. continue we going And we are to to early scale to opportunity R&D. continue to as continues it’s be to will – will we more to do collective as our top able that. we here, drive a believe lean in continue over and in and innings some will We time gets massive believe are we still We business. line the more will get

That’s one helpful. for last it. Got Maybe Cove. on me

cloud. adjacent like to migrating be endpoint, think disaster from might you have governance it on-prem end of backup the in particularly data there, maybe do So, with customers true like traction you opportunity recovery. as management like migration, markets great might terms like and particularly or data in the What true sounds

adjacencies but already on those what for – the because of you Adfpoint, you might just wondering, they some what side? example, I more like am Cove into have to top migrated peers that’s Some maybe have done next of enterprise-focused. on areas, But or have what are

in good Sure. It’s When it and of question. really small, a what pops mid-market medium is adjacencies up enterprises to selling Cove, to the we some as direct think relates directly.

data or have offering come about base We they a are protection are using co-manage saying want direct to don’t have but option which helpful talk looking not of – MSP. management we for or customer MSP, because endpoint also they for us an a they this offering a part is a much, direct our we good unified that a

enterprise. elegantly of looking So, in for the around the directly one ago, and that’s IT at we into are of departments, times On that fits led Cove big areas a winning – that big talked couple Cove lot a large is medium quarters of midsized And internal and those by we very in particular Cove. about solution markets.

well. looking go-to-market and And channel so Cove that’s of our story there little at there a bit lean are from potentially an and we area accelerate that view to as a in point

helpful. Got you. Thank Very it.

you. Thank

comes from ahead. Keith, Bachman BMO. Our from Keith question please final go

your the Hi. and the versus the question, with acquisition partners, your think versus do at how is, thinking growth very that to about I And or algorithm think about or is other of R&D over in wanted What’s comfort so much. next And are others, line debt organic mentioned key about. of drivers level X you side expanding about that speak kind SentinelOne you ask you as the to first that you driving portfolio? part to debt. years your Thanks. the Thank it level? of contracting Xx. you organic expansion I feedback on the are of and kind on rates that wanted up over where corollary a levers But your be down either to do as we three the it, or on the next, the of just going how what’s X gain little expanding comfort – get on strategy in or interest portfolio debt thinking going years or M&A or your see then higher. what’s bit your the about How partner call you should

called investment security, – And knew knew commonly then endpoint we companies we to we cycle, and across was as and we our looked SentinelOne. verticals, and compete at looked those will, elegant sure if is were we What we of with or where – to providing different Great When able to early all most is endpoint cycle. this is to that was that, are in choose is research verticals. hype research depends that our the globe, its, knew And bring we play in and that monitoring we we say provide development would right. it And hype the and service mix next-generation we it just at it’s three importantly, its call, we and the what on I at Today, that continue look, we X security. we And more and EDR. to we our ago, up are to profile, to management, we MSPs. with dollars investing AV. years to it days, of really that you way when where years how and best known on MSPs back partner to to level a be Sure. question. that we make and protection what its The of level, look in, there wanted continue to data expand offering customers what’s wouldn’t will millions that looked the in X management looked decided into the an – service I me, best three now solution excuse

want and thing customers. and this best when self. it’s to where in look And more working at make customers. enterprise-grade North to can or be we for we we so company constantly is for solution that software provide our better acquire with may our or served, our right efficient the something we that whether think at integrating we not MSPs and that’s and build an help Star competency, is If are our for warehouse best If looking it’s IP the obviously that, core our our

it’s And of can in service just acquired way cloud example, we what’s management are market, over assets. in the monitoring they of a Keith, out that customers really what’s So, because our we times, and the Spinpanel long-term. the lot an best the as

management everyone. do, So, better is to what that that monitoring believe we we we and and core can build than

fits And as great invest. So, a example, are the a for start, partnership a TAM. we a great we of a we get and And investment to after for head different now MSP, to continue at for enterprise. win win And a them I thesis. them profile may were to win richer our obviously our They tremendous not, our the partner, we this asset It’s in the we It’s security have enterprise-grade and small, going a to secure. win. an look a this kind it’s enterprise have it’s we bit to IP. success. They as to XX,XXX choose our LTV, better win with for acquired we that not little enterprise medium going via offerings, a customers, call gave relationship be help MSPs. if SentinelOne N-able, get a small up access we medium of if an wanted software. because – we team, But or access is their acquire R&D case, quad opened it that just

a win are our that, like find to that do that. can we if So, quad going we fits profile,

durable have that debt, balance it we to the we willing some a will protection well. willing sheet cash make I and revolver, or at. we increasing that believe would via capital, and are Tim a data servicing and find do – it the have our benefit MSPs better monitoring a our use we be as leverage, would them far are an whether using I security either for i.e., helping acquisition if means if management, we position of with are as we our that that thesis that acquisition. customers, As And and comfortable where think for to fits our long-term these if or we And we have are

Okay. Terrific.

ask Let ahead. me go a sorry, – follow-on just question

a color was little bit going to of add just I on Yes. that.

for above time. a that of I touched be comfortable comfortable standpoint, kind on, we think asset, asset, from shorter the as John gross flexing are improvement right better, customers, then like would period on anything south the we there vectors and for leverage part think And from the standpoint, Xx. that’s growth we different retaining very a strategic there we as of But right on room algorithm the of for a of think the is strategy, of retention I across look bit.

John retention and of bit, buying vectors bringing net or of Looking kind at products partnering new building, market. on either the to touched different the

We of We We on have to Spinpanel acquired new market partnered perspective. a MDR XXXX. a from built brought the in bunch products and front.

the share vectors tapping from new expand and to So, on all on and bringing those we of to products are continuing then three market focus market on new.

growth. accelerate improve from three all avenues a growth for of and those opportunity have So, to us perspective

just retention you the the net my specific we quarter? I through sort as that into Okay. – gross this you led on of was how should the XXX/XXX thinking and about Terrific. more versus rate go we question reported year be

Yes.

a to guidance headwind currency are guidance. more on where a a retention perspective. the net a we at where I reported as XXXX a Obviously, pretty would it was is at is stay from to constant looking of expect perspective, think there. and I throughout consistent currency from steady constant constant in as currency expect standpoint growth pretty lot currency the from the a at, things But fluctuation the I of things would to from gross year focusing bit, there standpoint more relates stay

this backdrop. consistent Okay. in Well, good is

So, I questions. much. appreciate very the Thanks

Keith. Thanks

closing now end That John session. hand you. over now Q&A you back of is I the the to Pagliuca for Thank remarks. will

And we thank you this Prague, be Listen, quarterly all take for will in earnings, we signing interest off ongoing from so and on us appreciate N-able. joining care. your

concludes This you call. Thank joining. for today’s

now may disconnect You your lines.