Zix (ZIXI) 31 Oct 192019 Q3 Earnings call transcript

Good morning. Welcome to Zix's Third Quarter 2019 Earnings Conference Call. My name is Don, and I will be your operator today. [Operator Instructions].

Joining us for today's presentation are the company's President and CEO, David Wagner; CFO, David Rockvam; and Vice President of Marketing, Geoff Bibby.

will call we your remarks, their open for the questions. Following in that like for will link section to would Web this the replay Investor company's of remind a available I made everyone call site. Relations and be via the recorded

would the call like Sir, Geoff over turn proceed. to I to Bibby. Now, please

quarter CEO, Don. With me call. Good thank Dave Thank Dave earnings and everyone, you, CFO, you for are our XXXX and morning, joining Wagner; our our third today Rockvam.

issued we the Web opened, Investor market press September release XXXX, for the Before of of site the results our a available third XX, our announcing www.zixcorp.com. Relations section in ended quarter at which a copy is

events These of that no of the It's that Please update differ important to and call, forward-looking note company the future future course also those to this the the actual statements. subject cause financial materially uncertainties statements statements. performance undertakes and such will from to obligation risks in that make are company. we to during results the could forward-looking regarding note statements forward-looking

consider conference to factors in the in those risk XX-Q and forward-looking SEC our examples press recent the contained provides that in actual results could you of risk risks. to those differ statements caution We today's and Form XX-K release in call. cause The materially this from factors most section filings with

all financial analyzing measures our or you intended company's call, the measures consider not a and to or we'll non-GAAP During are for the We GAAP superior present Non-GAAP both be when encourage performance. measures. isolation substitute considered financial to to results. in from GAAP

of in Relations to release, non-GAAP reconciliation found can Web press A today's section site. in which the certain measures is be GAAP included Investor our of

Wagner with his remarks. that, opening for Dave call to to I the Now Dave? turn over like would

Happy this and you us everyone joining morning. Geoff. for Thanks, thank Halloween

consecutive in growth AppRiver the quarter of we’ve was February the adjusted continuation ARR since strong of our operating of revenue achieving expanded year. XX% growth to XX% and We margins third XX%. acquisition delivered of the been we back organic performance quarter second The organic EBITDA with this a same for

that on was the and means was Organically, ARR XX% quarter XXX% Rule organic and adjusted revenue quarter up third delivering the growth inorganically of in for up XXX%. total EBITDA year-over-year, we’re The XX year-over-year we the years make we important will growth ARR continue an scale which achieve greater the crossed in stronger a XXX million to goal even is as to that the we come. threshold believe us

goal productivity provider to When security, of companies compliance leading sizes. of email AppRiver, was we become strategic the our cloud, and acquired solutions for all

goal. as delivering strategic So as the with with our company, how validates am I’m our our I results more progress are we towards and growth even profitability pleased larger XXXX a pleased year-to-date as

acquisition. number mailboxes There along are are partners three and them cloud over new added into leading net point, things the we our to validation businesses one, we for working are to QX XX,XXX Belief with moving mailboxes believe transition. in A partners, cloud alone. that channel with help the

customers products ZixEncrypt number the and in one, sales QX two, between XXX ZixArchive Validation their trials about which in from opportunities from less new than more up of compliance are almost customer partners team is cross-selling quarter. number in XXX sales new and two, add-ons X,XXX Office doubled Zix’s Validation Belief of QX, security, Zix’s closed in productivity in Validation X,XXX QX. more XXX number QX. attached than and mailboxes XX% point than our to number the strong. team to AppRiver three, the

and QX organic one, QX. we’re number ARR three, and in demonstrate the achieving our of enhancements end then number exceeded the after of EBITDA just second guidance acquisition. collaboration quarter better margins Validation XX% better the revenue email in point leading a amount together. Validation level of also two row And companies Belief are full top in validation be that security together. number delivering XX% delivering XX% in would we’ve the two, two adjusted quarters our growth three, product of we

I look more provide Rockvam, the forward QX our our ensuring spending I'd Dave? first validating metrics financials to details from to the quarter. CFO, like call on the Dave results, to turn for time to but over more

Dave, morning, and everyone. good Thank you,

we on we firing as As move our well continuing benefits clearly the with process we efficiencies ongoing meaningful and in our AppRiver. for demonstrated, as and forward recognize are integration to results quarter as all operational are cylinders financial sales

more Now of let’s up QX total purely last a numbers ARR of On on basis, a XX% year combined quarter, now of totaled XX% basis. ARR. our third about the organic the million, ARR makes end from cloud-based and XXX% in talk up detail. the At over $XXX.X

new the quarter, by divided at For the third renewals were quarter. sales the our XXX% dollar base we retention over renewals of our installed had plus net which the available beginning into represents the just that

the Our ARR. revenue, strong drove third success exceeded XX% for our in With yet gross Revenue cross-selling and new continued customers the same quarter we last another year. increased $XX.X XXX% million million quarter over quarter. guidance the from dollar $XX.X retention quarter growth million in to for in of of $XX.X of record

up implied and organic at across acquisition. was which XX% Total from AppRiver the AppRiver was guidance again of revenue growth time quarter, the the once of during Zix high-end the growth our

an their no partners of our the many perspective of integrity reporting be disclosed. ARR longer the on and versus to Zix the Due MSP Zix’s to from therefore has AppRiver revenue platform, AppRiver will and external customers movement and split lost

these these platform future the small better much MSPs a AppRiver and we and is result anticipate The is better customers that and as news changes. place a cross-sell good retention for of

of was on or which Our quarter revenue, from improvement dollar third XXXX. revenue or million an $XX.X total in adjusted the gross XX.X% quarter basis of $XX.X XX.X% profit the was for a total million of

profit year-over-year. quarter, similar was and to margin gross expected down for As our adjusted QX last percent

that carries our than story, following following distribution our proprietary been productivity As our solutions. and us know is margins many have you due lower largely this suite to of Microsoft’s of which

suite solution set productivity low-cost, higher-margin AppRiver our is for The an the for provides Microsoft security tool market and portfolio. lead Zix a generation excellent and unique

Our million expenses total adjusted QX in were was due year-over-year of revenue $X.X million or R&D XX% revenue of to XXXX third last compared The of year. quarter primarily of XX.X% the total the AppRiver. for dollar increase to $X.X or inclusion of

added by across internal the increase both This Zix quarter our hosted about million partially of with functions offset in associated of used software and $X.X capitalization new to platforms features AppRiver. and the was

marketing and were of XX.X% total or million last was to compared quarter million AppRiver. The $X.X and selling dollar adjusted on XX% the of in for expenses or a increase revenue revenue Our marketing to selling of basis of largely expenses due the in year. QX $X.X inclusion total

million quarter our year. total million were administrative QX and revenue of reported X.X% of $X.X or of XXXX, compared For general revenue to $X.X last in expenses adjusted third the of or XX.X% total

the We’re pleased continued Microsoft. achieving success with we’re with

which drive lead cost margins, sales sales. these Although to us, lower strong of gross contributes they generation lower a represent for

operating couple as revenue years. of as we’re out result, proprietary should a And solutions. adjusted continue expenses of significant balance declining achieving gross a we higher scale anticipate margin As in a we our percentage the P&L attach next to AppRiver, with with this over

attributable of or reported of a to common On to or we year. a loss compared a $X.X $X.XX per share of fully last loss shareholders net basis, a share of $X.X million per QX fully $X.XX profit diluted million GAAP diluted in

share, year. deemed dividends income before third XX% reported non-GAAP last QX or quarter an in fully representing million shares from $X.X was and $X.XX fully net diluted adjusted per the of Our diluted deferred of tax increase excluding we $X.XX

EBITDA XXXX totaled increasing reported $XX.X the And finally, QX $X.X XXX% compared we last in million to year. our million QX adjusted of for

last XXXX we XXXX. compared of adjusted As EBITDA points a reported QX sequential margin QX from QX adjusted XX however, XX% XX.X% On EBITDA for in a percentage of in revenue, basis basis, was total XX.X% increased year. to

entered QX, up in quarter $X.X we the quarter. flow from XXXX and At operations delayed for a acquisition reflecting million million, DeliverySlip of term the acquisition QX. of into five-year part million $XX.X the $XXX.X million for had in from of loan debt and the we cash was loan AppRiver total was Cash the completed second as third the draw our $XX million, we end $XXX of XXX%

adjusted AppRiver pay vision. room We EBITDA this in by acquisition. ability, flow while net cash strong a investing the from to in have generation up company's objective the This growth down depreciable projected long-term ample we step significant we carryforwards received operating basis and growth, debt tax supported our believe still executing on our is loss and

We development. to of $XX CapEx use purchases now $X.X and other million the were XXXX. and and capitalized CapEx normal for which other primarily be intangibles capital full internal software the for consisted year expect approximately million business intangibles quarter

related development capitalized CapEx The and additional software capital business to for other AppRiver’s were intangibles and cloud purchases. normal primarily

We year depreciation to $X.X to the amortization expect adjusted full approximately XXXX. and for million increase

at at $XX.X million the year. end third up last $XX end Backlog of the the quarter from of million, was QX

of For gross billings were X%. XXXX, XXX% organic total the while billings up totaled third quarter up were

slow changes It’s by mainly differences end important due to expect OEM relations, through over billings if growth was to quarter, work year. in the of last this we to their our organic that way the note these year the

fourth year quarter midpoint XXXX. $XX quarter We financial XXXX million. of our to which guidance $XX the our and range of million estimate turning the of guidance, currently $XX and expect million to Now our $XX fourth for increasing is for million, prior between revenue to full the

fourth to continuing also are to quarter be We our XXXX adjusted the margin EBITDA of for expect XX%.

to earnings $X.XX and loss forecasting Additionally, be adjusted share fully loss are we per of a be earnings of non-GAAP $X.XX. share diluted per fully a $X.XX, between diluted to and GAAP

our As revenue from a QX on which approximately our deferred adjustment acquired AppRiver, $XXX,XXX. a includes negative a impact required reminder, GAAP revenue financial of on the has outlook

to $XXX are $XXX growth range ARR to year-end, year-over-year. In midpoint of approximately This $XXX $XXX XXXX $XXX million new $XXX.X million organic at to increasing to to our XX% midpoint million fiscal from addition, of million. we XX% approximately previous the of the represents million rate tightening million target an

compared between total XX% we full basis, a and $XXX our increase pro million, are and forma On be Zix $XXX increasing XXXX. an organic XXX% for guidance between the to AppRiver. between growth year fiscal to would which of million and revenue XX% and For this XXXX, XXX% range represents

$X.X our on negative had revenue As guidance of impact over reminder, XXXX adjustment AppRiver, from guidance our the revenue a on required acquired includes deferred a revenue which million. a GAAP

the Our and our fully loss be per between of diluted a to fully $X.XX share be a of between $X.XX loss XXXX, per of is nature of diluted guidance $X.XX the share again, to non-GAAP earnings an XX% to AppRiver adjusted reported earnings between GAAP the we increase expected XX% compared acquisition. in This $X.XX now and and represents to highly for showing fiscal XXXX. $X.XX accretive

an progress our maintain continued ARR summary, us we to In quarters of that level believe revenue level drove our business. successful and of this double-digit helps and would a the drive growth. more confident three which with well can more metric, another integration of first profitably achievement investment growth execution, shareholder put two cross-selling of are efforts With we we solid as half the XX value and on quarter our becoming and Rule organic five-year that higher of vision scaling enhanced combined right as of us

my summary. completes financial This

we November detailed investor results, Investor which by well plan as quarterly report Web to refer to Dave? more analysis a For release as Form today's more visit financial to our Relations site file recent view Also on earnings X. presentation. our please our XX-Q, of

the solutions security, become strategy drivers. main email to context leading compliance executing review for sizes progress provider of the cloud three productivity overview, our in for growth Dave. our now will you financial companies all of Thank our and I of the

integration the update where open with will for call DeliverySlip I are Then questions. provide we of the an we before

a growth retention. our orders and to new drivers customers are to three reminder, As customers, increasing existing sales new

Our driver customers. first is growth new new orders to

one only and our of only for customers many was [indiscernible] in the healthcare traditionally deal third saw quarter, demand solutions all profiles. from our During Notably, was in industry finance, strongest verticals. one and we

compliance homebuilder, custody. a The better What and a or data posture in organization latter to in three they financial were charitable common chain. is healthcare their a their their these have other three protect enhancing that are restaurant all

more a systems deal compliance U.S. the than healthcare non-profit The and largest with for of mid-six in was the to one employees. figure encryption largest in provide outbound the quarter XXX,XXX filtering win

the with value of This customer customers importance Zix. in months win XXX. both This all Zix result a for also of re-contracted left environments. later, moved our mail email to G of highlights supporting with concerns their associated cost migration XXXX XX and they solution the cloud as the Suite Office Zix the and

new services; quarter encryption, a Office purchased regional bank and threat was who finance win protection the The during XXX. three

five from As came I in different top QX of wins mentioned, other the three a industries. variety

you As historically are strong in many compliance-oriented verticals. of we know,

So from a standalone Also seeing us. of first for to sign traction customer the verticals a that Zix’s was top see offering, growing variety solution. the positive we’re time the that a demand demonstrating a to as notably, other is archive five that it made

also are QX XX,XXX. momentum We MSP to added bringing end number to of approximately in We continuing net new total more than the with partners. our customers see X,XXX strong AppRiver our to AppRiver customers family

AppRiver net to new our X,XXX. also partners XX We added bringing monthly of number transacting partners, total

end our partners trial. now start XX,XXX the is customer quarter more third same demand which AppRiver again, We, and motion The last more trial for XX% XX-day free than our is X,XXX the for buy conducted trials consecutive have year-to-date and to than and period a trials year. up we a we portal drive to where MSP the from conducted model

great strong conversion of extremely other rates that XX%. thing and we our buy about try model enjoy The is about

which final a at take our and from add-on three let's the were second Two the healthcare customers. in of is top look government sales was to existing Two growth the in finance driver, the Now add-ons vertical. vertical. closer came

Office which healthcare Our encryption threat wasn’t top protection. as add-on well advanced as and customer purchased XXX

ZixEncrypt to advanced add-on solution. their that second archiving, XXX a Office Our government and existing largest augment was county purchased threat

their the rates. the five top One of the again one solutions attach per add-ons ZixEncrypt add-ons were In ZixArchive X.X total, an is of customer increased they add-on success expanded and average last for in two five demonstrating existing other deployments. of top increasing our group, to

represents third ARPU of to ARR increase XX,XXX than solution year-over-year. our sequentially $XXX of area, $XX.X was an by unchanged or essentially I per X% Looking results churn, in last productivity which we for quarter at more mentioned, the mailboxes quarter. Average by quarter. of Net revenue XX% from increased million user as added the

essentially the sequentially ARR was the at as wins. the of was new unchanged pricing XX.X $XX.XX, ARPU customer year-over-year. up was primarily to to million Encryption down X% sequentially result largest and X% volume granted

Our encryption XX,XXX, by of grew again churn. net seats

primarily last in that I result the protection ARR quarter. of XX.X decreased to price X% threat This Advanced decrease actually was a or call. $XXX,XXX increase million on quarter's the mentioned

was Our up a up this XX% XX% X% contributing ARPU was growth year-over-year total to $XX.XX to quarter-over-quarter in year-over-year solution category.

seats mentioning I quarters. four base threat seats experience to five XXX,XXX we this million them. acquired of of may cloud We that think it’s approximately churn Roaring worth mostly the X.X Penguin migrate on as the AppRiver the we to excess are over that next these solution before advanced the customer on-premise acquired

Our and to quarter-over-quarter by emerging business of endpoint million driven business. category grew archiving X% our ARR in in XX.X defense, our consumer both total growth

driver, retention. now increasing to growth third Moving on our

quarter retention XXX%, was one are retention ARR revenue a gross company we’re for really our is total XXX% combined to-date with Increasing up drivers and the success the our consecutive having from the over of third overall key and so increasing mentioned, growth, quarter. we Dave was pleased As company. as larger of XXX% last

great success As We new and of more transitioning we plan to quarter. we the migrate AppRiver-based the to to customers tightly had to continue to partners last customers integrating more platform. company, continue hundreds process

more this and next quarter half the We of will be transitioning hundreds in year. thousands then first

of core some customer shorter the really result our are see another retention We could as churn rates, pleased All-in-all, believe and term. with in higher our and in the but platform strategy. will it validation improving migration to newer the retention attach ultimately cause we

our our I’d more focus remarks my detail as results I final sharing investment AppRiver. on see why like QX around to validating core thesis

email primarily course, to first assumption cloud. and XX,XXX through continue to boxes partner that the year-over-year selling more seats X% MSP than supports base, core success sequential in Of growth our will resulting our net in our growth XX% productivity rotate productivity

was cross-sell. ability The assumption second to core our

our As The quarter-over-quarter more the opportunity. number into Zix like though are example the support a doubled into of [indiscernible] to spend cross-sell cross-sell that the of time trials cross-sell and ZixArchive Office I early drilling than base. earlier, little ZixEncrypt mentioned customer XXX more I’d

In the Zix base. through were XXX XX Office XX the Of key third couple points up second XX X accounts installed of into Office in There and of the a we the were from are the accounts accounts quarter, these in net new closed validation quarter. in channel, sales the XXX XX wins. third quarter,

packaging. that more this of demonstrating First, quarter-over-quarter up XXX% is the number was to market wins the responding than

survey dark prior Zix showing server. were the and still the their is that Second, trusted looking This AppRiver, still an two-thirds the customer with work on-premise customer contracting the running mail server XX for wins Zix transition to cloud on-premise meaning base and support pre-acquisition a our validates their to of the projects, of the that to was that majority cloud. to for partner exchange

the is added The of In around to bundles, this support also soon can point and focus in we traction community not existing the of that XXX our our program. with our level Zix partner-first of to we channel expand partners We Microsoft third are resell partners Office is IP. were our strategy. including the partner validation quarter, third the providing Zix XX pleased expecting this

these The our X.X, for customers fourth continue opportunity average of add-on point demonstrating validation the is XXX services of the overall average X.X higher. The for number drive of is attach rates to our us attach Office opportunity. versus clearly to

and Zix value team is get well are of level our see partners colleagues. executing only and being deliver how to of AppRiver day phenomenal for customers. the collaboration and a my high of the between every The result above results to all Zix/AppRiver as great teamwork achieved I

to little are objectively, but in I think major demonstrate team the XXXX. it’s driving the will harder to that come a do some that you important accomplishments market hear about These results of is

example, retention integration. I’d of than anticipated XX%, that added the like retention earlier delivered DeliverySlip transfer Not customers to rates team revenue strong cross-selling but an customer with nine in As motion different large also Zix our for with share go-to-market about more file acquisition we the of have QX. only our we are beginning net customers

We feedback capability. customer the from added about partner strong Zix are base getting really and this

under out Zix/AppRiver the branded we roadmap datacenters further been completed a capability large fully that coming in and us confidence giving We QX enhancements the flushed will our into deliver exciting of migration control with and in has the transfer technology file ahead. integrated QX quarters Zix the in

In was another validating milestones many key conclusion, quarter our with the step strategic direction. major third forward

to We go-to-market of team offerings. are and increased our team continuing sales our driving progress efforts motions, combined the one make as are great across and combined activity complementary increasingly larger both product across go-to-market

we quarter, allow With our to profitability cross-selling our expect year, expanding guidance. organic growth This last of success beyond. profile end year into to And increase into to heading our and ARR rates. the and visibility revenue profitable XXXX Zix through and have improve we should growth the attach increase XXXX growth improvements XX% the enhanced full to of continue

That concludes we’re questions. remarks. the to for open Operator, ready call our prepared

[Operator you. Thank Instructions].

Craig-Hallum. come Please Malouf will question from first our from Now proceed. Mike

in if integration of direction tag file And you’ve DeliverySlip a the Office XXX. pocket your With about you to into if the here? us bit a could bit could regards opportunity current how Very selling wondering of of product as little just sort successful? look significant to back so go the that thoughts could XXXX over Zix That for on and your if just the could large a sort Zix well onto that out branded out, done little regards transfer then opportunity you that putting for you’re as be with with that also and I’m was that, had of to experience wondering of you always of I’m Thanks. if cross-sell ability you far. frame this size

Mike. great questions, are Those

X.X than the plan installed looking XXX functions cross-sell we Office customers Zix we initial as base, at So in the the users. accounts million less our encryption with XXX into built

$XX we’re whatever of on And $XX it mailbox to an in to so million we’re average. that XXX of What seeing translated ARR. to average sold, accounts opportunity the size first, XX seeing is million now, closer

larger expected. So than better into would customers we’re slightly seeing originally we have traction

we’re early the good was I like the XXX still we’ll more as originally lower average we’re get over but to than we and see modeled. that higher running more So looking can in see accounts well up in transactions, than XXX the tells accounts. would that But where just lower into expect XX average we traction. coming we me XXX that it’s move fact the down at

upside over So time area. from that some that would indicate

file suggested survey on we to closed for work as and capability I to high the transfer really about introduced prior really transaction, to large Moving getting customers. we existing file talked offer, for good rates an transfer this as the feedback question, that attach Zix we opportunity to the when large the acquisition are

meeting of yesterday roots strong We industry and the had of functionality. they protection transfer the varies conveying big appetite product for a information. she are but title wire We their get expect who has partner really segment, that it subject is to a need course where since to with real that and place

bit of good the from next little that things back expecting ahead is year. a into half schedule and I’m we that So of head as

lot. appreciate great. I the Okay, Thanks help. a

Thanks, Mike.

Our proceed. next Please Northland Tyler from question from Wood Securities. comes

turn back Thanks this AppRiver trials the should we our trials all from are Zix When in you expect signings? going for still at just point XXXX for in questions. the that of XXXX start up into billings for those have taking those the security about to to trials or to we wait to base, showing talk free or

trials XXst the they’re on orders day to No, cancelled. unless the turn

We’ve that got conversion and so then out, the at but rate overall conversion, a XX% partners XX% is trying of lot are Our backing we’re rates it not yet. strong.

ARR or from convert to seeing existing once an the encouraging the even we and adding customers me numbers aren’t meaningful even more users. we’re numbers. they more perspective, really seeing early big What’s though are So yet absolute

nice a So on effect. it’s building snowball

we So with on of are sell. in cross what we track expected terms

We’re come and in accelerate and the marketing fall our I I to material ARR a work more to but into messaging really our in trials this those further, expect don’t expect materially that next honing impact as we move year year.

just penetrated opportunity. anything Great, think level do in Office SMB on mentioning broadly? How higher stuff? the XXX of you And Office XXX are on that’s securing terms then with strategy worth those And mailboxes more within their helpful. then Microsoft’s market

great MSPs, We to the We so survey work are the don’t Zix smaller into seeing the to so had Yes, is prior those both questions. seeing but to on business a XX% the pretty thorough base middle tighter of has we’re prams well. the survey mailboxes base innings that the the cloud, XX% the us indicate our in into on as smaller mailbox acquisition still adds early that customer that still [ph]. a accelerating we’re through have majority

for appetite this to the see strong cloud. really we transition a So

X a done we we with and transition them to partner are smaller value. And to may have really mailbox our clear once the and in they the nearly one more mailbox in mentioned is me is and A twice a An migration As of migrations and add [indiscernible] or team support more customer I a script, the ton that’s customers make once. to things implementation make provides year. that million the going to of that AppRiver as support end make partners value transition. becoming the that there

we’re nearly term with us having is go-to-market they into be would and SMC and overall their now the as value monthly their well as this a met see space. the Microsoft SMB, ecosystem hyperscaler how SME fitting providing the hyperscaler a into ecosystem – leadership In understanding now Microsoft team,

good. really feels a continue they with continue focus. fully to But always they’ll great specialized of all Microsoft to is a have, executing support help they good broad cases. to be a and and products. ecosystem to things understand ISVs, used important them Security great that and So company will build

Slack the support some channels can our that in acutely teams never probably ZixArchive Microsoft will LinkedIn archive doesn’t and archive most So cases support. and

and we’re see top Microsoft’s on ecosystem. so beneficial they really version the their building to real value cases And adding used as compliance-oriented that and out of

where a we they’re what of in position do. to Microsoft fit we trying support So both on sides

side, core cases don’t support the the end for cybersecurity we system. And regulations we to you that there used of into their the enable advance, security financial to coverage and lots compliance think the medium-sized need really as want compliance And the for. and on healthcare need become acute and care build strong On if of they about and level SMCs and security lots this that have on-boarding are that provide SMEs, of ongoing transition more customers market. that vertical they SMB concerns businesses; to don’t SMBs vertical, specialized as higher our

we position So really our to like and Microsoft appears like it as well.

helpful. you. Thank That’s

you. Thank

[Operator Instructions].

come Cowen Company. proceed. & will from Please question next Yako from Our Nick

on how comment you investments maybe then and And where of business additional thinking Could near-term making? in outside questions. are on my the taking the and U.S.? any for terms you’re international opportunity about Thanks guys. the plan the build-out Hi, you you

Thank That’s a great question, you. Nick.

cloud our of term. feel call I to that supports we few proportion really how We transition in We we added that for team. on the first X the longer the being in in had to about about ARR execute in is international well really good the trend. and adding for feel with that us. see transition on earlier XXXX to guess to million year early good half so last late million that UK They Europe building people our summer doubled and really the platform continues a team customers mentioned remain still that we continued and X to growth, value doubling I from really the $X.X European team quarter. the a So million, stages so and

be international But making we to them presence. would year. So measured will I in investments to measured coming the be extend our investments expect

that’s then one helpful. And OEM. follow up. Okay, just drag mentioned billings quick a from Dave, you

provide normalize? that when Just you that wondering more any details and if should around could

beginning the that towards next the strategy to the and We MSP we Zix/AppRiver Semantic model of Yes. and particular moved Google XXXX, of as early best expect more we on it away platform. in moving were from the would part being down year. OEMs ramping our normalize then go-forward In the XXXX for Cisco, year model as

direct So We those incremental up kind we’re were down. through a kind guess those come finish XXXX, more this I of to clean so those billing. kind came as of the some kind up. a they larger a can – bumping little billings little of that see of off, across And numbers one-time those through more done then in against kind ramped as did of platform, bit moved we those so more as billings customers our year quarters, those

handshake the quarter. the Semantic then that a on up cleaned And we’ve got having for

feel So end up that have had with ARR off a million we good doing QX, we for that. as up. going almost up end this we position finishing some we’re in quite with and the of future the It’s where that exactly have so of in didn’t way billings good there, to wrapped we’ll any we the in up it about time closing where X.X planned it it’s

in to of better end there. quarters come and up by we’ll start as from year that the up the expect coming those So finish the through moving

you. great. Okay, Thank

Thank you.

session. over At I’d this closing to for remarks. turn this Mr. our question-and-answer back his concludes call like time, now Wagner the to

day. early for and again just great wish We productive us you like a to I’d joining morning. thank this everybody

joining call. for XXXX on today earnings third us you Zix’s quarter Thank

You disconnect. may now