N-able (NABL) 13 Nov 232023 Q3 Earnings call transcript

Hello, and welcome to the N-able Third Quarter 2023 Earnings Call. My name is Alex, and I'll be coordinating the call today. [Operator Instructions] I'll now hand over to your host, Griffin Gyr, Investor Relations Manager. Please go ahead.

Thanks, operator, and welcome, everyone, to N-able's Third 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.enable.com. on press call our supplement

risks and market earnings by we during statements this our our to filings are call are and including and the statements, of update concerning our this are no business. based of those on to subject made our forward-looking financial SEC. law. uncertainties, in on information highlighted those information and except release global with outlook, currently statements including opportunities statements today's These environment duty as the impact the available Certain economic assumptions, also and required number undertake a These

risks with are Relations available these on will SEC and today's with measures, on otherwise call non-GAAP we Copies we statements Unless SEC. financial Additional today's on various highlighted certain on measures is Investor of specified, our the or financial in in financial our uncertainties website. discuss release today's them and and from information our earnings call. in measures. website. Furthermore, reconciliation Relations discussed is be refer filings available concerning the Investor we associated the earnings to when referring financial will A non-GAAP non-GAAP release press to GAAP measures our to

call over the John. will I now turn And to

thank and Griffin. today. Welcome, Thank you for everyone, joining you, us

advances, augment trifecta There getting a can modernize to their realize the factors legacy this. distracts them to few are remains outsourcing is the expensive and of market their IT age This look of and and operations of outsource meet the the push to IT organizations MSPs. growing requirements. benefit managed digital and key operations, core for service systems complex challenges as IT more from needs regulatory provider As their organizations strong.

N-able mind. in was formed with this

MSPs. to these mission the favorably our quarter unwavering to exceeded on. we EBITDA XX% of XX%, meet medium representing million, Despite expanding an top basis; growing by bottom as partners $XX.X challenges our purpose-built leading strength positions of results us Our highlight macro revenue a of an a margin environment, technology, on believe constant public standing guidance enterprise and provider head our XX% margin of market adjusted $XXX.X or line MSPs software highest IT small helping and EBITDA third our We and with a the currency million, with empower uncertain year-over-year ecosystem company. and adjusted as with stand-alone cement ever

constant raising are Tim guide $XXX.X guide and for currency XX% midpoint XXXX full will year while of million as of elaborate, million. year future the $XXX.X our And the groundwork this accomplished adjusted laying all our EBITDA from We of to full success. maintaining we revenue XXXX

a to market we response new initiatives N-able Our that teams and are are category, advanced into entering bringing particularly to product strategic we excited month. and detection managed important announce this

ranging determination focused into proprietors relentless through our development, sight discuss product product our we needs prominent innovation. trends the bring want And we providers, believe X publicly-traded have and fast-changing unique strategy. to sole I the landscape. dynamic service to MSP XX,XXX market technology approximately global a technology line Our of community to requires focus influencing value adapting to MSPs With size to in from

consolidation security modernization; second, First, the increasing up movement standards. market; and and third,

an economic ROI. eye MSPs with efficiency customer In have behavior. technology environment, uncertain First, proven consolidation and we driving see operational and on modernization an solutions

growth. reduce to solutions platform leading unlock and aligned [tool with MSP helping integrated needs, straw] technology their Our and

consolidate tech believe integrations, RMM, satisfy coupled their strongly desires of protection us positions with and to stack. platform We modernize to top-tier external MSPs security data our and our and multi-tenanted solutions, tech suite

IT bar A turning second enterprises to trend or is to MSPs and same larger of means challenges the or a MSPs market face run for MSPs operations. increasingly addressable are believe SMBs as market. up going augment security Large their and many IT this And MSPs, both realize of We N-able efficiency to to aim The and evolving a leader to in as raise product our this to appeal we market N-able. automation opportunity. segment. and continue MSPs go-to-market upmarket-focused solutions and enable investments our this to scalability, the position

developed to MSP land of to we trend help large midsize upmarket the better win great position capabilities directly. MSPs also IT and A win the upmarket, is byproduct teams our departments

core to opportunistically continue our MSP sales this seeing focus part direct our and partners, business. positive we pursue momentum IT is of While in are our

to turning significant attack priority. standards. a cyber successful a placed trend, has as Now impact of our increasing top IT security third The business security long

compliance to global growing that as from they tailwind actors, solutions security protect In also addition security a to bad MSPs requirements demand. to serve buying face

regulatory the endpoint Here, expanded approach protection, digital is robust enterprise. a is is and more, filtering layered content suite protection, and With recently modern provide option mail an the our that requirement. security a from of we to Security clear. to message requirements security and built shifting options safeguard fulfill spanning

capitalize to encouraging ability considerably the our upmarket success at of Cove to quarter here. $XXX,XXX land technology want in I scale to product larger suite in We we of trends, our ARR have updates quarter these initial ever representing MSPs further feedback invested to with to market and speaks to into third Starting and largest the our share received. our these and and A Cove, over made on known displacement at domains scale we involving competitor developing Cove's move exciting last help advance progress upmarket. a deal the

technical decided exposed thoroughly in requirements performance, MSP often gives evaluated multi-vendor Cove's sovereignty now they the Because restore is consolidate ability traction example protection is to innovation. and The our between excellent network keep data a protection each Cove just security commented to data technician-friendly and attack must and mind. interface data, data distinction data solutions with attacks cloud-first and of comes of to customers they can't mind. responding data blurry. in the the core market Cove. increasingly of on headaches approach, not customer MSP worldwide. With data located copies are centers market XX Cove meet approach, organization's legacy Understanding data customers' Cove's this which The Another data targeting protection product recent surface storage intuitive from copies, and built local Modern and with with Cove's going safe. strong specifically peace of on reduces network, sophisticated our solutions. risks was beyond And to a

the is our solution now and XXX Our protecting best XXXX year-over-year. ever, is Cove over X.X million new XX% backup approximately cohort Microsoft at users, customer growing

receiving [ matrix. we and share managed research to that are named champion ], recently Cove in firm, recognition, is and recovery their global delighted a also Canalys technology leadership backup industry Cove a

heels in means made end-to-end confines the quarter. laser-focused environments, on unified third MSPs RMM. front, where platform. IT RMM we We a significant the users modern, hybrid the going On its meeting beyond remain vision simplify the devices, delivering traditional messiest. complexity and on This a of manage this management progress capabilities We of this advancements enhanced analytics deeper enable we Apple on unveiling IT inventory of IT stacks These refreshed feature their the insight user give year. management interface, better. them released a asset released earlier new into environment view We to and the and technicians which comes their

business translate to tangible This impact. can

consolidation. upmarket to service ability powerful and while capabilities systems operating disparate go benefit bolster of MSP's the Our organizations with large realizing

resonating approach customers, seeing with demand this in steady we Our is segment. are and

to Turning security.

We for point solves unique advance marriage combining response. challenges help. detection about excited cannot cutting-edge in but are is with oversight organizations a advanced This staying a expertise our are alone. ahead entry continue security staffing those into evolving because to and the the particularly security to threats increasing, managed protection. MDR organizations threat technology human manage organizations combination environment and suite give and fatigue, mean our customers and our industry, need deep Alert threats of pain

year. broad is security larger In MDR thousands providing is the the much cybersecurity With Canalys customer's visibility MSPs, will across partners be than MDR desire than more for cloud ] technology we this This entire users, expressed managed endpoint, strong and services from cybersecurity that including research the stating goes N-able. and recently beyond their conducted selling they Industry of response with market. a for MDR opportunity [ firms powerful. the validate network. ecosystem, recent MDR poll our a EDR because IT also applications

multi-tenanted, with has perhaps the lines there's engagement modern from in met since one-stop we appeal broadens our a solutions of most this of and MDR services, telling, high Adding this opportunity. born as backing shop And and front for We architecture. the customer have technology, cyber commercializing significant a our national strategic defense partner expectations. security space, believe a cloud-native

security In are enhanced to enhanced This faster solutions, spectrum, vendors an MDR to mail, that with remains their propel want mission-critical, we To also delivering improving our we superior market integration our addition Across customer ecosystem breadth, to security helping through the to more recently experience. customer security partnership. and our offerings. forward. on end, committed to across focused from facilitating are functionality framework this our enabled we security framework, journey expand expands reach go-to-market time

focused investing and on the long great operating technology N-able powering advance that and trends are With to delivering of these the term are demand, positions for the MSP. age we

sell-to all of to our efforts goals the framework customers are leverage and sell-through operational at our the This algorithm, strategic a approximately gain MSP XX,XXX healthy to model. SME access within our medium-sized focused to We MSPs the as multipronged Our business and and reach XXX,XXX reach businesses. us as profit we partners refer to of allows solutions which margins. enables growth small- and over partnership sell our

And retention; growth, to these which of we market, of we an MSPs. new we lastly, employee, MSP regarding third and SME are building of an I N-able to customer MSP an land when grow. grow These we and And that adds an MSP When services each a elements a new model we we on cross-selling to the to components. our adding And unlock base. service across want in grow. MSPs; customer, quarter blocks are: When device existing operational MSP, the growth bring of when lands potential new updates our algorithm, MSP the discuss grow. MSP

N-able with MSPs. adding Starting new

Our new be engine strong. customer continues to

X we're best quarters are company. public XXXX became the cohort year, we ever a through since While customer dollars the only the

who This go-to-market an teams. the of of compelling to testament new reflects our with We efforts are our value the a are choosing environment, N-able. customers is uncertain to proposition and macro strength reaching partner success, despite

sponsored America, force Purple alone, events prospects. in North to we customers. the leads over Boot XX market, and third Head X and industry the was Nerd Education connecting reaching global quarter in adoption XX hosted partners the thousands with out roadshows hosted and N-able Camps, In across of

the to quarter. addition efforts helping our cross-sell on offerings expansion, land their In in educate drive our new value help our of and to the we MSPs, saw steady partners

With our have expansion. solution set to path security, friction enable spanning and a data MSPs protection RMM, low

revenue our with growing see per penetration base. a buy existing and there's across We set. average and in is further penetration Our potential partner product rich steady of solution, customers multibillion-dollar as cross-sell our our more uptake for opportunity

cross-sell the uncertain weighing retention. device environment While NCA is growth are healthy, and on macro and partner

operational and IT budgets spend. That our believe and numerous are tighter of said, device there tighter led growth. existing are spots retain to budgets optimization effort bright seeing customers. We and in expand We rationalization to slower have

highest Our and for Nerds, score our satisfaction see success support. enable their are demand customer matter who We continued scored Head evangelists technical subject on experts. partner partner organization ever

business grow customer ongoing partners experience, of constantly a We center. mission the part these grow. N-ableMe, as partners have our our of new engaged center, we as and the we invest of improve nearly elements our every XX,XXX to already in partner And launched with success through aspect because

strategy. which the With highest and of IT public extension testament as force, margin a SME the acting efficiently in our we history, to as serves the our our EBITDA MSPs spend, of our was an effectiveness strong third access sales adjusted quarter

execution people the our and One continued are culture are diversity, technology the area and focus superior and lifeblood equality our Great our belonging key is business. oxygen. But operational journey. of

with a We women develop X hosted recognized also summit Comparably, leadership by example, drive workplace help global platform leaders. culture a be further transformation women one leading corporate and brand execution and and the As to cultural cross-functional were in honored our excellence we to recent awards reputation quarter.

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

And you, us joining for Thank you John. thank today. all

both on by platform helped guidance management adjusted exceeding highlighted strong a our public our strong, top company demand were and ever results as highest the Steady our and quarter outperformance. for third EBITDA Our margin cost drive bottom lines. solutions

mindful model remains Looking and growing market growth the clear and remains ahead, of believe positioned with environment, we MSPs. our are vectors on multiple the strategic macro demand capitalize we durable, well while a focus our business to for

quarter a million, constant of growth third results, the perpetual was from historical currency X% $XXX.X maintenance or approximately from Other constant and was $X.X revenue, sales currency revenue revenue XX% revenue million, representing which XX% basis. approximately or approximately licenses year-over-year Subscription up primarily XX% on XX% approximately sale representing our of a For of services year-over-year. with consists professional associated revenue the $XXX.X approximately was year-over-year million, total growth on basis. services

ARR, that year-over-year. XX% of now up a up ago. from with We our ARR, XX% X,XXX approximately $XX,XXX which of total with ended approximately the Partners is of over more contribute ARR $XX,XXX XX% or approximately represent quarter year partners

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

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

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

year-over-year, Third EBITDA up approximately EBITDA adjusted quarter was approximately million, adjusted XX% $XX.X XX% margin. representing

average was Approximately the of shares. in capitalized million in million inclusive or our loan flow outside approximately cash was XXX development million, based quarter the costs, of $XX.X an Non-GAAP CapEx, of free ended quarter. $XXX million America cash of principal of outstanding approximately quarter X.Xx. We million XX% net per approximately on diluted with quarter million third $X $X.XX Unleveraged $XXX of leverage balance $X.X the representing revenue. and was North software in X.X% earnings revenue was the and share of weighted of

Turning financial outlook. to our

we discussed, N-able. believe market John for our opportunity see and tailwinds the in As long-term in

see As budgetary in R&D uncertainty MSPs, we we in to our the continues to macro with have in seeking And for critical engine to creating reflective bring new expectations we organizations look a our to spend the caution we continue while work growth to of to which tighter solutions our term, environment, to time market guidance. are reflected accelerate. IT these budgets near which optimize robust SME products,

for million, fourth range XX% expect approximately $XXX.X basis. the a of quarter we that currency mind, or revenue on growth total year-over-year to With in representing to XXXX, in of the million approximately XX% $XXX XX% to constant XX%

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

reported XX% million, we year midpoint now a year million expect total both of the currency prior and constant our of maintaining For XXXX, revenue $XXX.X representing to full guidance, approximately the $XXX growth full basis. on year-over-year

$XXX.X and of margin. year XX% now approximately XX% EBITDA the at adjusted up midpoint year-over-year to We representing and are EBITDA adjusted full an EBITDA outlook our million million, adjusted approximately raising expect $XXX.X

There CapEx, full of XXXX year the of guidance impact approximately negative a X.XX on and environment for our million the impact development changes foreign We speaks these ability revenue of operational outlook, remainder and euro be guidance XXXX moment since our to our total the the X.XX, the for have FX to EBITDA previous includes capitalized we year rates we approximately In revenue year of our strength. We fourth reflect and updating will X.XX FX guidance. reiterate FX exchange for million, respectively. changes Using full to to want and of adjusted reconcile been pound to quarter. expect that the translates for on euro last midpoint despite of our $X.X and which $X.X believe headwinds environment for software costs to the currencies I take the our of approximately raised XXXX. and other these of to call, the X.XX for updated assumed revenue current maintain rates pound the X% a rate

for to free approximately full flow We conversion year. also XX% be cash adjusted unleveraged EBITDA to expect the

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

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

closing, In third pleased are strong we quarter. with our

we the are are forward, of mindful opportunity. from long-term while Looking addressable believe uncertainty, macro benefit we we positioned to the uniquely robust market

We execution. have a of proven track record

data and new region by adjusted considerable invest management, Our margins, have addition model. of adds offering solutions business to IT the base another to protection security of industry. we flow are and cash needs flexibility provide sheet, is our strong customer gear free and strategically our EBITDA high the meet priorities. our to the we diversified MDR IT allocation balance And capital market. With The

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

Thanks, Tim. quarter heights made and We progress on strategic initiatives. in scaled new critical our business to the third

As the forward our we large on SME of ecosystem the vast. opportunity clear age vision advance IT and quest march believe is serve growing. is MSP, we the to and our is The we

model, operational and our code differentiated over to technology growth to X,XXX-plus profit with efficiently MSPs, clear market cracks trillion-plus excellence our enterprise-grade is to our and technology MSPs. $X appealing the energy opportunity sharp and by SME the N-ablites, IT to delivers and focus to which direction deliver providing continuing providing And strategy market driving great on both

open questions. the will we Operator? for that, line with And up

Mike Needham. first comes Instructions] Our of [Operator from Cikos question for today

I guide and to the here raise know had that beat EBITDA, the the some year we're and that as Great maintenance addressed the and revenue those revenue full despite seeing for here FX that of beat see earlier. as the headwinds, of Tim well

but to. kind we're engine And as growth getting that for the the appreciate of algorithm. are probably comments different questions angles, John, that there's these both talking think I at X new I customer well of

the The more strongest a 'XX ago? help you a XX be traded Is potentially spin. is is we thinking it's to follow-up can about days publicly from first you I I saying that might the in guys macro, question things are do customers the where about really customer is macro. a the know -- for even guys macro. that I first perspective company hey, cohort since dollar versus of the that saying, cohort I when the demonstrating tied cautionary that company the you have those environment. calendar on new a guess the difficult a beyond basis are know think more That's quarter-to-quarter comment us were cautionary question. context

Sure. a and team talking appreciate you I you I'm Thanks, the to little looking tomorrow. to Mike, following stock. more bit your and forward

the on out purposely So multifaceted to wanted have look, the just quarter-on-quarter algorithm comment, approach. that spell we this folks growth we to remind

mentioned, really As was of even the you algorithm that part NCA the major is strong There's QX we're necessarily seeing to no difference to quite the QX, strong. compared performance. It quarter-over-quarter QX. a like from macro environment in in quite QX

SMEs. it's a their both hit of they're more, looking rather additional we're And of a their bit of more of line targets, adding same, Mike, to I top is continuation achieving little line that the targets. the cross-sell through would way where MSPs seeing services their that say, than bottom and

that And so coming bit that's of seeing moderated up. little device adds where we're a

licensing on their spending And little relates portfolio. as bit the I'd to moderated say broader it's focus of adds across costs their a a where a device of money so more they're and licenses, continuation really it

new it. to here. And second then but almost the this one Got of competition comes the question, back customers

the any removed that? there wanted just any so through Datto coming And with quarters front? is enable the see, to on benefit some there I change from competitive is Obviously, to acquisition,

you And to sense that the a for and then talking that is, what N-able. have competitive that, are at I guys MDR But about guys level. some imagine in you secondary the does obviously, piece offering elevates

remarks, the see color just I So bullish MDR. those in any had wanted to any but could pieces? incremental on get feedback that some if since the you you guys receiving comments know prepared X are I

Yes.

Data the Protect in to uptick say, our Cove I'd offering. we a NCA, continue On see strong

cost offering back, So as out spun MSP category, protection a ownership. the the from as when from years as opportunity, we demand and a the and we data looked from seeing we're business Cove base; of have one, couple and what but we from a at a a two, differentiated the tremendous TCO, technology of a category total

as the back to brand, the Cove decided new our continuing the from invest offering. we're offering of a up suite customer all really, call and a the opposed more hard an front NCA, internally as we offering. go-to-market to product that So years fruit work new and to to bring it the couple really of our that starting And and to teams of a we pushing in leadership differentiate see and cross-sell brand just as initiative back started

across the it's pretty say, one success Data Cove So had I headline, geos, point in if we're that to really to spot, I But overall, customers. our having consistent. would new bright offering Protection

been on MDR is Mike, by we market, think studying We offering landscape. make found both time. some will we sure an compared this we've cross-sell. that wanted the are all front, bullish. our and that competitive to yes, quite to the This studying And N-able we could been an for itself that On that help, offering differentiate the we've

large have a we you know, security offering. As

N-able And trust so look with they and N-able to security MSPs the offerings.

continue expect the having the customer an also, not to in offering, a RMM and them they're them now market, offering our this if will or with early the with trust MDR of with new some And with we a conversation conversations acquisition. to but MDR. MSPs the data help us NPA for So N-able of we're market some protection on in offering, even

offering of brings acquisitions. new but also customer in this cross-sell And to so both excited quite as we're what terms

further look get we there. as into updates So XXXX for

comes Blair. William question of next Our Ader from Jason

you've down as revenue? of said the purposes, ask to RMM your about just modeling a for big I us just what bit. that little And how RMM about a publicly on is drill business, can you percentage wanted remind just

on of in question. of down Tim. kind in within terms size underlying the on overall business, historically of the lines business, Jason, components the size just of But how think business. RMM to the them of ranking Drilling terms color product the what kind stack we the have this don't of is the of given and we we for just said disclose Thanks the business. about

data and #X, security RMM. is is #X. protection data #X the than RMM is And security bigger protection of So and combination is

So product they're within business. sizable the all lines

Got you.

of it And per pricing, some And then where a growth. pricing. RMM have competitive device fair wondering in know market kind it's side, it's don't time? Okay. over pressure those what amount continuation dynamics of on of like just of sort I'm some the the a bombing situation people been the device market of if the of price. -- a sounds are that how on sort We've the also I pressure heard on sort in shifted of there's

through that But to we're putting words and then a I mouth, in also pricing environment, and aside macro if DP what be the you don't in strength is the seeing environment do on environment? the to or that RMM comment How your what in RMM you're just you grow tighter that pricing? the -- counteract some And growth to be want device put I grow the a maybe guess, sort assume macro pressure of it's either going Let's on of environment weaker what in XXXX. weaker strategy to would strategy same on guys could just but security? there in

is this And John P. Jason. Thanks,

way, reasons, that is the the we don't we really look by of type LTV disclose opportunity at the one when -- MSP. broader the of by from the revenue we So

familiar so device, mid-$XX relations per largest way, So probably stack, protection that's we when that they to stack so And a and and one. Security about is MSP, think if I RMM, in $XX. say, the is you're we're But investor low a hey, on data that could around an $X opportunity MDR. about Backup XXs, typically opportunity per the of from type right? that By $X the of device opportunity. MDR, our you depending piece. on point excited why you deck, down have, with the know opportunity is, about view, with what be of material offering that's the the now think

And what do is revenue by try RMM. to we the on opposed focus adoption word so as just to

And looking trust get the coming so has us, dissimilar some been RMM. of front our door to Historically, for MSPs and of into and competitors the we're N-able too MSP. to is this land for not where the

And and so that's landing they rhythm add with with and from cross-sell well. would in now actually do different would go different expect we're into we're when But come we and protection, pattern. We're there. and a and as data a cross-selling to that hope then now with RMM. finding and Cove We MDR

MSPs that per give to per user per device, or up the month that stack about $XX that with X, trust So to different value N-able that at of building lanes least that And potentially opportunity. $XX the avenues X will get begin into from cross-sell motion. then type and could we

unlock But so partner on revenue. more us, So that the the focus It's is it's for necessarily on N-able can $XX. MSP we on the RMM adoption. the not relationship, really RMM so,

If to devices smash won. the be roughly multiply that going you times that the -- and game by XX, we you real that's that it $X the $XX that where get X million to And is you and take billion $X have opportunity. billion

TCO, the efficiency customer help more of their platform total with path. about of can all help their and And landing showing and services MSP. their them ownership the of through add with the cost we how us, and more regardless value and play, trust For what the it's then to

really strategy. the So that's

Today, of security of or through data then of there, And RMM, will N-able through protection. say, through X X and MDR offerings. X years X it ago, it be through I'd evolution And the type was, come X RMMs or come slight, X tomorrow, leading it's into in other hey, those our RMMs.

So that's how billion, about excited just our customer that's why think we $X.X today. in we're the overall base billion within opportunity $X

that's partly years, evolution that of Makes understand over just to the want X-plus referred I therefore, or $X that last sense. market just been you. due the there some broaden? of Got to have $X to actually sort you had down. Is to -- that the of pricing guys evolution more coming the And And it to. is have the just is needs you sort that, Or shifted?

with, the the refer gotten or I the are this, X X-axis, particularly then, you're playing And often if market the to business larger, to on a When -- of TAM going and And that little all say we more axes, you think point. well, the now strategy right? you're the I'd by I But for. right? one it has to increases about you're price you're Y a opportunity you market, that stack the as as X a have services and laser-focused bit what if as the have axis well services. service any add stack on company,

what And that we're sure the and helping them enterprises. MSP for medium we're add making are really landing small, more playing

I'd focus of willing to becoming a you're story, security, a offerings focused protection, benefits, take a you're the on mix of the offering. not one for It's of adding on platform So bigger, say, different data bigger can just LTV. we now one more because cost the different adding

go about about years. really increase stack -- need things things the been $XX the managed land that don't we're the that have has adding acquire for diminished. I adding we're in are us up started want you business detection so just itself. And tactics So for security, it's I'm is strategy stack -- just tech changes like not response, because tech the or for XX which you ago. now this tech That I've that the I things of believe and to think that, RMM years might that to Office endpoint gone with necessarily and they value in XXX more continues adding we're those stack and customers to of them. and value backup, somewhat grow like them by

Matt next Our Markets. RBC Instructions] of question from [Operator Hedberg comes Capital

that certain you in make I said John, are presume large could prepared direct with customers. remarks, these having I your customers believe fairly sense. relationships IT

an letting the do everything little draw provide could you if handle more more between strategy of MSP wondering of where on and Just that relationship? direct a sort a you and detail line

MSP. there very management, those department, think And our Great cases and Matt, offering is and so whether IT our what more under itch for what's of the monitoring you from home. similar of and hybrid was working all are similar Efficiency. if different remote type Data internal They're it's professional the department, is an scratch about? Cove that IT a that to thanks. offices in remote especially where environment, there's office, Protection offerings, different framework, internal scrutiny geos, question. a or yes, I And Yes. are a issues is the ROBO use office/branch the And Matt, folks performance right? and IT same referring as about right,

department an our internal platform do and via or IT less. tools, where that automation need can has same more our with our MSP And they leverage

little bit were just to So that to focused the their began a finding they bit marketing in leaning use what marketing that offerings we've case to not talk satisfies of that are sales a selling had And needs. -- time. and mid-market with because persona, team, success quite persona's understand the XXXX, of up and And had And very personas have us. is have similar. a Matt, little or we setting we more but specialized finding really from and go-to-market were what our for sales needs more we're we're buying some a really effort more been in enterprise and quite necessarily a motion that

has the part Overall, of of And that for our so one it's sure. been spots a been bright success. business

there's on the is to as these then them N-able themselves, IT that will choosing And our far assets to tools, benefit really own offering, not question of as and The an co-manage our If software. their internal manage line, the allow provide it's with same a with customers. department line. we MSPs your digital is second MDR thing

in internal you're central an And so platform can to bring augment. to if Protection. department, can you Cove IT of Data then a CIO choose MSP And use RMM you our an or

and So same your on environment. team consultant, internal provider, eyes both IT both service your see your can glass managed have and the

the enterprise increasing, issues. result I of is of and happening of but what's departments, customers. a MSPs Jason's staffing size size also because Matt, CIO both Y-axis internal concept TAM our the to that N-able refer And and direct the the IT is of question, the so is with on landing now, hey, our have that environment as larger co-managed this in X-axis to of that a the Y-axis And as always I our and mentioned TAM motion larger own I services servicing where getting look, customers, is a bigger was IT saying, my

in Let budget so of augment well. MSP me to services save can need, I that and do actually and pull as some I these an some

finding that we're formula. healthy be a so And to

a that less, internal so So that platform can trying fact same allows with just do protected, their MSPs are so separately in these in both digital the that and productive personas to a assets doing thing, or keeping together to really both the workforce with it departments solve do model co-managed either our resonates more their collaborative manner. IT

are for and similar perfectly are our type personas really of platforms that the architected So built persona. and

QX bit how metric. on perhaps impact if result of it into on a your thoughts improvement, perspective bit of nice John. And a constant this maybe little helpful, picked points for that. NRR, a XXXX there's currency But incremental maybe see you kind catalyst one that slight mean, from it XX-month that you up a there. like is there's I trending flush? well curious a just an that super a It QX. could with seems of I as But up motion. do kind maybe obviously, looks as on next move as continue then basis of Because think -- Obviously, QX? budget XXX -- little like trailing it's That's Tim. year

Yes.

would was the XX-month slightly up, On trailing say. it I

I we acceleration it in consistent haven't as about to of would And QX, On from an historically, NRR we think type the say any quarter, versus consistent. been year. But with significant slight change quarter-over-quarter. live of us did from to It's fairly be the the due of through QX. -- timings to from pretty the QX get perspective I steady end MSP a to change we lend metric. kind price of a an some was next aren't That an perspective. will pretty wouldn't QX. in flush quarter say, budgeted natural NRR perspective that of the year like modeling expect seen NRR of We any I it second would increase

Essex next comes JPMorgan. question Our Brian of from

the expansion. controls of drivers looks when the levers which I help some some they? But of that guess, How them on leverage Tim, you see might It the us to expenses did you different. be understand in Maybe operating operating sustainable quarter. the the if you point, cost are in that, you some into sequentially, what like actually looks had incremental that look of we Great as of us understand like we behind pull essentially And seasonal. dig margin some operating can Maybe think be could declined of it the, into you start leverage help kind XXXX? to about how quarter? may of then

absolutely. Yes,

all R&D. G&A, but leverage of X across P&L, sales see it opportunities Looking aspects, the kind historically, I marketing we across and think touched on whether be this and we've

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little prepared talking the we we on customers, bit from remarks. a to -- our know this It's Sure. and hit

bigger for here, very even customers And and a to So cybersecurity asked talking MSPs. did MSPs XXXX, at areas is of for survey that where sizable their we small amount them mind. from results, much they're was good pretty and believe of large were the opportunity. that we looking what we a services And and good survey customer XXXX and there's focus our both our news the Brian, our top

adoption, base. your broader the cover So it will believe that I installed on

as they the MSPs enterprise. roll so uptick into double-click have medium is what will their the And of this type and that out small to

focus and much more things get companies to believe driving this. we of overall compliance looking the a protect insurance, back compliance And of to a that on be to view, point cyber to from driver just not there's when up, helping this second MSPs. thing also as detect and of really the One, a being stack able are the there's there's we a and respond if so is more push by is there's X and across view. big And but base, from way, are point the

with as So risk risk to more black -- MSP? And scale as a and white an to sliding is be is of the now compliance, maybe it security, how from I'm willing now enterprise level aversion what range or decision, small binary. used medium gray really, take a a before a of or was and a

requirements that pretty is you're care compliant, health are. be certain in like fintech, in with play as what you be industry you want you medium specific need a small, as want that need Cyber whether those compliant. or enterprise, geography to a in to the market to you're U.K. what if Essentials, the to If in And whether they're

up verticals for and the need cybersecurity And MSPs the enterprise. the and services different the of medium it our these that in lot to across participate small, a driving seeing across sizes. that's geographies So we're at pop the across

will time roll quite the broad bullish and on as bullish take this installed it MSPs quite motion a It get base. we're the will our but So with to the that themselves, some have we're out appeal opportunity. comfortable

At you. questions. Thank currently further this have no time, we

So to any John I'll Pagliuca further for hand back remarks.

of the call quarterly you to beginning questions for looking for all at Take you Thank and our talking and participating to XXXX. all in the forward care.

Thank you today's joining call. for

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