Q4 2019 Earnings Call
Good afternoon, welcome to Zix this fourth quarter and full year 2019 earnings Conference call. My name is Gigi and I'll be your operator today, joining us for today's presentation or the company's president and CEO, David Wagner CFO, David Rock band and Vice President of marketing Geoff Bibby.
Following their remarks, we will open the call for your questions.
I would like to remind everyone. On this call will be recorded and made available for replay via a link and then Investor Relations section of the company's website now I would like to turn the call over to Jeff maybe Sir. Please proceed.
Thank you Jay good afternoon, everyone and thank you for joining our fourth quarter and for your earnings call with me today as did you mentioned her CEO, Dave Wagner interim CFO, Dave Rockvam after the market because we issued a press release announcing our results for the fourth quarter and for year ended December 31st 2019, a copy of which is available in the Investor Relations section of <unk>.
Hi, Www Dot VIX got Dot Com. Please note. The during the course of this call will make forward looking statements regarding future events in the future performance financial performance of the company. These forward looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those in the forward looking statement, it's important to all.
Also note that the company undertakes no obligation to update such statements, we caution to consider risk factors that could cause actual results to differ materially from those in the forward looking statements contained in todays press release and in this conference call. The recent your section of our most recent form 10-K in 10-Q filings with the FCC provides examples of progress.
During the call your present, both GAAP and non-GAAP financial measures Nongaap financial measures are not intended to be considered an isolation from a substitute for or superior to our GAAP results. We encourage you to consider all measures when analyzing the company's performance.
Reconciliation of certain GAAP to non-GAAP measures is included in todays press release, which can be found as I mentioned in the Investor Relations section of our site now with that I'd like to turn the call everyday Wagner for his opening remarks, Dave. Thanks, Jeff Good afternoon, and thank you everyone for joining us today.
Fourth quarter capped off an excellent finish to a record year for zix.
This earnings call is on the exactly one year anniversary of the closing of the App River acquisition in February Twentyth 2019. It has been an exciting year as a larger integrated company. We grew annual recurring revenue or a our our by 177% from 70.
6 million at year end 2018 to nearly $210 million at year end 2019, we grew revenue by more than 15% organically for each of the last three consecutive quarters.
Our success continued in Q4, as we delivered double digit organic revenue adjusted EBITDA and they are our growth while maintaining solid adjusted EBITDA margins and generating strong cash flow I'm very proud and appreciate about our team as we delivered this outperformance in the face of demanding rigorous.
And successful integration process during the year.
As we look back on 2019, we're extremely pleased with the progress. We've achieved we are already more than twice as large as either that or at river was on a standalone basis prior to the combination illustrating the fact that our new hole is greater than the some of the parks.
We are now a cohesive team aligned around one shared vision, becoming the leading provider of cloud email security compliance and productivity solutions for companies of all sizes.
With that backdrop I'd like to revisit the three core strategic premises that the App River acquisition was built on first businesses are moving mailboxes to the cloud and they are looking for partners to help them with that transition. This premise had been validated many times over now but.
Our strongest affirmation came in Q4, two the record level of net productivity seats, we sold which totaled more than 77000 feet add a prodigious 36% year over year improvement and a 9% increase from Q3, we are encouraged by our success with the Microsoft productivity suite as we build.
Leave the migration to mailboxes to the cloud provides us highly effective low cost lead generation tool for our higher margin security and compliance portfolio.
This is a trend we expect to continue to capitalize on for the foreseeable future as we continued to deliver profitable EBITDA growth on an absolute basis to use a baseball analogy. We believe we're still in the second or third inning of companies migrating to the cloud and that they will increasingly leverage partners to facilitate and support that transition.
Gartner published a study titled Cloud solution provider program or CFP.
One solution for those adversely impacted by Microsoft Enterprise agreement or a changes.
This report recommends that current E customers. So let the bids from csps to assess their value versus pick declining value of the E. A program for mid market enterprise.
Further argue that more than 50% of organizations with a current ebay well move to alternative agreements, most notably CSP agreements by 2023, our strategy is well aligned with Microsoft direction with more than 4300 monthly transacting MSP partners and our network and.
More than 4 million encryption users for attach opportunity.
The second strategic premise underpinning our investment was that cross sell opportunities between security compliance and productivity our strong during Q4. The zix team closed nearly 11000 Officethree hundred 65 mailboxes up from 3300 in Q3 and 1500 in Q2 those numbers speak.
For themselves and the takeaway as clear as customers move the cloud they want the office 365 productivity Tivity suite and security and compliance by design.
During the fourth quarter, our sales team again added new non encryption products to nearly 45% of new customer add ons in the quarter, which is similar to Q3 and is up from 40% in Q2. In addition, operator partners and customers completed more than 600 trials of encryption and archiving.
Q4 up from 70% up 70%.
From approximately 350 in Q3 and up from 150 in Q2, we think that is extraordinary.
The third premise supporting our acquisition was that two leading email security companies would be better together, putting the simplest terms, we've exceeded our topline guidance for three consecutive quarters delivering year over year organic revenue and a our growth of at least 15% each quarter Zix App River together.
We have created a solution, where security and compliance or integrated with productivity by design, our focus on solutions and on service for our partners enabled them to think board and deliver more value for their end customers. If these validating points that give me high confidence insane to App River was the right deal at the right.
Time for Us there's still a lot of work ahead, but we have the right team in place to realize our vision in the years ahead now before I talk about our growth drivers and outlook I'd like to turn the call over to our CFO, Dave Rockvam to provide more detail on the financials for the quarter, Dave. Thank you, Dave and good afternoon, everyone as our performance for the core.
Order in full year demonstrates we are continuing to realize the financial benefits and operational efficiencies that come from being a fully integrated organization at scale.
Now, let's talk about the numbers in more detail at the end of the fourth quarter, our air our totaled $209.7 million up 177% from Q4, 2018 and up 16% on a purely organic basis on a combined company basis cloud based air are now makes up 81% of total.
There are for the fourth quarter, we had just over 101% net dollar retention, which represents our renewals plus our new sales into the installed base divided by the end renewals that were available at the beginning of the quarter. Our strong gross dollar retention of over 90% growth in new customers and continued success and cross selling.
Drove yet another quarter of record air or.
Total revenue for the fourth quarter increased 173% to $50.4 million from $18.4 million in the same quarter of 2018.
With $50.4 million of revenue, we exceeded our guidance for the quarter.
Total organic revenue growth across Dixon App River was 15% during the quarter, which once again was at the high end of our implied growth guidance from the time of the App River acquisition.
The full year of 2019 total revenue increased 146% through $173.4 million from $70.5 million as of the same date last year.
On an organic basic basis across six and App River revenue for the full year was up 15% compared to 2018.
Our adjusted gross profit for the fourth quarter was $29.2 million or 58% of total revenue.
Which was an improvement on a dollar basis from $14.6 million or 79.3% of total revenue in the fourth quarter 2018. This means we doubled our gross margin dollars from Q4 2018, demonstrating the positive gross margin dollar generation ability of the combined company and the true ability to continue.
Our profitable growth trajectory.
For the full year of 2019, our adjusted gross profit was $104.7 million or 60.3% of total revenue, which was an improvement on a dollar basis from $56 million were 79.5% of total revenue in 2018.
The acceleration of Officethree hundred 65 led to a continued mix shift in our gross margin percent in Q4. Those of you have been following our story no that Microsoft's productivity suite carries lower margins than our productivity proprietary solutions. We are pleased with our success and are willing to trade off grow.
Gross margin percentage for long term EBITDA dollar expansion as we continue to acquire a substantially larger customer base and attach are proprietary solutions.
Going forward, we believe the migration of mailboxes to the cloud provides us with a highly effective low cost lead generation tool for higher margins security portfolio.
Our adjusted R&D expenses for the fourth quarter of 2019 were $4.3 million for 8.6% of total revenue compared to $2.4 million or 13.1% of total revenue in Q4 2018.
The year over year dollar increase for both the quarter end year was primarily due to the inclusion of AEP River.
Our adjusted selling and marketing expenses for the quarter were $11.5 million or 22.7% of total revenue.
Compared to $4.9 million or 26.7% total revenue in Q4 2018.
Selling and marketing expenses were over $1 million higher than our internal plan in Q4, primarily due to commission expense in Q4 related to assay six so six for AEP River.
For the fourth quarter of 2019, our adjusted General and administrative expenses were $4 million or 7.9% of total revenue compared to $2.6 million or 14% of total revenue reported in Q4 of 2018.
As you can as you can see from our operating expense numbers, we're achieving and will aim to continue to achieve great synergy from the acquisition of AEP River, which should continue to deliver lower opex as a percentage of revenue and continue to drive our adjusted EBITDA growth.
On a GAAP basis, we reported a net loss attributable to common shareholders of five a loss of $5.2 million or loss of 10 cents per fully diluted share.
This compares to net income of $9.2 million or 17 cents per fully diluted share on Q4 2018.
For the full year of 2019 net loss attributable to common shareholders totaled a loss of $24.6 million or loss of 46 cents per fully diluted share compared to $15.4 million or 29 cents per fully diluted share in 2018.
Our net loss for the fourth quarter and full year 2019 included higher than previously projected expenses in Q4 related to the Finalization of certain integration projects Sox compliance.
Retention bonuses associated with the acquisitions and severance expenses. The majority of these integration efforts and related expenses were completed by the end of the year and we don't expect to carry any significant integration related costs into 2020.
Our fourth quarter non-GAAP adjusted net income before David deemed dividends and excluding deferred tax was $6.7 million or 13 cents per fully diluted share. This compares to $4.6 million or nine cents per fully diluted share we reported in Q4 2018.
For the full year of 2019, non-GAAP adjusted net income before deemed dividends and excluding deferred tax taxes totaled $23 million or 43 cents per fully diluted share compared to $17.5 million or 33 cents per fully diluted share reported in 2018, an increase of over 30.
Percent.
And finally, our adjusted EBITDA for Q4, 2019 totaled $11.5 million.
An increase from $5.6 million, we reported in Q4 of 2018 as a percentage of total revenue adjusted EBITDA for Q4, 2019 was 22.8% compared to 30.2% in Q4 2018.
For the full year 2019, adjusted EBITDA totaled $39.5 million or 22.8% of total revenue.
Compared to $20.1 million or 28.6% of total revenue reported in 2018.
It's worth mentioning that we would have been within our Q4, adjusted EPS and adjusted EBITDA guidance, if the impact of the $1 million of additional expenses, primarily primarily related to the commissions from App River were excluded.
Cash flow from operations for the fourth quarter 2019 was $6 million an increase of 22% over Q4 2018 at the end of Q4, we had $13.3 million in cash and our total debt position was $178.3 million, which includes the five year $175 million term loan.
Loan we entered into as part of the App River acquisition, and the $10 million delayed draw loan related to our acquisition of delivery slip in Q2 2019.
We are forecasting approximately 11.5 million an interest expense on our term loan in 2020.
We continue to believe we have ample room to pay down this debt, while still investing in the company's growth and executing on our long term vision.
This objective is supported by our strong cash flow generation ability projected adjusted EBITDA growth significant net operating loss carry forwards and a step up in the depreciable tax basis, we received from the App River acquisition.
Capex and other intangibles for the fourth quarter 2019 were $3.8 million, which consisted primarily of normal business capital purchases and capitalized internal use software development.
We expect Capex and other intangibles to be approximately $13 million for the full year 2020.
We also expect adjusted depreciation and amortization to be approximately $10 million for the full year 2020.
Our backlog at December 30, Onest, 2019 was $89.4 million, which was up 22% from $73 million at the end of Q4 2018.
For the fourth quarter of 2019 total gross billings were up 12% organically to $49.3 million from $44 million in Q4 2018.
Now turning to our financial guidance for the first quarter in full year 2020.
For the first quarter quarter of 2020, we currently expect revenue to range between $52.2 million and $52.7 million.
On the cost side, the first quarter typically includes a slight decline in profitability and cash flow for the company as our first quarter include includes increases in cost associated with payroll taxes sales and marketing investments for the year and timing of the payment of the company's annual bonus program and retention bonuses associated with our acquisitions.
With this in mind, we are forecasting fully diluted GAAP loss per share attributable to common shares to be in a range of a loss of four cents and a loss of three cents.
And non-GAAP adjusted earnings per share before deemed dividends and excluding deferred tax expense or benefit to be in the range of 12 cents to 13 cents.
The first shared guidance figures are based on an estimated basic share count of $53.3 million for Q1 2020.
We expect adjusted EBITDA to be approximately 23% of total revenue in Q1 2020.
For the full year, we are currently forecasting revenue to range between $220 million in $225 million, representing an increase of between 27, and 30, 30% compared to 2019 and 16% to 18% on an organic basis, we expect fully diluted GAAP earnings per share attributable to common shares to range between.
Loss of 10 cents in a loss of seven cents and non-GAAP adjusted earnings per share before deemed dividends and excluding deferred tax expense or benefit to be in the range of 56 cents to 58 cents.
The Pershare figures are based on an estimated basic share count of 53.5 million for 2020.
Adjusted EBITDA is forecasted to be in a range of $51 million to $53 million or approximately 23% to 24% of total revenue.
We also expect air are at the end of the fiscal 2020 to be in the range of $243 million to $247 million, representing an organic growth rate of approximately 16% to 18% compared to air are at the end of 2019.
Looking ahead, we're confident that our financial performance in 2019, coupled with building sales momentum will allow us to maintain steady revenue growth of 14% to 16% and adjusted EBITDA growth of 11% to 15% in our three to five year model.
This completes my financial summary for a more detailed analysis of our financial results. Please refer to todays earnings release as well as our 10-K, which we plan to file by March 10th.
Also visit our Investor Relations website give you more recent investor presentation Dave.
Thanks, Dave now I'd like to review, our Q4 execution in the context of our three primary growth drivers after which I will provide an update on our integration initiatives and our outlook for 2020 before opening the call for questions. As a reminder, our three primary growth drivers are one new orders.
New customers to sales to existing customers and three increased retention, starting with new orders to new customers.
As I remarked earlier it is clear that our go to market effort and sales channels are gaining traction during the fourth quarter. We saw strong demand for all of our solutions from customers of all sizes in a wide range of verticals under Zix go to market side three of our top five new customer wins were in healthcare one was in government.
And the other end finance traditionally our strongest verticals, our largest new customer in the quarter with a six figure win with a Canadian government entity that purchased our new large file transfer solution.
This customer was in a pilot deployment and went to a full competitive RFP. This fall, which we won for 4000 feet.
They are exploiting the full range of this products robust features and we scored a remarkable 97% on the technical portion of the RFP.
The second largest deal with equally remarkable as we closed our first standalone phenomenal support sale in the quarter with a 7000 employee healthcare organization phenomenal support as a premium support SKU for Officethree hundred 65.
We expect larger enterprise customers continue to buy Officethree hundred 65 directly from Microsoft, but this deal shows the value we can bring to enterprise customers with phenomenal support to enhance their office 365 experience. These two wins further demonstrate how tightly we've already.
Integrated as Zix and at River pre sale sale and post sales teams work side by side as one cohesive team to win these deals.
The third largest deal was for office 365, and advanced threat protection in the Finance protocol and the last two deals were in encryption and threat in healthcare. These three deals averaged two solutions per customer.
On the partner side, we increased our total number of monthly transacting MSP partners to 4338 in the quarter.
Some of the larger new partner additions were in the UK. As an example, we had an MSP with more than 100 customers that has already added 3500 users of Officethree hundred 65, and our advanced threats solution. They are assessing encryption and archiving as well and new Irish partner added Officethree hundred 65 and evaluating.
As a competitive displacement as well as encryption and archive as new services.
In North America, we won the headquarters location of a 200 location it franchise business locations, we hope to penetrate in the coming quarters.
Moving onto our second growth driver, which is sales to existing customers three of the top five add ons, we secured in the fourth quarter were in healthcare one was in real estate and the other in government.
All three cross selling motions were represented which includes our office 365.
Dan threat and archiving solutions only one of the top five and add ons was encryption only in total this group also averaged two solutions for customers.
On the partner side I already mentioned, the 70% increase in trials from Q3 to Q4 per encryption and archive more specifically in North America, our largest emmis.
Agreed to standardize on our advanced threat offer for their basic package and has agreed to add encryption and archive to their better and best packages, respectively. We also added encryption to a healthcare focused MSP that expects to standardize on encryption to all their existing health care accounts in Q1.
Has added encryption as a mandatory feature for all future new healthcare accounts.
In the UK a partner added earlier in 2019 agreed to standardize our that threat solution for 4500 mailboxes displacing a competitor.
Now, let's look at a result for the fourth quarter by solution area.
Well, we believe this our by solution information is helpful to investors. It's important to note that we do not manage our business by solution category increasingly our sales are made at bundled solution. This means we have to use management judgment to allocate value to eat solution area.
That having been that productivity, our AR increased 9% sequentially to $96 million, which represents an increase of 27% year over year net of churn we added more than 77000 mail boxes in the quarter as I mentioned earlier.
Encryption ANRR was $73 million, which is essentially unchanged from last quarter and is up 7% year over year.
Our encryption seats declined by less than 1001% or about 30000 seats from Q3. This decrease is primarily the result of the end of life VCT is our former OEM product with Cisco.
Previously disclosed these customers will migrate either our core product or the Cisco when they stay with us our seat count is unchanged, but our price per seat more than doubles.
You May go with Cisco, we lose the lower priced OEM feet and Thats, what happened with a couple of account last quarter.
Our seat count is up 20% year over year, and we do expect continued to grow our core encryption business.
However, it will not be surprising Pat intermittent small depth like this one.
Advanced threat protection, EMR was $23.4 million compared to $22.8 million last quarter, we continued to gain traction from our cross sell into the zix base as well as App reversed selling motion with partners. Our seat count was up nearly 8% year over year, while weve increased our annual recurring revenue by 25.
5% as we continue to add more value for our customers in this area and finally, our emerging category grew 5% quarter over quarter of $18 million air are driven by growth in both our archiving business and in total defense, our consumer endpoint basis.
Moving on now to our third growth driver increasing retention.
Our total company net dollar retention was 101%, which was down slightly from last quarter.
We were down just a little bit in both App River and that's net retention, which of course was offset this quarter by higher sales to new customers.
For the full year, we finished over 102% with both Zvex and App, we never ending both Q4 and the full year at over 100%.
Increasing retention is one of the key drivers of our increasing overall revenue an annual recurring revenue and we're really pleased with the success, we're having to date and we expect to continue to build on the success.
We also successfully transitioned hundreds of customers over the past two quarters into the at river platform.
And with the new launch of our secure cloud in early Q2, which will talk about more next we expect our net dollar retention to begin to accelerate further.
Closing out the revenue section I would like to highlight the addition of our new Chief revenue Officer, John Delayo.
John what the sales leader at NCR for nearly 20 years, leading team in various product lines with revenues up to $2 billion annually and in various geographies, including a several year assignments in the United Kingdom.
He moved onto Datacard, where he led the sales and service team bear as they grew from 300 million to more than 600 million in revenues over five years.
David I worked with John for two years that Datacard as we integrated Amtrust into Datacard, John brings a wealth of go to market knowledge across many products geographies and sales motions, we expected experiences and his expertise to be invaluable as we focused on scaling thanks to the next level.
John consulted with Zacks and various roles over the past 18 months, but just joined as our permanent.
Chief revenue officer effective February Onest.
As I mentioned earlier, one of the most impressive thing I've seen since bringing zixone. Our favorite together is the level of collaboration and commitment across the organization and key functional areas.
Our teams are closely aligned around our major new product launch plan for early Q2 Twentytwenty. This release will place every one of our products into a single platform called secure cloud, where our customers will have one pane of glass that means one law again and one unified interface across the.
Patients for productivity security and compliance.
There are three components that make up our secure cloud.
And make it so uniquely powerful one is the deep suite of offerings to the cloud native platform architecture that under guards them and three the intelligent technologies like analytics and machine learning been improve them both continuously if they complete offering that.
Continuously makes employees safer freer and more productive.
Delivers a level of efficiency that judgment doesnt just translate into advantage for the information technology and security teams. It's a whole business advantage I'm really excited the fee. This combination of our integration play out for our partners and customers in the coming quarters.
I should also mentioned that the unification of our formerly separate technologies has for advanced threat has progressed better than expected. Our development team is unifying the best aspects of both advanced threat solutions into a single email security solution more tightly integrating our core.
Pete and completely modernizing and refreshing the user interface look and feel for a best in class experience.
While this launch accelerates our transition on a visual and a product level. It will also bring even greater value to our partners and customers for many of our customers. This transition will be a multi step multiyear process, but we are aiming for the majority of new customer onboardings to be in the new cloud platform secure cloud by Q4 of.
This year.
In closing 29 team was an extra ordinary year presents as we grew annual recurring revenue by 177% from 76 million to nearly $210 million.
Our scale increased our operating leverage and has led to improving sales and better overall execution, which is best exemplified by our 106% year over year adjusted EBITDA improvement in Q4.
Taken together our success integrating our solution and our teams has of entering Twentytwenty with significant operating and financial momentum. We believe we are well positioned to augment our current cross selling success, which should lead to continued revenue growth and profitability improvement into twentytwenty and beyond.
We are confident that are building sales momentum will allow us to maintain steady growth, while also enabling us to achieve our three to five year vision of profitably scaling into the leading cloud based email security compliance and productivity solutions provider in the marketplace.
That concludes our prepared remarks, Gigi, we're ready to open the call for questions.
As a reminder to ask a question you wanting to press star one on your telephone.
Charlie Your question press the pound Keith Please standby will we compile the Q and a roster.
And our first question comes from the line of Daniel Ives from Wedbush. Your line is now fence.
Yes, thanks, and great quarter versus the year.
So thanks, Dan your neared, yes, so when you seen firsthand the Microsoft side.
And obviously you had division and it seems like it's really start.
To really execute.
I mean, what's the biggest thing that you're seeing.
As you're hearing from customers, maybe the cross sell opportunity.
That's maybe surprise you.
On the maybe on the positive side in terms, what you're seeing in terms numbers from where we were maybe three to six months.
Yes, that's a great question, Dan and.
Yeah, we're not totally surprised but we're really pleased with the acceleration in the marketplace.
Around the cloud at round Officethree hundred 65, we had done careful work.
In advance of the acquisition at least yes path that that.
Survey task that thesis that our partners and customers.
I wanted a partner to help them make this migration.
The thing that I would say surprise me to take that 7000 feet healthcare account.
That was looking for more than half support and service solution around their officethree hundred 65 implementation that something we didnt expect to see and then that Gartner report that I highlighted in my opening remarks.
Not a complete surprise, but we're really pleased with where Microsoft is taken their go to market strategy and really both bring that CSP part of their business and we think we're really now uniquely positioned to help.
Your medium sized enterprises. In addition to the for the more Midmarket buyers that we were thinking would be applicable to our solution sets. So it's coming together really well. The last thing that is a supply that I could not be more proud of our technical teams, we talk that a year ago that we thought to be a three to five year journey into at the platforms Dennis.
Rated that platform integration is coming together in early Q2 as commented it together in a way that really visually appealing.
Really in my in my way, Thank you really compelling value proposition, because we uniquely bringing together our productivity secured and appliance by design for our partners and customers.
Got it.
And.
When you say about before the acquisition so in the pricing increases and things that were not does a few like now you'd answered you know the handholding, that's really based fill in the rear view mirror.
Yes, so that is on the rear view mirror that really positive thing in the forward mayor is the.
Is that continue to grow by fee in the future for our sales teams I talked about.
Adding chief revenue officer, just here a couple of weeks ago, when we're already seeing the benefit of bringing the teams to gather collaborating more closely on training and value proposition.
So we have some good good.
Good good learning and good work ahead of US the continued to operate.
Better as we move forward, Yes, I think if you look at in Q2 will be delivering to those App river customers on advanced threats. So beginning a lot of new feature functionality, that's coming over from the zix protect product so that should help even further with retention and winning new customers and winning new partner. So we're excited about that.
Thanks, again, great job to team.
Okay. Thanks.
Thank you. Our next question comes from the line of Tyler would from Northland Securities. Your line is now open.
Hey, Thanks for taking my question.
When you look at those 600 trials into the App River base.
How are you how is the conversion rate of those trending is holding up versus where it was in the last couple of quarters.
Yes, there was a big uptick this quarter. The initial quarter, we saw a lot of Bob partners trying and then.
As far as it took to see our work we saw really big uptick in conversions it.
It's not yet where that.
The longer term ever products that it's it edging up that way very nicely and and that as you recall as a 90%.
Hi conversion rate from a trial, which is extraordinary from everything we can see in a market.
Great and then one last one you've mentioned Europe, both for on previous calls.
Going off of that could you kind of walk us through what you expect there and kind of more broadly the international contribution you think about linear but now 2020 guidance.
Yes, Sir.
Our I'm really proud of our international teams I don't want to the management is still nascent and where it where it as to where it's going.
So we expect the can get continued to see them.
Thank you.
Well in 2020 hour, we're still building out.
Our localization Dale localization plan throughout the course 2020, so we look at that to be a more meaningful opportunity heading into 2021.
Alright, Thanks, that's all for me.
Thanks.
Thank you as a reminder to ask a question you wanted to press star one on your telephone to withdraw your question press the pound Keith.
And our next question comes from the line of Nick Yacko from Cowen and company. Your line is now open.
Hey, guys. Thanks for taking my question Congrats building on the strong results.
Just wondering.
Once once unit.
The integration is complete just curious if you can provide any any color on how you're sort of thinking about the the go forward product roadmap and and as the from the size of that you sort of think about.
Build versus buy.
Those are two great question, Nick and.
So I'm really as I said really proud the team as its come together into one core platforms secure cloud.
And that is the focus of our development going forward.
That will roll out into the market in April as we we trade up the salesforce and that will become the primary motion.
Yeah.
For the company and Thats the motion that we really see customers wanting whats as they move to the cloud service provider agreement that consumption that true cloud consumption model, where they can add the users. They had literally every day every week and be built only for that the users that there.
That they have in the organization at that time, and it really a powerful differentiator as I think about CSP versus a and increasingly advantage to think about our encryption and archiving capabilities delivered as an integrated.
Compliant security and compliance solution with as customer so our roadmap going to be focused there we're going to continue to take great care of the legacy Zix catheters and find them.
Easy migration upgrade path into that cloud platform I back will be a multiyear journey for some customers.
And that that will come together as I said with the with the okay. Our of having the vast majority of new customer Onboarding.
On to this secure cloud by Q4.
And on the on the build versus buy.
I feel like we've done a nice job over the last four years I thinking.
Carefully and deliberately about that.
The.
Technology that would help accelerate the business further we continue to do that.
And.
And with the integration coming together, well, we'll be continuing to evaluate.
Areas, we can augment that the technology portfolio.
Yes through both organic efforts and potential inorganic additions to the to the to the company going forward.
Okay. That's helpful. And then I think Broadcom has been done fairly clear that that they want to focus on sort of symantec's larger customers. Just curious if you guys are seeing any any benefit from from some dislocation from that deal.
So we are we've been able to win competitively against them consistently.
Across across time.
We're a little bit different than the others in this space, we have an OEM relationships, our last OEM as Symantec.
And so we have you say argue with the our OEM customers would be at risk. While we're at the same side, taking advantage of that that displacement. So we're we're balanced on them our balanced on that on that particular competitive dynamic.
Okay, great. Thanks, guys.
Thank you Nick.
Thank you as a reminder to ask a question you wanting to press star one on your telephone to withdraw your question press the pound key.
At this time. This concludes our question and answer session I'd now like to turn the call back over to Mr. Wagner for his closing remarks.
Thank you everybody for joining us today for your.
Finally attention too.
Thanks, and we look forward to.
Our next quarterly call in April.
Thank you for joining us today for Zix. This fourth quarter full year 2019 earnings call you may now disconnect.
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