Q1 2023 Absolute Software Corp Earnings Call
[music].
Good afternoon, everyone and thank you Christine and welcome to absolute Software's fiscal 2023 first quarter results conference call.
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I would also like to remind everyone that this conference call is being recorded today November eight 2022.
I would now like to turn the floor over to your host Zhu Han Kim Vice President of Investor Relations. Please go ahead.
Good afternoon, and thank you for joining us today with me on today's call are Kristie, Wyatt, President and Chief Executive Officer of absolute software and raunchy, our interim Chief Financial Officer.
Before beginning our formal remarks absolute software would like to remind listeners that certain portions of todays call may contain forward looking statements.
That reflect current views with respect to future events and conditions and any such statements.
Are subject to assumptions risks and uncertainties that could cause actual results to differ materially from those projected in these forward looking statements.
Any forward looking statement contained in today's conference call are made as of today's date Tuesday November eight 2022, and absolute software undertakes no obligation to update or revise publicly any of the included forward looking statements, whether as a result of new information future events or otherwise, except as may be required.
Feared by applicable Securities law.
For more information on the assumptions risks and uncertainties relating to these forward looking statements.
Please refer to the appropriate section of the company's most recent MD&A, which is now available on absolute softwares website and will also be available on SEDAR and Edgar I would now like to turn the call over to Kristy White. Please go ahead.
Thank you to everyone joining us today for absolute trough versus Q1 fiscal 2023 earnings call.
As a part of today's call we will cover the results for the first three important themes the diversity of our customer base investments, we have made in the business and how we're faring amidst macroeconomic concerns.
First our results.
In Q1, we delivered consistent and steady year on year growth of 15% and adjusted EBITDA margin of 21%.
Third in our last call. This quarter, we made a one time investment in our company kick off as well as sales head count investments to support growth later in the year, which was partly responsible for the downtick in EBITDA margin, we fully expect to maintain our rule of 40 operating model for the full fiscal year as we have previously discussed.
Enterprise and government sector AOR growth continued to be strong and expanded as a percentage of our total revenue increased.
Increased 18% year on year, despite being a seasonally slow quarter for the enterprise.
Demand was particularly healthy for secure endpoint solutions for both security and use cases as we continue to improve our customer focused go to market motion.
Our solid execution was also reflected in our customer satisfaction results.
We continue to see our NPS score strengthen setting another record. This quarter. We were also recognized as a leader for the 11th consecutive quarter by <unk> Dot Com in the fall 2022 endpoint management report for the second consecutive quarter as a leader in the zero Trust networking grid report.
We also saw some nice mentions from industry analysts, including a feature enforced or is the future of endpoint management report and companies your Kool who named absolute and overall leader in their 2022 leadership Compass Zero Trust network access report.
Finally, our after the endpoint growth increased by 13% year on year and is now more than 14 million devices actively connecting to our cloud services.
At our recent financial Analyst day in New York, We showed both the vertical market diversity in our business as well as the diversity of our go to market channels with just over 50% of our sales going through our OEM partners.
One of the verticals that continues to grow nicely as health care. As an example, this quarter, we helped a large medical device company to improve the visibility reporting and compliance capabilities across more than 40000 devices in a highly regulated environment there.
Our focus was ensuring their critical tools for endpoint and Crimson and device management remain healthy and operational as well as the.
Alrighty to remediate in the event that they need to protect intellectual property and other sensitive data on the endpoint.
Another strong vertical for us in the quarter with professional services, where we saw yet another large global professional services organization with an extremely large hybrid workforce leverage absolute resilience for critical applications to improve productivity and decrease the risk profile and will not work.
Very much like Genpact, the customer who spoke at our Investor day. This customers taking advantage of the full suite of our secure endpoint capabilities.
Turning to education, consistent with our view that education will remain at a high single digit low double digit market for us we saw 7% year on year growth as the segment continues to decrease as an overall percentage of our total total revenue.
We did see some effect of ongoing supply chain initiatives with our OEM partners, resulting in some deals being pushed out or in some cases.
The mix from Pcs to chromebooks as they were more readily available.
Like many of our education customers, one large U S School district, this quarter machine missing device rates in the teens.
They turned to our resilience for chromebooks offering across the 75000, new student chromebooks to help them identify lost or stolen devices.
And they are leveraging our professional services team to manage their growing device fleet and assist with recovering those devices at the end of the school year.
Yeah.
Well secure access experience some summer seasonality, especially in Europe , we are happy with the growing set of opportunities, especially in transportation and logistics, where we saw several key design wins with major airlines as well as continued strength in the state and local government segment.
One of the key wins this quarter in our secure access portfolio included a large multi county police force in the U K, where we replaced our underperforming legacy VPN product with our persistent self healing secure access solution and shrink first responders are able to access and mission critical applications in rural and remote areas known for having poor cellular.
Coverage and assuring officers can securely communicate with one another in pursuit of their safety and <unk>.
They are serving in the community.
Staying on secure access for a moment, we are seeing accelerated demand for our cloud hosted secure access offering with its near instant time to deployment ability to scale with business demand and lower cost of ownership versus an on premise solution or cloud SA offering gives enterprises, the ability to scale remote and hybrid work initiatives as well as.
Quickly implement <unk> solution across the company with our best in class user experience.
Well it was a small part of the overall, let's say business. When we acquired Netmotion cloud deployments are growing quickly and we expect cloud to be a material driver of new secure access to ore this fiscal year as well as an efficient delivery vehicle as our OEM partners are bringing USA online. In addition to growing OEM support for Esa portfolio, we own.
So added British telecom and Ingram micro U S to the growing carrier in reseller partner community.
Yeah.
The second theme I want to discuss today is around the investments we continue to make in our team and our last call. We discussed investing early in the new fiscal year to set us up for growth in the second half, we accomplish that by filling quota carrying and she R&D positions at the end of Q4 and early in Q1, ensuring that teams were staffed and ready to execute against our.
First half plan.
We also wanted to ensure that most of our employees could be onboard in time to attend our company kickoff.
Our company kick off with a powerful start to our year, enabling the entire absolute team to train and time on the agile absolute story and with one another.
These costs are all now fully baked into Q1 results and will produce continued revenue impact in the remainder of the fiscal year.
As we continue to focus on driving awareness and demand for absolute we welcomed Alison Hansen in her new Chief marketing officer this quarter.
The final pieces for executive team. This year, we also announced the industry veterans for nurseries to Chief Information Security Officer, and we promoted Mark Grace to Chief revenue Officer, as Matthew Schoenfeld exited the business to pursue a new opportunity.
Mark has unparalleled knowledge and Bruce can add slips business and is known for his outstanding leadership for building high performance go to market teams.
And finally last week, we announced that Jim <unk> will be joining us as our new CFO .
Jim is a southern time CFO with a proven track record in financial leadership, SaaS companies and a passion for helping software businesses scale and look forward to you meeting Jim after he started with US on December 5th.
While we are seeing steady demand for our solutions, we continue to monitor external market conditions closely and we remain confident in the financial outlook, we provided last quarter based on our growing enterprise business and the diversity within that business.
In New York, we talked about our customers and prospects need to adopt resilient for strategies given.
Given the growing threat landscape and sophistication of cyber attacks.
With the investments we've made we're seeing the strategic impact that absolute self healing intelligent security solutions are contributing to our 18000 customers around the world and the massive opportunity in front of us with our unbreakable connection embedded in more than 600 million devices.
Our focus continues to be consistent steady execution balancing profitability cash generation and growth to deliver value for our shareholders.
Before I hand, it over to Ron I want to express my gratitude and sincere thanks to him as he.
He won't know Ron stepped in as interim CFO earlier this year and has played a critical role in helping to drive our business. He's had a tremendous impact and we have appreciated his support as we've conducted our CFO search.
That I would like to hand, it over to Ron for more details on the financials.
Thanks, Christy good afternoon, everyone and thank you for joining us.
On the call today I will first go over our Q1 fiscal 2023 financial results.
Time, reviewing the impact of the net motion secure access product currently has on our business model.
And then discuss our outlook.
Now onto the Q1 results.
As a reminder, we are reporting revenue and year over year comparisons on an adjusted basis that excludes.
Any ifr rais purchase accounting impact on deferred revenue.
We believe this adjusted revenue metric provides a more meaningful and transparent view of the combined business.
Adjusted revenue was $54 2 million for Q1 fiscal 2023 up 10, 6% from the prior year and relatively flat sequentially over Q4 fiscal 2022.
The increase from the prior year as a result of the continued growth in our base, we faced a tough comp as compared to the previous year's Q1, where we had a large multiyear international secure access deal.
A slowing in the conversion of perpetual licenses to term.
Seasonal mix of secure endpoint versus.
Yes, we.
We did see some macro pressures on contract length, which had a small negative impact on revenue, but it didnt impact a R. R.
At the end of Q1, approximately 77% fewer accidents. They are our portfolio, we launched subscription arrangements up slightly from the 73% in the prior quarter and 59% at the end of Q1 fiscal 2022.
In contrast, with the route ability of our secure endpoint sales.
15, accounting treatment requires absolute to recognize 50% of the value of secure access on premise term contracts in the quarter signed with a balance of amortized over the term of the agreement.
As we have seen over the past year. This has resulted in some significant variability in the timing of revenue recognition.
For example, if all of our absolute contracts had been amortized as a traditional SaaS product the growth rate in Q1 would have been 15% versus the 11% that we experience.
Overtime, we expect secure access cloud to grow faster than the on premises term version of secure access and help us return to the same smoothness and predictability of the secure endpoints SaaS model, we had before the acquisition.
Total <unk> was $215 7 million as of September 32020% to 15% growth versus the prior year and up $6 2 million from the prior quarter.
<unk> revenue <unk>.
Not impacted by revenue accounting complexities related to term licenses and we believe it is the best indicator of absolute progress in growth.
They are our growth was driven primarily by continued strength in enterprise and government, which grew 18% in Q1 versus 17% in the prior year and 17% in the prior quarter.
<unk> grew <unk> by 7% versus 18% in the prior year and 12% in Q4.
The strength in enterprise.
Came from strong new logo acquisition and continued improvements in net dollar retention.
New customer signings were a strong $4 million up from the prior quarter's $2 8 million and down modestly from last year's $4 7 million, which included a very large deal and secure access and a large new education customer.
Secure endpoint in particular saw strong new customer acquisitions as the go to market strategy of a focused use cases continues to mature.
We did well in professional and financial verticals and we are seeing strong activity in other large verticals such as logistics and transportation.
Net dollar retention of 108% was slightly down from last year's Q1 of 109% and was flat sequentially from the prior quarter.
We saw enterprise net dollar retention continued to improve sequentially. Despite the small drag of a legacy customer non renewal of an end of life product.
Education, and they are a $47 million was up 7% year on year, but relatively flat sequentially in what is typically a strong education quarter.
We saw some education deals pushed out due to their inability to receive delivery of laptop purchases.
Due to the supply chain delays.
We do expect to sign some of these deals in Q2. However, we are also seeing school boards adapt to this challenging environment.
Shifting their device mix to include more chromebooks, which have been easier to acquire than laptops.
The number of Chromebooks, where now attached to has increased significantly but are lower a R per endpoint from chromebooks is creating a new near term headwind in education.
That said, we continue to believe our growing education endpoint population means it can still be a meaningful but slower contributor to our growth going forward.
Moving onto cost and profitability for the quarter.
Adjusted EBITDA for Q1 was $11 5 million or a margin of 21%.
The decrease in the adjusted EBITDA margin from prior quarter and prior year as a result of increased head count from hires made throughout Q4 that are now fully loaded into the Q1 numbers along with approximately $1 million in extra costs, approximately 200 basis points of margin associated with the company kickoff, which is in the sales and marketing.
Right.
Looking forward given the number of new people, we have already brought on board over the past few quarters, we expect modest additional hiring.
While we expect operating expenses to be up in Q2, as we fully absorb the new hires over the second half of the year, we expect operating expenses to be relatively flat.
That said the new hires are having the desired effect and we're excited about the increasing coverage in our pipelines and the number of more strategic conversations we're having with large fortune 500 customers.
And we believe we can continue to fund this growth by more fully utilizing and reallocating resources internally where necessary.
Adjusted gross margin of 88% remains at historical levels in Q1, we have begun moving our service to the public cloud and are now incurring higher costs. As previously mentioned over time, we may see a gross margin contraction of 100 to 200 basis points.
Operating cash flow from operations was $15 2 million and our cash and short term investment balance grew from grew to $67 6 million from $64 million last quarter after servicing that debt and paying our dividend.
Concerning our debt our coupon increased by 125 basis points since the last call, resulting in approximately $900000 in additional interest expense for Q1 versus Q4 <unk>.
Given our strong cash flow from operations and our expectation of continued profitable growth. We are confident in our ability to service the debt, while continuing to pay the dividend and organically delever the balance sheet as we continue to build our cash balance.
To that end on Friday, we made a $5 million payment against the debt and we will continue to opportunistically pay down the debt as cash balances permit.
Turning to guidance.
The macro environment of inflation P. C shortages layoffs et cetera are impacting many businesses and we are not immune as noted in our discussion about the education market and chromebooks. However, given our recent growth in the enterprise space and the increasing activity in the secure access product line with a higher mix of secure access in there.
Coming quarters, we are leaving both of our adjusted revenue and adjusted EBITDA outlook for the full fiscal year, ending June 32023, unchanged and we will be keeping a tight hand in the hiring and other operating expenses.
The growth in our <unk> base continues to drive sequential growth in our total revenue. However, as we saw in Q1 this fiscal quarter, we expect intra quarter fluctuations to be greater this fiscal year than last year, driven by seasonality and the impact of multiyear term licenses and secure access.
Looking at linearity, we are seeing in the back half of the year will be a slightly higher percentage of the year than 2022.
As of September 2022, the remaining value of the deferred revenue write down we will take going forward over future periods as approximately $2 $5 million. The deferred revenue accounting write down was <unk> 6 million in Q1 down from $5 3 million in Q1 of fiscal 2022, and $1 5 million in Q4.
Fiscal 2022.
We anticipate the quarterly difference between our Ifr S reported an adjusted revenue numbers will continue to decline as we move forward and be immaterial by the end of the fiscal year.
Before I turn back over turn it back over to the operator I wanted to say congratulations to Jim Mcniel, who will be joining who'll be taking over as the full time Chief Financial Officer on December 5th. This was my second tour of duty with absolute and I have been impressed by the remarkable progress. The company has made in all facets of the business.
And especially in its people and products.
I have no doubt that the company is on the right track to find even greater success in the coming years.
With that we appreciate your time and support and we're glad to open the call for any questions operator.
Thank you we will now begin the question and answer session to ask a question you May Press Star then one on your telephone keypad, if youre using a speakerphone. Please pick up your handset before pressing the keys to.
To withdraw your question. Please press Star then two.
At this time, we will pause momentarily to assemble our roster.
And the first question will be from Doug Taylor with Canaccord Genuity. Please go ahead.
Yes, Thank you and good evening.
Last call and during your Investor Day in New York, you spoke about the expectation that you'd.
Exit the year closer to 20% revenue growth in Q1 as you noted started a little below the guidance pace of 15% to 17%. So my question is whether that 20% exit run rate is still a relevant.
Target in this market and what gives you.
Specifically gives you confidence in that acceleration from these Q1 levels over the course of the year.
Yeah, Okay. So I think theres, a number of things that we think about.
Number one is that we've been having very strong growth in the enterprise side and you saw that with 18% year on year growth and that was up from last quarter's 17%.
We also are actually looking at it and are.
Growing secure access pipeline that we're seeing right now and I would also remind you of the the area that I talked about the Ifr S impact on.
And Q3, and Q4 are actually very large renewal quarter, so theres big linearity towards that back end of the year.
And that makes a big difference the other thing that's happening as you are aware, we've hired a lot of new people in the sales group in Q4 and into Q1 and those people are coming on board and there are scaling up very quickly and we expect improving productivity with those so yes at this stage, we still see it as a.
A meaningful answer to get to the 20%.
Okay. Thanks.
Thanks for that.
I mean, you talked about the hiring for the company overall, but on the management level you've expanded your executive team.
Very much on display at that Investor day.
Are there any other you know our roles.
Rolls that youre looking to fill at the C suite or at the executive management level following.
Following the recent hires.
Hi, Doug.
I would say none none immediately.
Thanks.
The addition of Samir I think we spoke a little bit last year about some transitions between 19 security and so I think there's definitely a welcome addition to the team we have talked about kind of our new CMO and then of course, Jim will be joining us in December so.
I've said before I never say never if he was always sort of a work in progress, but I think we feel great about the team we've put together and how they've really come together coming into this year.
Okay, well on that note I'll, thank Ron for stewardship over the financials and look forward to meeting Jim. Thank you.
Thank you.
And the next question will come from Adam Tindle with Raymond James. Please go ahead.
Okay. Thanks, Good afternoon I just wanted to continue the conversation on guidance I think Ron you said, you're maintaining guidance, you're acknowledging that there's macro impacts that you're seeing but you're expecting a higher mix of secure access which underpins this and I imagine Christy could probably add to this as well, but the question would be yes.
Yeah, that's a newer business for you guys, obviously, you've had it for a little while now, but you know certainly not as much visibility and modeling as you have in your core.
Maybe just help us with the visibility that you have in making that assumption that secure access is going to accelerate I'm wondering if there's anything contractual with new channel partners or something that you can give us to help our level of confidence that get as high as yours.
Sure.
I can start and then Ron can can certainly jump in I think Ron already touched on a couple of the big ones, which is first and probably most importantly is the visibility we have on that business.
Given that it is recurring and and we have talked about the <unk> 15 impact.
And how we see that sort of trending through the year and so given that these are seasonally large renewal quarter. Then we start to see some of the impact of that <unk> 15 sort of lightning and the in the second half of the year. So that's the first piece. The second piece is we've talked about pipeline coverage coming into the quarter.
And we've talked about kind of the number of large deals we see moving through and the kinds of design wins, we're seeing in the pipeline.
That continues to look really strong and we've made some.
Changes over the past couple of weeks as a result of the transition in the selling organization.
Two to really drive the focus behind the SA business across both North America and international and so so I think we feel very good about not just the new capacity that we brought on onboard over the past two quarters, but also the pipeline that's kind of building behind it.
Got it Okay, and then I guess, maybe as a follow up to that can you.
Maybe just talk about plan B, if you know like enterprise spending you're seeing push outs at end of quarters for Big Enterprise Ah <unk>.
And all of the companies, whether it's a service now or sales force et cetera.
So if that were to ultimately havent forbid impact this business, maybe I'm sorry, it's kind of thought through a plant be wondering if you could talk to.
What you would do if you did see some growth deceleration. Thank you sure and I think we talked a little bit about this in New York, We keep a very close eye on the pipeline the coverage, what's going on sort of in the in the market around US I think one thing that's quite unique about us because.
Because we've been operating under this sort of balanced profitability model for sure.
For quite a while now is that if we start to see things shift on the topline we certainly make the right set of decisions kind of on the hiring front, we did make some investments coming into Q1 to set us up for growth in the second half that said, we haven't really well it really has.
Load hiring as we came through Q1 and coming into Q2, as we kind of keep an eye on the market around us and so I think operationally.
As you would expect us to where we're sort of tracking both of those very very closely we're very committed to hitting that rule of 40 target on the fiscal year.
And.
Sort of know what we need to do to get there.
Got it yes, it makes sense to me and he got plenty of margin to us.
Work with the inverse so look forward to following I. Thank you for the question.
Thank you.
And the next question is from Pannose Michel Bolus from BMO capital markets. Please go ahead.
Hi, good afternoon.
Chris maybe just to close it up on the macro I mean, so you called out the.
Chromebook mix shifts do you called out maybe.
It may be a bit of shortening in the.
The contract length.
Anything else you are seeing or not at this stage I mean as far as sales cycles level.
The level of sign up required for deals any change in that regard.
Not yet and as I said before I think we feel very comfortable with the coverage we came into this quarter and kind of what's building for the second half. So I don't think we've seen the effect of that I think on the on the education side. It really has been driven by availability.
I think that there were.
Where they have the opportunity to take a certain number of devices, what they can get their hands on as chromebooks, we see them take more chromebooks, then N. P. CS if those are not available, but that sort of the the number of seat growth and the amount of seat growth. We see happening within these accounts continues to maintain an and sort of stay steady so.
So nothing that we've seen yet, but as I said before we're keeping a close eye on it as we go into the end of the year.
Okay and then.
Obviously, there's been some currency moves so how do we think about it in terms of the recent decline of the Canadian dollar just how much of a tailwind is that as.
As we think about.
Opex and margins.
So.
So our.
Closures are the are obviously, Canada and then in the U K.
We did in fact hedge.
Some of that earlier in the year, and which is actually very favorable compared to our plan, but not nearly as favorable as it could have been now right and unfortunately.
But you know our goal is not to speculate on those things.
Right now we're in pretty good shape, obviously has a positive impact we sell our product primarily in U S dollars.
But it could have a negative impact at some point in time.
The currency becomes a U S dollar becomes too strong against everybody else. So.
But otherwise we're in pretty good shape.
Yeah. The other thing I would remind folks I guess just on top of that is that we've talked a lot about our growth strategy and one of the key parts of our growth strategy being international growth.
One of the reasons why that's such an interesting area for us is because so much of our market and our sales are still actually happening within North America and so.
I think that that balances out a little bit I think some of the currency swing, we see across customer accounts.
Okay great.
And then last one for me is.
Just remind us in terms of the fed ramp certification any update there or the timing is on that.
We're still waiting on some more details to come back from the fed ramp office. So I don't have anything new to announce on that yet today.
Okay, Great I'll pass the line thanks.
Thank you and the next question is from Scott Berg from Needham. Please go ahead.
Hi, everyone. Congrats on the good.
And thank you for taking my questions.
I have two first as a follow up to comment Ron made you having more conversations with fortune 500 companies today.
And that's partially driven by the larger sales force, but as you look at those kind of conversations.
Which side of the business are they really more focused on is it more on the resilient side or the sphere.
Access functionality or potentially both.
Hi, Scott that's a great. It's a great question and I.
So just trying to think it through I guess on the secure access side I think we see organizations continue to manage the risk of remote workforce. So we talked on the call about some of the interesting design wins, we've had in there. They typically tend to be large multinational organizations who are.
Derisking their hybrid and remote workforce strategy and so that remains a really important part of the conversation I think on the <unk> side with secure endpoint.
That really is kind of I kind of I think hooking into connect.
Connected to where the work from anywhere conversation, but even more broadly as all of their budgets are coming under pressure, they're wanting to make sure that they get the most amount of coverage and protection that they already have and in many cases. It is it is about sort of shoring up the protection that they have because many of them are not in a position to sort of spend up and ramp up.
New security projects going on across the organization and so if you look at some of the quotes that we've given in the past where they say, it's like having another REIT team manager it helps them sort of offset additional head count costs on the IP side, because we can automate some of the self healing and the resiliency of those products.
And so I think it sort of fits within their do more with less.
Strategy as a result of kind of the pressure that they are underneath within their own organization.
Got it helpful and then from a follow up.
Thank you Christie.
You talked about the new CF <unk> excuse me of that.
Starting with Matthew's departure.
<unk> had some change in your sales leadership over the last couple of years I'd call. It more evolution than revolution, but how should we look at this change has any of the playbook does it change differently with the with the internal promotion or is this.
Opportunity, maybe inject even more change your sales organization.
Wouldn't say there was any sort of macro changes into or large changes into how we're thinking about go to market and what most broadly clearly we were disappointed around the timing of Matthews departure, but these things happen I think mark is a well established leader within the organization. He has been with the company for a long time.
There's the truly nobody within the building who understands the business as well as he does or has fostered the close relationships with our OEM partners, but he has also held incredibly large roles in his past within Dell in other companies with them with our direct to customer roles as well so.
So I don't think you'll see any massive shifts from us and we were able to do the transition relatively quickly I think within the week of announcing we had already installed mark in the position. He had already announced his next level down we had done some consolidation of roles to kind of.
As we brought people up within the organization until all roles are filled everybody's locked in their teams that happened within seven to 10 days and now folks are focused on executing against the quarter.
Great Congrats again and thanks for taking my questions.
Thanks Scott.
And the next question is from David Kwon from TD Securities. Please go ahead.
Good afternoon.
Wanted to talk a bit more about FX.
Particularly I guess as it relates to the top line I was curious to what extent the.
The revenues were negatively impacted by the stronger U S dollar.
Well, they're actually they're not actually impacted because we sell in U S dollars.
Okay.
The biggest thing that we have the expense we have we have.
The exposure is actually on the expense side primarily.
With our employees that we have in Canada and in the U K.
Some other countries too, but those two in particular are the largest pieces.
But how about when you are selling like into Europe or are you selling in U S dollars.
Yes.
Okay. So the vast majority of your revenue is.
<unk> charged in U S dollars.
Correct correct.
Okay.
And then just one.
On a related note the international AOR, that's been pretty strong kind of 45%, 50% growth over the last year, but this quarter it dropped into the low thirties any particular reason for that.
Oh I don't think there was anything other than just timing of deals.
Yeah, I would say Europe , especially is typically a softer quarter in the summer quarter, and I think we talked a little bit about that with with secure access.
And that has been historically, a more direct sales for us and so those projects do have a tendency to slow down a little bit when you hit the summer months and.
Folks aren't Super excited about the boat running plc and in the month of August .
But I don't think we're seeing anything more broadly sort of internationally, we continue to get great traction with our OEM partners on ramping up and investing more in international reach.
Because were coming for me.
We've done quite well with international over the past couple of years, but we are still coming off of a relatively small base.
So I think youll continue to see us do more there.
Thanks, and just my last question.
As it relates to the macro.
How are you finding the north American environment versus Europe , and other international.
International areas and regions are you finding it more difficult in Europe in particular versus what Youre seeing in North America.
I think well.
Well I think Ron touched on some of the sort of what I'd call things around the edges that we've been watching them contract term is one that we said earlier and I think we said.
Even on the analyst day that that's one of the things, we'll watch closely but not a huge impact on air are but that can have an impact on some of the other metrics as well I don't know that outside of kind of the direct selling piece that I touched on for the summer months I don't know that I've seen a big difference between Europe , and North America for Matt.
From a demand perspective, but they're very different markets for us right, we're much more entrenched and with our partners and direct within our North American space in education is a bigger impact on.
Sort of quarter over quarter on our on our North American business. So.
Outside of that I don't know that I have any any sort of the headlines are big conclusions to pull out of that.
Alright. Thanks.
Thanks, David.
Ladies and gentlemen, this concludes our question and answer session I would like to turn the conference back over to Kristy White for any closing remarks.
Thank you and I want to thank you all again for joining US today. This month marks the start of my 50 year, leading absolutely in that time, we've grown into a security software company with more than $200 million in recurring revenue 18000 customers and more than $14 million in user devices that depend on us to keep delivering for them our path to success continues to be <unk>.
<unk> steady execution balancing profitability cash generation and growth to deliver value for our shareholders.
Unique resilient self healing intelligent security solutions, we are positioned well in a large and growing market and focused on serving our customers at this critical time in our industry. Thank you all again for joining us.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.
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