Q4 2021 Rapid7 Inc Earnings Call

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Speaker 1: Good day and thank you for standing by. Welcome to the Rapid 7 fourth quarter and full year 2021 earnings conference call. At this time, all participants are in a listen only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you'll need to press star 1 on your telephone. Please be advised today's conference is being recorded. If you require any further assistance, please press star then 0. I would now like to hand the conference over to your host today, Sunil Shah, Vice President Investor Relations. Please go ahead.

Good day, and thank you for standing by welcome to the rapid seven fourth quarter and full year 2021 earnings conference call. At this time all participants are in a listen only mode. After the speaker's presentation. There will be a question and answer session to ask a question. During this session you will need to press star one on your telephone please be advised todays.

Is being recorded if you require any further assistance. Please press Star then zero I would now like to hand, the conference over to your host today, Sydney L. Shaw Vice President Investor Relations. Please go ahead.

Okay.

Speaker 2: Thank you, operator, and good afternoon, everyone. We appreciate you joining us today to discuss Rapid7's fourth quarter and full year 2021 financial and operating results, in addition to our financial outlook for the first quarter and full fiscal year 2022.

Thank you operator, and good afternoon, everyone. We appreciate you joining us today to discuss rapid seven's fourth quarter and full year 2021 financial and operating results.

In addition to our financial outlook for the first quarter and full fiscal year 2022.

Speaker 2: With me on the call today are Corey Thomas, our CEO , and Tim Adams, our CFO .

With me on the call today are Corey Thomas our CEO and Tim Adams, our CFO .

Speaker 2: We have distributed our earnings press release over the wire and it is now posted on our website at investors.rapid7.com along with the updated company presentation and financial metrics file. This call is being broadcast live via webcast and following the call an audio replay will be available at investors.rapid7.com until February 16, 2020.

We've distributed our earnings press release over the wire and it is now posted on our website at investors <unk> com along with the updated company presentation and financial metrics file. This call is being broadcast live via webcast and following the call an audio replay will be available at investors by rapid seven dot com until February 16 2022.

Speaker 2: During this call, we may make statements related to our business that are forward looking under federal securities laws. These statements are made pursuant to the FAYCARPER provisions of the Private Security Certification Reform Act of 1995, and include statements related to the company's positioning or future goals, and financial guidance for the first quarter in full year 2022, and the assumptions underlying vegetables and values. These forward-looking statements are based on our current expectations and beliefs and on information currently available to us.

During this call we may make statements related to our business never sward looking under federal Securities laws. These statements are made pursuant to the safe Harbor provisions of the private Securities Litigation Reform Act of 995.

<unk> statements related to the company's positioning our future goals and financial guidance for the first quarter and full year 2022, and the assumptions underlying such goals and guidance. These forward looking statements are based on our current expectations and beliefs and on information currently available to us.

Speaker 2: Actual outcomes and results may differ materially from the expectations contained in the statements due to a number of risk-fenancerities, including those contained in our most recent court of report on form 10Q, and in the fifth week more reports that we follow via.

Actual outcomes and results may differ materially from the expectations contained in these statements due to a number of risks and uncertainties, including those contained in our most recent quarterly report on Form 10-Q and in the subsequent reports that we filed with the SEC.

Speaker 2: The information provided on this conference call should be considered in live session.

The information provided on this conference call should be considered in light of such risks.

Speaker 2: Actual results and the timing of certain events may differ materially from the results or timing predicted or implied by such forward-looking statements, and reported results should not be considered as an indication of future performance.

All results and the timing of certain events may differ materially from the results or timing predicted or implied by such forward looking statements and reported results should not be considered as an indication of future performance.

Speaker 2: Rapid 7 does not assume any obligation to update the information presenting on this conference call except for the extent required by F with the law.

<unk> does not assume any obligation to update the information presented on this conference call except to the extent required by applicable law.

Our commentary today will be primarily in non-GAAP terms and reconciliations between our historical GAAP and non-GAAP results and guidance can be found in today's earnings press release.

Speaker 2: Our commentary today will be primarily in non-GAB terms and reconciliation between our historical gap and non-GAB results and guidance can be found in today's earnings press release. At times, in a prepared comments or in response to your questions, we may offer incremental metrics to provide greater insight into the dynamics of our business or our quarterly results. Please be advised that this additional detail may be one time in nature and we may or may not provide an update in the future on these.

Times in our prepared comments or in response to your questions. We may offer incremental metrics to provide greater insight into the dynamics of our business or our quarterly results. Please be advised that this additional detail maybe onetime in nature, and we may or may not provide an update in the future on these metrics.

Speaker 2: With that, I'd like to turn the call over to our CEO , Cory Tom.

With that I'd like to turn the call over to our CEO Corey Thomas.

Thank you Sunil.

Speaker 3: Thank you, Senille. It's an afternoon to everyone on today's call. Thank you for joining us. Rapid seven finish, 2021 on a high note, delivering strong fourth quarter results on broad base strength across our security transformation and vulnerability management solutions.

Afternoon to everyone on today's call. Thank you for joining US rapid seven finished 2021 on a high note delivering strong one quarter result on broad based strength across our security transformation vulnerability management solutions security transformation saw year over year organic growth of over 50.

Speaker 3: The treaty transformation saw a year over year organic ARR growth of over 50% exceeded our expectations for the quarter and the year. Driven by our team's strong institutions and their growing need for customers to manage increasingly complex security environments.

Per se has exceeded our expectations for the quarter and the year.

Driven by our team's solid execution and a growing need for customers to manage increasingly complex security environments.

We ended the year with $599 million of AR.

Speaker 3: We ended the year with $599 million of AR.

Speaker 3: Growth of 38% over the prior year, and growth of over 30% on an organic basis.

Growth of 38% over the prior year and growth of <unk>.

Over 30% on an organic basis.

Speaker 3: These growth rates highlight the compelling value proposition our insight platform is delivery to our customers and support our belief that 2022 will be another strong year for RAPIC 7.

These growth rates highlight the compelling value proposition of our insight platform is delivering to our customers and support our belief in 2022 will be another strong year for rapid seven.

Speaker 3: Our commitment to executing on our growth and profitability framework is definite in today's results.

Our commitment to executing on our growth and profitability framework.

And today's results, we delivered nearly 100 basis points of non-GAAP operating margin expansion for the year, while accelerating our growth and absorbing our largest ever acquisition to date.

Speaker 3: We delivered nearly 100 basis points of nine-gap operating margin expansion for the year, while accelerating ARR growth and absorbing our largest ever acquisition to date.

Speaker 3: We also saw significant scale in cash flow exceeding $50 million of operating cash flow in 2021 and delivering $35 million of fee cash flow for the year ahead of expectation.

We also saw significant scale and cash flow.

$15 million of operating cash flow in 2021, and delivering $35 billion of free cash flow for the year ahead of expectations.

Speaker 3: This puts us on a great trajectory to execute against our mid and long-term pre-cashful targets.

This puts us on a great trajectory to execute against our immediate and long term free cash flow targets.

Speaker 3: While Tim will share more on our operating results during his prepared remarks, these financial highlights illustrate the strength of our underlying business and our commitment to making responsible investment in growth.

While Tim will share more on our operating results during his prepared remarks, dd's financial highlights illustrate the strength of our underlying business and our commitment to making responsible investments in growth.

We began last year with our three enjoying goals in mind.

Speaker 3: We began last year with our three enduring goals in mind, to enable customers to securely try to...

To enable customers to securely transition to the cloud.

Speaker 3: to expand the capabilities and value proposition of our best in class insight platform. And to balance our dual mandate of scaling properly while strategically investing to drive durable growth.

To expand the capabilities and value proposition of our best in class in fact platform at the balanced our dual mandate of scaling profitably, while strategically investing to drive global growth.

Speaker 3: In March, we expanded on this vision at our investor day, where we outlined our medium to long-term financial goals and elaborated on a few key opportunities, including the large and expanded a transferable market for our solutions, our ability to grow ARR for customers by cross-selling and upselling into our base.

In March we expanded on this vision at our Investor day, where we outlined our medium to long term financial goal and elaborated on a few key opportunities, including the large and expanding addressable market for our solutions, our ability to grow our pro customers by cross selling and upselling into our base focus.

Speaker 3: both the theme on higher road strategic customers to support this

On higher growth strategic customers to support this expansion.

Speaker 3: and an underpinitrated international market with significant room for searing.

In an underpenetrated international markets with significant room for share gains.

During 2021, we executed exceedingly well across all of these opportunities.

Speaker 3: During 2021, we executed extremely well across all of these opportunities.

We accelerated our growth, while expanding our addressable market beyond $30 billion or per customer grew 17% for the year approaching $60000 per customer by customer.

Speaker 3: We've celebrated ARR growth while expanding our adjustable market beyond $30 billion.

Speaker 3: ARR for customer who's 17% for the year approached in $60,000 per customer.

Speaker 3: Customer growth accelerates driven by increased demand and notable improvements in retention. As we eclipse 10,000 customers' global.

Customer growth accelerated driven by increased demand and notable improvements in retention as we eclipsed 10000 customers globally.

And we saw approximately 50% year over year growth in our international revenue.

Speaker 3: And we saw approximately 50% year over year growth in our international evidence.

Speaker 3: Moreover, the escalating cyber threat land thick weights grants throughout the year validates the durability of these opportunities. As customers transform their business, cloud adoption gains pace, and the ability to manage cybersecurity risk becomes even more challenge.

Moreover, the escalating cyber threat landscape, we experienced throughout the year validates the durability of these opportunities as customers transform their business.

Loud adoption gains pace and the ability to manage cyber security risk becomes even more challenging.

These issues are now a top priority for executives and boards, particularly as the labor market for security professionals tightened regulatory scrutiny and brand risk increase.

Speaker 3: These issues are now in top priority for executives and boards, particularly as the labor market for security professionals tighten and regular Tory scrutiny and brand risk increase.

Speaker 3: These market conditions provide a healthy, spectacular backdrop for our strong growth in 2021 and should support durable ongoing growth in 2022. I highlight three areas that are driving our success.

These market conditions, providing a healthy secular backdrop for our strong growth in 2021 and should support durable ongoing growth in 2022.

Highlight three areas that are driving our success today.

Speaker 3: First, our insight platform provides customers with a broad-based integrated suite of best-than-class security operation solutions.

First our insight platform provides customers with a broad based integrated suite of best in class Security Operation solutions, we've invested in and expanded our capabilities over the last few years to build a leading position in the extended detection and response cloud security vulnerability risk management markets.

Speaker 3: We've invested in and expanded our capabilities over the last few years to build a leading position in the extended detection and response, cloud security and vulnerability risk management.

Speaker 3: We further strengthen our customer value proposition by adding platform services, including store and threat intelligence to provide security teams with copper heads with ability, analytics, and automation that they need to manage an evolving IT environment.

We further strengthen our customer value proposition by adding platform surfaces, including Thor and threat intelligence to provide security teams with comprehensive visibility analytics and observation that they need.

To manage an evolving environment.

The depth and breadth of our platform is increasingly becoming a competitive differentiator.

Speaker 3: The depth and breadth of our platform is increasingly becoming a competitive difference.

Speaker 3: It's driving the man with our customers, particularly as security teams look to consolidate and increasingly fragment it that a security solution.

It's driving demand with our customers, particularly our security teams look to consolidate and increasingly fragmented set of security solutions.

Speaker 3: This is demonstrated by the strong growth we saw across our insight platform throughout 2021, with particular strength driven by our security transformation solutions, which now represents the majority of our total ARR.

This is demonstrated by the strong growth we saw across our entire platform throughout 2021, with particular strength driven by our security transformation solutions, which now represents the majority of our total <unk>.

Speaker 3: We see a long run we're ahead in terms of our platform opportunity as we expand our base of multi-product platform.

We see a long runway ahead in terms of our platform opportunity as we expand our base of multi products platform customers.

The recent law for cell phone ability highlights the value of holistic visibility and monitoring our insight platform can't provide and helping customers to drive better security outcomes.

Speaker 3: The recent law enforcement's self-ordinability highlights the value of holistic visibility and monitoring our insight platform can provide and helping customers to drop better security out.

Speaker 3: beyond the critical importance of INSPEC VM and providing visibility to the risk and customer-stri-tional environments. Customers are leveraging INSPEC Cloud6 to identify vulnerable cloud instances, INSPEC IDR to monitor for attacker behavior related to law for sale. Our applications have created capabilities to both monitor and block against attack attempts and allow Raptor for forensic analysis of exploitation attempts against the vulnerability.

Beyond the critical importance of insight provided visibility to their risk in customers traditional environments customers are leveraging insights.

Two identify vulnerable cloud emphasis inside ADR to monitor for tanker behavior related to long haul shale, our application security capabilities to both monitor and block against the package, yes, and the last Raptor for forensic analysis of exploitation test against the vulnerability.

Speaker 3: The scope of incidents like law for sale demonstrates the persistent nature of the elevated threat landscape our customers are facing today. And why we expect cybersecurity will remain top of mind for organizations of all sizes as we look ahead.

Cope of incidents like law for sale demonstrates the persistent nature of the elevated threat landscape. Our customers are facing today and why we expect cyber security remains top of mind for organizations of all sizes as we look ahead.

Speaker 3: The second aspect of our business I want to highlight is our market leading incident detection response.

The second aspect of our business I want to highlight is our market leading incident detection and response.

As the topic of FBR gains minds here. Many of you have asked how rapid seven in fact, ADR is delivering customer impacted the theory.

Speaker 3: As a topical XDR games miniatve you have asked how rapid seven inside IDR is delivering customer impact.

Speaker 3: The answer is that we've always approached IDR from this.

The answer is that we've always approached AAR from this perspective.

Speaker 3: When we began building IDR in 2013, most people were focused solely on data collection.

When we began building <unk> in 2013, most people will focus solely on data collection.

Speaker 3: Rabbit 7 took his detection first approach. His been named, incident detection, and was found.

Rapid seven took a detection first approach has been an incident detection and response by.

Speaker 3: by combining leading data collection capabilities on our insight platform, with detections from our analysis of attack of behavior and layering on user behavior analysis, by identifying monitoring and compliance fast boards, we were able to build not just a market leading stem, but also a market disrupting capability to detect and respond to attacks more effectively.

By combining leading data collection capabilities on our insight platform with Detections from our analysis of attack of behavior and layering on user behavior analysis file integrity monitoring and compliance dashboards, we were able to build not just a market leading them, but also a market disrupting capability to that.

Tech and respond to attacks more effectively.

We have since extended the breadth and depth of our offering at a risk capabilities, including endpoint detection and forensics and network traffic analysis to provide more comprehensive visibility across customer environments as well as embedding automation to drive productivity customers deliver better security outcomes.

Speaker 3: We have since extended the breadth and depth of our offer and a risk capability, including endpoint detection and forensics and network traffic analysis to provide more comprehensive visibility across customer environments as well as embedding automation to drive productivity to have customers deliver better security out.

Speaker 3: Our investments in natively integrating these capabilities is why customers are choosing insight IDR to help minimize the seams and gaps that exist in their fragmented technology environment.

Our investments and natively integrated <unk> capability.

<unk> customers are choosing <unk> to help minimize the scenes gaps that exist in their fragmented technology environments today.

Speaker 3: We continue to invest in expanding our platform capabilities, most recently via the addition of insights best in class threat intelligence.

We continue to invest in expanding our platform capabilities most recently.

Insights best in class threat intelligence offering.

Speaker 3: remain early on our integration efforts that have begun to see the vision of combined internal and external attack surfaces monitoring resonate with our customers.

We remain early on our integration efforts.

Good to see the vision of combining internal and external attack surface monitoring resonate with our customers.

During the fourth quarter, we saw great progress on our ability to sell into our existing customer base with nearly 40% of our new threat intelligence business driven by cross sell.

Speaker 3: During the fourth quarter, we saw great progress on our ability to sell insights into our industrial race when nearly 40% of our new threat and health justice business driven by Cross-Cell.

Speaker 3: A great example of this was a six-featured competitive displacement with a well-known global food in Brewershire.

A great example of this was a six figure competitive displacement with a well known global food and beverage brand the customer added threat demand alongside our detection and response and vulnerability management solutions and part because of the enterprise relevant alerts and the ability to automate workflows to improve the efficiency.

Speaker 3: The customer added direct command alongside our detection and response and vulnerability management solutions in parts because of the enterprise relevant alerts and the ability to automate workflows to improve the efficiency and effectiveness of their thoughts.

And effectiveness of their stock.

Speaker 3: We were remained bullish on our long-term opportunity to deliver a market-leading XDR solution to our customers as we continue to integrate threat intelligence into IDR.

We remain bullish on our long term opportunity to deliver a market, leading xdr solutions to our customers as we continue to integrate threat intelligence the IAR.

Lastly, I would like to take a moment to discuss the emergence of our cloud native security platform insight cloud.

Speaker 3: Lastly, I'd like to take a moment to discuss the emergence of our cloud-native security platform in Site Cloud.

Speaker 3: Digital transformation and the accelerating customers shift to cloud-based infrastructure is a surrounding security problem.

Digital transformation and the accelerating customer shifts to cloud based infrastructure is disrupting security programs cloud environments, a more dynamic and scale in a different place than traditional IP environment. This is why security teams are increasingly looking for solutions that are built from the ground up and manage the unique risks in there.

Speaker 3: Cloud environments are more dynamic and scale than a different place in traditional IT environments.

Speaker 3: This is why security teams are increasingly looking for solutions that are built from the ground up and manage the unique risk in their cloud environment.

Environments.

Speaker 3: While the cloud security market remains in its early days, it is clear to us that success and security cloud relies on holistic data collection, analytics, and automation, all capabilities that are core to rapid-7Ding.

While the cloud security market remains in its early days it is clear to us.

Seth and feature in the cloud relies on holistic data collection analytics and automation all capabilities that are core to rapid <unk>.

Speaker 3: This is how we have architected insight cloud thick by integrating three critical areas of technology to bring together multi-cloud data for which visibility and analysis across cloud foster management, cloud workflow protection and cloud identity and entitlement management.

This is how we have architected insight cloud.

By integrating three critical areas of technology to bring together multi cloud data for which visibility and analysis across cloud posture management cloud workload protection and cloud identity and entitlement management, we continued to innovate and invest heavily in this space given the massive opportunity ahead to help our customers.

Speaker 3: We continue to innovate and invest heavily in the space given the massive opportunity ahead to help our customers migrate securely to the cloud.

Like rates securely in the cloud.

Our approach is resonating with customers as evidenced by competitive six figure deal with a fortune 500 company.

Speaker 3: Our approach is resonating with customers as evidenced by a competitive 60-degree deal with a Fortune 500 company.

Speaker 3: The customers homegrown approach to securing and growing multi cloud environments was struggling to scale with the pace of their cloud development.

The customers homegrown approach to securing and growing multi cloud environments was struggling to scale with a piece of their cloud development.

Speaker 3: they selected NCI Cloud for our scalable automation, seamless integration with NCI VM, and our public cloud provider coverage that few competitors can add.

They selected insight.

For our scalable automation seamless integration with <unk> and our public cloud provider coverage.

Competitors can match, our swift time to value and out of the box capabilities provided tangible benefits for the customer, allowing insight cloud.

Speaker 3: our swift time to value and out of the box capabilities provided tangible benefits for the customer, allowing insight cloud tech to become, in their words, a cornerstone of their security program.

Come in their words, a cornerstone of their security program.

As we look across all three of these areas, we expect that many of the market dynamics, we experienced in 2021, we will continue to intensify.

Speaker 3: As we look across all three of these areas, we expect that many of the market dynamics we experience in 2021 will continue to intensify in 2020.

Okay.

The attack landscape continues to become more hostile and the pace of innovation, particularly the move to the cloud is accelerating and the security cap is getting wider it.

Speaker 3: The attack on land space continues to become more hostile and the pace of innovation, particularly the move to the cloud is accelerating. And the security cap is getting wider.

Speaker 3: It is clear that security now have a permanent seat at the table in executive and board discussion.

It is clear that security now have a permanent seat at the table and executive Board discussions.

Speaker 3: And we expect this to feel a durable growth for our best and sweet insight platform as we look ahead to 2022.

And we expect this to fuel durable growth for our best and Sweet insight platform as we look ahead to 2022.

Speaker 3: These dynamics are also impacted by the increased turnover of many companies or facing in today's labor market, exacerbating what has already been a tight talent environment for 5% security professional.

These dynamics are also impacted by the increased turnover. Many companies are facing in today's labor market exacerbating what has already been a tight talent environment for fiber security professionals.

Speaker 3: Rapid Steppin's sustained focus on addressing the needs of resource constrained customers by delivering best-than-class productivity and efficacy of C3D programs while lowering the cost of operations, positions us well to drive strong customer impact through our insight platform in this environment.

Rapid seven a sustained focus on addressing the needs of resource constrained customers by delivering best in class productivity and efficacy of security programs, while lowering the cost of operations positions us well to drive strong customer impact through our insight platform in this environment.

Speaker 3: As we march forward in the 2020 students, we remain committed to executing against our three and during goals for our seven. Enhancing our customer's ability to truly transition to the cloud, building out an increasingly integrated best-in-fleet platform experience and driving the pain, profitability growth.

As we March forward into 2022, and we remain committed to executing against our three enduring goals rapid seven.

Enhancing our customers' ability to securely transition to the cloud.

Moving out and increasingly integrated best in fleet platform experience.

Drivers obtain profitability growth.

Speaker 3: We believe that sex hotel wins insecurity and the evolving IT environments put us in a great position to execute on these goals in 2022. And we're confident that we have the right technology and people to drive another year of durable goals. Our team remains committed to delivering on our 2025 goals of the coming and over $1 billion will look 40 coming and we see great line of fight to achieve in debt given our strong execution in 2021.

We believe that secular tailwind and security in the evolving IP environments put us in a great position to execute on these goals in 2020.

We are confident that we have the right technology and people to drive another year of durable growth. Our team remains committed to delivering on our 2025 goal of becoming an over 1 billion dollar rule of 40 company and we see great line of sight to achieving that given our strong execution in 2021.

Amidst an ever escalating cyber threat landscape I am tremendously grateful to all of the security professionals around the world, who work tirelessly to keep our technology environment.

Speaker 3: amidst an ever-escalating cyber threat landscape, I'm tremendously grateful to all of the security professionals around the world who work tirelessly to keep our technology environment safe.

Speaker 3: The law for self-audibility, strength, security, teams at the end of an already busy year, and I'm proud of our rapid 17, for their commitment to supporting our customers during the ongoing remediation.

The law for shelf on ability strength securities at the end of an already busy here at all.

<unk> of our rapid 17 for their commitment to supporting our customers. During the ongoing remediation efforts, we know that the threat environment will continue to escalate impacting organizations of all sizes and that gives us conviction in the importance of our mission to make the best security operations achievable Tal. Thank.

Speaker 3: We know that this red environment will continue to escalate, impact the organization of all sizes, and that gives us conviction and the importance of our mission to make the best security operations achievable to all. Thank you to our team and to our customers for supporting us on this journey.

Thank you to our team and to our customers for supporting Us on this journey.

Before I turn the call over to our new CFO type items I would like to thank Jeff Colosky.

Speaker 3: Before I turn the call over to our new CFO , Tomatoes, I would like to thank Chef Kalowski for significant contributions over the last five years.

<unk> contribution over the last five years.

Speaker 3: When Jeff saw in the company, we had a VM solution and an annual revenue run rate of around $150 million. Today, we have broad-based best-of-class security operations platform generating nearly $500 million in annual hours-recurring revenue. Jeff was a critical player in this transformation. We were...

When Jeff joined the company, we had a VM solution and an annual revenue run rate of around $150 million today, we have a broad base best in class security operations platform generated nearly $600 million in annualized recurring revenue.

Jeff was a critical player in this transformation, we wish him all the best in retirement Tim.

Speaker 3: Tim, we're thrilled to have you on board as we usher into the next chapter of Growth for Rapper 7. And I'm excited about all the great experience you will bring to our leadership team. Thank you for joining us today. And now I'm going to hand the call over to Tim. Tim.

Tim we're thrilled to have you onboard as we usher in the next chapter of growth for rapid seven and I'm excited about all the great experience, we're bringing to our leadership team. Thank you for joining us today and now I'll hand, the call over to Tim.

Okay.

Thank you Corey.

Speaker 4: Good afternoon, everyone. Thank you for joining us on the call today.

Good afternoon, everyone. Thank you for joining us on the call today.

Speaker 4: I look forward to working with all of you and hopefully meeting you face to face in the near future.

I look forward to working with all of you and hopefully meeting you face to face in the near future.

Speaker 4: First, let me say I'm very excited to be part of such a great company. I have known Corey in the Rapid 17 for a few years, and I am truly honored to be here. I've been on board for just over a month, and I have been impressed by the level of talent and experience across the organization.

First of all let me say I'm very excited to be part of such a great company I have known Korean the rapid <unk> for a few years and I'm truly honored to be here.

I've been on board for just over a month and I have been impressed by the level of talent and experience across the organization.

Speaker 4: There is a strong culture of collaboration, teamwork and customer folks.

There is a strong culture of collaboration teamwork and customer focus.

Speaker 4: As one of the executive leaders, I will be working across the company to ensure that we continue to align our business and finance strategies to support our overall growth and long term financial targets.

As one of the executive leaders I will be working across the company to ensure that we continue to align our business and finance strategy to support our overall growth and long term financial targets.

Now before I turn to the results.

Speaker 4: Now before I turn to the results, I'll remind you that except for revenue.

A reminder, that except for revenue.

Speaker 4: All financial results we will discuss today are non-GAAP financial measures unless otherwise stated.

All financial results, we will discuss today are non-GAAP financial measures.

Yes, otherwise stated.

Speaker 4: Additionally, reconciliation between our gap and non-gap results can be found in our earnings press.

Additionally, reconciliations between our GAAP and non-GAAP results can be found in our earnings press release.

Speaker 4: Rapid 7 delivered strong fourth quarter in full year 2021 results.

Rapid seven delivered strong fourth quarter and full year 2021 results.

Total ending a $599 million grew 38% over the prior year driven by growing customer demand customer demand across our portfolio of security transformation and vulnerability management solutions.

Speaker 4: Total ending ARR of $599 million, grew 38% over the prior year, driven by growing customer demand across our portfolio of security transformation and vulnerability management solution.

Speaker 4: ARR growth was over 30% on an organic basis in 2021. An acceleration over the prior year in highlights Rapid 7's exceptional ability to drive durable growth as we scale our visit.

<unk> growth was over 30% on an organic basis in 2021 and acceleration over the prior year and highlights rapid seven's exceptional ability to drive durable growth as we scale our business.

Full year revenue of $535 million grew 30% over the prior year and exceeded the high end of our guidance range.

Speaker 4: Four-year revenue, a $535 million, grew 30% over the prior year, and exceeded the high end of our guidance range.

Speaker 4: Strong demand for insight platform solutions drove product revenue growth of 31% over the prior year to $501 billion.

Strong demand for our insight platform solutions drove product revenue growth of 31% over the prior year to $501 million.

Speaker 4: As Corey shared earlier, the need to manage risk across an increasingly complex IT environment, pure organic growth of over 50% in our security transformation solutions, ARR in 2021.

As Corey shared earlier, the need to manage risk across an increasingly complex it environment.

Organic growth of over 50% at our security transformation solutions.

In 2021.

Speaker 4: I am thrilled to share that our security transformation solutions now represent the majority of our total ARR.

I am thrilled to share that our security transformation solution now represents the majority of our total <unk>.

Speaker 4: We continue to see a healthy mix of growth coming from both new and existing customers during the year. In addition to experiencing strong and improving customer retention rates throughout the year.

We continue to see a healthy mix of growth coming from both new and existing customers during the year.

In addition to experiencing strong and improving customer retention rates throughout the year.

Speaker 4: Our customer base grew 18% over the prior year, ending 2021 with over 10,200 customers globally.

Our customer base grew 18% over the prior year, ending 2021 with over 10200 customers globally.

Speaker 4: our expanding suite of leading security solutions and the compelling value proposition of our insight platform is underscored by the ARR per customer of 58,300 at year-end, which is up over 17% over the prior year.

Our expanding suite of leading security solutions and a compelling value proposition of our insight platform is underscored by the IRR per customer of 58300 at year end, which is up over 17%.

Over the prior year.

Speaker 4: Our commitment to driving durable growth while expanding margins within our profitability framework is clear and our operating results.

Our commitment to driving durable growth, while expanding margins within our profitability framework is clear in our operating results.

Speaker 4: Rapid 7 generated approximately $8 million of operating profit, a year over year improvement of nearly 100 basis points, and $35 million of free cash flow during 2021, both of which,

Rapid seven generated approximately $8 million of operating profit a year over year improvement of nearly 100 basis points and $35 million of free cash flow during 2021.

Both of which exceeded our guidance.

Speaker 4: We were able to achieve these results while increasing our investments in growth.

We were able to achieve these results, while increasing our investments in growth.

Speaker 4: absorbing our largest acquisition today, and hiring and retaining talent in a more competitive labor environment. Now,

Absorbing our largest acquisition to date and hiring and retaining talent and a more competitive labor environment.

Now turning to our fourth quarter results.

Speaker 4: Total revenue in Q4 of $152 million was up 34% over the prior year and above the high end of our guide.

Total revenue in Q4 of $152 million was up 34% over the prior year and above the high end of our guidance.

Speaker 4: Product revenue grew 35% year over year to $141 million.

Product revenue grew 35% year over year to $141 million.

Speaker 4: Our international revenue grew 59% and represented 20% of total revenue for the fourth quarter. While North America revenue grew 29% over the prior year and represented 80% of total revenue.

Our international revenue grew 59% and represented 20% of total revenue for the fourth quarter.

While North America revenue grew 29% over the prior year and represented 80% of total revenue.

Speaker 4: Product gross margin was 75% in the quarter, while total gross margin for the quarter was 71%. Down slightly from the prior year, but in line with our range of expectations.

Product gross margin was 75% in the quarter, while total gross margin for the quarter was 71%.

Down slightly from the prior year, but in line with our range of expectations.

Yes.

As we've shared previously we continue to expect product gross margin to trend in the mid seventies and overall gross margin in the low seventies.

Speaker 4: As we shared previously, we continue to expect chronic roast margin to trend in the mid 70s, and overall roast margin in the low setting.

Speaker 4: During the fourth quarter, we continue to invest in growth and innovation and absorb a full quarter of expenses from our insights acquisition.

During the fourth quarter, we continued to invest in growth and innovation and absorbed a full quarter of expenses from our insights acquisition.

Speaker 4: Fails and marketing expenses grew 34% year over year and represented 44% of revenue as we ramped investments to position ourselves for growth in 2022.

<unk> and marketing expenses grew 34% year over year and represented 44% of revenue as we ramped investments to position ourselves for growth in 2022.

Speaker 4: R&D investments grew 45% year over year and represented 22% of revenue, while GNA expenses grew 31% and represented 9% of revenue.

R&D investments grew 45% year over year and represented 22% of revenue, while G&A expenses grew 31% and represented 9% of revenue.

Speaker 4: Our ability to reinvest our top line over performance from the second half of last year provides a strong foundation for growth in 2022 while maintaining the commitment to executing against our profitability framework.

Our ability to reinvest our topline over performance from the second half of last year provides a strong foundation for growth in 2022, while maintaining the commitment to executing against our profitability frameworks.

Fourth quarter operating loss of $6 billion was slightly better than our guidance.

Speaker 4: Fourth quarter operating loss of $6 billion was slightly better than our guidance.

Speaker 4: are adjusted even, they're lost with $2 million in the quarter. And that income per share was a loss of $16.

Our adjusted EBITDA loss was $2 million in the quarter and net income per share was a loss of 16.

Speaker 4: Moving to our balance sheet and cash flow. We ended the year with cash equivalents and investments of $258 million compared to $310 million at the end of Q3 2021. The reduction was primarily driven by the November reduction of the remaining $45 million of our convertible senior notes due in 2023.

Moving to our balance sheet and cash flow.

We ended the year with cash cash equivalents and investments of $258 million.

Compared to $310 million at the end of Q3 2021.

The reduction was primarily driven by the November redemption of the remaining $45 million of our convertible senior notes due in 2023.

Speaker 4: We delivered better than expected fourth quarter in full year cash flow from operations, reflecting strong ARR growth, and we exceeded our expectations by generating $35 million of free cash flow in the year.

We delivered better than expected fourth quarter and full year cash flow from operations, reflecting strong <unk> growth and we exceeded our expectations by generating $35 million of free cash flow in the year.

Yes.

This brings us to our guidance.

Speaker 4: The strong results we achieved in 2021 highlight the large and growing opportunity we have to deliver our best and sweet insight solutions to customers and they face an increasingly complex risk environment.

Our strong results, we achieved in 2021 highlight the large and growing opportunity we have to deliver our best in suite insight solutions to customers as they face an increasingly complex risk environment.

Speaker 4: I would demonstrate it success across the three areas that Coria elaborated.

Our demonstrated success across the three areas that Korea elaborated on.

Speaker 4: The breath and death of our insight platform as customers look to consolidate down to strategic security vendors.

The breadth and depth of our insight platform as customers look to consolidate down to strategic security vendors.

Speaker 4: Our unique approach to delivering a market leading extended detection and response solution.

Our unique approach to delivering a market leading extended detection and response solution.

And our early traction and helping customers migrate securely into the cloud provide a solid foundation for our outlook into 2022.

Speaker 4: and our early traction in helping customers migrate securely into the cloud provide a solid foundation for our outlook into 2022.

With that in mind for the full year 2022.

Speaker 4: With that in mind for the full year 2022, we expect an ending total ARR of $740 million to $750 million, which represents growth of 24% to 25%. We plan to share relevant ARR guidance updates likely in the second half of the year.

We expect an ending total.

<unk> of $740 million to $750 million, which represents growth of 24% to 25%.

We plan to share relevant AOR guidance updates likely in the second half of the year.

Speaker 4: We expect total revenue for the full year to be in the range of $682 million to $690 million representing growth of 27 to 29%.

We expect total revenue for the full year to be in the range of $682 million to $690 million.

<unk> growth of 27% to 29%.

Speaker 4: On profitability measures, we anticipate non-GAP operating income to be in the range of 17 million to 24 million dollars for the full year, with non-GAP net income per share in the range of $5.16 to $16.00.

On profitability measures, we anticipate non-GAAP operating income to be in the range of 17 million to $24 million for the full year with non-GAAP net income per share in the range of five to 16.

This is based on an estimated $60 9 million dilutive weighted average shares outstanding.

Speaker 4: This is based on an estimated 50.9 million diluted weighted average shares outstanding.

Sure.

Speaker 4: For full year 2022, we expect to generate strong growth in operating cash flow, which went coupled with slightly higher CAPEX infrastructure investments to support our growth. Should drive healthy overall growth and free cash flow to a range of 40 million to $45 million for the year.

For full year 2022, we expect to generate strong growth in operating cash flow, which when coupled with slightly higher capex infrastructure investments to support our growth.

Should drive healthy overall growth in free cash flow to a range of 40 million to $45 million for the year.

Speaker 4: The operating margin expansion we expect in 2022 reflects our growth outlook and is consistent with the profitability framework we have previously outlined.

The operating margin expansion, we expect in 2022 reflects our growth outlook and is consistent with the profitability framework, we have previously outlined.

Speaker 4: Moving to quarterly guidance. For the first quarter of 2022, we expect total revenue in the range of $153 million to $155 million, representing year over year growth of 30 to 32%.

Moving to quarterly guidance for the first quarter of 2022, we expect total revenue in the range of $153 million to $155 million.

Representing year over year growth of 30% to 32%.

Speaker 4: We expect the non-GAF operating loss for the first quarter in the range of $7 million to $5 million, driven in part by early year investments and some annual Q1 events such as kickoff.

We expect non-GAAP operating loss for the first quarter in the range of $7 million to $5 billion driven in part by early year investments and some annual Q1 events such as kickoff.

Speaker 4: We expect a non-GAF net loss of 18 to 15 cents per share for the quarter, which is based on 58.3 million basic weighted average shares outstanding.

We expect a non-GAAP net loss of 18% to <unk> 15 per share for the quarter, which is based on $58 3 million basic weighted average shares outstanding.

Speaker 4: In conclusion, we remain committed to driving durable growth and margin expansion within our profitability framework as we continue on our path to becoming an over $1 billion rule of 40 companies.

In conclusion, we remain committed to driving durable growth and margin expansion within our profitability framework as we continue on our path to becoming an over $1 billion rule of 40 company.

Speaker 4: Thank you for joining us on the call today and with that, we will open the call for questions. Operator.

Thank you for joining us on the call today and with that we will open the call for questions operator.

Speaker 1: Thank you. If you have a question at this time, please press star then one on your telephone. If your question has been answered, or you wish to remove yourself from the queue, please press the pound.

Thank you have you have a question at this time. Please press Star then one on your telephone to ask a question has been answered or you wish to remove yourself from the queue. Please press the pound key.

Speaker 1: And our first question comes from the line of Rob Owens with Piper Sandler. Your line is open, please go ahead.

And our first question comes from the line of Rob Owens with Piper Sandler. Your line is open. Please go ahead.

Yes. Good afternoon. Thanks for taking my question, obviously, a strong quarter punctuated by acceleration in looking at that organic <unk> number it's clear that the environment is as good as it's ever been so Corey with with the vulnerabilities out there with all the attacks do you have any sense is there a pull in of demand that we're seeing right now.

Speaker 4: Yeah, good afternoon. Thanks for taking my question. Obviously, it's strong quarter punctuated by acceleration and looking at that organic error number. It's clear that the environment is good as it's ever been. So...

Speaker 4: korey with with the vulnerabilities out there with all the attacks jenny sense is there a poll in the demand that we're seeing right now curious how sales cycles are trending and how sustainable are these levels and i do note that it does look like you're going to hit your midterm goal of seven hundred fifty million in air are one year early just based on your guidance alone

Curious how sales cycles are trending and how sustainable are these levels I do note that it does look like you're going to hit your mid term goal of $750 million in one year early just based on your guidance alone.

No Rob it's a great question, so what I would say the demand environment overall quite healthy we started highlighting that at <unk>.

Speaker 3: No, Rob, it's a great question. So one of the demand environmental roles quite healthy. We started highlighting that at the tail end last year. And it's driven partially by some of the big name and vulnerabilities that compromise.

Last year.

Driven partially by some of the big name either vulnerability to compromise.

Speaker 3: But I do think that it's actually moved to a level where this is on the permanent agenda now of both CEOs and boards and we think that's a very good backdrop for Our business and our original role. I think part of the thing that has allowed us to capitalize on that well is I think there are team of the great story And great delivery on the ability to give

But I do think that it's actually moved to a level where this is on the permanent agenda now both CEO and board and we think Thats a very good.

A backdrop for our business at all or at least overall not a part of the thing that has allowed us to capitalize on that well I think that our team at the great story and great delivery on the ability to give customers the productivity they want and the efficacy they want and lots of organizations are looking for both of those so just because it.

Speaker 3: customers, the productivity they want, and the efficacy they want, and lots of organizations are looking for both of those. So just because it's in demand, they still want efficiency and productivity. And I think that's really the story that transcends. And so to answer your core question, is we think that that is adorable?

It's in demand they still want to efficiency and productivity and I think that's really the story.

That transcends.

And so to answer your question as we think that that is durable.

Speaker 3: We don't tend to chase sort of like the latest the latest sped or the latest breach of the latest compromise. We tend to focus on like what's the long term outlook and prospect and we are seeing a high level of focus like customers and we do think that we actually have durability of opportunity ahead of us.

We don't tend to chase sort of like the latest.

The latest bad or the latest <unk> compromise, we tend to focus on like what's the long term outlook and prospects and we are seeing a high level of focus by customers and we do think that we actually have durability of opportunity ahead of us.

Great. Thank you.

Thank you.

Thank you and our next question comes from the line of Keith <unk> with.

Speaker 1: Thank you and our next question comes on the line of with Kerala with Barclays, your line of open.

Barclays. Your line is open. Please go ahead.

Okay, Great Hey, guys, it's that could Kelly at Barclays. Thanks for thanks for taking my questions here and welcome Tim.

Speaker 4: okay great hey guys at the cackelia parkley thanks for thanks for taking my questions here and welcome to

Thank you.

Speaker 4: Corey, maybe for you, I was wondering if we could talk a little bit about the cross selling success this year. You know, to your point, nearly $60,000 an ARR per customer with just the bigger best and sweet as you noted, how do you sort of think about the cross sell effort going into 22 with, as that list of products kind of continues to expand?

Corey maybe maybe for you.

I was wondering if we could talk a little bit about the cross selling success. This year to your point nearly $60000 in AOR per customer with just the bigger best in suite. As you noted how do you sort of think about the cross sell effort going into 'twenty two as that list of products kind of continues to expand.

Yes.

Speaker 3: So if we thought of it, you know, as you know, we expanded our product portfolio over the last years. And our focus first in part of this was making sure that we're making the right products because it's all adopt. I think hands down, we nailed the formula for how do you actually deliver like highly effective sophisticated products that are also adaptable and consumable and accessible for our wide range of customers.

As you know we've expanded our product portfolio over the last few years, our focus first and foremost with making sure that we're making the right products that customers will adopt <unk>.

Hands down we know the <unk>.

Or how do you actually deliver it.

Highly effective sophisticated products that are also adaptable.

And consumable and acceptable on a wide range of customers and so we feel we actually got that right and for that part of the equation is incredibly important.

Speaker 3: And so, we feel we actually got that right. And for that part of the equation, it was incredibly important, not just to actually call sell the package, but to make sure that each of those offerings could stand on their own. And we've proven that out over the last several years.

Just to execute cross sell a package, but to make sure that each of those offerings could stand on their own.

We've proven that out over the last several years over the last year or so you've heard me start to talk about packaging and pricing well, let's say that now that we've actually proven that we have this political business suite.

Speaker 3: Over the last year, so you heard me start talking about Paxing and Paising. Well, I'll say that now that we've actually proven that we have this quote-unquote best of suite. And really what that means is customers aren't making trade off in quality in order to actually get the benefits of a platform, platform leverage. How do we then actually turn that into something that we can use to actually reduce friction and hot customers about? Frankly, we do have our cost about how we actually engage with customers.

And really what that means is customers aren't making trade offs and quality in order to actually get the benefits of our platform a platform leverage how do we then actually turn that into something that we can use that to reduce friction and how customers adopt and frankly reduce our calls about how we actually engage with customers.

Speaker 3: And this is where cross-downing becomes quite strategic over time. And what I say is that in our pilots over the last few years, we've seen evidence, we've seen the attractiveness of customer and we've seen the adoption. And so what I said is we've seen the proof point.

This is where cross selling I think it becomes quite strategic over time, and what I'll say is that in our pilots over the last few years, we've seen the evidence we've seen the attractiveness to customers and we think the adoption and so what I'll say is we've seen the proof point and now here we are continuing on the scale of those proof points.

Speaker 3: And now from here, we're continuing with the scale of those two points as we go forward. So it won't be like, it won't be one big thing over night that what we'll do is we'll get better and better at actually finding the all-optimum mix of adoption for customers that works for customers and works for us. Now, the one they got to say,

As we go forward, so it'll be like it won't be one big Bang over night, but what we'll do is we'll get better and better at actually finding the optimum mix of adoption for customers that works for customers and works for US the one thing I would say.

Speaker 3: to keep in my eye socket is that when we think about adoption, we're really focused on customer adoption, not graphic seven sales. And what that really means is we want to actually deliver technologies and sell technology to the customers at the pace that they can adopt those technologies, because we think that that's what leads to the most enduring success, and frankly the best long-term customer economics. So that's how we approach it. I think we made good progress. I still think we got lots of upside in front of us, but we're only role that we want to be on.

To keep in mind socket is that when we think about adoption, we're really focused on customer adoption not rapid seven sales and what that really means is we want to exit deliberate technologies in cell technology to the customers at the pace that they can adopt those technologies because we think that's what leads to the most enduring success and frankly the <unk>.

Long term customer economics, so that's how we approach. It I think we made good progress I sort of got lots of upside in front of us, but we're on the road that we want to be on.

Speaker 4: got it that makes a lot of sense to him maybe for my full of for you since this is our our first call all all together uh... i was wondering if you just talk a little bit of that's about you know what attracted you to the opportunity at rapid seven and understanding that it's only been a month uh... you know at at at the company anything you want us to know just about your process or rigor when when thinking about the guidance uh... you know just the overall guidance plot

Got it that makes a lot of sense, Tim maybe for my follow up for you. Since this is our first call altogether.

I was wondering if you can just talk a little bit tell us about.

What attracted you to the opportunity at rapid seven and understanding that it's only been a month.

At the company anything you want us to know just about your process or rigor when thinking about the guidance.

Just the overall guidance philosophy.

Speaker 4: Yeah, socket, thanks. First, let me re-emphasize, I'm thrilled to be here. I guess I've known Cory for about five years or so now and Jeff Kalowski.

Yes.

First let me reemphasize I'm thrilled to be here.

I guess I've known Cory for about five years, or so now and Jeff Koloski and their first class people. They built a great company, which I think all of you will agree with and so I'm really thrilled to be here.

Speaker 4: and their first class people, they built a great company, which I think all of you will agree with.

Speaker 4: And so I'm really thrilled to be here. It's a very strong team, you know, in the 30 plus days that I've been here, I've had the chance to meet a lot of folks face to face and you can tell they are very smart, very hardworking, very engaged, very passionate.

It's a very strong team in the 30 plus days that I've been here I've had the chance to meet a lot of folks face to face and you can tell they are very smart very hard working very engaged very passionate and really focused on the customer, which I think is critically important.

Speaker 4: and really focused on the customer, which I think is critically important. Cory talks a lot about the culture of a company, and I think that is very important, that really does matter to me how we operate and behave and work with each other. And I think it's all very...

Corey talks a lot about the culture of our company and I think that is very important that really does matter to me, how we operate and behave and work with each other and I think it's all very important and it's very mission driven.

Speaker 4: And it's very mission driven. There are a lot of bad actors out there that are creating a lot of havoc to the world as we know it. And I think we're out there really trying to get in front of that and prevent a lot of that.

There are a lot of bad actors out there that are creating a lot of havoc to the world as we know it and I think we're out there really trying to get in front of that and prevent a lot of that.

Speaker 4: So I'm thrilled to be here and I look forward to working with everyone over the next several years

So I'm thrilled to be here and I look forward to working with everyone over the next several years.

Speaker 4: In terms of the guidance, we feel very good about the guidance that we put out. We think it's showing very strong growth year over year with the top line ARR range that we share.

In terms of the guidance, we feel very good about the guidance that we put out we think it's showing very strong growth year over year with the topline our range that we shared.

Speaker 4: And I will tell you, I think this team does an outstanding job. They are very thoughtful. They are very thorough. And it's a collaborative approach, not just of the finance team, but we reach out to the sales leaders. Our COO Andrew Barton is very strong and very engaged with us. And it really is a very thoughtful process. And I feel very comfortable with how it's come together. And we feel very good about the guidance that we've shared with you today. . . . . . . . . . . .

And I will tell you I think this team does an outstanding job. They are a very thoughtful very thorough and it's a collaborative approach not just of the finance team, but we reach out to the sales leaders our COO, Andrew Burton is very strong and very engaged with us and it really is a very.

Full process and I feel very comfortable with how it's come together and we feel very good about the guidance that we've shared with you today.

Very helpful guys. Thanks very much thank.

Thank you.

Speaker 1: Thank you and our next question comes from the line of Matt Hedberg with RBC Capital Market. Your line is open, table ahead.

Thank you and our next question comes from the line of Matt Hedberg with RBC capital markets. Your line is open. Please go ahead.

Great. Thanks for taking my question guys and I'll offer my welcome to Tim as well looking forward to working with you.

Speaker 4: Great, thanks for taking my question, guys. And I'll offer my welcome to Tim as well, looking forward to working with you. You're boring.

Hey, Corey.

Speaker 4: Security transformation products are clearly driving a lot of your growth and I think it's a huge focus on TAM expansion. But obviously you still have a pretty healthy VM business. I'm wondering if you could comment on as we think towards next year, maybe the relative health of that business versus maybe some of the Star Trek trends.

Yes.

Security transformation products are clearly driving a lot of your growth.

Huge focus of Tam expansion, but obviously you still have a pretty healthy VM business I'm wondering if you could comment on as we think towards next year.

Maybe the relative health of that business versus maybe some historic trends.

Yes.

Speaker 3: Yeah, so I'll talk about both of those. Let me start by saying that I think that as we go forward, it becomes less...

I'll talk about both of those let me start by saying I think that as we go forward it becomes less important mostly because of the way that we actually sell and operate actually break out security transformation and beyond as we actually continue to drive the castelli packaging any adoption strategy where brokers.

Speaker 3: important mostly because of the way that we actually fell in operate, that actually break out to transformation in the VM. As we actually continue to drive the cost-selling, be packaging, and the adoption strategy, we're focused much more about how to drive, productive usage and consumption workups within the VM. So I just wanted to give that intro. And then to address your other questions, yes, we asked your seeing,

Much more about how to drive productive usage and consumption of our customer base.

Wanted to give that interim.

Did that address your other question, yes, we actually are seeing great growth all straight calculation and were seeing durable growth on the vulnerability management, we feel very good about all the aspects of our business.

Speaker 3: all the street restoration and we're seeing durable growth on the vulnerability management. It was very good about all the aspect of our business.

Speaker 3: As you know, a rarely rigorous about how we think about it. So security transformation, we saw extraordinary growth last year. And we see durable growth this year. We've used the 40% number for a couple of years now, and that really builds into durability. And we see that same durability of actually going into the future.

Barely rigorous about how we think about it so security transformation, we saw extraordinary growth last year, and we see durable growth.

This year, we've used the 40% number for a couple of years now and that really builds into durability and we see that same durability, we actually go forward into the future.

Speaker 3: And when we think about vulnerability management, we see visibility as a persistent backdrop that drives not just vulnerability management, but it's also a big driver right now.

When we think about Warner building management, we see visibility as a persistent backdrop that drive not just mobility management, but it's also a big driver of client solutions also and so to get to your core question is that when we look at our complete portfolio, we see extraordinary opportunity across the entire portfolio and most.

Speaker 3: Also, and so to get to your core question is that

Speaker 3: When we look at our complete portfolio, we see extraordinary opportunity across the entire portfolio. And most importantly, we see the opportunity to actually meet customers wherever they are on the journey.

Italy, we see the opportunity to actually meet customers wherever they are on that journey and one of the things that I think our sales team is really operational lobbying.

Speaker 3: And one of the things that I think our sales team is really operationalizing with the help of Andrew and a bunch of other people, it just finds that we can go in and figure out what customers most expected issues are and address those issues whatever they are. And then from there, we can actually expand their success with the adoption of the solution.

With the help of Andrew and a bunch of other people at this mindset that we can go in and figure out what customers' most pressing issues are and address those issues wherever they are is there from there we can actually expand their success with the document solutions.

Okay. That's great. Thanks, Great maybe just a really quick follow up and it touches on something you mentioned in your script, but did.

Speaker 4: That's great. Thanks, Quirk. Maybe just a really quick follow up and it sort of touches on sort of something you mentioned in your script. But did log4j have any impact on your Q4 growth rates? And how do you think about that as a potential demand generator sort of benefit to 2022?

Did log for Jay has any impact on your Q4 growth rates and how do you think about that as a potential.

Demand generator sort of benefit to 2022.

Speaker 3: Yeah, that's a great question. So we treat all these things as healthy backdrop.

Yes, it's a great question.

We treat all of these things.

That's healthy backdrops, but keep in mind, we don't go in and sell them to any type of breach of crisis like we're very focused on how do we help customers with their long term security program, but we think that these things do is it reminds customers about why security is important and that's what we actually sell into is how you actually build great security program with importance of secured.

Speaker 3: But keep in mind, we don't go in and sell into any type of

Speaker 3: What we think that these things do is it reminds customers about why security is important. And that's what we actually spell into is how you actually build great security programs and the importance of security. We work very hard with ourselves to focus on the long-term aspects and not just sort of like using really painful incidents to have with our customers as the reason that we go in and sell, but yet still they provide incredibly healthy backdrops for customers to understand why security is incredibly important.

<unk>.

We worked very hard with our sales team to focus on the long term aspects.

And not just sort of likely using really painful incidents where our customers as the reason that we go in and sell but yet still they provide incredibly healthy backdrop for customers to understand what security is incredibly important.

Thanks Kurt.

Speaker 5: Thank you.

Thank you.

Speaker 1: Thank you and our next question comes from the line of Brian Essex with Goldman Sachs. Your line is open. Please go ahead.

Thank you and our next question comes from the line of Brian Essex with Goldman Sachs. Your line is open. Please go ahead.

Hey, good afternoon, and thank you for taking the question first of all Tim Congrats on the new role looking forward to work with you again.

Speaker 6: Hey, good afternoon. Thank you for taking the question. First of all, Tim, congrats on the new role. Looking forward to work with you again. Thank you for the end.

Thank you Brian .

Speaker 6: And then Corey, maybe if we could talk a little bit about the algorithm for growth throughout the year, you've had really balanced.

And then.

Maybe if we could talk a little bit about.

The algorithm for growth throughout the year, you had really balanced.

Speaker 6: you know, land and expand between customer growth and expansion within existing customers. Are we looking at the same algorithm in 2022 and then maybe on the back of that?

Land and expand between customer growth and expansion within existing customers or are we looking at the same algorithm in 2022, and then maybe on the back of that.

Speaker 6: Could you talk about investments you've made in sales and marketing in the sales force and pricing configuration that might either drive that consistency or trend it one way or another away from the historical.

You talk about investments you've made in sales and marketing with Salesforce and <unk>.

Pricing configuration that might either drive that consistency, you're trending one way or another away from the historical trend.

Speaker 3: Yeah, it's a great question. Our reminds you, when I think about sort of like the drivers of both, you really alluded to the two of them. You know, we're the land and new customers that we're driving AR for a customer. And we have a big focus on both, but with the opportunity and the time in front of us, it's an incredible opportunity on the AR for customer, which is a heavy focus.

Yes, it's a great question I'll remind you as well.

I think about sort of like the drivers of growth are you really alluded to the two of them read Atlanta, new customers that we're driving here.

But for our customer.

And we have a big focus on both with the opportunity and the Tam in front of us.

Credible opportunity on a per customer which is heavy.

Focus.

Speaker 3: What we said are our analytics still holds today. We expect ARR for customer to actually be over the medium and lower terms, a higher goals contributor than adding new customers. And it's not because adding new customers is not good. We love to add new customers.

What we said at our analyst that still holds today, we expect our per customer to actually be over the medium and longer term a higher growth contributor, but adding new customers. It is not because adding new customers that good we love to add new customers.

Speaker 3: It's just that we also have so much opportunity to actually provide great service to our existing customers.

But we also have so much opportunity to actually provide great service to our existing customers.

Speaker 3: And that's a heavy part of the focus. The other thing I remind you is that while we occasionally provide sort of like spits, we actually don't provide structural indented.

That's a heavy part of the focus the other thing I'll remind you that while we occasionally provide sort of like fifth we actually don't provide structural incentives.

Speaker 3: that are about how our sales teams have to actually grow. And the reason that's important is that you actually expect how sales teams actually focus a lot of their time and attention on customer grades, especially when we have so much potential for customers.

There are about.

How are sales team capex to grow and the reason that's important is that you would actually expect sales pace actually focus allowed their time and attention on customer great, especially when we have so much potential for customer.

Speaker 3: And so if you ask me, I'll go back to the original outlook that I gave at the analyst. The last year is that listen, we think that we can actually grow ARR for customer and consistently drive that forward. And we actually think that we can grow also new customers, but it won't be at the same pace over the medium term as the ARR for customer growth. That's it. Last year we were quite happy with the dynamics. And if the dynamics split around this year, we're following that two is not something that we're managing, we're really managing the quality of our customers.

So if you ask me I will go back to the original.

With that I gave at the analyst day last year is that listen we think that we can actually grow.

Our pro customer and consistently drive that forward and we actually think that we can grow also new customers, but it won't be at the same pace over the medium term as our customer growth. That's it last year, we were quite happy with the dynamics and if the dynamics flip around this year, we're fine with that too is that something that we're managing we're really managing the koala.

We are on customer adoption.

Speaker 6: God, it's super helpful. And maybe just to follow up, I guess jump fall and this one, given it, has only been there a short time, but on the pan.

Got it Super helpful and maybe just a follow up.

I guess jump on this one given that it's only been there a short time, but on the Tam.

Speaker 6: What, how do you think about the way that your customers are thinking about cloud security spend? And I know some of your peers have talked about, five to 50% of total cloud IT spend should be the number, but they're still in evolving market. And I think pricing still has to be worked out, but any kind of reconciliation there in terms of where there might be upside-down sides to your TAM estimates and how you kind of thought about addressing the opportunity there.

What how do you think about the way that your customers are thinking about.

Good security spend and I know some of your peers have talked about 5%.

Percent of.

Total cloud spend should be the number but it's still an evolving market and and I think pricing still has to be worked out but any any kind of reconciliation there in terms of.

Where there might be upside downside to your Tam estimates and how you kind of thought about addressing the opportunity there.

Speaker 3: Yeah, I'll start with, we should be pretty pragmatic with 10 minutes of it. And we revised, I think we revised it again in this. Derek, if you look at some of the measures.

Yes.

We tend to be pretty pragmatic with the Tam estimate we revised overtime I think we've revised it again.

Jack if you look at some of the materials and the way that we actually think about it is it's really based on what we think the realistic potential is.

Speaker 3: And the way that we actually think about it is it's really based on what we think the realistic potential.

Speaker 3: for customers and we revise those are times as you stick cloud it's still early in general I mean we're still early and the overall cloud adoption cycle for customers

<unk> customers and we revise our plans.

As you say, it's still early in general I mean, we're still early in the overall cloud adoption cycle for customers. We're still early in the types of services that customers are adopting and yet still were seeing both good success and it's something that we're incredibly excited about and so I think cloud is one.

Speaker 3: We're still early in the types of services that customers are adopting. And yet, still, we're seeing both good success and it's something that we're incredibly excited about. And so I think Cloud is one that you absolutely have revision in the future, but it's premature to do that today because again, we want this to be durable with us.

Absolutely.

Vision in the future, but it's premature to do that sort of the day because again, we want this to be durable with customers.

Speaker 3: And so I would say that our cloud estimates that we just updated are very good. And we spoke great about today, but the cloud markets evolving. So you can expect that to be as it evolves, something that as it makes sense, we'll revise that in the future.

And so I would say that our cloud effort that we just updated our very good and we feel great about today.

But the cloud markets evolving so you can expect that to be a bit of all something that at the midpoint.

We will revise that in the future.

Brian Let me. This is Tim Yeah go ahead, sorry, let me just add to a comment Cory made earlier is that you're really capturing the mind share now of the C level suite and at the board level and certainly at audit Committee levels.

Speaker 4: Right, let me just add to a comment, Corey made earlier, is that you're really capturing the mind share now of the sea level suite and at the board level and certainly at audit committee levels.

Speaker 4: This broader framework of cybersecurity and what are we doing and how do we feel about our environment? It's top of mind, you know, right at the level where you want to be and my experience has been over the past couple years. You see folks really willing to invest more because the downside of having an event.

This broader framework of cyber security and what are we doing and how do we feel about our environment is top of mind right at the level, where you want to be in my experience has been over the past couple of years, you see folks really willing to invest more because the downside of having an event.

Speaker 4: Far outweighs the additional investment that they want to put to work.

Outweighs the additional investment that they want to put to work.

Yes.

Got it that's super helpful. Thank you very much.

Thank you.

Speaker 1: Thank you and our next question comes from the line of Fatima Balani with City. Your line is open. Please go ahead.

Thank you and our next question comes from the line of Chemo Pavan <unk> with Citi. Your line is open. Please go ahead.

Speaker 7: Good afternoon, thank you for taking my questions and Tim, very nice to telephonically for each of you.

Good afternoon, and thank you for taking my question, Tim gave us to Telefonica achieved.

Speaker 7: I have one for you and one for Kim, so I'll start with you. You alluded to the international performance in your prepared remarks, so I just wanted to peel that onion back a little bit. You've now seen four straight quarters of accelerating growth in your rest of world.

I have one for you and one for Ken So I'll start with you you alluded to the international performance in your prepared remarks, but I just wanted to peel that onion back a little bit.

We've now seen four straight quarters of accelerating growth in your rest of world.

Speaker 7: execution. So I'm curious if you can take a step back and share with us any notable drivers or any patterns of observable strengths whether that is...

<unk>. So I'm curious if you could take a step back and share with us any notable drivers there any patterns that circle, both strengths whether that is.

Speaker 7: concentrated in certain countries or certain GOs or any particular products that are really driving the bus on some of your international performance in the acceleration in international business.

Concentrated in certain countries or certain geos or any particular products that are really driving the bus on some.

With your international performance and the acceleration in international business and then myself.

Speaker 3: Absolutely, so it's a great question. You know, our highlight probably too, things is it's less specific geographic. We're seeing fairly broad based adoption. I do think one of the drivers though is sort of like two factors. One of the demand factors is that I think cyber security as a specific of the willingness to invest in cyber security programs is growing. If you go back a couple of years, I used to talk about the fact that

Absolutely.

So it's a great question.

I would highlight probably two basis, it's less specific geographic were seeing fairly broad based.

Adoption I do think one of the drivers, though is sort of like two factors. One is the demand backdrop is that I think cyber security specifically the willingness vaccine <unk> security program is growing.

If you go back a couple of years I used to talk about the fact that.

Speaker 3: The, in general, this is sort of the generalization, the global organizations did not have the same priority on cyber security as you sometimes found in the US and actually think that they can have a close of chances. But if you have a basic driver that's there, I think the regulatory environment helps that, but also I just think you have an environment where people are actually panicking about security. So I think that they helped the demand backdrop. The second part is probably a little bit more particular to us.

Until this is sort of a generalization be global.

Global organization did not have the same priority on cyber security as you somehow found in the U S actually because that gap has closed but if you have it.

A basic driver Thats, there and the regulatory environment helps that but also asset that you have an environment, where people are actually Kansas City. So I think that's a healthy demand backdrop.

In part, it's probably a little bit more particular to US is that we've got lots of innovation, but when we do innovation and we lost two offerings.

Speaker 3: is that, you know, we've done lots of innovation, but when we do innovation and we lost your awkwardness, I gave the staff a call earlier when I was talking about Jeff, but that we introduced a platform, we mean awkwardness available, we have new services, buying,

On the call earlier I was talking about Jeff we introduced the platform offerings available, we have new services by and large.

Speaker 3: Those new operating services tend to actually start their distribution in the US and they tend to start in our cloud US.

<unk>, new offerings and services tend to actually start their distribution in the U S and Asia.

The star in our cloud instances.

Speaker 3: What's happened is over the last couple of years, we've actually got those technologies distributed around the world to more cloud instances. We've been lots of great work by our core infrastructure and platform teams. And that's kind of important in a world where like data sovereignty is more and more important.

Whats happened is over the last couple of years, we've actually got.

Those technologies distributed around the world to more cloud instances, it's been lots of great work by our core infrastructure and platform teams and Thats kind of important in a world where like data sovereignty is more and more important. So that's a couple unlocking our potential and then we've also invested a lot in our partner.

Speaker 3: So that's a couple unlocking potential. And then we also invested a lot in our partner ecosystem and our global sales team, global service team, global support team, that actually support those customers around the world. So it's that combination of things that allow us to unlock the potential to meet the demand. And we're leveraging all the great stuff that we've actually invested in along the way.

Ecosystem.

Our global sales team and global service team and.

Global support team to actually support those customers around the world. So it's a combination of both.

That allows us to unlock the potential to meet the demand and we're leveraging all the great stuff that we've actually invested in along the way.

Speaker 7: I appreciate that, Marie. Kim, really quickly for you appreciate it's been but 30 days in the seat. But just with respect to some of your commentary around gross margins, I can see that you're still operating within your disclosed envelope. But just wondering if there are any one tiny items.

I appreciate that Gary and Tim really quickly for you appreciate it's been 30 days in the seat, but just with.

Respect to some of your commentary around gross margins.

I can see that you are still operating within your disclosed envelope, but just wondering if there are any one tiny items.

Speaker 7: In the compression, we saw this quarter, and really how we should think about the shape of gross margins, working through calendar 22, especially as some of the cloud portfolio and in cloud security solutions, start hitting escape velocity. And that's it for me, thank you.

In the compression we saw this quarter and really how we should think about the shape of gross margins working through calendar 'twenty, two especially as some of the cloud portfolio and cloud security solutions start hitting escape velocity and Thats. It for me. Thank you.

Speaker 4: All right, now it's a very good question and just to remind everyone of the framework that we shared at the investor day about a year ago.

Alright.

Very good question and just to remind everyone of the framework that we shared at the Investor day about a year ago.

Speaker 4: is that we expect our product gross margins to stay in the mid-70s with total gross margin in the low 70s. If you go back and look at previous quarters, you will see some

We expect our product gross margins to stay in the mid seventies with total gross margin in the low seventies and if you go back and look at previous quarters, you will see some.

Speaker 4: variability quarter over quarter, which we really attribute to product mix. We go back and we take a hard look at that. And it's important to note, and Cory and I both mentioned this earlier that we have

Variability quarter over quarter, which we really attribute to product mix. If we go back and we take a hard look at that and it is important to note in Corey and I. Both mentioned this earlier that we have on <unk>.

Speaker 4: outstanding growth this past year in the security transformation solutions growing over 50% on an ARR basis and it now makes up the majority of that ARR.

Outstanding growth this past year, and the security transformation solutions growing over 50% on an IRR basis and it now makes up the majority of that.

Speaker 4: These products are earlier in the maturity curve and we have programs in place that will drive scale and drive additional efficiency. So again, we think it's all contained within the guidance that we've given for 2022 and we stay within that framework that we outlined about a year ago.

These products are earlier in the maturity curve and we have programs in place that will drive scale and drive additional efficiencies. So again, we think it's all contained within the guidance that we've given for 2022 and we stay within that framework that we outlined about a year ago.

I appreciate that thank you.

Speaker 4: Thank you, thank you, everyone. And just a reminder, just to try to get as many questions as we can if we keep it down to one question. Thank you.

Thank you. Thank you everyone and just a reminder to try to get to as many questions. As we can keep it then one question. Thank you.

Thank you and our next question comes from the line of Jonathan Ho with William Blair. Your line is open. Please go ahead.

Speaker 1: Thank you and our next question comes from the line, Adjana's in Ho with William Blair. Your line is open, please go ahead.

Speaker 8: Hi, the mecho, my congratulations. It just with the strong ARR per customer growth, if they're way for you to maybe parse this out a little bit more between, in perhaps larger platform lands, expansion and your existing assets or your maybe new product addition, I just want to get a little bit more granularity on how to think about, you know, sort of the sources of that, you know, strong ARR per customer growth. Thank you.

Hi, Let me Echo my congratulations.

With the strong <unk> per customer growth is there a way for you to maybe parse this out a little bit more between perhaps larger platform lands expansion in your existing assets or maybe new product additions I just wanted to get a little bit more granularity on how to think about sort of the sources of that strong IRR per.

Customer growth. Thank you.

It's a great question. Unfortunately, there's not a simple parsing that actually gives you the answer you're looking forward because it actually was.

Speaker 3: It's a great question. Unfortunately, like there's not a double parking that actually gets you the entry looking for, because it actually was with multiple contributors. We continue to execute well across customer segments, both big and fall. As we talked about earlier, we talked about some times that our different products do have different ASP.

Contributors.

We continue to execute well across customer segments, both big and small.

As we talked about earlier, we talked about sometimes are different products do have to pay a fee.

Speaker 3: You could say average security transformation solutions has slightly higher ASP than DM. But again, that depends on sort of like segment and mix. You also have different trends internationally and you have distribution.

You can see our average security transformation solutions.

Slightly higher Asp's.

Then Jim.

But again that depends on sort of like segment and mix. You also have different trends internationally or do you have distribution, what I would say in general to actually get to sort of like the larger trends.

Speaker 3: What I would say in general to actually get to sort of like the larger trends that you can actually just think about, is ultimately over time there'll be two big contributors to the AR for customer. One of the obvious cross-fail, which we talked a little bit about earlier, the second is up-fail, which is about sort of like what's the usage and adoption on a per customer overall. And those are gonna be like the biggest things that are actually gonna drive the- that are gonna drive the-

We just think about is ultimately over time there'll be two big contributors to the to the ARPA customer one of the obvious cross sell which we talk a little bit.

About earlier.

The second is upsell, which is about sort of like what's the usage and adoption on a on a per customer overall.

Those are going to be like the biggest things are actually going to drive.

That are going to drive the dynamic.

Speaker 3: And so, and what we're seeing is some combination of all of that. Combined with the fact that as much as you look at cloud and IDR, they do have higher ASBs as we can even have success there that actually manage.

And what we're seeing is some combination of all of that combined with the fact that especially if you look at cloud and <unk>. They do have higher ASP as we continue to have success there that actually matters.

Thank you.

Thank you David.

Speaker 1: Thank you and our next question comes from the line of Michael Turrets with keeping your line as open. Please go ahead.

Thank you and our next question comes from the line of Michael <unk> with Keybanc. Your line is open. Please go ahead.

Speaker 9: Hey everybody, so that's on the corner Tim, Tim, welcome. I wanna come back to the cross-cell.

Hey, everybody congrats on the quarter, Tim welcome I want to come back to the cross sell to the cross sell question that second starting with.

Speaker 9: through the cross-cell question that does, second, start with. I'm, Cory, I'd love that, that's analysts say it's a 22% of your customers and multi-platform sales. Is there an update on that and where it's going? And importantly, can you talk about what are these specific products that most often are sold together? And how are you going about

Corey.

At Analyst day, it's a 22%.

Of your customers that multi platform sales.

Is there an update on that and where it's going in and importantly can you talk about what are the specific products that most often.

Hold together and how are you going about.

Speaker 9: packaging multiple products together in order to get those multiple products.

Packaging multiple products together in order to get those multiple product sales.

Speaker 3: Yeah, so it has continued to actually improve. I don't have an update to give at this moment and we'll give it epithetically. But it has continued to improve. And really what you're seeing right now or clusters that are some ways aligned with how we've actually done some of our early packaging pilots and some of the things that resonate. So you definitely get cluster around IDR. We actually see...

Yes, so it has continued to actually improve.

I don't have an update to give at this moment and we will give it episodically.

But it has continued to improve and really what youre seeing right now are clusters that there's some ways align with how we've actually.

Some of our early packaging pilots some of the things that resonate. So you definitely see a cluster around itr.

Will you actually see.

Speaker 3: you know, IDR and SOAR and the enhanced input to leverage the other thing going on. So you see things like that. And that's a part of the modern stock that almost sell English.

<unk>.

<unk> and soar and the enhanced important dilemma between other than going up so you see things like that and Thats become part of the modern socket normal cell.

On the selling motion.

Speaker 3: We're seeing the emergence of the idea of the Cloud for Door, where people are sort of like Cloud for Steuzers, and then they're thinking about their vulnerability manage.

We're seeing the emergence of the idea of the cloud front door, where people are select cloud first users and they're thinking about their vulnerability management and eventually we are seeing some early tea leaves that they think about protection through the layers of hop exiting by cloud so again.

Speaker 3: And eventually we send them relatively, but they think about the text and do the layers of how they actually make my cloud. So again, those are early indicators. And then some customers are just interested in visibility. And so they actually think about both their cloud and their vulnerability management and sort of like the visibility platform.

Those early.

Early indicators and there are some customers that are interested in visibility.

And so they actually think about.

Both their cloud and their vulnerability management selected visibility platform.

Speaker 3: And so what our sales team is actually doing right now is really working to actually operationalize the motions.

So what our sales team is actually doing right now is really working to actually operationalize the motions.

Speaker 3: that they see. But the thing I would emphasize is that it's, we want to be able to respond to how to customer things are about it. And of course, we'll always have some guidance about what we see across customers.

But again the thing I would emphasize is that.

We wanted to be able to respond to how the customer thinks about it and of course, we will always have some guidance about what we see across customers, but our goal is to actually respond to our customers. So customer profitability thats, great. If they want actually updated monocular socket thats absolutely amazing.

Speaker 3: But our goal is to respond to our customers. So customer close to visibility is that's great. If they want to actually update a modern author's talk, that's absolutely amazing. If they want to actually operationalize everything around the cloud, they will package over time and deliver the experience.

If they want to actually operationalize it being around the cloud there will package over time and deliver the experience that I. Just gave you. The three that are the most common that I actually see the most often tracks around.

Speaker 3: I just gave you the sweetest and the most common that I actually see the most often tracked around.

Great quarter. Thanks.

Thank you very much.

Speaker 1: Thank you. And our next question comes from the line, a Jonathan Rukovar with Bearded Human is open. Please go ahead.

Thank you and our next question comes from the line of Jonathan <unk> with Baird. Your line is open. Please go ahead.

Yeah.

Hey, Jonathan you might be on mute.

Speaker 10: I'm sorry about that. Yeah, I am. Oh, there you go. Got it. Yeah, so Corey, if you'd like to hear your thoughts on the competitive landscape for XDR, you're specifically, who you view is delivering on, you're a true enterprise grade detection response capability. So that just your thoughts is the market of all with these end point vendors, so introducing or the R-capability. How do you think that shakes up the space over time?

Sorry about that.

Got it.

Yes, so corey, but love to hear your thoughts on the competitive landscape for Xdr, specifically, who you view as delivering on true enterprise grade detection and response capability. So that just your thoughts as the market evolves with this endpoint so introducing.

Or VR capabilities, how do you think that shakes up the space over time.

Yeah, I'll talk about the attributes.

Speaker 3: Yeah, I'll talk about the attributes of it in broad categories as well.

Broad categories, if because we.

We don't.

Speaker 3: We don't talk specifically about specific competitors, necessarily, but the attributes of how I think about the winners and the other are some, I think I think perhaps I'm the leader, but there's also definitely other players. Is one, you actually have to be able to actually bring data in natively. And it has to actually be a broad set of data. It has to be endpoint data, network data, long data. You have to be able to bring that in contextualize it and then allow people to actually do two things.

We don't talk specifically about specific competitors necessarily with the attributes of how I think about the winners and there are some I think I think wrap them later, but there are definitely other players is one that you actually have to be able to actually bring data and neighborhood and it has to actually be a broad set of data has to be endpoint data network data log data.

To be able to bring that in contextualize. It and then allow people to actually do two things with it.

Should be able to do high quality detections against that.

Heterogeneous data set and actually very very fast automated.

Investigators.

Speaker 3: And we think that that is going to be, we think that is going to sort of like the keys and essential and we've had this piece for a long time. And there's multiple players in the market that are actually trying to build in that direction. And I think we're going to have to look at the whole position.

And we think that that is going to be we think that that sort of like the key and essentially we've had this business for a lot of that and there's multiple players in the market that are actually trying to build in that direction.

I think represented well positioned there.

Speaker 3: in that market at all. The second question to the director is the endpoint players.

Overall, the second cost of the drug is the endpoint players.

Speaker 3: I was Northern Branding of XDR because again we come from different places our line there our reminds the rest of the years

Ill ignore the branding of Xdr forget we come from different places are Ryan I'll remind the rest of the year.

Is that xdr is really the combination of two things one it's a broad based trend.

Speaker 3: is that XDR is really the combination of two things. One, it's a Broadway trend to say, we can't have these gaps and these scenes in terms of visibility and how we actually process it.

Can't have these gaps and the scenes in terms of visibility and how we actually process information.

Speaker 3: And that's true whether you look at how we approach it from an enterprise data perspective.

And Thats true whether you look at how we approach it from a enterprise data perspective, that's also true for the endpoint players about how they promote appropriate from an endpoint perspective, that's also true for network Banesto.

Speaker 3: that's also true for the endpoint players about how they promote your firm and endpoint perspective. That's also true for network players. So in some ways, everyone has to have the X and XDR because customers are not being successful with a highly fragmented technology and a highly fragmented security environment. So that's a natural customer driven trend. How do you actually reduce the gap in the things in the ability that allow you to operationalize?

Some ways everyone has to have the <unk>.

And xdr because customers are not being successful with a highly fragmented technology in a highly fragmented security environment. So that's a natural customer driven trained is how you actually reduce the GAAP gains in visibility that allow you to operationalize.

Speaker 3: Now when it comes to the idea of how do we think about how these things intersect across, and keeping my minute, these are partners also, is that yes, you'll actually see a lot more bleeding and overlap. So you will actually see some of the endpoint players that actually have some storage services or some data services that they can take in a lot of data. And by the way, we actually have endpoint data that actually takes us.

Now when it comes to the idea of how do we think about how these things irrespective calls.

And keep in mind. Many of these are our partners also is that yes, you will actually see a lot more bleeding and overlap. So you will actually see some of the endpoint players that actually have some.

Some storage services or some data services that can pick up market.

By the way, we actually have endpoint data that actually get to that.

Speaker 3: You're still going to end up with a pretty feasible, not like a small one, a feasible gap between...

Still going to end up with a pretty sizable not like a small with a sizable gap between.

Speaker 3: In-point players' abilities actually take in all types of enterprise data at that scale, process it, organize it, and do the compliance and the investigation and the inter-price-wide detection that we actually do. Likewise, by the way, is that we have great, we have some of the best-pin class in-point forensic technology with Miloso Rapp.

Endpoint players ability to actually take it all types of enterprise data at that scale processing organize it.

And do the compliance and the investigation and the enterprise wide detection that we actually do like pause by the way is that we have great. We have some of the best in class endpoint forensics technology with lots of Rep.

Speaker 3: with large companies and governments all over the world used the technology, but that's not the same. It's actually having a comprehensive enterprise endpoint cloud.

With large companies and governments all over the world to use the technology, but thats not the same as actually having a comprehensive enterprise endpoint platform and so what I would say is that it gets confusing because we may use the same language, but the center of mass is different rapid seven is when we talked about.

Speaker 3: And so what I would say is that it gets confusing because we may use the same language, but the center of mass is different. Rapid 7 is when we talk about XDR, we are an enterprise data platform that's allowing you to collect all the relevant data across your platform, be able to actually search that, organize that, do high quality detections on that, and then do high quality investigations on that, that's to move up the internal data sources and the external data sources, and then automate all those stock workbooks.

We are an enterprise data platform thats, allowing you to collect all the relevant data across our platform be able to actually search that organize that do high quality of the Texas on that and they do high quality investigations on that consumer about the internal data sources and the external data sources, and then automate all of those thought workloads.

Speaker 3: That is extraordinarily different than what the enterprise players are offering in the market today. And so that just gives you a little bit of flavor about what the difference is, but also what are the similar trends that we're all adapting. Yeah.

That is extraordinarily different than what the enterprise players are offered in the market today and so that just gives you a little bit of flavor about what different diseases, but also what are the similar trends that we're all adapting.

Yeah, that's great. Thanks Corey.

Thank you very much.

Speaker 6: Thank you on our next question comes from the line of Brad Reback with Cecil. Your mind is open, please go ahead. Great, thanks very much. Just real quick, Corey, are your customers seeing any issues with employment levels being able to deploy your solution?

Thank you and our next question comes from the line of Brad Reback with Stifel. Your line is open. Please go ahead.

Great. Thanks, very much just real quick Corey are your customers seeing any issues with.

Employee employment levels being able to deploy your solutions.

Speaker 3: Yes, I mean, not give you one word and answer. It's something that we're actually tracking. And that is an area of concerns is that again, we're very focused that when we sell, we measure ourselves on what we call the customer value realization. Get the customer, get the promise.

Yes.

And that will give you a one word answer it's something that we're actually tracking and that is an area of concern.

But again, we're very focused back when we felt we measure ourselves on what we call the customer value realization that the customer gets the promise and one of the most frequent challenges.

Speaker 3: And one of the most frequent challenges is staffing capacity.

Perfect.

Capacity.

Speaker 3: And so it's one of the things that I've probably spend in the most amount of time of, you know, we have, I think it was after all that I forgot to ask and so I'm like, how do you think about some of your investments? I would say lots of our investments are going to actually, how do we evaluate some of the investments that we're making, not just in our sales, our customers, but also heavily in our partner ecosystem.

So it's one of the things that I, probably spending the most amount of <unk>. We have I think it was asked earlier.

Like how you think about some of your investments I would say lots of our investments are going to actually how do we accelerate the investments that we're making.

Not just in our sales of vessels that were also heavily on our partner ecosystem. So that we can actually have an ecosystem that if customers can't find the resource they need they can still get the security that they need overall and so yes that is a big concern of mine and our team.

Speaker 3: so that we can actually have an ecosystem that if customers can't find the resource they need, they can still get the security that they need overall. And so yes, that is a big concern of mine and our team because customers do need talent and they're having higher turnover. It's taking them a longer time to actually fill those gaps.

Because customers do need talent and theyre, having a higher turnover.

It's taken them a longer time to actually fill those gaps and what we're doing is we're working with our partner ecosystem actually find ways that allow them to actually still build out their security program and they're actually building their teams and that's been quite well received by our customers.

Speaker 3: And what we're doing is we're working with our partner ecosystem to actually find ways that allow them to actually still build out their security program and to actually build their teams. And that's been quite well received for our customers.

That's great. Thank you very much thank.

Thank you.

Speaker 1: Thank you, and this is going to conclude our Q&A session for today's conference. And I would like to turn the conference back over to Cory Thomas for any further remarks.

Thank you and this is going to conclude our Q&A session for today.

Like to turn the conference back over to Corey Thomas for any further remarks.

Speaker 3: Well, thanks for operating. Thank you all so much for joining us today. We enjoyed it and we appreciate your question and we look forward to the next.

Thank you operator, and thank you all so much for joining us today.

We enjoyed it and we appreciate your questions and we look forward to the next.

Speaker 1: This concludes today's conference call. Thank you for participating. You may now disconnect.

This concludes today's conference call. Thank you for participating you may now disconnect.

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