Q1 2022 Backblaze Inc Earnings Call
Good afternoon, ladies and gentlemen, thank you for standing by.
Welcome to Barclays first quarter of fiscal year 2022 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. The Star then one key on you touched on the telephone.
We will go to offer assistance at any time. Please press Star then zero.
I would now like to turn the conference over to your Speaker host James Kisner, Beth Vice President of Investor Relations. Please go ahead.
Thank you and good afternoon and.
And welcome to <unk> first quarter of fiscal year 2022 earnings call.
On the call with me today are glib Butman co founder CEO and chair person of the board and Frank <unk> Chief.
Chief Financial Officer.
Today.
<unk> will discuss the financial results that were distributed earlier this afternoon.
Statements on this call include forward looking statements that include our future financial results.
Use of our IPO proceeds.
Results from new product and partner announcements, our ability to compete effectively acquire new customers and retain and expand our business with existing customers.
Hire and retain key personnel.
And effectively manage our growth.
These statements are subject to risks and uncertainties that could cause actual results to differ materially.
In particular those described in our risk factors that are included in our Form 10-K for the year ended December 31, 2021, and there are other financial filings.
You should not rely on our forward looking statements as predictions of future events.
All forward looking statements that we make on this call are based on assumptions and beliefs as of today.
We undertake no obligation to update them, except as required by law.
Our discussion today will include non-GAAP financial measures.
These non-GAAP measures should be considered in addition to and not as a substitute for our GAAP results.
A reconciliation of GAAP to non-GAAP results may be found in our earnings release, which was furnished with our form 8-K filed today with the SEC.
You can also find a slide presentation related to our comments in the webcast, which will also be posted to our investor relations page after the call.
Before I turn the call over to Glenn.
I'd also like to mention that in the latter portion of recall, we will be addressing questions from non institutional or retail investors. We gathered through the state technologies platform. We're also pleased to announce that <unk> is planning to participate in the stock purchase program.
Which rewards individual shareholders, who hold a minimum amount of shares for a specified period of time with exclusive gifts.
Stay tuned in the coming weeks for additional details.
I'd now like to turn the call over to Glenn Glenn.
Thank you James and thanks to all of you for joining US we had a great start to 2022 with 27% year on year revenue growth to $19 5 million.
Reflecting higher growth in the business compared to 24% growth in Q1 of 2021.
Our <unk> cloud storage business grew a strong 48% comprising 36% of total revenue.
And our computer backup business grew 18% year on year.
<unk> for the company reached $79 million with Btu.
Two comprising over $28 million and computer backup comprising approximately $51 million.
As the leading independent cloud for data storage at.
At <unk>, we continue to make it astonishingly easy to store use and protect data.
As a reminder for those on the call that may be newer to the story, we have two cloud service offerings that operate on our storage cloud.
First our <unk> cloud storage service provides developers and it.
Personnel, a public cloud storage service that is dramatically easier and one fifth the price of Amazon Web services S III and others.
And second our computer backup service provides unlimited cloud backup for laptops and desktops for companies and individuals.
While the computer backup business remains the larger of our two cloud service offerings at the moment, our strategy and the increasing investment to center around capitalizing on the roughly 100 billion dollar total combined 2025 addressable markets for <unk> cloud storage as projected by IDC.
Yeah.
I want to start by highlighting three key recent product and platform enhancements.
Number one.
<unk> data migration.
Across the World. There are approximately 50 trillion gigabytes of data stored across cloud providers and on premise storage cut.
Customers are a diversified cloud providers often want to leave.
But have been locked in through the complexity of getting their data out and access vikas fees.
Customers with data on premise often want the benefits of cloud storage, but migrating their data from legacy systems has been complex and time consuming.
To help prospective customers, we were excited to launch our universal data migration program, which is a set of integrated services that make it easy and free for eligible customers to move data from a wide variety of sources, including other cloud storage providers and all of the common on premise storage solutions.
We also cover the costs of the cumulative egress fees to free customers from their vendor lock in.
We also announced the partnership with the SaaS companies. So that that is aimed squarely at this challenge soda specializes in helping businesses move their data from on premise to the cloud while ensuring customer data is secure and transit and structured exactly as needed in the cloud.
We developed a solution that manages soda services, giving customers the security and support they need to move their data over.
With Universal data migration.
<unk> can easily and freely migrate data from where it may be locked in today and.
And immediately start getting the benefits of <unk> cloud storage, including ready access to all data.
<unk> cost savings over alternative offerings and the ease of use of our platform.
Number two.
B to reserve.
Customers Love, our <unk> cloud storage.
But some are not set up to purchase in a pay as you go consumption model.
Back please be to reserve is a strategic new offering that provides predictable capacity based pricing.
<unk> reserve is attractive to customers, who are more accustomed to paying for storage on an annualized basis, such as in an on premise offering with those that just want more predictable pricing.
<unk> Reserve also makes it easier for channel partners to include <unk>, when they sell backup storage or other products that work well with Btu.
Additionally, <unk> reserve offers new benefits, including our Universal data migration services to help customers move their data into <unk> storage premiums.
Premium support and more.
Number three partner API.
Customers have been able to use <unk> cloud storage inside of our alliance partner products for years.
As a reminder, alliance partners our name for the independent software vendors also known as Isps.
Who integrate our storage cloud into their solutions.
Additionally, those partners have expressed interest in being able to offer the benefits of our cloud storage directly to their customers.
Our new partner API empowers those partners to easily integrate and manage <unk> costs are seamlessly within their offerings.
By unlocking an improved customer experience for these alliance partners.
Our partner API allows them to easily build additional cloud services into their product portfolio, which in turn drives increased demand for <unk> as the cloud storage backend for those services.
I also want to share an update on cloud application.
We previously announced that we intend to ship this functionality in June and we remain on track to do that we recently had a key milestone launching the beta of <unk> application.
As a reminder, cloud application makes it easy for customers to keep a copy of the data geographically distributed.
To support disaster recovery compliance objectives or to help move the data closer to end users for faster access.
These product and platform enhancements add value not only for our customers, but for our partners as well.
Our partner ecosystem continues to grow which I would like to underscore by describing two new partnerships. In addition to the joint solution with soda I mentioned earlier.
The first partnership is with catalog.
<unk> provides immutable backup protection and instant recovery for virtual machines and kubernetes.
Kubernetes is the leading open source platform that developers use to build and deploy applications efficiently.
And then you'd ability is a feature of that prevents data deletion over a specified period of time frequently used to protect against ransomware attacks.
<unk> now integrates backwards b two to provide customers, particularly developers.
With data backups that are designed to be impervious to cyber criminals.
Another recent partner announcement was our joint solution with the Tara.
Tara offers cloud based network attached storage or NAS for short.
And users back please be too as the storage cloud underlying the offering.
So terra is trusted by the world's largest companies, including Mcdonalds GE, Unilever and live nation as well as the U S Department of defense and other government agencies worldwide.
This joint solution benefits small and medium enterprises looking to adopt cloud based mass by allowing them to safely and securely move their on premise file system to the cloud.
<unk> enterprise cloud services platform with back please be too provides customers a path to cloud adoption without the painful step of rebuilding the data structures and workflows in the cloud.
You can learn more about these platform enhancements and new partnerships at Barclays Dot Com Slash blog.
Before handing over to Frank the two customer stories I want to share with you that demonstrate the value that <unk> can bring for businesses.
Many of you are likely familiar with fortune media when unfortunate media spun out of its parent company Meredith Corporation to become an independent enterprise it needed to set up a new technology infrastructure that could avoid the limitations of its predecessor and served the company well into the future.
Most people think of Fortune magazine, when they think of Fortune media, but one of Fortune's. Most valuable assets is its extensive video archive, which includes conference recordings executive interviews panel discussions and more over the years Fortune Hasnt met hundreds of thousands of hours of video that they saw for future use.
Fortune media needed a place to keep these extensive video archives cost effectively.
Previously used a cold storage solution from our legacy cloud storage provider, but it included significant limitations when it came to accessing and finding historical content.
This was a major pain point for fortune, because we purposely historical content was becoming a significant revenue source.
By switching to <unk> B to Fortune media was able to store those hundreds of thousands of hours of video on a storage platform that enabled them to quickly access any footage.
Thus, eliminating multiple layers of their previous archiving system, reducing their storage costs by almost two thirds and dramatically reducing the need for it support.
This is a great illustration of how our ease and affordability uniquely empower major brands to do more.
The second success story I would like to share features a developer customer big cartel.
And demonstrates several aspects of the strength of our platform for developers.
Big Cartels mission is to make it simple for artists and creators to build a unique online store and sell their work.
<unk> helped artists sell $2 $5 billion of their work to date.
And they count Etsy and shopify among our competitors.
In the past because thats, all used Amazon necessary for storage and.
And fastly for their content delivery network.
But given their mission to support independent business owners.
Felt ethically conflicted about using Amazon for obvious reasons.
Further Amazon US III had recent service outages that caused the company to worry about having Amazon necessary as a single point of failure for storing customer content.
After learning about <unk>, and our partnership with Fastly, which includes free egress to them.
Cartel recognized an opportunity to adopt an alternative to Amazon they fit the cartels ideals and ethos as well as their use case.
So now when a customer upload content.
It gets started in both Amazon necessary Ambac, please be too.
Fastly preferentially deliver that content to the customer sites from <unk>.
It's a multi cloud use case with <unk> as the primary.
As a result of the partnership between back please and Fastly Big cartels infrastructure costs have gone down even as they doubled their storage footprint.
Even better they were able to transfer all of their data in a single day with our data migration service. An example, wire a new universal data migration services so valuable.
Big Cartel is now saving 50% and operating costs by adding back please be twofold origin storage versus using Amazon as three alone.
This is a wonderful example of how our open partner ecosystem.
Ease of use and our trusted status as an independent provider makes us a powerful alternative to legacy solutions.
As we outlined during our IPO back in November .
See a large market.
Our opportunity as the leading independent cloud for data storage.
We are executing on the strategy, we laid out by investing significantly in our product and platform.
And our sales and marketing efforts.
I want to take a moment to thank our talented and dedicated team of employees, who make all of this possible.
Based on their feedback pathways was certified as a great place to work this February .
As we continue to hire new team members to help drive our growth.
Our culture remains a differentiating factor and a competitive advantage in attracting the best talent and we look forward to welcoming many more people to our team.
I'll now turn the call over to Frank <unk>, who can review the financial results of the quarter in more detail.
Frank.
Thank you Glenn and thanks, everyone for joining us today.
Turning to our Q1 financial results unless otherwise noted I will be referring to non-GAAP metrics and the growth rates mentioned are year on year.
We remain focused on two key metrics revenue growth and adjusted EBITDA. Adjusted EBITA is defined as earnings before interest depreciation amortization stock based compensation expense and other expenses or benefits that are noncash or that we deem nonrecurring.
Our Q1 revenue totaled $19 5 million, an increase of 27% year on year backed.
<unk> contributed sales of $7 million, reflecting 48% growth computer backup revenue totaled $12 $3 million, reflecting 18% growth.
In Q1, <unk> cloud storage represented 36% of total revenue continuing its upward trend.
Computer backup continued to benefit from the price increase we implemented in the last month of Q3 2021.
We cost since most backup customers are on an annual or two year subscriptions. This increase which was from roughly $6 per month to $7 per month, we will continue to phase in as they renew across the next two years at the higher price.
Our retention metrics remain strong we track two key metrics net revenue retention and RR and gross customer retention. These.
These metrics are defined in more detail in our earnings release and filings.
Basically <unk> is the growth of the recurring revenue for initial set of customers, while gross customer retention measures retention of customers.
Both metrics, our trailing four quarter averages.
Total company <unk> was 112% with <unk> cloud storage at 129% and computer back up at 104%.
Gross customer retention was 91% overall with 90% for <unk> cloud storage and 91% for computer backup deal.
<unk> NR or in gross customer retention metrics were all within one or two points of the values for Q4 2021.
Working down the P&L adjusted gross margin, which excludes noncash expenses of depreciation amortization and stock based compensation was 76% improving from 75% last quarter and in line with our expectations.
Adjusted EBITDA was a loss of $3 million or 15% of revenue down from the positive $2 1 million or 14% in quarter one of 2021.
This reflects planned expenses from higher investments in both sales and marketing and R&D as we continue to increase investments pursuing the large market potential for <unk> cloud storage as well as increased G&A expenses chiefly related to public company costs.
Turning to the balance sheet cash cash equivalents and short term investments totaled $99 $1 million as of March 31 2022.
Now I'd like to provide our outlook for Q2.
For the second quarter, we expect revenue to be in the range of $22 million to $26 million.
We expect Q2, adjusted EBITDA margin of negative 19% to negative 15%.
We expect Q2, 2022 basic share count of approximately $31 million to $33 million.
I also want to make a general comment on our current expectations for our business mix in 2022.
While we do not guide revenue by product, we would like to provide some additional texture on our expectations for be two cloud storage growth in the near term.
While overall revenue growth has remained steady in Q1, we are seeing some softness in data growth. Consequently, we want to be cautious considering very high inflation and various other headwinds, particularly for the mid market.
As such we think for modeling purposes that looking at the average absolute dollar growth over the last four quarters sequentially is a reasonable estimate of growth for <unk> cloud storage for quarter two.
Our full year 2022 revenue guidance range remains unchanged at $83 million to $86 million.
Turning to 2022 EBITDA margin guidance, we continue to expect our full year 2022, adjusted EBITDA margin of negative 18% to negative 14%.
This guidance continues to reflect a plan to materially increase our investments in 2022 to address our significant market opportunity and with the aim to accelerate our long term growth.
I will now turn the call back to James Operator, we are now ready to take questions from analysts.
Thank you, ladies and gentlemen, if you like to ask a question at this time. Please press. The Star then one key on your Touchtone telephone.
Please standby, while we compile the Q&A roster.
No first question coming from the line of a Thai kitchen with Oppenheimer. Your line is open.
Thanks, Hey, guys.
Maybe I'll start with where we finished Frank can you unpack that growth slow softness in data growth.
Is there any color you can give us around this.
When in the quarter have you seen this and what type of customers are you seeing this and when you talk to customers.
What is the reason they get for it.
Well I'll just reiterate we don't guide for <unk> growth.
We wanted to be transparent about what we were seeing.
So that everyone could understand need to growth in your models could be accurate in that regard. What we have seen is something that happened in the first quarter to answer the first part of your question and it really was in the growth of data being added by our customers.
Now.
We were looking at that to reflect that the best way. We can is to start looking at the sequential growth with what we've been doing it the better way of modeling.
So it certainly.
Not we don't want to be overly concerned about it but we wanted to just point out what we actually are seeing.
Okay, but frankly I think it sounded like to be clear you don't have a good reason as to why there is a softness it sounds like.
Well, we presume that in in line with what we're seeing from other peers. That's in place the pressures of inflation and interest expense et cetera do affect mid.
Mid market companies quickly and maybe more than others and we suspect that the reason.
Okay and given inflation.
There isn't a company on the planet no matter what vertical it is that he is in raising prices.
Have raised in your computer backup clearly, but is there any plan to raise prices to help me think about that for the next 12 months.
There isn't.
Really committed to being a great value.
And as companies do have pressures.
On expenses, we hope they look to us as a way to save on their storage costs that we really wanted to keep.
Economical as possible there okay.
So how should we be thinking about gross margin kind of I'm sure your cost of <unk>.
Billings are data centers that is rising.
Peer to peer basis.
Well, we've had we're doing fine there are.
Those margins.
Actually up a little bit from <unk>.
Prior quarter, 1%.
And being as that we're not seeing on the cost of capital of the infrastructure, we're not seeing a great deal of increase there yet.
We are monitoring it very closely but we are okay for the first half of all of our purchases this year.
And on the Red Lake gross margin too and our labor rates remain in line with expected. So we are doing fine as far as that guys. Okay. Great last one for glib Glib I wanted to talk about the universal data migration. It sounded like a very interesting plan, maybe you can talk about.
You said that discipline is available to someone who is eligible but so when you. So perhaps you can clarify who would be eligible for something like this and what are the terms if I wished and migrate meaning if you do this for a day and what is it that they do for you meaning are they committed to a 12 for one two or three year relationship.
How do you get those dollars back on the backend.
Yes, it's a.
A good question.
Universal data migration.
Good benefit for customers, who are locked into either other cloud providers, where they feel the EBIT figure extent, there where they're locked into on premise storage that they want to get out of a move to the cloud.
For eligible customers what that means.
We migrating at least 10 terabytes.
Gather to us.
The commitment is to keep the data with us for one year.
Thank you for that market.
That went in during that one year, there's no additional fees will actually be leaving money off of their their storage because once if the price of both of the competitive offerings out there.
So it's great from our perspective.
What we offer for the customers.
It is free for customers to get their data out of the other brands because we will subsidize those fees.
By switching to a it will actually be lower cost related to keep the data for that program.
Got it very good thanks, guys ill jump back in queue.
Thank you guys.
Our next question coming from the line of Simon Leopold with Raymond James Your line is open.
Hi, guys. This is victor in for Simon.
Last quarter, you noted that you were going to increase investments in sales and marketing.
A bit can you speak about some of the specific actions that you've taken and what your plans are for the balance of 2022.
Alright.
Fair.
So we said that we would increase the investments in sales and marketing we've done exactly that.
We.
Have scaled up the outbound sales effort so.
As you May know, we were primarily an inbound.
Self serve motion.
Years before in urban <unk> started our outbound sales effort to complement those models, we found that it takes several quarters to see.
There is both of those or at least to start reaping the benefits of those.
We hired up.
An outbound sales team in the first quarter of this year primarily.
And so.
<unk>.
It's early.
We're just scaled effects in Q1.
But we're seeing pipeline scale, we're seeing some early traction from the investments from earlier last year.
Our continued enthusiasm.
Our community there we want to continue to do paid advertising and testing and optimizing and scaling that we brought on a developer evangelism.
That team has published key content for how to use the two with Brian .
Including with our partners houseware vastly an altar.
We're hosting our own developers.
We're sponsoring with sustaining and developer focus group continent.
And then the other item that we highlighted last quarter with our marketing teams. So we started that.
And in the last few months.
You've done a lot for joining.
Yes releases Webinars blog posts, the key studies and event.
Our other partners, including Cat.
Scatological terror.
So overall, we have been investing.
Sales and marketing will continue to invest and scale those efforts.
That's helpful can you speak some about the competitive environment.
And if you've absorbed any adjustments from peters to their pricing strategy recently that might affect.
The value proposition from Barclays.
So I don't think that much has changed in the competitive landscape we continue to.
I see.
The diversified cloud vendors Amazon, Google Microsoft out there, we continue to take customers from them that wants to switch and that's part of the universal data migration.
Our focus is helping those customers that want to switch to an easier and lower cost provider and as I mentioned with the cartel.
Yes.
Customers moving over because they want to be with an independent platform that allows them to have access to other best of breed providers.
So.
We haven't seen too much on that front there are.
There are a variety of smaller companies that offer.
Cause of origin appointed newest pop up.
But I wouldn't do that.
The competitive landscape has materially changed.
Since last quarter.
Okay. That's helpful. Thank you very much.
Sure.
And our next question coming from the line of Erik <unk> with JMP Securities. Your line is open.
Yes, thanks for taking the question I wanted to follow up on the.
On the slowing growth in data.
What do you think those customers are doing.
Is there and.
And the data that they're storing.
Slowing it or is it slowing or what are they doing with the data if theyre not storing it back.
Back please.
Just to reiterate.
Just wanted to say that or be too.
Is that a beta product growth is really very good 48% is very rapid.
We're seeing for likely slower added growth. So what we're thinking that it is that the customers are not creating as much data storage its not that we think they're placing it someplace else no reason for them to do that but it's really and the reason that would happen is if they were pulling back.
Some of their work.
Concerned about the inflationary pressures that are out there already.
<unk> expenses, there might be incurring because of higher interest rates or things like that so that that's what we're attributing it to right now.
Do you have any reason to believe AWS is seeing a similar trend.
It appears.
We're seeing a similar trend AWS is very diversified with a whole lot of products. So it's not quite the same question in a different market and we are the very upmarket and we are of course are in the mid market I Wouldnt really look I don't know.
What they are doing in relation to all of that.
Okay, then last last question.
On the on the.
The data migration service.
What.
Much upfront spend do you think that will take on the part of back Blaze to migrate those customers can you give us any any sense on how much do you think that's going to take my cash usage perspective.
It's not a robust announced.
Because we have very good economics there.
And also so.
<unk> is very manageable.
Just to clarify here.
We don't outweigh some large amount of cash preemptively as each customer decided to migrate data we held customer migrate theater.
Okay.
It is just pure customers migrate the other thing to note is that.
Some of the things that we have done are to optimize the way in which <unk> is done out of the different system.
On the <unk>.
<unk> lowered our cost of migrating their data much below what it would have caused the customer to do that on their own.
What would be an example of how you can reduce the egress costs.
So an example of that.
Bundled together multiple clients and set up a direct connect.
Systems, where it would be.
Complicated and likely.
Not cost efficient for them to do that on a one off basis.
Okay, great. Thank you.
Okay.
Our next question coming from the line of.
Eric <unk> with Lake Street Capital Your line is open.
Yes, I wanted to revisit the gross margin. The 76% was slightly ahead of what you guided I believe last call you talked about 74% to 75% range for FY 'twenty two.
I assume that you're reiterating that what takes that down.
Down in Q2, three and four.
Okay.
Eric.
I'm going to repeat your question.
I didn't hear the last bit of it.
What Eric was asking.
There was.
Slightly higher gross margin this quarter.
And with.
$70 75.
For the full year 2022.
Does that imply that we're going to have lower gross margin in the quarter of the year Oh, no not necessarily we had said that our gross margin was.
Increasing very slightly over time and that was simply because the expenses for head count and other areas of the data centers were not growing as fast.
And that likely is still the case.
Okay.
You want to.
When all of a sudden done for FY 'twenty two what do you think the gross margins finish out the year at.
We really don't guide gross margin for the whole year, but you should think of it in the range that we've been talking about now.
So I'm going to run with <unk> 74 to 76.
Expense.
Expense wise.
You talked about some of the investments that you've been making in sales and marketing and R&D. I know you had given a numeric expectation for employee growth for the full year and that was an expansion of going to about 450 employees up from 270, where you finished out.
The prior year and I just wanted to know is this.
On average you got to be adding about 40% to 50 employees per quarter around that track on that pace.
Yes, yes.
Yes, it's slightly slower.
Always a challenge to hire the technology people and also we always evaluate we're constantly evaluating but yes, we are on that page.
Got it thanks for taking my questions.
Our next question coming from the line of Jason Ader with William Blair. Your line is open.
Hey, guys. This is billings at Simmons on for Jason Ader, Glenn maybe on expanding on Simon's question from before I know you said the competitive landscape hasn't really changed but maybe.
A little deeper.
AWS has made some changes to the egress policies a couple months back and then second.
Cloud flares, obviously, a very important partner for you guys, but they announced there are three solution back in September .
Can you speak a little bit to if those dynamics are coming kind of coming up competitive conversations and what kind of impacts are.
Yes, thanks, Jonathan.
The exit is there hasnt been anything materially different than what I mean by that is.
Certainly AWS announced that they were going to be lowering some of their existing prior to our last earnings call and we talked a little bit about it than that.
It's a very very small change.
The address unplanned frankly, I'd be happy if they dropped them completely would make it easier for customers to migrate away from AWS is why they keep the EBIT. So.
So we haven't seen anything material from that because it was such a small change.
Their pricing on the southwest side, we continue to work with <unk> and with customers and partnership efforts to continue to move forward on that front.
We haven't.
We haven't seen anything new other than the.
Original announcements.
They have put out.
Back last year.
Got it got it and then maybe another one for you Glenn.
I know you guys called out the data growth dynamics in the Btu cloud side, but I also think.
It's important.
Remember that it's important to not forget that some of the upside in the quarter came from the computer backup side can you maybe just expand on some of the dynamics that help drive that and I know you guys.
When we get the customer count annually, but if you had to.
Attributed to factors would you say it was aided mostly by the price increase or maybe better than expected customer hands than maybe originally anticipated I'm curious for your thoughts there.
Let me make sure.
Good question, you're asking.
How did we accelerate growth.
Up to 27% versus 24% in the prior quarter.
Quarter in the prior year's quarter.
Yes, just trying to get at you guys put up some good numbers for the computer backup business wondering if you could kind of dig deeper on some of the dynamics that helped drive that.
Got it yes, yes, the computer backup side.
We continue to grow that business through acquiring more customers, but.
The acceleration in growth there is driven in strong part behind the price increase that we did last year as it continues to roll through.
The entire base.
Thank you.
Mhm.
Our next question coming from the line of Zach Cummins with B Riley Your line is open.
Yes, hi, good afternoon.
Taking my questions and I apologize, if you've kind of gone over some of these dynamics already but.
I'm just curious of what you've been hearing from customers in your conversations with intersections with them in recent months I mean, just given all the different macro headlines.
What's the overall sentiment that you're seeing across your customer base, whether it be spur.
Spending plans or kind of what they are thinking about from from strategic initiatives perspective.
<unk>.
Yes, it's a good question.
Yes.
Fundamentally we continue to hear from customers that they are trying to run their businesses.
And running their businesses for most of them they have.
Their own digital initiatives some of them are to get their systems into the cloud some of them are to just streamline the way that the infrastructure works.
That is that multi cloud setup.
They continue to want to run their businesses.
Paying attention to.
To the macro trends are paying attention to.
How are things with COVID-19, they're paying attention to things around inflation, they're paying attention to.
The Russia, Ukraine situation, but.
In the face of all that they're trying to run there.
And so.
So defensive.
Continuing to try to run their businesses.
We are trying to help them with their different initiatives.
It's certainly on People's minds.
And there is.
The inflation aspect is something that certainly is concerning some of the customers.
Thank you Troy.
But they're also trying to continue to run their business as they can.
Understood.
Just the other question for me is really around your cloud reputation brought it it sounds like it's been the beta at this juncture I.
I mean can you give any sort of incremental update of maybe the feedback you've received from any customers that have used the product. Thus far any kind of are you still on that same timeline to get this fully launched in the second half of this year.
We're actually on the timeline of getting it launched in the first half of this year, which is our which is our target before and we're still we're still on track to do that.
And.
Customers are using it we've been.
<unk>.
Put out.
For customers, who are interested in the beta.
A lot of customers that signed up for that and they're experimenting with it so.
So so.
So far all signs are positive and we continue to plan.
Plan to get that launched and available customers before before the end of June .
Great. Thanks for taking my questions I appreciate it and best of luck for the rest of the quarter.
Thank you appreciate it.
Great. Thanks for all those great questions from the sell side community I would now like to request that came from the non institutional investors.
There are investors that many questions.
A few of the prices have already been answered.
To address that a handful of these other markets.
Hi couple of questions and timeline.
The first one is for Glenn.
Where do you expect the company to be in two years' time.
Thanks.
The questions from the.
Institutional commuting, but does have submitted questions and voted on them I really appreciate it great to hear the engagement from the broad base.
In terms of the company in two Years' time, we aim to continue to grow the company with both of our cloud offerings and with a particular focus on Youtube cloud storage and our opportunity. There. We believe that data is the digital worlds most precious resources.
And our storage cloud and our role as the leading independent research and.
Enables us to continue in our mission to make it astonishingly.
To store used and protect that data and we will continue to do that over the next years to come.
Michigan is also going to be.
During tough ongoing macroeconomic conditions widened the founder leadership team decided to proceed not pushed back the timeline with the planned sale 20% of their total shares.
Post IPO and the share price is already suffering tremendously.
It's a fair question and we like to be proactive and transparent.
So we put a detailed explanation of our motivations and are posted on our blog a few weeks ago and encourage everyone to read that.
At <unk> Dot com platform.
The important thing to understand is that this plan was designed to be a low impact.
Longer term diversification plan for some of the founders personnel.
Tier business customers.
But overall I think you saw in the press release.
We are reiterating our guidance for the year and we're continuing very strong growth.
Okay.
Next one is for Glenn.
It is truly be releasing new products to backup network storage or servers that can be used on a different price to meet the needs of the business and commercial industry.
So we're continuously releasing new products, such as our announcements recently around universal data migration and future reserve and the partner API and our upcoming cloud application feature.
To be specific about backing up the network storage and servers.
I assume this question may be coming from users of our computer backup service with sports laptop and desktop backups for businesses.
RMB two pumped storage offerings already supports businesses for these needs and so much more.
<unk> cloud storage actually came about in part because so many businesses came to a thing they loved our laptop desktop computer backup service and they wanted us to help them with their other storage needs.
B to help thousands today by being the cloud storage, where the network storage and server backups are stored.
We work with partners, such as technology, Q Nap true NAV and net year to back up their network storage devices, we work with partners such as <unk> MSP 360 in retrospect for server backup.
Work with the Commvault and catalogue <unk> and others for virtual machine backups.
These amounts and hundreds of other alliance partners today enable customers to protect their network server and virtual machine data with backwards.
And our object lock functionality enables us to help these customers protect their data from ransomware with a number of these partners as well.
So today already thousands of our customers use computer backup for laptop desktop backup.
And b to cloud storage for their network and server backup needs.
And.
Being able to use this makes it easy and cost efficient storage.
Available for both types of use cases.
Okay, Michigan for Frank.
What growth rate are you targeting for <unk> in the next five years and when do you expect it to overtake the personal backup offering.
While we don't guide growth by product line.
But we did it that day ticket grow faster then consider backup and remember that most of our investments are going to be too. So given that <unk> has a very high revenue per user.
High revenue retention rate and the overall growth rate is very high we do expect these two to eventually overtake backup.
As the largest business in the coming years.
Okay.
Well the products the management of the overhaul of and a way to use for the MSP.
Industry with a better management of a bit of a tenant.
Automation that can be used in commercial spaces that EDF in the us and the residential.
I think that question is getting at whether it will make our product more attractive to managed service providers and to companies a key departments.
So for those not familiar five years ago, we launched groups.
Uses of functionality, which made it easier for MSP managed service product and for companies like key department to manage multiple users companies or departments.
And it allows them to setup nominal users, but to have each person have access to both computer backup and Btu club storage have multiple administrators get notifications and reports and view all of this to our central dashboard with central ability.
Over the last few years, we have also added single sign on functionality to integrate with Google and Microsoft authentication services.
Support for a mass deployment of our computer backup service across any number of laptops and desktops.
And support for endpoint device management tools, such as Jim and others.
We continue to innovate to make it even easier for managed service providers and mid market organizations to handle their storage needs.
Moving to <unk>.
Is the goal of the <unk> team focused on home residential user groups with continued development storage back enviable available through it three will become an annuity assured marketplace, both residential and commercial.
So I think the best asking if we're focusing more on consumers or businesses.
Our computer backup services serve both businesses and individuals.
B to craft storage is primarily focused on supporting businesses and developers.
Both our computer backup in the two businesses are growing rapidly and we're putting significant resources behind each.
With the broad range of use cases, and the large market opportunity and as Frank said, the higher revenue per user or <unk>, we are putting increased energy behind our BT cloud storage offering.
Okay.
Nevertheless, the glib here.
How do you plan to bring more value to the company and products.
Fundamentally we believe there's tremendous value in data and so as much as we continue to make it easy to store use and protect that data. We continue to innovate and offer new features and benefits just as we showed this quarter with the announcements today.
To serve that mission and to and by investing in sales and marketing to bring those features and benefits.
More customers.
As we add value to our products, which adds value to our customers that results in value for backwards.
Yes.
In fact based currently compete for any large government contracts.
<unk> can support any size company or organization and we have both governments and portion sizes of companies as customers, but large government contracts and not a focus for us we focus primarily on serving the 60% of the market. That's represented by the underserved mid market.
Nothing against the Globe is actually expanding any major acquisitions or partnerships with you next quarter.
So we don't pre announce acquisitions for a number of reasons generally we're focused on are significant organic opportunities, but we keep an open mind to anything that can accelerate our strategy.
And just as with the soda catalog <unk> and secure announcements.
We just made we continue to look for new partnership opportunities that benefit our customers.
Thank you, Kevin and thanks for those answers before handing back to Glenn.
<unk> mentioned that we will be attending investor meetings hosted by Oppenheimer in Boston in New York on May eight 2019.
We're also hearing a day revenue <unk> Electric company on May 25, 2006 in Los Angeles. Additionally, we are hitting the William Blair growth conference.
Chicago and G&A are existing investors in Minneapolis, and meetings hosted by mixture of MGM.
Now I'll turn the call back to Greg for closing comments.
Thanks, Dave.
And thanks again to all of you for your interest and participation and we look forward to updating you again on our progress in just a few short months.
Operator, you may now end the call.
Ladies and gentlemen, this does conclude our conference for today. Thank you for your participation you may now disconnect.
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