Q4 2021 N-Able Inc Earnings Call
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Thank you for your patience VNA group fourth quarter 2021 earnings call, we will be starting in around 10 minutes time.
This is to allow all participants to get connected before we begin today's presentation.
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Good day and welcome to enables fourth quarter 2021 earnings call.
I'm as breaker and I'll be today's event specialist.
You have the opportunity you talked a question today.
If you wish to do so please press star followed by one on your telephone keypad.
I would like to hand, the call over to Howard MA Senior director of Investor Relations. So Howard. Please go ahead.
Thank you breaker and welcome everyone to enable its fourth quarter and full year 2021 earnings call with me today are John Koller Yoga enables president and CEO and Tim O'brien, EVP and CFO . Following our prepared remarks, we will open the line for a question and answer session. This call is being simultaneously webcast.
On our Investor Relations website at investors <unk> Dot Com. There you can also find our earnings press release, which is intended to supplement our prepared remarks during today's call certain statements made during this call are forward looking statements, including those concerning our financial outlook. Our market opportunities are continued to expectations. Following the spin off.
Half of our business from solo ends in July 2021, and the impact of the global economic environment on our business.
Statements are based on currently available information and assumptions and we undertake no duty to update this information except as required by law.
Statements are also subject to a number of risks and uncertainties, including those related to the spinoff transaction completed in July .
Additional information concerning these statements and the risks and uncertainties associated with them is highlighted in today's earnings release and in our filings with the SEC copies are available from the SEC or on our IR website. Furthermore, we will discuss various non-GAAP financial measures on today's call unless otherwise specified when we refer to financial measures we will.
Referring to the non-GAAP financial measures a reconciliation of certain GAAP to non-GAAP financial measures discussed on today's call is available on our earnings press release on our IR website.
And now I will turn the call over to John .
Thanks Howard.
And thank you all for joining us today.
About six weeks ago, we had our 2022 company wide kickoff event.
Our leadership team discussed the state of our industry.
We're enable is on our journey and while we feel confident about the future.
I thought it'd be useful to recap a few themes from our kickoff.
In 2021, we rallied around the phrase forward together.
As we became a Standalone company and laid the foundation for success in 2022.
With our 2021 mission accomplished we've turned our focus squarely to elevating and accelerating our business.
And therefore, a rally cry. This year is earned more enable fans.
Van is more than just the customer what we call an MSP partner.
Or are growing employee base are enabling.
Vans also include prospects strategic partners industry analysts media investors and more.
Earning more fans has important implications because in order to do so we must execute on key objectives, such as helping our partners solve their problems.
Better connect our brand to the market.
It enhanced the overall experience for MSP partners and enable employees alike.
As we continue to execute on growing fan base will be another indicator of success.
Two months into the new year the environment in 2022 in many ways still looks a lot like 2021 with.
With the World learning to cope with what May become an endemic phase of Covid.
The new normal for work doesn't look like it's going away.
As such our industry tailwind tailwind, which include increased complexity labor scarcity and rising cyber threats remain as strong as ever.
I want to briefly double click into each of these.
First IC complexity is best captured by the concept of hybrid everything.
In a work from anywhere World SME.
<unk> rely on an MSP to manage workloads digital assets and identities across the on Prem and public cloud environments.
Second labor scarcity limits Smes from self managing their own stack and serves as a catalyst for outsourcing their IC management and security to MSP.
Increasingly we are seeing large enterprises use MSP to co manage their assets.
Not surprisingly MSP, the struggling with labor scarcity too.
They need to do more with less labor and Thats, where we add a lot of value.
Third.
Given the proliferation of security breath cyber threat management is in our core risk management function and.
Empowered by our security staff Msp's have the wherewithal to secure their end customer environments.
We ended 2021 on a high note with new bookings in the fourth quarter at the highest level in 2021 and up year over year.
<unk> fourth quarter revenue grew 13% in constant currency and exceeded the high end of our outlook.
Our data protection and security portfolios continued to deliver standout growth.
Driven by continued robust demand for our enabled Microsoft 365 cloud to cloud backup and enable Edr solutions.
In fact.
Our edr offering which is built on central ones best in class technology and seamlessly integrated into our platform now sits on over 1 million end points, while our Microsoft 365 backup offering protects over 25000 and customer domains and over 900000 exchange mailboxes.
During the fourth quarter, we appointed two new leaders to our data protection business.
Chris Group and enable veteran who was promoted to general manager of data protection and the addition of Stefan boss as VP of data protection product management.
Im joined US most recently from Dell, where he was chief product owner of the portfolio of data protection products.
As the market continues to shift towards cloud native infrastructure.
We're excited about our cloud native data protection as a service solution is positioned.
We provide complete protection for our customers across endpoint devices servers, and Microsoft 365 via a unified console in a single pane of glass.
Built on our proprietary true Delta technology, our backup and restore functionality allows for five times less storage for the same number of restore points compared to competing solutions.
Enabling a higher service level and lower cost.
Data protection is a priority for us.
Up leveling of leadership underscores our commitment to helping msp's better protect both their businesses.
And those of their customers.
Now as I did on our last earnings call I want to continue the practice of sharing notable customer wins.
First we won a six figure deal with a Belgian based MSP that chose us for RMM Edr data protection and password management, replacing a competitive <unk> solution and two separate backup solutions from leading data protection vendors.
Despite having invested in customization built around their previous RMM vendor. This MSP ultimately chose enable due to our tight integrations and easy to use interface, while our automation manager and net past network traffic analyzer, where big pluses too.
Second we.
We sold a near six figure <unk> deal with a Connecticut based MSP that included RMM Edr and data protection.
Also replacing a competitive RMM vendor and two data protection vendors.
In this case are powerful and cost effective data protection offering for endpoint and $3 65, and virtual machines led to win while our seamless integration facilitated the multi product land.
Third.
We landed a five figure IRR Standalone data protection deal with an Australian based MSP, including both enabled backup for devices and <unk> hundred 65 backup.
We believe this deal speaks to the increasing recognition of our fully cloud based data protection portfolio as well as the international breadth.
Finally.
As a testament to the enterprise grade quality of our solutions in the quarter, we landed a 200 K IRR direct deal with a fortune 500 company.
Now to be clear.
Don't focus on internal IP departments, but.
But we nonetheless get inbound requests at times and in this case, we were invited to bid in an RFP process.
This company was looking to consolidate its unified endpoint management solution onto one vendor.
Not only did our RMM exceed their patch management and remote control needs, but our other out of the box features like network topography asset warranty tracking automation manager and report manager helped us secure this win.
We also had some notable expansion deals in the quarter.
First our longstanding partner that already uses multiple enabled products added over 200 K of Edr.
This security focused partner promotes four core pillars to its SME customers as part of it in our central security hygiene manner.
Managed patch management managed Edr differentiate advantage backup solution and our multifactor authentication.
And making their decision this partner value the power of our Edr solution seamless integration with our platform and other products and our differentiated partner's success and support.
Second we had a significant cross sell data protection also over 200 K of IRR, including enabled Microsoft 65 backup and recovery testing.
This partner was using us only for a small number of RMM nodes prior to seeing our differentiated data protection portfolio.
We believe this expansion deal was a real testament to both the technological prowess and value proposition of our data protection solutions.
We also had several large additional edr cross sell deals as more of our existing partners acknowledged the need to.
Upgrade to our best in class solution, given the heightened risk environment.
Our traction and expansion deals has been amplified by our continued investment in partners success resources, such as the MSP Institute or.
Our head Nerds program market builder campaigns and partner care and technical support teams.
In 2021 enable head nerds gave over 10000 sessions of consultation to partners across boot camps and 101 trainings.
We have our goals set to exceed over 50000 consultations this year.
Over the last several months, we've introduced more targeted efforts to increase partner engagement, including through quarterly strategic business reviews with partners, which leads to increased account retention and new opportunities.
We continue to augment training for our PSM. So that they are best equipped to identify and address MSP pinpoints.
And for MSP before more hands off approach, we will be introducing more self guided onboarding and adoption programs throughout the course of this year.
Now I want to turn to some fourth quarter product and go to market highlights.
First we started multiple private previews for products to be generally available in 2022 and.
And most of 2021, we're focused on product security and platform hardening.
Causing a delay in new product introductions.
Earlier this month <unk>.
DNS filtering, which is a cloud based AI driven content filtering and threat protection services. Additionally, we continue to improve our data protection capabilities, including a 30% performance increase for <unk>.
<unk> servers and <unk>.
65 data stores.
As I look to the rest of this year and beyond.
We are extending our core strengths and monitoring to cloud and hybrid environments.
We will continue to introduce key capabilities with our cloud native data protection portfolio, and we're planning to introduce additional powerful yet easy to use security solutions.
We are pleased to return to a more normal cadence of product launches this year.
Targeting multiple new offerings per year going forward.
As organizations continue to adopt new and diverse solutions, including Windows 11, new versions of the Apple operating system and new cloud capabilities enables.
Portfolio will continue to expand our capabilities to ensure that msp's can manage monitor and secure the broadest range of platforms. In addition, we will be enhancing our security and data protection offerings to ensure msp's are able to provide the latest technologies and protection to EMS to Smes across the globe.
On the sales and marketing front, we improved.
The conversion rate on our website as we upgraded landing pages that better reflect the enable brand value.
And we're seeing good progress in our channel expansion efforts as we continue to support our distribution partners around the globe with dedicated salespeople.
In these situations are salespeople bring a deeper level of knowledge on our products. While the distribution partner is primarily responsible for the account management and customer care.
In fact.
Overall sales productivity has improved sequentially each year in 2021.
And finally, we generated a 15% quarter over quarter increase in our total sales pipeline, which we believe is primarily attributable to more targeted customer acquisition efforts.
I will circle back at the end with some closing thoughts, but now I'll turn it over the call to Tim to discuss our financial results and outlook.
Thank you John and thanks to all of you for joining us on the call today.
I want to start off by recognizing the significant contributions made by our team in 2021.
Whether it would be building out of our <unk>.
<unk> and G&A functions.
Increased investment and system security and rebranding to enable.
I am proud with what we have accomplished in 2021 and how the foundation, we have laid that sets up well for success in 2022.
Now I will review, our full year and fourth quarter financial results and then discuss our financial outlook for 2022.
We finished 2021 just ahead of our outlook.
Total revenue of $346 5 million.
Representing 14% year over year growth on a reported basis.
And 12% on a constant currency basis.
Subscription revenue was $336 $8 million.
Representing 97% of total revenue and grew one percentage point faster than total revenue on both a reported and constant currency basis.
Total revenue in the fourth quarter was $89 $5 million, representing 12% year over year reported growth.
13% on a constant currency basis.
FX turned out to be roughly eight percentage point of headwind versus roughly neutral when we gave our guidance in November .
Subscription revenue was $87 3 million, representing approximately 13% year over year growth or 14% on a constant currency basis.
Other revenue, which primarily represents maintenance revenue from our discontinued legacy licensed model was $2 $2 million down 11% year over year and consistent with prior quarters.
We ended the quarter with $1 678 partners that represent $50000 or more of IRR.
The 14% year over year increase.
Partners with over $50000 of IRR represent 47% of our total IRR up from 42% a year ago.
Our quarterly performance continued to be driven by our security and data protection solutions and in particular, our enable edr and enable Microsoft 365 cloud to cloud backup solution.
As John mentioned, new bookings in the fourth quarter, where our best bookings quarter in the year.
While we don't comment on bookings every quarter. It is noteworthy in this time.
Our bookings in Q4 surpass those of Q4, the previous year, which was prior to both the solar wing fiber incident, and the rebrand to enable two events that hurt new customer acquisition for most of 2021.
This is an encouraging sign and gives us confidence as we move into 2022.
Dollar based net revenue retention, which is calculated on a trailing 12 month basis was 100%.
Our net revenue retention has been driven by a balanced mix of both cross sell of additional services and device expansion as well as consistent growth retention rates in the 86% to 87% range.
Turning to profit margins note that unless otherwise stated all references to profit measures and expenses are calculated on a non-GAAP basis and exclude the items outlined in the GAAP to non-GAAP reconciliation provided in today's press release.
Also note that historical financials for all of 2020 and the period of 2021.
Included operating expenses that were prepared using carve out allocation methodology, while we were still apart and solar ones.
Therefore, our standalone financials are not directly comparable to those prepared prior to the effective spin off date.
Full year 2021, gross margin was 86, 8% compared to 87, 4% in 2020.
Fourth quarter gross margin was 86, 6% compared to 87, 1% in the fourth quarter of 2020.
Full year 2021, adjusted EBITDA was $113 3 million, which.
Which is at the midpoint of our financial outlook range and represents an adjusted EBITDA margin of 32, 7%.
Fourth quarter, adjusted EBITDA was $227 $8 million.
Representing a 31% EBITDA margin.
And reflecting back to drive revenue growth acceleration in 2022 and beyond.
Unlevered free cash flow was approximately $43 $5 million in the full year and $10 1 million in the fourth quarter.
Unlevered free cash flow.
Contain some nonrecurring items, including elevated Capex for office build out to support Standalone operation.
And a couple of cash neutral transfers between enable and balloons.
Excluding these items on Levered free cash flow in 2021 would have been over $70 million, representing approximately a 52% conversion from adjusted EBITDA.
Capex was $34 8 million or 10% of revenue for the full year and $12 5 million or 14% of revenue in the fourth quarter.
Excluding the one time office build outs that I just mentioned Capex would have been approximately 8% of revenue for the full year.
non-GAAP earnings per share was <unk> 35 for the full year based on 169 million weighted average diluted shares and seven in the fourth quarter based on 180 million weighted average diluted shares.
We ended the year with approximately $67 million of cash and had an outstanding loan principal balance of $349 million.
Representing a net leverage of approximately two five times.
Now I'll provide our financial outlook for the fourth first quarter and full year.
For the first quarter of 2022, we expect total revenue in the range of $91 million to $96 million.
Representing approximately 9% year over year growth or approximately 11% growth on a constant currency basis.
We expect a deceleration in revenue growth in the first quarter is due primarily to a slowdown in new customer acquisition for most of 2021.
Following the disruptive impact of the solar wind guideline and rebrand to enable as well as delays in new product introductions in 2021.
Accordingly, we expect adjusted EBITDA in the range of $26 $5 million to $27 million.
Representing approximately 30% margin at the midpoint.
For the full year 2022, we expect total revenue of $384 million to $388 million.
On a 11% to 12% year over year growth on a reported basis or 13% to 14% growth on a constant currency basis.
We expect full year adjusted EBITDA in the range of $118 million to $122 million or approximately 31% margin at the midpoint.
Given that nearly half of our revenue is generated outside of North America I want to provide some guidelines around the impact of FX movements.
For both the first quarter and full year, we are assuming exchange rate of 113 for the euro.
And one can they buy for the British pound.
As a proxy.
<unk> is about $900000 of revenue impact while every cent of the pound is about $300000 of revenue impact for full year 2022.
So for example, <unk>.
Even that the dollar has been appreciating if we hadn't used FX rate at the time, we gave fourth quarter guidance in November our full year revenue outlook would have been approximately $4 million higher.
As implied in our full year outlook.
Constant currency basis, we expect year over year revenue growth to accelerate throughout the year.
With respect to expenses and profit while our revenue mix is approximately 50% international our expenses are more heavily indexed to the U S.
Therefore, the FX impact to revenue is not perfectly offset by the FX impact to expenses.
So based on current rate, we will experience a modest net headwind to adjusted EBITDA in 2022, primarily driven by the euro.
In addition, our first quarter adjusted EBIT margin outlook reflect higher we made ahead of returns on go to market and product investments.
We expect to realize in the back half of the year.
Our first quarter and full year margin guidance implies that adjusted EBITDA margin will improve in the second half of the year.
Capex will normalize this year into the range of 4% to 5% of total revenue.
We expect adjusted EBITDA conversion to Unlevered free cash flow to be approximately 70% in 2022.
We expect total weighted average diluted shares outstanding of approximately $180 million for the first quarter and approximately $181 million for the full year.
Finally, we expect our non-GAAP tax rate to be approximately 25%.
In both the first quarter and the full year.
Now I will turn it over to John for closing remarks.
Thank you Tim.
I want to remind everyone of our three key investment areas going into 2022.
Bolstering our partner's success resources.
Expanding our multi pronged go to market approach and.
And bringing powerful and secure products to market faster.
While each of these investments have different return horizons, we are realizing progress on all fronts.
As a result, we're seeing steady improvement in sales rep productivity.
Our partners success managers have been uncovering new opportunities.
And we're happy to reinstitute, a regular cadence of product launches with expected multiple new offerings per year going forward.
I don't think we're alone in noting that the last couple of years have been difficult across the board for a variety of reasons.
But from where I sit.
Can honestly say I am overwhelmed by the energy excitement and resilience, but my fellow enabled lights.
Optimism and confidence of our MSP partners as we head into 2022.
The industry tailwind, we are seeing indicate strength for MSP is across the globe.
We are excited to continue to execute it.
And execute well for our partners and earn more fans in 2022.
With that operator, we are ready to take questions.
Thank you.
Phoenix to ask a question. Please press star followed by one on your telephone keypad.
If you change your mind any time, please press star Keytruda with your question.
As a reminder.
Followed by one to ask any questions today.
The first question.
Yes.
Comes from Jason <unk> of William Blair, Hey, Jason your.
Your line. Please go ahead.
Yes. Thank you good morning, guys. So just two quick ones first just on the macro.
Does it feel like we're back to pre COVID-19 levels of demand and then secondly, as you think about the top line outlook.
Outlook for this year and beyond.
What really gets you guys back to kind of let's call. It a mid to high teens type of topline growth what are the.
Kind of one or two key catalysts that get you there.
Sure.
Thanks, Jason.
Nice to hear from you again.
Hello.
We intentionally.
In our prepared remarks talked a little bit about bookings for us.
We also gave a reference point that it predates.
The cyber incident, the rebrand and a couple of other things that for me, it's a good leading indicator.
Across our <unk> and our product portfolio that the demand is back and that the MSP community is thriving and growing so.
Across the <unk>.
Tire portfolio NGO, we do see a strong level of demand and I think thats.
Indicative of what we did and not from our bookings in Q4.
To your second question.
We always.
Think about the business and the business model from our point of view of land expand retain.
And for us to get back to that it was high teens and even beyond that level.
It is imperative that we continue to execute and progressing as we have on those three dimensions right and so.
We've done a good amount on the retained part we've invested in customer success, we're seeing gross retention and better opportunities from that part of it.
So that's been a steady progress I think the two key things that we're seeing now is that returned back to new product introduction.
For a couple of different reasons, we didn't have a new product introduction last year right and so the fact that we're out of the gate as earlier as we are with already a new product introduction it brings.
In additional our offering for our MSP to sell for keep their end customers secured.
The opportunity for our partners success folks to have a conversation and our sales teams to sell another important SKU and the layered security and we believe we will continue to introduce new products throughout the year, which will help with that expansion story, which will help with that net retention story, which will help push us to that higher growth level.
That coupled with that better view of that demand should get our new customer motion continuing to go up into the right and the coupling of all three of those things gives us that that belief.
I think you can see that as we.
And our guide as well.
And then where do you see an IRR zones.
Sorry, Jason can you repeat that.
Yes, where do you see net retention rates going.
Sorry, I didn't know.
Yes so.
We've held steady and net retention is comprised of the expand part and the retained part so I think the retention part we'll study and we should see some slight improvement there and really when we're introducing these new products. That's when we expect the net retention number is two to be better than where they were.
This year.
Thank you.
Thank you we now have our next question from the line from.
Sterling Auty with Jpmorgan. Thanks, Danny Please go ahead.
Yeah, Thanks, Hi, guys. So.
Thank you for the comments around the deceleration expected in the first quarter, but I wanted to dig a little deeper on that.
Plenty of commentary about the strength in bookings strength in demand in the fourth quarter and what I'm wondering is how long does it take for that strength to translate our how much consistency in that strength you need to really turned the quarter and reaccelerate because I think you talked through.
Hey.
Lower customer adds throughout 'twenty, one but finished strong so is this a multi quarter.
Phenomenon that needs to happen before we get the real Bang for the Boston in terms of revenue growth.
Okay.
Thanks Sterling.
Thanks for the question I am not happy to give some more color, yes, and the nature of the business model and we kind of hit on the drivers of that.
But the nature of the business model does cater to it taking.
A couple of quarters for that strong performance that we talk to on Q4 bookings to permeate into the business.
A lot of the deals are set to kind of ramp over.
Three or four month period so.
I think if you look at Q1 guidance compared to full year guidance, you kind of feedback permeating through the implied acceleration on the top line.
When you just look at Q1 versus full year guide.
And a part of that is also.
But no NPI.
No new products released in 2021.
And we do have a new one that's just come out in Q1 year as well.
Any part of the story as well as we accelerate through the year.
Got it and then one other follow up question just.
I didn't catch it in your commentary the gross margins were down more than I would've expected more than what we've seen seasonally what in particular in the fourth quarter weighed on the gross margin.
Okay.
Yes prime.
Merrily.
Data center costs, and those will fluctuate from time to time, but we expect margins to hold very steady from a from a gross margin standpoint, as we as we go forward.
Got it thank you.
Okay.
Okay.
Thank you we now have another question on the line from <unk>.
Matt Hedberg with RBC capital markets. Please go ahead, when you're ready Matt.
Well thanks, thanks for the questions.
Jon I guess going back to the new bookings the strength in the bookings and <unk>, which is great to hear it's probably hard for you to decipher how much of that is enabled specific versus improving MSP trends.
I guess I'll ask the question I mean, how much of it do you think it's specific to what you guys have done sort of building up close to stand versus just we're getting back to maybe some more sort of pre COVID-19 MSP demand trends.
Hey, Matt Thanks.
Look.
Also we had some.
Headwinds that were specific to enable as well right and so we had we have the.
The solar winds breach we had to rebrand so we had what I'd call some micro.
Or a brand specific company specific headwinds last year.
And so.
As those dissipate and as we continue to build our brand as we continue to prove to the MSP community to strengthen our security of our offering that relationship with the MSP community.
Seeing that that performance pick up and those kind of I'd say micro unique headwinds to dissipate. So that's definitely a part of it I do believe.
The advancements we've made in our in our product the security hardening the.
The continuing development of our offerings and particularly with our data protection offering our integration that we have with Microsoft and the <unk>.
Movements, we've made across our portfolio on an automation level, we're continuing to see conversion mat increased rates. So we talked about sales productivity the <unk>.
Double click into there is conversion is also getting better we're winning more and in particular, we're winning more at the higher end of the market as the MSP is getting more and more complex as their larger that's where we really shine in particular and our win rates there are actually even better.
Then then our average win rates, which for me is a testament to the strength of our platform the breadth and depth and the development efforts that we've done.
And so the market there and in particular the demand there in the high end is pretty strong why we're continuing to see market consolidation will continue continuing to see with us often people refer to as smart money into the space and MSP is it getting a little bit more sophisticated they're rolling up the rolling up companies are acquiring one another and when they do.
That that's the right time to do it.
Our tech staff check and when you look when they're doing that tech stack check. They are looking for a platform that's robust enough and scalable enough and we really shine in that capacity. So on that end of the market in particular, we're seeing strong demand and strong conversion rates.
Got it that's helpful and then maybe one for Tim.
You talked about maybe some of the components that are pressuring your 'twenty two EBITDA guide versus the street. It sounds like some of it's FX, but that some of the also was front end loaded hiring yes. Im wondering if you can give a bit more color on.
Sure.
That spend is focused is it is it is that R&D and sales and marketing.
A little bit more color there would be helpful.
Yes sure Matt.
A little bit of color there.
It's on both fronts on the sales front, it's really driving expanding our go to market approach.
More silicon like a channel led motion into regions, where we traditionally had only sold in a direct fashion.
So there are some bigger investments in sales there.
Theyre going to are going to kind of lead prior to the return and then and then on the R&D front on the product side of things to drive, which John touched on multiple new product offerings per year, which we had one come out here in Q1.
Other slated for the rest of the year. So those are the key areas of investment that are driving margin a little bit lower in the first half of the year compared to where we expect to see it.
Half of the year.
Got it thanks, a lot guys.
Okay.
Thank you.
We now have Mike.
Most of my company say, Mike. Please go ahead, when you're ready.
Hey, guys. Thanks for taking the questions here I wanted to ask.
About the.
This deceleration we've spoken to in Q1 than I would've thought.
So understandable with the solar winds in the pull is on demand Gen and the rebranding but what.
So we're moving away from that so can you help us think about how much.
Of an overhanging win.
When that should dissipate as we're walking through calendar 'twenty two and then the follow up question for Tim, but you had constant currency growth rates by quarter for calendar 'twenty, one just to help us level set expectations.
Are you willing to reiterate the 15% to 17% medium term.
Revenue growth rates that you guys articulated for the calendar 'twenty three 'twenty four time frame.
Morning, Mike This is John .
Okay.
Hey, Tim I'll start maybe and then you can add a little bit more color if that's okay.
Yes, Mike just to help reconcile because it's probably.
Two statements that probably need some reconciliation right.
In one hand, we are saying Hey look bookings in Q4 were strong and the best in quite some time and then on the other hand.
You were saying.
But new customer the impact for the new customer.
Businesses, creating a little bit of a headwind in the revenue growth.
The reality is right. So our booking number that happens in Q4 doesn't really manifest itself in much revenue in the quarter I, often referred to our business as a snowball business in those bookings begin to manifest themselves and then they pay themselves grow into that cohort and so really with the.
The revenue growth.
Here that you've seen in Q4 is it really a manifestation of those lower bookings number is that lower new customer acquisition performance.
And that Q1, and even really in some sense that Q2 period from last year and as we as we build beyond that and add better cohorts from that Youll see the impact dissipate and that acceleration begin to kick in.
And also as we bring on these customers they present that and obviously a great opportunity now to build cross sell that breadth and depth of the offering that we have which would help also on the expense front, Tim sorry didn't mean to cut you off but you can add and then you can answer my second question.
Yes, I would just add that.
If you think about when the impact started it takes.
All four quarters to kind of grow over some of that impact and that's kind of what we're seeing here in Q1, where we expect to kind of bottom out.
Loan growth perspective in the year, where we really sell the.
The impact of the fiber and the rebrand a little bit in the very back half of the first quarter of 2021, but more so in Q2 Q3.
In Q4, and as we grow over that four quarter period.
Q2, and the rest of the year.
We expect to see that acceleration off of kind of this Q1 metric.
On that on that new customer acquisition impact.
And then on the on the constant currency.
Last quarter, we gained 14% growth Q4 was 13% growth in the full year.
12% constant currency growth for the first half was closer to about 10% constant.
Constant currency growth rate.
That's great. Thank you and then I know you've also spoken about.
This return towards more normal.
New product introductions, which is which is great to hear can you give us a flavor given last year was a little bit.
<unk> is still is probably the wrong word, but I know that you guys highlighted the platform important right.
What is that a more typical cadence for new product introductions zone on your court.
Anything there would be incremental thank you.
Sure.
So first.
Let's talk about the areas and then we will talk about the cadence. We think it's important so we continue to reference these three macro trends and the tailwind and Thats.
The labor scarcity. This digital transformation, the increased risk on or around cyber and when you take in those those those are the those are the tailwind. Those are also the demands of our MSP partners in the community and those SME right. So we take the needs we take the demands from our MSP, but also their customers and we build a roadmap of <unk>.
<unk>, so youll see us bring to market.
Offerings that help in all of those areas in particular, we referenced in the prepared remarks solutions that help msp's with cloud management and the management of the infrastructure and also SaaS part of the cloud. So we expect to bring those along we continue to expect to bring easy to use but powerful and thats.
Important combination security offerings for these MSP so for them to deploy at a scalable and repeatable way across their customer base and we will continue to help msp's manage everything in an automated way to help.
Drive their efficiency up so they can do more with less and this labor kind of scarce world that we're living in and so those are the areas as far as cadence Mike.
It depends on it depends on the level of complexity of what we're bringing to market.
I expect there to be a few we also had needs to be mindful and a lot of the offerings that we have or sell in the sell through capacity what do I mean, we bring things to market. We actually helped the MSP with the marketing the education the collateral the packaging for them to go sell onto their end customers. So we need to be mindful not to overwhelm the MSP community because they do.
To process Digest and sell this as well so it's a couple right I think depending on the year, depending on the demand depending on the appetite.
To be about two to four offerings per year.
Very helpful. Thank you guys.
Thank you we now have a final question on the line from Edward Maggie.
<unk> asset management.
Please go ahead when you're ready.
Thanks for taking my questions and congrats on a strong cap for 2021 first question here. Some of our notable wins included MSP is based in foreign countries.
<unk> portion of your total revenue comes from outside the U S. Today can you go with different international strategy, why it's working and why we can do it as a key strength for enable moving forward. Thanks.
Good morning, Ed.
Sure.
Right really built an hour.
And our original DNA, when we really pick these.
Company off.
We've had a strong presence in Europe via our both combination of our of our local teams in the UK and the Netherlands, but also with these distribution partners. So we have a.
Consider an intimate relationship with some key distributors in geos that really have a strong MSP presence.
And thats been our history, what we've done in the last really that's a 12 to 18 months and we're continuing to lean in as have we.
Somewhat referred to as <unk>.
Hybrid our multi pronged approach, where we're now coupling our own sales teams with these distribution partners to go deeper into their base and to do two things one to win bigger accounts larger MSP with a little bit maybe more of a complex sale sale why because my earlier question, we do better we win when the MSP.
Looking for a more complex bit so we're hoping that the distributors when those larger accounts and more strategic accounts number one number two as it relates to data protection and security, we're bringing that expertise that our security expertise our data protection expertise to the distributor because that end customer really wants to talk to that expert who actually understand some.
<unk>, a little bit more intimately and thats been that winning combination where where our distributors are helping us with the customer care and the management.
In particular in language that we might not cover personally and then we're coming in with that expertise and that knowhow to give that MSP that perfect combination that theyre looking for the expert.
Global expert with that local without local touch and it's that combination that really I believe has us leading internationally in the market.
Really helpful and just one more from me you've demonstrated many times the strength of the partnership with them to Hawaii, which has stuck out in some key cross sell cases can you quickly walk us through the approach you take two evaluating product introductions.
<unk>, new partnerships versus acquiring companies that develop the technologies themselves. Thanks.
Great Great question.
We start with that demand that I mentioned in Mike's question earlier right and then we take a look at what is the best way to service. The MSP that is our north star and we have we have three avenues there add right. We obviously build a lot of the technology ourselves whether that be our complete data protection suite our patch.
Management suite, our E Mail security suite, our password management suite. These are all our own proprietary technology and we build that ourselves.
And then if we believe that we can build it ourselves that's what we'll do we'll also look across and see if we should partner.
And in the case of sensible one.
We know that that we believe them to be a leading a leading partner providing the best solution for our MSP that are both powerful and easy to use and we took their powerful stack.
Brought it into our platform made it more MSP friendly did a tight integration with a tremendous amount of work to make it a little bit easier for MSP to deploy and manage and navigate through and Thats, where we would go through more of the OEM path, where we believe is a technology out there that is that it's better to partner with the industry leader and.
It's an area, where we believe we want to keep our flexibility and options open if the technology evolves, we have the flexibility now to go with another vendor and.
And then lastly, you brought this up we are always looking at potential ways too.
Bring in new offerings through inorganic means.
This is a muscle that we did not flex in 2021.
But now that we have the spin behind US now that we're squarely focused on elevating and accelerating our business I expect us to leverage that muscle as we go into 2022.
Very helpful. When you spend behind you very excited to see what's in store for 2022 and that's it for me thanks guys.
Thank you for the efforts we now have another question on the line from Mike Seekers Anthony.
Please go ahead your line.
Hey, guys. Thank you for getting me on real quick through this funnel I know earlier at pretty going into question. So I apologize upfront for the word because I got to work on that.
But one of the things I did want to highlight.
From the earlier question.
You guys at the time of this has been discussed at 15% to 17% revenue target over the medium term to calendar 'twenty three 'twenty four.
But are you willing to reiterate that and I know I'd asked that earlier, but.
Wanted to make sure that we have that will out there for everyone on the earnings call. Thank you.
Yeah, Hey, Mike.
Yes.
Yes.
Yes, that's right.
I think.
Nothing that is nothing.
Nothing has changed on that Brian I think if you go back to kind of some of the points. We've hit on on kind of getting a new customer acquisition normalized getting our new product introduction back into the normal cadence of bringing a couple of those to market per year continuing to invest in our partners success.
The team and that motion in that strategy to drive higher retention rate.
We still feel confident in that kind of mid term range that you mentioned that in 17.
Percent number for the medium term.
Yes, Mike.
Yes.
And just as we look at the performance over the last quarter, where we are now.
For me.
And the team frankly, we're right on course right.
We've accomplished what we wanted to accomplish we're quite pleased with what we've accomplished and we feel where we are.
We're in the exact position we thought we would be in.
To move this business in and begin to accelerate.
Great. Thank you again guys. Thank you appreciate it.
No I appreciate the follow up apologies again, Mike.
Okay.
Thank you.
As we have made to ask the question if I understood I'd like to hand, it back to John for some closing remarks.
Thank you operator, and thank you all for attending this conference and looking forward to talking to you all again in 90 days.
Thank you that does conclude today's call. Thank you again for joining you may now disconnect your lines.
Okay.
Okay.
Yes.
Okay.