Q2 2021 N-Able Inc Earnings Call
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Hello, everyone and welcome to the <unk> second quarter 2021 earnings call. We will begin in a couple of minutes. If he would like to register a question ready for the Q&A. Please press star followed by one on your telephone keypad. Thank you for your patients.
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Hello, everyone and welcome to the <unk> second quarter 2021 earnings call. We will begin shortly if you'd like to register a question ready for the Q&A session. Please press star followed by one on your telephone keypad. Thank you for your patience.
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Hello, everyone and welcome to the enable second quarter 2020 one's earnings call. My name is Daisy and I'll be coordinating this call you'll have the opportunity to ask a question at the end of the presentation, if you'd like to register a question. Please press star followed by one on your telephone.
<unk> I will now hand over to hoist Howard MA the senior director of Investor Relations from enable to begin so Howard. Please go ahead.
Great. Thank you David and welcome everyone to enable a second quarter 2021 earnings call with me today are John Peeler Yoga enables president and CEO and Tim O'brien, EVP and Chief Financial Officer. Following our prepared remarks, we will open the line for a question and answer session. This call is being simultaneously webcast.
On our Investor Relations website at investors <unk> Dot com on our Investor Relations website. You can also find our earnings press release, which is intended to supplement our prepared remarks during today's call certain statements made during this call are forward looking statements, including those concerning our financial outlook our market opportunities our expectations. Following the recently.
Pleated spin off of our business from solar wind and.
The impact of the global economic environment on our business.
These statements are based on currently available information and assumptions and we undertake no duty to update this information except as required by law. These statements are also subject to a number of risks and uncertainties, including risks related to the spinoff transaction additional information concerning these statements and the risks and uncertainties associated with them is highlighted in today's earnings release and <unk>.
In our filings with the SEC copies are available from the SEC or on our Investor Relations website. Furthermore, we will discuss various non-GAAP financial measures on today's call unless otherwise specified, whom we refer to financial measures, we will be referring to the non-GAAP financial measure a reconciliation of the differences between GAAP and non-GAAP financial measures discussed on today's call.
Are available in our earnings press release on our Investor Relations website.
Finally, please note that the spinoff transaction was completed on July 19th after the end of our second quarter throughout our second quarter, we operated as part of solar wind and our financial results for the period have been prepared from slow Windsor is historical accounting records and presented on a standalone basis as if our business operations had been conducted independently from solar winds.
While the allocations and estimates in these carve out financials are based on assumptions that enables management believes are reasonable the financial results presented for our second quarter. It may not be indicative of the financial position results of operations and cash flows have enabled in the future or if enable has had been a separate standalone publicly traded entity during the periods presented.
And now I will turn the call over to John.
Thanks Howard.
I want to thank everyone for joining today's call and for your interest in enable.
Given that this was our first earnings call as an independent company I wanted to start off by highlighting some of the differentiated aspects of our business model before touching on second quarter performance and then turn it over to Tim for more detail on our financial results and outlook.
One year ago solar wins announced the intent to spin off solar winds MSP, which we have rebranded as enable.
I'm delighted to say that we completed the spinoff and began trading as a standalone public company on July 20th.
This marks a significant milestone for our entire enable organization, which has over 300 employees strong and services MSP partners and approximately 150 countries worldwide.
I want to express my admiration for and gratitude to both the internal and external teams for their tremendous dedication.
Work and perseverance during the separation process.
This has been a dynamic journey filled with valuable learnings that we believe enhances our ability to execute on our strategic initiatives.
And build a brand identity that aligns with our partner centric mission.
As we begin to write the next chapter at enable.
There are many factors that give me confidence in executing on our commitment to be the trusted partner for MSP.
And deliver reliable Iot management and security solutions for millions of small and medium enterprises around the world.
For clarity what other companies may refer to as their customers, we refer to as our partners.
Is there a success drives our success, creating a unique and powerful business model.
First it all starts with our people.
We added key members of the senior leadership team over the last year, including a chief technology and product Officer, Chief Customer Officer, Chief Marketing Officer, Chief Security Officer General Counsel, and finally, our Chief people Officer.
I often refer to enable the extended leadership team as a quilt.
One comprised of industry veterans and new thought leaders.
Having the right team in place has allowed us to increase our organizational focus and begin executing on initiatives across product go to market and partner success.
Second we have Reenergized our strategy.
We continue to improve our platform and strive to be the one stop shop for integrated monitoring and management security data protection and business management tools for MSP use at all stages of their business lifecycle.
Third.
We believe we have set ourselves up to be a growth oriented rule of 50 company over the long term that can appeal to a wider range of investors, who appreciate a balanced mix of growth and profit.
With increased flexibility in capital allocation as a standalone company, we can pursue targeted investments partnerships and opportunistic acquisitions with the goal of accelerating growth over time, while maintaining high profit margins.
We believe we are still in the early stages of a large and growing opportunity for MSP to further support the increasing demand by Smes for fully managed it.
According to Frost <unk> Sullivan, our addressable market was approximately $23 billion globally in 2020 and expected to grow at a compounded annual growth rate of 14% to approximately $44 billion by 2025.
While <unk>, while outsourcing has been around for decades, the complexity and sophistication of cyber threats that SME face everyday have reached record heights.
Unlike larger enterprises.
Sme's, often don't have the resources and talent to navigate mission critical issues that can directly impact their operations and productivity.
For <unk> of all sizes and across all industry verticals and geographies.
MSP has are increasingly their trusted partner for it management and security and we are a trusted partner for MSP.
Providing them with a purpose built solution and resources and education to help our partners grow their businesses.
Our partners are at the center of our distinctive aspect of our business model, which we call partner enabled growth.
There are multiple levers to partner enabled growth.
We grow when we acquired new MSP partners.
We grow when our partners add new end customers and we grow when partners leverage additional services powered by our platform to manage and secure their end customers.
In this manner.
Our partners Act as an extension of our Salesforce and facilitate standardization on the enabled platform.
This allows us to access the SMB market efficiently and profitably.
To accelerate this growth we've been making significant investments in our partners success organization, which is dedicated to help our MSP partners drive and expand their sales and marketing strategies train them and pricing and packaging best practices and.
And use automation to streamline their operations so that they can build successful businesses.
There are three key pillars that make us a platform of choice.
<unk>.
The breadth and depth of our remote monitoring and management capabilities.
Given our origins in remote monitoring and management, we offer what we believe is unparalleled scalability reliability and support for MSP and end customers of all sizes.
We have continued to expand the breadth of our monitoring coverage, including through native integrations and partnerships with leading enterprise tech vendors like Microsoft Apple and Cisco.
And we continue to deepen our capabilities across remote control patch management and reporting and analytics.
Second.
Security is deeply deeply ingrained enables culture, we are well aware of recent cyber attacks in our industry, we understand that purpose built technologies for MSP.
If used for malicious purposes could potentially expose end users and devices to attack.
But we also understand.
More importantly.
That such technologies enable MSP to efficiently manage and secure their end customers.
Therefore, given where we sit in the industry supply chain, we believe the processes required to be a leading provider of security need to span multiple levels.
At the product portfolio level, our MSP partners depend on us for a comprehensive set of security solutions across endpoint mail web patch and data protection used to protect their end customers.
But equally as important we actively enforce security principles designed to ensure that our platform and our internal protocols are secure.
At enable security as part of our core we.
We have a layered approach to security following witnessed in this framework and leveraging <unk> benchmarks protect our company employees MSP partners and their customers.
We've invested in our people processes and technology as it relates to effective security management.
This includes numerous controls like MFA privileged access management centralized logging 24 by seven remote monitoring operations vulnerability identification and remediation employee training and much more.
We want security to be top of mind for all employees and believe that our focus on security is a critical piece of our culture.
Our third key pillar, which I mentioned earlier is our focus on partner success.
Our partners success organization consists of non quota bearing reps, whose sole purpose is to facilitate the best possible partner journey, which we believe leads to greater partner satisfaction reduce churn and expanded utilization of our platform.
To that end, we have a number of initiatives, including hands on training and free resources through our MSP Institute.
Consultations and boot camps with our head nerds say.
Sales and marketing training programs, a variety of peer to peer groups and partner focused events all of which are designed to help partners drive both retention and expansion.
We will continue to invest in our platform security and partner success as a stand alone company.
Turning to the second quarter.
We are pleased with our performance delivering 60% year over year revenue growth that exceeded the outlook. We gave in mid April we continue to expand the number of devices managed and secured on the platform. While our partners continue to deploy our cross sell more services powered by our platform.
Demand for data protection solutions remained robust led by our SaaS cloud to cloud backup solution.
We have one of the leading fully cloud based data protection offerings in the market, which continues to outpace our overall company growth.
Demand for security solutions has also been a consistent source of strength.
Led by our enable edr offering powered by central one.
Further broadening our security portfolio during the second quarter, we announced a partnership with DNS filter to integrate its cloud based web and content filtering solution into the enabled platform we expect.
The integration will be made generally available later in the year and.
In addition, we saw solid traction with partners leveraging our integration with Microsoft in June which was launched at the end of the first quarter.
Msp's now have the ability to perform interim device management functions directly within the enabled platform.
We continue to expand our Apple device management capabilities.
With deeper performance monitoring web and TCP service checks as we prepare to support the upcoming Mac OS Monterey release.
Lastly, we continue to add our partner's success resources platform flexibility, we launched market builder, which provides MSP with complete campaigns. They can quickly and easily brand and use in their own sales and marketing programs.
And in addition, we now have over 50 active technology providers and our Technology Alliance program, which is a testament to the flexibility we offer to our partners via our open ecosystem framework.
This is aligned with our goal to be the industry leader in platform functionality and extensibility and to maximize choice for our partners.
With our security data protection business management, and tap solutions, all integrated with our leading RMM capabilities within a single pane of glass, we believe we matter the most whereas the messiest for MSP.
With that I will hand over the call to attempt to recap of our Q2 results and provide our financial outlook.
Thank you John and thanks to everyone joining us on the call today.
I will review our second quarter results and then update you on our expectations for the remainder of the year.
As we mentioned at the beginning of the call. Please note that our financial results are presented using carve out allocation methodology as we still operated as a part of solar winds during all of the second quarter prior to the completion of our spin off on July 19th.
Financial results include all revenue and cost directly attributable to enable.
As well as the allocation of expenses related to certain functions facilities and services provided by solar wind.
Total revenue in the second quarter was $85.3 million, representing 16% year over year growth and exceeding the high end of our guidance range.
Subscription revenue of $82.8 million increased 17% year over year and represented 97% of total revenue.
Other revenue declined 3% year over year and represented maintenance revenue from customers that bought our solutions under a legacy license and maintenance model in the past we discontinued license sales in the first quarter of 2020.
Our quarterly performance was driven by continued strong demand for our security and data protection solutions, among both existing and new partners as our layered security strategy continues to resonate with MSP partners.
In particular, both our SaaS cloud to cloud backup and enable Edr solutions continued to outpace overall revenue growth and have exceeded initial internal expectations.
Dollar based net revenue retention, which is calculated on a trailing 12 month basis increased slightly to 110% up from 109% in the second quarter of 2020.
We continue to add new manage devices and see increased adoption of incremental services on our platform, which we believe are the most appropriate indicators for growth and a testament to the effectiveness of our partner enabled growth model.
Trailing 12 months gross revenue retention was 86% in the quarter up slightly from 85% in the first quarter and in line with the second quarter of 2020.
We ended the quarter with $1.647, MSP partners spending over $50000 of IRR with us a 32% year over year increase.
Partner spending over $50000 of IRR now represent 46% of our total IRR up from 38% a year ago.
International revenue mix outside of the U S and Canada was approximately 50% in the second quarter, we saw similar strength in both direct sales and sales via our distributor channel.
As a reminder, we partner with distributors for a significant percentage of our international sales.
Turning to our profitability and free cash flow metrics. Please note that unless otherwise stated all references to profit measures and expenses are calculated on a non-GAAP basis and exclude the items outlined in the GAAP to non-GAAP reconciliations provided in today's press release.
Second quarter gross margin was 86, 4% compared to 86, 6% last quarter and 87, 6% in the second quarter of 2020.
Adjusted EBITDA was $28.2 million, representing approximately 33% adjusted EBITDA margin.
Unlevered free cash flow was approximately $15 million in the quarter and reflects some transitory cash outlays, including elevated capital expenditures for build out of offices in four locations to support our operations as a Standalone company.
And other investments related to the spinoff.
Capex was approximately $10 million in the quarter or 12% of revenue and we expect capex to remain elevated at about $9 million in both Q3 and Q4 as we complete our office build out.
We expect Capex to return to historical levels of approximately 4% of total revenue following the completion.
Of these office build outs and spin off related costs.
As we enter 2022, we expect adjusted EBITDA conversion to Unlevered free cash flow to be approximately 70%.
Note that both adjusted EBITDA and Unlevered free cash flow exclude approximately $6 million of spinoff related costs in the second quarter.
Representing primarily accounting legal advisory and other professional fees.
As a reminder, the spinoff was completed on July 19th.
These one time spin off related costs will continue through the third quarter due to the remaining accounting and legal work streams.
We expect that they will be significantly less than the third quarter compared to the second quarter and will largely subside by year end.
Non-GAAP EPS in the second quarter was <unk> <unk>.
Based on pre spin weighted average share count of approximately $158 million.
I will now give some comments on our cash position capitalization and share count post spin.
We ended the second quarter with approximately $50 million in cash.
Based on our planned cash bag at the time of spin off on July 19, our cash position was also approximately $50 million.
In conjunction with the spin we raised $350 million term loan and an undrawn revolving credit facility of $60 million.
Based on current interest rates, we expect annual cash interest expense to be approximately $13 million.
Concurrent with the spin off from solar wind. We also completed an issuance of primary shares via a private placement offering to select institutional investors.
Proceeds from both the term loan and private placement were distributed to solar winds.
Following this transaction our outstanding share count was approximately $179 million, which reflects the two for one distribution ratio from solar winds as well as approximately 21 million shares issued in our private placement.
Now I'm going to provide our financial outlook for the third quarter and full year.
For the third quarter, we expect total revenue of $86.5 million to $87 million.
Representing 13% to 14% year over year growth and adjusted EBITDA of 27, 5% to $28 million.
Representing an adjusted EBITDA margin of approximately 32%.
For the full year 2021, we are raising total revenue expectations to $343 million to $345 million, representing 13% to 14% year over year growth and adjusted EBITDA to $109 million to $111 million, representing an adjusted EBITDA margin of approximately 32%.
We expect total weighted average diluted shares outstanding of approximately $176 million in the third quarter and approximately $182 million in the fourth quarter.
We expect our non-GAAP tax rate to be approximately 25% to 26% for the third quarter and for the full year.
When you think about our revenue growth cadence throughout 2021 recall that the impact of.
Of the Covid pandemic was most pronounced in Q2 of 2020, which created a more favorable year over year comparison relative to what we will see for the remainder of the year.
Additionally, our Q3 and full year EBIT forecast reflect growth investments in our go to market motion partner's success, and R&D as well as investments in security Standalone public company costs and incremental expenses needed to operate on a standalone basis.
Lastly, I want to provide some color on the extent to which we will rely on transition service agreements or TSA from solar wind in the near term heading into the completion of our spinoff.
We believe we have already added nearly all incremental infrastructure and personnel necessary to support independent operations with minimal expected reliance on TSA.
That said as a standalone public company beginning on July 20.
Our results will include the costs associated with DSA that we've entered into with solar winds.
The TSA are intended to provide enable with certain corporate and shared services for a limited period as well as some knowledge sharing and training primarily to ensure a smooth operational transition.
We expect to exit the majority of the TSA is by the end of this year.
With the covered services transitioned to new or existing enable employees all of which is factored into full year guidance.
I'll now turn the call back over to John for some closing remarks.
Thanks, Tim.
As we think about the future of enable and how we can create more value for our partners employees and shareholders.
We will take a measured build buy and partner approach to our platform expansion.
While targeting the rule of 50.
In the near to medium term, we are focused on a few key initiatives and investment areas.
The first is an international sales, where we see opportunities to attract some larger MSP and plant our flag and new accounts via channel partners.
Second we're investing more in partner's success and support to further execute on our retain land and expand strategy.
Third is our investment in product and innovation, we will continue to invest to bring new solutions to market to meet the growing and evolving needs of the SME.
Also when msp's choose their tech stack, they are increasingly mindful of the willingness and ability of vendors to invest in security of their products. We're investing more in the security of our platform and our security processes, which is just as important to us as performance and extensibility.
Finally.
I want to conclude by thanking our employees partners and stakeholders for their trust and their commitment to enable.
With that operator, we are ready to take questions.
Of Colo operators Lindon.
Okay.
Ladies and gentlemen, if you would like to ask a question. Please press star followed by one on your telephone keypad. If you would like to withdraw your question. Please press star followed by Jay and then preparing to ask a question. Please ensure you Amit you likely so that star followed by one on your telephone keypad to register a question.
Our first question comes from Mike <unk> from Needham. Your line is open. Please go ahead.
Hey, good morning, guys and thanks, Thanks for taking the questions. Congratulations on the beat and raise first quarter out of the gate.
<unk> had a question for John I know in your closing remarks, you were talking about some of the near term investment initiatives and I thought that's probably a good place to start as people get ramped up on the story here can you explain between international partner success and support and then the R&D innovation, which of these investments we should be looking to Nir.
For term versus longer term understanding that these are going to take some time to play out as you guys are putting those investments in place.
Yeah. Thanks, Mike I appreciate the time and I appreciate the comments and the interest in enable and actually your questions perfectly framed because we do look at our investments.
And <unk> way and as I think about the three areas of investment.
He runs near term to mid term I would say in the order that we presented them. So.
We've already begun increasing our level of investment in our international sales and marketing effort and and we've already begun to see.
Some degree of success in return there so that that I expect to be measured in.
Months.
And really starting to show up really it's been showing up already are international.
Traction I think is outpacing our north American one and we continue that to expand we think the opportunity there.
Is quite strong in particular in the high end of the market. So that's the shortest return.
Often look at investments as like a J curve in that one.
Probably the steepest in shortest kind of curve. If you will the second one partner success.
This is a continuation on our on our story here, we've always been big on partner success, but we're really increasing that investment in and really making sure that we're touching the customer the MSP in a way that helps them grow and we've been investing there we have a new chief customer officer, there we brought in a bunch of folks.
And really new teams to make sure the MSP or touch the rate there. So when I go back to the J curve. There that's a little bit more medium term I expect that one to really start showing up towards the end of this year beginning of next year and then lastly.
On the technology front.
We brought on Mike Adler, Who's our new Chief Technology, and product officer, and Mike has done a great job focusing on what's important and making sure that our products are the highest quality. But then also looking at ways that we can bring new solutions to market and so as I mentioned in the prepared remarks, we will have our DNS filtering available this year.
<unk> will have other offerings.
Beginning to lineup in the second half excuse me in the first half of 'twenty, two but given the nature of our business. The fact that we have these all of these msp's. It takes what I refer to as our snowball. So those new products to the new solutions take a little bit of time to accumulate and this and the subscription and recurring revenue model and so.
That J curve will be a little bit of a longer slope and we'll get a return more in the mid term there.
That's very helpful and it makes a ton of tankers for those solutions ramping over time. Thanks for the color. There and then just one other question, if I could and I'll cede the floor, but.
I guess a lot of the feedback I've been getting from different clients Theyre trying to discern I get the criticality of the core <unk> solution. As you guys are bringing to your MSP partners can you kind of detail.
I guess.
That that criticality level or the value of that asset to your partners and maybe it'll be helpful color as well.
How many of these.
<unk> partners are operating multiple <unk> solutions or is it really theyre going to just one or a <unk> solution.
Yes, perfect any color there would be helpful.
Yes, I'll start with your second question because it will help answer your first question. So.
<unk> speaking and MSP has won RMM in their platform why because it's really their central nervous system to run their business, we often refer to it internally at the RMM as the operating.
<unk> system for the MSP, Mike it's effectively a fabric that we that allows the MSP to run all of their technical services. So what do I mean, if an MSA in MSP is obviously monitoring and managing all of these devices and workstations leveraging the RMM, but then via our platform because the platform is this fabric.
We're actually plugging in all these different offerings, whether they be monitoring our security so.
This allows the MSP to properly patch, which you know is a fundamental part of of any type of good security hygiene. It allows them to deploy it efficiently and effectively.
And our rules based way endpoint protection, whether it be traditional AAV or our edr. It allows them to deploy backup and disaster recovery. So it becomes as conduit in this fabric for the MSP to really do everything they need to do remotely and efficiently and its really its really the secret sauce.
That led to this industry being with this industry is allowing these MSP to one create a recurring revenue stream and managed services and really the RMM enabling them.
To do so efficiently and profitably. So it is the core bit our technicians, it's effectively.
A lifeline for these for these technicians.
Thanks again.
Our next question comes from Edward <unk> from Bahrenburg Edward Your line is open. Please go ahead.
Good morning, guys and congrats on a great first great quality spinoff and thanks for taking my question I'll start here on the security front in the wake of the most recent headlining breach. This past July 4th weekend can you shed a little light on how conversations may have changed with your MSP partners.
Sure the way their conversations with their customers have changed as well.
Yes.
Yeah, Great Great question Edward.
Again appreciate your interest in and enable social look.
What happened to <unk>.
It is unfortunate.
And as a member of the MSP community, we recognize that and it's unfortunate.
Incidents that a pair and the news are really the ones, where the bad guys were successful.
But there are numerous attacks that happen every day that arent reported right and and broadly speaking.
What my guidance to our MSP.
Our conversations that we have internally, it's really along three areas and three topic points right.
One is you need to make sure youre investing in <unk>.
Technology Security security, that's really I'm.
Im sorry technologies focused on on the different surface areas.
Along whatever vector that might be in a layered approach number one number two you need to have dedicated security personnel.
That's completely dedicated and focused.
On security initiatives does not have shared thing or something or something that people can do as aside priority or focus that needs to be a dedicated focus and third and this is the one that's often I'd say overlooked you need to really adopt cyber security culture.
And look that's something that we preach internally at enable and Thats something that we that we preach onto the MSP as we've been preaching this frankly for a number of years and it resonates I think the MSP is understand it.
The evolution of the story really it went from an inconvenience.
Maybe back four or five years ago to now focus on our understanding that it can be an extinction event for a small medium enterprise. So the MSP are leading the charge, they're looking to us to help provide the council the technology and an integrated platform for them to deploy this layered security approach efficiently and profitably.
So, yes, I think it's getting a little bit more attention I'm glad it's getting a lot more attention we need we need to raise the awareness for.
The SME for the small medium enterprise for the MSP and really across the industry.
Great. That's really helpful and like you guys said you guys have been preaching the importance of security just to follow up here.
As I've mentioned stronger adoption of some parts of the platform in the wake of the breach and wanted to get a sense I know it's quite early.
But I wanted to get a sense of how you guys may have seen some sort of demand change or increase in adoption of your R&M tools training the writers on it.
Yes, we <unk> touched on it briefly in the prepared remarks, but.
I will go into a little bit further detail.
We're seeing msp's.
A little bit more holistic approach.
Across their entire SMB as state and we're also seeing the SME I think.
There are understanding the need to invest.
This layered security approach so what does that mean for us that means we're seeing backup and disaster.
Astral recovery continuity.
<unk> solutions are backup cloud to cloud backup offering has gotten significant traction endpoint protection continues to outpace our growth. We have we have a traditional anti virus offering, but we also have our enable edr offering and.
I would say is also outpacing our overall growth. So it's top of mind for the MSP, we have passed a password.
Management offering that we have and because for the MSP. The surface area is twofold right. It's their own environment and we have offerings that we give them like our password management to help them with their own environments. But then it's also the environment of their customers of course, and so really we're seeing anything to do with security and alarm.
The lines of protection anything really in the NIST framework rally right anything thats, not prolong the protection detection and the ability to recover.
We're seeing kind of be more top of mind for both the MSP in the SMA.
Great really helpful. Thanks, I'll cede the floor and hop back in queue.
Great.
Our next question comes from Matt Hedberg from RBC capital markets. Your line is open. Please go ahead.
Oh, great. Thanks, guys. Thanks for taking my questions.
John I, just wanted to drill in a little bit on kind of the health of your end markets.
What are some of the signs that you're seeing in your business.
Could could point show an acceleration here and I guess importantly, how do you think about Smes increasingly leveraging technology that you offer.
In a post Covid world, where everybody is really going through these digital transformation, it's not just the large enterprises.
Yes.
Thanks, Matt.
Nice to hear from you again.
Look I actually referred to the digital transformation is the digital evolution because.
For me it is not a beginning and an end.
It's a continuation.
Covid did really didn't change our thesis I don't think it actually even changed the thesis of the SMB what it did is it effectively accelerated.
Elements of the need for the SME.
The difference a couple of years ago to today and SME.
Needs to embrace technology on all fronts, I, often say and people ask me is there a focus in the verticals for MSP.
Yes, if the SEC.
Semi has a customer they need it and in and if you don't have a customer you're really not in business right. So whether it be protecting your own. If you are the SMB, if you're protecting your own data protecting your customers' data, helping with the productivity of your staff of your teams.
Corresponding with your with your.
With your customers.
It is it is the bloodline of went from a differentiator in the SMB market to absolutely table Stakes in any vertical I can't think of a vertical that doesn't require it so with that as a backdrop, we're seeing the smes adopting SaaS applications pushing more to the cloud and where they're helping the MSP is with this ever.
Elution and that's our that's our job right or our mission is to empower. These msp's. Our vision is to enable the digital evolution for the SME and as more and more of these smes are adopting SaaS applications pushing their workloads to the cloud pushing more and more there to data to the cloud where are they.
To make sure. The MSP is are there to able to do so efficiently and to make sure that all of those all of those data is being able to be protected and secured.
<unk>.
We are seeing the SMB embracing this in all fronts I think most notably in the short term, we're seeing an uptick as I mentioned with the last call and security. We're also seeing it in collaboration and a bunch of different areas.
Got it that's super helpful. Thanks, John and then maybe one for Tim.
You guys grew 16% in the quarter and being this being your first I guess post spin call you guided Q3, and Q4 or Q3, and the full year, 2014% to 14% growth just wanted to get sort of an idea of what the assumptions that you had an embedded in that guide coming off a really strong quarter.
Just kind of try to understand what's embedded in that full year guidance.
Yes, yes looking back.
Looking back into 2020 from a year over year compares standpoint for Q2.
Q2 was the most impacted quarter last year from from the Covid pandemic.
Whats driving I would say a more.
A more favorable year over year compare.
And the other piece of the equation is that in.
Any any any FX tailwind is most pronounced in Q2.
From a year over year perspective as well.
More so in the first half of 2021 versus the second half.
Got it thanks, a lot guys.
Thanks, Matt.
Before our next question I would just like to remind everyone. If they would like to register a question. Please press star followed by one on your telephone keypad.
Our next question comes from Keith Bachman from Bank of Montreal, Keith Your line is open. Please go ahead.
Thank you. This is Adam on for Keith So maybe for John is everyone gets ramped up on the story I was wondering if you can describe the main differences between enable and competitors, including data and what do you guys have that help set you apart from from those competitors.
Sure. Thanks Keith.
Look.
A lot of the difference is in our origins right we are.
We were born as this remote monitoring and management platform.
We cover the entire industry, we cover the low end in the MSP market. We cover the high end of the MSP market and Thats important because even on the low end as they grow we grow so well number one we cover the entire market number two the fact that we're born and RMM, we really focus on where its the messiest for the MSP a lot of.
The competitors talk about a single pane of glass and Thats important because of efficiency, where we believe that.
That efficiency needs to play in is being able to integrate all these different operating systems. All of these different environments for the SME. The challenge for the MSP is that Theyre managing 10, 12, 200, 500 different small medium enterprises with with a proliferation of different devices and different network configurations and SaaS.
<unk>. So the challenge there is how you pull this all in and Thats one of the parts of our secret sauce with our with our integrations with Microsoft via in tune. The work that we do with Apple and Cisco excuse me the Apple ability to monitor manage Apple devices, our partnership with with Cisco, giving them the ability to.
Effectively and efficiently manage.
Cisco types of devices that allows our MSP is the aggregate all of this and in one single screen. So they can monitor and manage this stuff efficiently and Thats, where our focus has been that coupled with we believe we have the broadest set of security offerings in the market that are integrated with the platform again.
Theres that integrated and platform, where it again why that's important to guidance and an MSP can deploy endpoint protection can deploy our backup disaster recovery via this one powerful console.
And so it becomes that effectively that central nervous system for them. So that's what we're that's what we're focused is how to make it efficient for these MSP and when I think about the landscape and how this world is going to continue to evolve and get more and more complicated it's in that area whats going on with cloud how the environment continues to get more and more.
Weighted these networks get more and more challenging the vertical is getting a little bit more different our job is to help simplify for the MSP make sure that they can do so securely and efficiently and Thats, where our focus is and so that's where that's where I believe we stack up in our <unk>.
Head and shoulders above our competitors not view and the ability to integrate and blend in all these different technologies.
<unk> technologies.
And.
Networks and devices.
Okay got it very helpful. Thank you.
We have a follow up question from Edward <unk> from Bamberg Edward Your line is open. Please go ahead.
Thanks I appreciate it.
In the prepared remarks, you made note of the strike and Apple.
And you also just made it in the last question as well.
We've seen great strength from players in this market. This past quarter can you just expand on how we can think about enables future as you look to tap into this growing apple device market.
Yes, it's multi pronged is what I would say Edward right and so when we think about the future.
And where we're pushing and where we believe the growth is for <unk>.
As P partners and the challenges.
For the Smes.
It's along a couple of different lines one.
Okay, and that's a new challenge for them.
So it is a new challenge for monitoring and management is also need.
You need to employ a layered security approach and as we think about the future environment as more and more work was pushed to the cloud where we're taking over.
Look at different ways that we can help MSP.
Understand the risk and manage their risk whether it be vulnerability scanning in vulnerability management and different types of different types of different security tools and offerings along that environment.
That's really the.
Really a lot of our focus area as it relates to Apple Yes. This is.
This is one of our Differentiators.
It's not a it's not a homogenous network.
As you have an apple device and a Microsoft laptop, you're working on now that presents a unique problem for the MSP and one of the things that sets us apart.
Is our ability to allow these msp's to manage windows device that Google device.
An apple device and I believe the investment that we're making with our Mac team and what they are able to do to allow MSP is not only just to monitor and manage.
Mac devices, Apple devices, but also that enabled them to to secure and if necessary back up some of these devices. So we're going to continue to push there to get closer to because it's very much a hybrid world and a bunch of different fronts and for the MSP. The small medium enterprise is looking for the MSP.
To manage all of it right there the single day or the single neck. The choke so to speak for the small medium enterprises. It doesn't matter if it's an apple device a windows device a Linux box.
Their job is to monitor it manage it and secure it and Thats, where we stand and that's why we will continue to invest on all the different operating systems to make sure that we can be there to help them in this kind of hybrid proliferated world.
Great. Thanks, that's helpful you're right on with the Apple phone and Microsoft power laptop nothing.
Nothing further.
Good question.
Thanks, Ed.
We have no further questions. So thank you everyone for joining you may now disconnect your lines and have a lovely day.
Thank you all thank you.
Yeah.
Okay.
Okay.
Okay.
[music].
Okay.