Q2 2025 SecureWorks Corp Earnings Call

Good morning, my name is Carlion, I'll be the Conference of Braces of Today.

Operator: At this time, I'd like to welcome everyone to the SecureWorks 2nd quarter fiscal 2025 financial results conference call. All lines have been placed on mute to prevent any background noise.

Speaker Change: At this time I'd like to welcome everyone to the secure work second quarter.

Speaker Change: This school 2025 financial results conference call.

Operator: A supplemental slow presentation to the company's paper marks can be found on the company's website.

Speaker Change: All lines have been placed on mute to prevent any background noise, a supplemental slide presentation to a complete map of maps can be found on the company's website.

Operator: After the speaker's remark, there'll be a question after the session. If you'd like to ask a question at this time, simply press star followed by one on your telephone keypad, and if you'd like to withdraw that question, it's star followed by two.

Speaker Change: After the speaker's remarks there will be a question not for session. If you'd like to ask a question at this time, simply press star full up by one on your telephone keypad and if you'd like to withdraw that question, it is star full up by two.

Kevin Toomey: At this time, I would like to turn the quiver to Kevin Toomey, SecureWorks Vice-President of Investigations. Mr. Toomey, please begin.

Speaker Change: At this time, I would like to turn the quiver to Kevin Toomey to secure work's vice president and best abrelations. Mr Toomey, please begin.

Kevin Toomey: Thank you, operator.

Kevin Toomey: Good morning and welcome to SecureWorks 2nd quarter fiscal 2025 earnings call. Joining me today are Wendy Thomas, Chief Executive Officer, and Alpana Wegner, Chief Financial Officer. During this call, unless otherwise indicated, we will reference non-GAAP financial measures. You will find the reconciliation between these GAAP and non-GAAP measures in the press release and presentation posted on our website earlier today.

Kevin Toomey: Thank you, operator. Good morning and welcome to secure work second quarter fiscal 2025 earnings call. Joining me today are Wendy Thomas, our Chief Executive Officer and Alpana Wegner, our Chief Financial Officer.

Speaker Change: During this call, unless otherwise indicated, we will reference non-gap financial measures. You will find the reconciliation between these gap and non-gap measures in the press release and presentation posted on our website earlier today.

Kevin Toomey: Finally, I'd like to remind you that all statements made during this call that relate to future results and events are forward-looking statements based on current expectations. Actual results and events could differ materially from those projected due to a number of risks and uncertainties, which are discussed in our press release, web deck, and SEC filings, which you can also find on the investor relations website at investors.secureworks.com. We assume no obligation to update our forward-looking statements.

Speaker Change: Finally, I'd like to remind you that all statements may during this call that relate to future results in events or forward-looking statements based on current expectations.

Speaker Change: Actual results and events could differ material from those projected due to a number of risks and uncertainties, which are discussed in our press release, web deck and SEC plans, which you can also find on the Investor Relations website at investors.securework.com

Wendy Thomas: With that, I'll turn the call over to SecureWorks CEO, Wendy Thomas. Thank you, Kevin, and welcome everyone. Our business continued its strong momentum in the 2nd quarter. Cages revenue grew 7% year-over-year to 71 million, and we delivered on our Q2 total revenue commitment. Annual recurring revenue, or ARR, now stands at 290 million, driven by the strength in new customer acquisition and expansion. And our Cages average revenue per customer, or ARPC, expanded to $150,000 per customer. Our non-gath cages growth margin of 74% remains strong, growing 360 basis points year-over-year. And we delivered positive adjusted EBITDA once again this quarter.

Speaker Change: We assume no obligation to update our forward-looking statements with that, I'll turn the call over to SecureWork CEO, Wendy Thomas.

Wendy Thomas: Thank you, Kevin, and welcome everyone.

Wendy Thomas: Our business continued its strong momentum in the second quarter.

Wendy Thomas: Cages revenue grew 7% year over year to 71 million and we delivered on our Q2 total revenue commitment.

Speaker Change: Annual recurring revenue for ARR now stands at $290 million driven by the strength and new customer acquisition and expansion.

Speaker Change: and our cages average revenue per customer or ARPC expanded to $150,000 per customer.

Speaker Change: Our non-gap cages grows margin of 74% remains strong, growing 360 basis points year over year.

Wendy Thomas: We are demonstrating that the security outcomes delivered by our Cages platform, the success of our partner ecosystem, and our advanced automation and AI capabilities are propelling the growth of our business profitably. And they give us ample runway to further benefit from the scale that our business model offers. And Cages is increasingly receiving accolades from industry experts. Secureworks was recently recognized as the gold winner in the Golden Bridge Awards, in the category of AI and cybersecurity innovation, the only company out of more than 1,000 nominated to win this award. A testament to our commitment to excellence and innovation, helping organizations reduce cyber risk and prevent cyber attacks by harnessing the power of AI in managed detection and response.

Speaker Change: and we delivered positive adjusted EBITDA once again this quarter.

Speaker Change: We are demonstrating that the security outcomes delivered by our Tages platform, the success of our partner ecosystem, and our advanced automation and AI capabilities are propelling the growth of our business profitably.

Speaker Change: and they give us ample runway to further benefit from the scale that our business model offers.

Speaker Change: and Tages is increasingly receiving accolades from industry experts.

Speaker Change: Secure works with recently recognized as the Gold Winner in the Golden Bridge Awards, in the category of AI and cybersecurity innovation.

Operator: At this time, I'd like to welcome everyone to the SecureWorks 2nd quarter fiscal 2025 financial results conference call. All lines have been placed on mute to prevent any background noise. A supplemental slow presentation to the company's paper marks can be found on the company's website.

Speaker Change: The only company out of more than 1,000 nominated to win this award.

Speaker Change: A testament to our commitment to excellence and innovation.

Speaker Change: Helping organizations reduce cyber risk and prevent cyber attacks by harnessing the power of AI in managed detection and response.

Operator: After the speakers remark, there'll be a question after session. If you'd like to ask a question at this time, simply press star followed by one on your telephone keypad, and if you'd like to withdraw that question, it's star followed by two.

Wendy Thomas: In the second quarter, we progressed our growth strategy in several key areas. Specifically, we launched Cages IDR, our new identity threat detection and response solution, solving a threat vector that has plagued companies for years and furthering the protection of our customers. We gained traction across our global partner ecosystem, adding new key partners, increasing momentum and sales productivity, and partner win rates. And, we continue to increase the extensibility of our platform to enable customization of playbooks, integrations, and advanced detectors to drive scale in the platform and increasing margins for partners and for us.

Speaker Change: In the second quarter, we progress our growth strategy in several key areas.

Kevin Toomey: At this time, I would like to turn the quiver to Kevin Toomey, SecureWorks Vice-President of Investipulations. Mr. Toomey, please begin. Thank you, operator. Good morning and welcome to SecureWorks 2nd quarter fiscal 2025 earnings call.

Speaker Change: Specifically, we launched Tages IDR, our new Identity Threat Detection and Response Solution, solving a threat vector that is playing to companies for years and furthering a protection of our customers.

Speaker Change: We gain traction across our global partner ecosystem.

Kevin Toomey: Joining me today are Wendy Thomas, Archief Executive Officer, and Alpana Wegner, Archief Financial Officer. During this call, unless otherwise indicated, we will reference non-gap financial measures. You will find the reconciliation between these gap and non-gap measures in the press release and presentation posted on our website earlier today.

Speaker Change: Adding new key partners, increasing momentum and sales for activity and partner win rate.

Speaker Change: and we continue to increase the extensibility of our platform to enable customization of playbooks, integrations, and advanced detectors to drive scale in the platform and increasing margins for partners and for us.

Wendy Thomas: I'll turn to product innovation in the second quarter, starting with a significant product advancement in identity security. First, for background, as traditional cyber defenses have hardened, attackers are taking advantage of vulnerable user identity, with nearly 80% of breaches involving some form of identity compromised in the mix. And given that identity misconfigurations impact 95% of organizations, the risk here remains high. To put that risk into context, the average cost of a data breach reported last year was $4.5 million. In speaking with CISOs, this is often the number one fear that keeps them up at night, one that isn't covered by traditional controls such as endpoints.

Kevin Toomey: Finally, I'd like to remind you that all statements made during this call that relate to future results and events are forward-looking statements based on current expectations. Actual results and events could differ materially from those projected due to a number of risks and uncertainties which are discussed in our press release, web deck, and SEC fileings, which you can also find on the investor relations website at investors.secureworks.com. We assume no obligation to update our forward-looking statements.

Speaker Change: I'll turn to product innovation in the second quarter, starting with a significant product advancement in identity security.

Speaker Change: First, for background, as traditional cyber defenses of hardened, attackers are taking advantage of vulnerable user identity, with nearly 80% of breaches involving some form of identity compromise in the mix.

Speaker Change: and given that identity misconfigurations impact 95% of organizations. The risk here remains high.

Wendy Thomas: With that, I'll turn the call over to SecureWorks CEO, Wendy Thomas. Thank you, Kevin, and welcome everyone. Our business continued its strong momentum in the 2nd quarter. Cages revenue grew 7% year-over-year to 71 million, and we delivered on our Q2 total revenue commitment. Annual recurring revenue, or ARR, now stands at 290 million, driven by the strength in new customer acquisition and expansion. And our Cages average revenue per customer, or ARPC, expanded to $150,000 per customer.

Speaker Change: To put that risk into context, the average cost of a day to breach reported last year was four and a half million. In speaking with Cecos, this is often the number one fear that keeps him up at night.

Wendy Thomas: This is why we built and launched Cages IDR, our identity threat detection and response solution, to help security leaders detect, prioritize, and respond to identity-based threats across their organization's environment and on the dark web. Conventional identity and access management controls, like multi-factor authentication, are helpful but insufficient. Cages IDR provides comprehensive attack surface coverage of credential access techniques, providing visibility into identities, monitoring for gaps in the environment, flagging risky user behaviors, alerting when credentials have been exposed on the dark web, and detecting and accelerating response to identity-based threats, in lockstep with Cages XDR. Like all threats, speed is of the essence, and these capabilities and a time to detect that's counted in seconds are superior to what we see in the market today.

Speaker Change: One that isn't covered by traditional control such as endpoint.

Speaker Change: This is why we built and launched KHS IVR, our Identity threat detection and response solution, to help security leaders detect, prioritize, and respond to identity-based threats across their organizations environment and on the dark web.

Speaker Change: Conventional Identity and Access Management Controls, like multi-factor authentication, are helpful but insufficient.

Wendy Thomas: Our non-gath Cages growth margin of 74% remains strong, growing 360 basis points year-over-year. And we delivered positive adjusted EBITDA once again this quarter. We are demonstrating that the security outcomes delivered by our Cages platform, the success of our partner ecosystem, and our advanced automation and AI capabilities are propelling the growth of our business profitably. And they give us ample runway to further benefit from the scale that our business model offers. And Cages is increasingly receiving accolades from industry experts.

Speaker Change: THSIDR provides comprehensive attack surface coverage of credential access techniques.

Speaker Change: Providing visibility into identities, monitoring for gaps in the environment, flagging risky user behaviors, alerting when credentials have been exposed on the dark web, and detecting and accelerating response to identity-based threats, in lockstep with TASXDR.

Speaker Change: Like all threats, speed is of the essence, and these capabilities and a time to detect that's counted in seconds are superior to what we see in the market today.

Wendy Thomas: And these will make a meaningful difference in protecting our customers' environment from one of the most prevalent and lucrative attack vectors deployed by threat actors. I'm pleased with the feedback from our early adopters on Cages IDR and the results they are experiencing. Customers appreciate Cages IDR's ability to rapidly detect gaps in other misconfigurations in their environment, particularly in areas of misconfiguration and vulnerable exposures across the Azure and Microsoft ecosystems. Cages IDR ensures customers can close those gaps while preventing threat actors from accessing and then moving laterally within their network.

Wendy Thomas: Secureworks was recently recognized as the gold winner in the Golden Bridge Awards, in the category of AI and cybersecurity innovation, the only company out of more than 1,000 nominated to win this award. A testament to our commitment to excellence and innovation, helping organizations reduce cyber risk and prevent cyber attacks by harnessing the power of AI in managed detection and response. In the second quarter, we progressed our growth strategy in several key areas, specifically, we launched Cages IDR, our new identity threat detection and response solution, solving a threat vector that has plagued companies for years and furthering the protection of our customers.

Speaker Change: and these will make a meaningful difference in protecting our customers' environments from one of the most prevalent and lucrative attack vectors deployed by threat actors.

Speaker Change: I'm pleased with the feedback from our early adopters on Tages IDR and the results they're experiencing.

Speaker Change: Customers appreciate ages IDR's ability to rapidly detect gaps in other misconfigurations in their environments. Particularly in areas of misconfiguration and vulnerable exposures across the Azure and Microsoft ecosystems.

Speaker Change: Tages IDR ensures customers can close those gaps while preventing predators from accessing and then moving literally within their network.

Wendy Thomas: This quarter, we also launched a more personalized MDR offering, with guidance on proactive security posture management and defense, called Tages Managed XDR Plus. Many organizations struggle to find tailored cybersecurity solutions that fit their unique needs at an affordable price. Police. They often have to settle for one size fits all approaches that don't offer the proactive defenses they need for resilience. The tages plus offering addresses this gap by providing a more targeted threat hunting experience, personalized security health guidance, and customized reporting to support compliance with a growing set of regulatory requirements. With this offering, we are making good on our commitment to help our customers mature their security posture over time.

Speaker Change: This quarter we also launched a more personalized MDR offering, with guidance on proactive security posture management and defense called Tages Managed XCR+.

Wendy Thomas: We gained traction across our global partner ecosystem, adding new key partners, increasing momentum and sales productivity, and partner win rates. And we continued to increase the extensibility of our platform to enable customization of playbooks, integrations, and advanced detectors to drive scale in the platform and increasing margins for partners and for us.

Speaker Change: Many organizations struggle to find tailored cybersecurity solutions that fit their unique needs at an affordable price.

Speaker Change: They often have to settle for one-side spits all approaches that don't offer the proactive defenses they need for resilience.

Speaker Change: The Tages Plus offering addresses this gap by providing a more targeted, threatening experience, personalized security health guidance, and customized reporting to support compliance with a growing set of regulatory requirements.

Wendy Thomas: I'll turn to product innovation in the second quarter, starting with a significant product advancement in identity security. First, for background, as traditional cyber defenses have hardened, attackers are taking advantage of vulnerable user identity, with nearly 80% of breaches involving some form of identity compromise in the mix. And given that identity misconfigurations impact 95% of organizations, the risk here remains high. To put that risk into context, the average cost of a data breach reported last year was $4.5 million.

Speaker Change: With this offering, we are making good at our commitment to help our customers mature their security posture over time with a clear return on their investment.

Wendy Thomas: With a clear return on their investment, this too grows our share of wallet, further propelling our industry-leading ARPC. Shortly after we launched our Plus offering last quarter, we won a multi-year contract with a leading real estate development company in the Middle East. This company had a local MSSP relationship that was not providing the capability that they needed to address. Gaps and threat detection were falling on their lean team, which meant they had little to no time to proactively manage the security posture of their organization in the space of rising cyber attacks on their business. This customer chose Managed XDR Plus for the personalized proactive approach to getting ahead of the risk, improving their security posture, addressing the regulatory compliance requirements, while scaling their security team, all at a meaningful return on investment.

Speaker Change: This too, growd our share of wallet, further propelling our industry-leading ARPC.

Speaker Change: Shortly after we launched our Plus Offering Left Quarter, we want to multi-year contract with a leading real estate development company in the Middle East.

Speaker Change: This company had a local MSSP relationship that was not providing the capabilities that they needed to address.

Wendy Thomas: In speaking with SESO's, this is often the number one fear that keeps them up at night, one that isn't covered by traditional controls such as endpoint. This is why we built and launched Cages IDR, our identity threat detection and response solution, to help security leaders detect, prioritize, and respond to identity based threats across their organization. This is why we built and launched Cages IDR, which is the number one fear that keeps them up at night, one that isn't covered by default.

Speaker Change: Gaps and threat detection were following on their lean team, which meant they had little to no time to proactively manage the security posture of their organization in the face of rising cyber attacks on their business.

Speaker Change: This customer chose Managed XDR Plus for the personalized proactive approach to getting ahead of the risk.

Speaker Change: Improving their security posture, addressing the regulatory compliance requirements, while scaling their security team, all at a meaningful return on investment.

Wendy Thomas: Our tages platform is also supporting our go to market momentum, but the industry is experiencing an inflection point in the approach to security resilience. We see this in the displacement not only of legacy security technologies, but also in the consolidation spend on and the number of technology partners. The AR Tages XDR platform, we are expanding to address a growing set of security use cases, such as identity and exposure management. Our open and integrated approach de-risks the consolidation of technologies with full visibility into the efficacy of cages and point controls, ensuring cages as well positions as organizations reevaluate their security investments and resilience strategies.

Speaker Change: Our case of platform is also supporting our good and market momentum.

Speaker Change: The industry is experiencing an inflection point in the approach to security resilience.

Speaker Change: We see this in the displacement, not only of legacy security technologies, but also in the consolidation spend on and the number of technology partners.

Wendy Thomas: And detecting and accelerating response to identity based threats, in lockstep with Cages XDR. Like all threats, speed is of the essence, and these capabilities and a time to detect that's counted in seconds are superior to what we see in the market today. And these will make a meaningful difference in protecting our customer's environment from one of the most prevalent and lucrative attack vectors deployed by threat actors. I'm pleased with the feedback from our early adopters on Cages IDR and the results they are experiencing.

Speaker Change: They are a TASXDR platform. We are expanding to address a growing set of security use cases, such as identity and exposure management.

Speaker Change: Our Open and Integrated Approach, the risks to consolidation of technologies, with full visibility into the efficacy of cages and point controls, ensuring cages as well-positioned as organizations re-evaluate their security investments and resilience strategies.

Wendy Thomas: Our supportive choice means that customers can work within their own time constraints around their technology evolution, with optionality to evolve their security controls to save vendor spend and management costs at a compelling per end point pricing model that has no surprise variable data charges. Last quarter, we won a consolidation opportunity with the leading multinational electronics company, where the team had invested in multiple security products in recent years, but we're not seeing the results they had hoped for. Their team was even more overwhelmed with alerts from a variety of costly and unconnected security controls, while facing rising cyber risks to their business.

Wendy Thomas: Customers appreciate Cages IDR's ability to rapidly detect gaps in other misconfigurations in their environment, particularly in areas of misconfiguration and vulnerable exposures across the Azure and Microsoft ecosystems. Cages IDR ensures customers can close those gaps while preventing threat actors from accessing and then moving laterally within their network. This quarter, we also launched a more personalized MDR offering with guidance on proactive security posture management and defense called Tages Managed XDR Plus. Many organizations struggle to find tailored cybersecurity solutions that fit their unique needs at an affordable price.

Speaker Change: Our support of choice means that customers can work within their own time constraints, around their technology evolution, with optionality to evolve their security controls to save vendor spend and management costs.

Speaker Change: That a compelling per endpoint pricing model that has no surprise variable data charges.

Speaker Change: Last quarter, we want a consolidation opportunity with a leading multinational electronics company, where the team had invested in multiple security products in recent years, but we're not seeing the results they had hoped for.

Speaker Change: Their team was even more overwhelmed with alerts from a variety of costly and unconnected security controls.

Wendy Thomas: This customer was seeking valid detections and the automation required to scale their existing SecOps team. By consolidating on Tages, they immediately benefited from fewer higher fidelity detections with full threat context and automated response capabilities. The ability to seamlessly manage security operations 24-7 with a predictable and compelling total cost of ownership. Let them to make secure works, their global security partner. We also saw great momentum across our global partner ecosystem this quarter, with the addition of new key partners and acceleration in our deals one together. This quarter, we expanded the number of partners we have with global reach, while offering all of our partners strong operating margins, customized sales and technical enablements, and marketing collaboration.

Speaker Change: while facing rising cyber risks to their business.

Wendy Thomas: Police. They often have to settle for one size fits all approaches that don't offer the proactive defenses they need for resilience. The tages plus offering addresses this gap by providing a more targeted threat hunting experience, personalized security health guidance, and customized reporting to support compliance with a growing set of regulatory requirements. With this offering, we are making good on our commitment to help our customers mature their security posture over time. With a clear return on their investment, this too, grows our share of wallet, further propelling our industry leading ARPC.

Speaker Change: This customer was seeking valid detections and the automation required to scale their existing set out to team.

Speaker Change: By consolidating on pages, they immediately benefited from fewer higher fidelity detections with full threat context and automated response capabilities.

Speaker Change: The ability to seamlessly manage security operations 24-7, with a predictable and compelling total cost of ownership, led them to make secure works their global security partner.

Speaker Change: We also saw great momentum across our global partner ecosystem this quarter, with the addition of new key partners and acceleration in our deals one together.

Wendy Thomas: Shortly after we launched our plus offering last quarter, we won a multi-year contract with a leading real estate development company in the Middle East. This company had a local MSSP relationship that was not providing the capability that they needed to address. Gaps and threat detection were falling on their lean team, which meant they had little to no time to proactively manage the security posture of their organization in the space of rising cyber attacks on their business.

Speaker Change: This quarter, we expanded the number of partners we have with global reach, while offering all of our partners strong operating margins, customized sales and technical enablements, and marketing collaboration.

Wendy Thomas: The broader channel increasingly appreciates the competitive advantages, the stages, and the secure work suite of solutions offer, demonstrably reducing risk and supporting resilience, increasing the market's recognition that XDR represents the next era in security. Supported by the growing success in our partner first go to market, we saw increasing momentum in sales productivity, with our better together go to market motion and to Q, and our partner win rate improved to the highest level since we launched our partner first go to market motion. In Q2, approximately 80% of global Tajus new logo sales closed were partner deals, reflecting the security value Tajus-based solutions bring to their customers.

Speaker Change: The broader channel increasingly appreciates the competitive advantages that cages and the care works suite of solutions offer.

Speaker Change: The Monster Blade Reducing Risk and Supporting Resilience, increasing the market's recognition that XDR represents the next era in security.

Wendy Thomas: This customer chose managed XDR plus for the personalized proactive approach to getting ahead of the risk, improving their security posture, addressing the regulatory compliance requirements, while scaling their security team, all at a meaningful return on investment. Our tages platform is also supporting our go to market momentum, but the industry is experiencing an inflection point in the approach to security resilience. We see this in the displacement not only of legacy security technologies, but also in the consolidation spend on and the number of technology partners.

Speaker Change: supported by the growing success in our partner first go to market, we saw increasing momentum and sales productivity with our better together go to market motion than to queue.

Speaker Change: and our partner Wingnery improved to the highest level since we launched our partner for a skota market notion.

Speaker Change: In Q2, approximately 80% of global cages in the mobile sales close were partner deals, reflecting the security value of cages based solutions for their customers.

Wendy Thomas: In second quarter, we also continue to add to the more than 50 managed security services partners in our program. I'll highlight one MSP partnership sign this quarter, with a premier provider of IT and technology solutions. This partner is delivering managed detection and response services, powered by the Tajus XDR platform, to protect its elite clients across the financial services, life sciences, and professional services sectors. This partner made a seven-figure ARR commitment upfront, beginning with the transition of customers from its legacy SIM technology onto the Tajus platform to drive higher retention and margin expansion for their business.

Wendy Thomas: The AR Tages XDR platform, we are expanding to address a growing set of security use cases, such as identity and exposure management. Our open and integrated approach de risks the consolidation of technologies with full visibility into the efficacy of cages and point controls, ensuring cages as well positions as organizations reevaluate their security investments and resilience strategies. Our supportive choice means that customers can work within their own time constraints around their technology evolution, with optionality to evolve their security controls to save vendor spend and management costs at a compelling per end point pricing model that has no surprise variable data charges.

Speaker Change: In second quarter, we also continue to add to the more than 50 managed security services partners in our program.

Speaker Change: I'll highlight one MSSP partnership sign this quarter with a premier provider of IT and technology solutions.

Speaker Change: This partner is delivering managed detection and response services powered by the TGXDR platform to protect its elite clients across the financial services, life sciences and professional services sectors.

Speaker Change: This partner made a seven-figure AR commitment up front, beginning with the transition of customers from its legacy sim technology onto the Tages platform to drive higher attention and margin expansion for their business.

Wendy Thomas: Partnerships like this provide further validation of Tajus' ability to drive scale for large managed security services providers, empowering them to provide organizations from all sizes with access to enterprise level security within an attractive business model.

Speaker Change: Partnerships like this provide further validation of pages as ability to drive scale for large managed security services providers, empowering them to provide organizations from all sizes with access to enterprise level security within an attractive business model.

Wendy Thomas: Last quarter, we won a consolidation opportunity with the leading multinational electronics company, where the team had invested in multiple security products in recent years, but we're not seeing the results they had hoped for. Their team was even more overwhelmed with alerts from a variety of costly and unconnected security controls, while facing rising cyber risks to their business. This customer was seeking valid detections and the automation required to scale their existing SecOps team.

Wendy Thomas: In conclusion, Tajus is defining the future of threat detection and response, driving superior sustainable growth and value creation. Our agile expansion of features and capabilities to protect against threat actor access vectors, delivering organizations improved security risk costures and the best security outcomes, and are open without compromise approach. These, combined with our growing successful partnership ecosystem, put us in an advantage. In an environment where vendor consolidation and scaling spend on both security technology and talent are top priorities, demand for our Tajus security offerings remain strong. Tajus is the platform of choice for organizations to bolster their security posture at a proven return on investment, driving our growth now and into the future.

Speaker Change: In conclusion, pages is defining the future of threat detection and response.

Speaker Change: Driving Superior, Sustainable Growth and Value Creation.

Speaker Change: are agile expansion of features and capabilities to protect against threat actor access vectors.

Speaker Change: Delivering organizations improved security risk clusters and the best security outcomes.

Wendy Thomas: By consolidating on Tages, they immediately benefited from fewer higher fidelity detections with full threat context and automated response capabilities. The ability to seamlessly manage security operations 24-7 with a predictable and compelling total cost of ownership. Let them to make secure works, their global security partner. We also saw great momentum across our global partner ecosystem this quarter, with the addition of new key partners and acceleration in our deals one together. This quarter, we expanded the number of partners we have with global reach, while offering all of our partners strong operating margins, customized sales and technical enablements, and marketing collaboration.

Speaker Change: and are open without compromise approach.

Speaker Change: These combine with our growing successful partnership ecosystem, put us in an advantage.

Speaker Change: In an environment where vendor consolidation and scaling spend on both security technology and talent are top priorities, demand for our cages security offerings remain strong.

Speaker Change: Tages is the platform of choice for organizations to bolster their security posture at a proven return on investment, driving our growth now and into the future.

Wendy Thomas: I want to thank you for investing in our mission to secure human progress, and thank you to our customers and partners for joining forces with us.

Speaker Change: I want to thank you for investing in our mission to secure human progress.

Alpana Wegner: With that, I'd like to hand the call over to Alpana to cover our financial results and guidance. Thanks, Wendy. Good morning, everyone. I will review our Q2 results before I provide expectations for Q3 and fiscal year 25. We once again hit our financial commitments in Q2. We delivered total revenue exceeding 82 million, which was at the high end of our expectations, primarily on the strength of description deals closing earlier in the quarter. Year over year, total revenue growth was impacted by a 13 million decline in revenue from the wind down of our non-strategic legacy business.

Speaker Change: and thank you to our customers and partners for joining forces with us.

Wendy Thomas: The broader channel increasingly appreciates the competitive advantages, the stages, and the secure work suite of solutions offer, demonstrably reducing risk and supporting resilience, increasing the market's recognition that XDR represents the next era in security. Supported by the growing success in our partner first go to market, we saw increasing momentum in sales productivity, with our better together go to market motion and to Q, and our partner win rate improved to the highest level since we launched our partner first go to market motion.

Speaker Change: With that, I'd like to hand the call over to Alpana to cover our financial results and guidance.

Alpana Wegner: Thanks Wendy, good morning everyone. I will review our QT results before I provide expectations for Q3 in fiscal year 25.

Alpana Wegner: We once again hit our Financial Committments in Q2. We delivered total revenue exceeding 82 million, which was at the high end of our expectations. Primarily on the strength of the description deals closing earlier in the quarter.

Alpana Wegner: You're over year, Total Revenue Growth was impacted by a 13 million decline in revenues from the wind down of our non-strategic legacy business.

Wendy Thomas: In Q2, approximately 80% of global tajus new logo sales closed were partner deals, reflecting the security value tajus based solutions bring to their customers. In second quarter, we also continue to add to the more than 50 managed security services partners in our program. I'll highlight one MSP partnership sign this quarter, with a premier provider of IT and technology solutions. This partner is delivering managed detection and response services, powered by the tajus XDR platform, to protect its elite clients across the financial services, life sciences, and professional services sectors.

Alpana Wegner: Patient subscription revenue was 71 million, up 7% year over year. Total ARR increased 5% year over year to 290 million, in line with our expectations. Our ARPC with 150,000, up 14% year over year, and remains a premium to the industry average, underscoring the value that Tages provides our customers. The growth in our ARPC was driven by strength and new logo and existing customer expansions. We ended the quarter with 1,900 Tages customers. We saw new customers added in the quarter at a higher ARPC than the customers that turned. As our Tages pricing is largely on a per end point basis, growth and end points is another indicator of platform expansion.

Alpana Wegner: Page of subscription revenue was 71 million, up 7% year over year.

Alpana Wegner: Total ARR increased 5% year over year to 290 million in line with our expectation.

Alpana Wegner: Our ARPC with 150,000 up 14% year over year, and remains a premium to the industry average, undergoing the value that pages provides our customers.

Alpana Wegner: The growth in our ARPC was driven by strength and new logo and existing customer expansion.

Alpana Wegner: We ended the quarter with 1900 pages of customer.

Alpana Wegner: We saw new customers added in the quarter at a higher ARPC than the customers that churned.

Wendy Thomas: This partner made a seven figure ARR commitment upfront, beginning with the transition of customers from its legacy SIM technology onto the tajus platform to drive higher retention and margin expansion for their business. Partnerships like this provide further validation of tajus' ability to drive scale for large managed security services providers, empowering them to provide organizations from all sizes with access to enterprise level security within an attractive business model.

Alpana Wegner: As our page is pricing is largely on a per-end point basis, growth and end points is another indicator of platform expansion. Our end point count grew more than 9% year over year in the second quarter.

Alpana Wegner: Our end point count grew more than 9% year over year in the second quarter. Our Q2 operating results are strong, reflecting our continued focus on operational efficiency, productivity improvements, and cost discipline. Q2 non-GAAP Tages subscription growth margin of 74.3%, an improvement of 360 basis points versus second quarter a year ago driven by automation, continued cloud architecture scaling, and by leveraging our AI and machine learning capabilities across the business. Total non-GAAP growth margin expanded by 608 basis points to approximately 69% in the quarter. Total non-GAAP growth margin expanded by 680 basis points to approximately 69% in the quarter.

Alpana Wegner: Our Q2 operating results are strong reflecting our continued focus on operational efficiency, productivity and performance in cost discipline.

Alpana Wegner: Thank you to non-gap-tages subscription gross margins of 74.3% and imprisonment of 360 basis points. First and second quarter a year ago, driven by automation, continued cloud architecture scaling, and by leveraging our AI and machine learning capabilities across the business.

Wendy Thomas: In conclusion, tajus is defining the future of threat detection and response, driving superior sustainable growth and value creation. Our agile expansion of features and capabilities to protect against threat actor access vectors, delivering organizations improved security risk costures and the best security outcomes, and are open without compromise approach. These, combined with our growing successful partnership ecosystem, put us in an advantage. In an environment where vendor consolidation and scaling spend on both security technology and talent are top priorities, demand for our tajus security offerings remain strong. Tajus is the platform of choice for organizations to bolster their security posture at a proven return on investment, driving our growth now and into the future.

Alpana Wegner: Total non-gaps per smurgeon expanded by 680 basis points to approximately 69% in the quarter.

Alpana Wegner: Total non-gap-chorus margin expanded by 680 basis points to approximately 69% recorder.

Alpana Wegner: Total growth margins reflect the MS life of our other MSS business in Q1, resulting in revenue being nearly zero in Q2. Adjust the EBITDA with 1 million in line with our guidance of 1 to 3 million and an improvement from a loss of 10 million in Q2 of the prior year. EBITDA was impacted with more than 1.3 million of redundant or transitional costs associated with the end of life of our other MSS business. Gap net loss with 15 million in the second quarter, or 17 cents per share, compared with gap net loss of 32 million, or 38 cents per share, in the same period last year.

Speaker Change: Total Gross margins reflect the endless life of our other MSS business in Q1, resulting in revenue being nearly zero in Q2.

Speaker Change: I tested EBITDA was 1 million, in line with our guidance as 1 to 3 million, and an improvement from the loss of 10 million in Q2 was a prior year. EBITDA was impacted with more than 1.3 million of redundant or transitional costs.

Speaker Change: Associated with the end of life of our other MSS business.

Wendy Thomas: I want to thank you for investing in our mission to secure human progress, and thank you to our customers and partners for joining forces with us.

Speaker Change: Daphne at Laws was 15 millions in a second quarter or 17 cents per share compared with Daphne at Laws of 32 million or 38 cents per share in the same period last year.

Alpana Wegner: With that, I'd like to hand the call over to Alpana to cover our financial results and guidance. Thanks, Wendy. Good morning, everyone. I will review our Q2 results before I provide expectations for Q3 and fiscal year 25. We once again hit our financial commitments in Q2. We delivered total revenue exceeding 82 million, which was at the high end of our expectations primarily on the strength of description deals closing earlier in the quarter.

Alpana Wegner: Non-GAAP net income was breakeven or zero cents per share compared with non-GAAP net loss of 9 million or 10 cents per share in the same period last year. Turning to the balance sheet and capital allocation, we ended Q2 with a strong balance sheet. With 48 million in cash, note debt and an undrawn 50 million credit. Facility. Our cash flow from operations was 4 million in the quarter compared with 27 million used in the prior year period. The decreased use of our operating cash is driven by our focus on cost discipline, reduction in duplicative costs, and increase in operational efficiencies.

Speaker Change: Now, a gap net income was break even, or zero cents per share, compared with a non-gap net loss of 9 million or 10 cents per share in the same period last year.

Speaker Change: Turning to the balance sheet in capital allocation, we ended cute too with a strong balance sheet with 48 million in cash, note that, and an under on 50 million credit facility.

Speaker Change: Our cash flow from operations is 4 million in the quarter, compared with 27 million used in the prior year period.

Alpana Wegner: Year over year, total revenue growth was impacted by a 13 million decline in revenue from the wind down of our non strategic legacy business. Patient subscription revenue was 71 million, up 7% year over year. Total ARR increased 5% year over year to 290 million in line with our expectations. Our ARPC with 150,000 up 14% year over year and remains a premium to the industry average, underscoring the value that Tages provides our customers.

Speaker Change: The Decree's use of our operating cash is driven by our focus on cost discipline, reduction and duplicative costs, and increase in operational efficiencies.

Alpana Wegner: As a reminder, our cash flow can fluctuate from quarter to quarter, with the first half seasonally being a use of cash primarily due to the timing of annual incentives payouts, and the second half typically generating cash from operations.

Speaker Change: As a reminder, our cash flow can fluctuate from quarter to quarter, with the first half he's going to be a use of cash primarily due to the timing of annual incentive payout, and the second half typically generating cash from operations.

Alpana Wegner: Now turning to third quarter and full year fiscal 25 guidance. For Q3 fiscal year 25, we expect total revenue of 80 to 82 million, adjusted EBITDA to be between break even and 2 million, and we expect a range of non-GAAP net loss per share of one cent to non-GAAP net income per share of one cent. For the full year fiscal 25, we now expect total ARR to be 300 million or greater, total revenue of 328 to 335 million, total non-GAAP gross margins to be 68 percent, inclusive of tags gross margins to be 74 percent. Adjusted EBITDA to be between 6 and 12 million, non-GAAP net income per share to be between 3 and 9 cents, cash flow from operations to be between cash used of 2 million and cash generated of 8 million, and we expect CAPEX to be in line with fiscal year 24.

Speaker Change: Now turning to third quarter in full year fiscal 25 guidance.

Alpana Wegner: The growth in our ARPC was driven by strength and new logo and existing customer expansions. We ended the quarter with 1900 Tages customers. We saw new customers added in the quarter at a higher ARPC than the customers that turned. As our Tages pricing is largely on a per end point basis, growth and end points is another indicator of platform expansion. Our end point count grew more than 9% year over year in the second quarter.

Speaker Change: For two, three, fiscal year 25, weeks back total revenue of 80 to 82 million adjusted EBITDA to be between break even and 2 million and we expect a range of non-gap net loss for share of 1 cent to non-gap net income for share of 1 cent.

Speaker Change: For the full year fiscal 25, we now expect total ARR to be 300 million or greater.

Speaker Change: Total revenue of 328 to 335 million total non-gap gross margins to be 68% inclusive of 74%.

Alpana Wegner: Our Q2 operating results are strong reflecting our continued focus on operational efficiency productivity improvements and cost discipline. Q2 non gap Tages subscription growth margin of 74.3%, an improvement of 360 basis points versus second quarter a year ago driven by automation, continued cloud architecture scaling and by leveraging our AI and machine learning capabilities across the business. Total non gap growth margin expanded by 608 basis points to approximately 69% in the quarter. Total non gap growth margin expanded by 680 basis points to approximately 69% in the quarter.

Speaker Change: I just did even that, to be between 6 and 12 million, non-gap net income per share to be between 3 and 9 cents.

Speaker Change: Cash flow from operations to be between cash use of 2 million and cash generated of 8 million.

Speaker Change: and we expect CapEx to be in line with fiscal year 24.

Alpana Wegner: In closing, our Q2 results give us confidence in our ability to meet our 2025 outlook. We are executing on our gross strategy and will continue to deliver additional value to our customers and partners by opportunistically investing in sales and marketing to accelerate our partner momentum, and in product development on new and innovative capabilities, both across add-on and native security products. We remain committed to EBITDA profitability as we continue to drive scale in our business. Thank you for joining us on the call today.

Speaker Change: In closing, our Q2 results give us confidence in our ability to meet our 2025 outlook.

Speaker Change: We are executing on our growth strategy and we'll continue to deliver additional value to our customers and partners by opportunities to greet investing in sales and marketing to accelerate our partner momentum.

Alpana Wegner: Total growth margins reflect the MS life of our other MSS business in Q1 resulting in revenue being nearly zero in Q2. Adjust the EBITDA with 1 million in line with our guidance of 1 to 3 million and an improvement from a loss of 10 million in Q2 of the prior year. EBITDA was impacted with more than 1.3 million of redundant or transitional costs associated with the end of life of our other MSS business.

Speaker Change: and in product development on new and innovative capabilities.

Speaker Change: both across Adon and Native Security Products.

Speaker Change: We remain committed to EBITDA profitability as we continue to drive scale in our business.

Alpana Wegner: Wendy will now rejoin us as we begin Q&A.

Speaker Change: Thank you for joining us on the call today. Wendy will now rejoin us as we begin Q&A. Operator can you please introduce the first question?

Operator: Operator, can you please introduce the first question? Thank you.

Alpana Wegner: Gap net loss with 15 million in the second quarter or 17 cents per share compared with gap net loss of 32 million or 38 cents per share in the same period last year. Non gap net income was breakeven or zero cents per share compared with non gap net loss of 9 million or 10 cents per share in the same period last year. Turning to the balance sheet and capital allocation we ended Q2 with a strong balance sheet.

Operator: At this time, I would like to remind everyone that if you'd like to raise a question, please press star for a vote by one on your telephone keypad, and to remove yourself from that line of questioning, it would be star followed by two.

Speaker Change: Thank you. At this time, I would like to remind everyone that if you'd like to raise a question, please press star for one on your telephone. Keep that and to remove yourself that line of questioning, it would be star followed by two. Our first question comes from Hamza for the Wala of Morgan Stanley. Hamza, your line is now open.

Hamza Fotowala: Our first question comes from Hamza Fotowala of Morgan Stanley. Hamza Fotowala is now open.

Hamza Fotowala: Hi, good morning. Thank you for taking my question. Maybe when do I'll start with you? Obviously, a lot of macro uncertainty out there, but a very intense threat environment at the same time. I'm wondering, going into your new fiscal year, how are you feeling about the overall macro and spending environment?

Hamza: Hi, good morning. Thank you for taking my question.

Speaker Change: Maybe Wendy, I'll start with you, obviously a lot of...

Alpana Wegner: With 48 million in cash note debt and an undrawn 50 million credit. Facility. Our cash flow from operations was 4 million in the quarter compared with 27 million used in the prior year period. The decreased use of our operating cash is driven by our focus on cost discipline, reduction in duplicative costs, and increase in operational efficiencies. As a reminder, our cash flow can fluctuate from quarter to quarter with the first half seasonally being a use of cash primarily due to the timing of annual incentives payouts, and the second half typically generating cash from operations.

Speaker Change: Macro uncertainty out there, but...

Speaker Change: a very intense threat environment at the same time.

Speaker Change: I'm wondering, um, going into...

Speaker Change: Your new fiscal year, how are you feeling about?

Hamza Fotowala: And then maybe I'll ponder for you. How are you feeling about your position from investment and a sales capacity standpoint to really drive that top-line growth sustainably going forward?

Alpana Wegner: the overall macro and conspending environment, and then to be Alpana for you.

Speaker Change: How are you feeling about your position from investment and a sales capacity standpoint to really drive that top line growth sustainably going forward? Thank you.

Hamza Fotowala: Thank you.

Wendy Thomas: Good morning. Thanks, Hamza, for the questions. When we look at the marketplace right now, we see continued good demand for cybersecurity in general, and then specifically for Tages, the acceleration in our opportunity around kind of legacy, technology, displacement, vendor factors for us. Our sales cycles were stable, if not slightly better, kind of within the range of recent times, so we haven't seen a big shift there. And frankly, just given where we are in terms of about a little over 18 months into our partner first strategy, we saw really good performance in terms of those relationships this quarter, highest wind rates, you know, 80% of new sales, increasing mix of deals coming from those partners. So from our position in terms of market tailwinds as well as our execution around our partner first strategy, we continue to see good demand going into the second half of our fiscal year.

Speaker Change: Good morning, thank you for the questions.

Speaker Change: When we look at the marketplace right now, we see continued good demands for cyber security in general and then specifically for KJSC.

Alpana Wegner: Now turning to third quarter and full year fiscal 25 guidance. For Q3 fiscal year 25, we expect total revenue of 80 to 82 million adjusted EBITDA to be between break even and 2 million, and we expect a range of non-gap net loss per share of one cent to non-gap net income per share of one cent. For the full year fiscal 25, we now expect total ARR to be 300 million or greater, total revenue of 328 to 335 million, total non-gap gross margins to be 68 percent, inclusive of tages gross margins to be 74 percent.

Speaker Change: Acceleration in our opportunity around kind of legacy, technology displacement, vendor consolidation particularly some replacements. When we look at the sort of macro factors for us, our...

Speaker Change: sales cycles were stable if not slightly better kind of within the range of recent time. So we haven't seen a big shift there.

Speaker Change: And frankly, just given where we are in terms of about 118 months into our partner first strategy, we saw a really good performance in terms of those relationships this quarter highest, win rates, 80% of new sales.

Alpana Wegner: Adjusted EBITDA to be between 6 and 12 million, non-gap net income per share to be between 3 and 9 cents, cash flow from operations to be between cash used of 2 million and cash generated of 8 million, and we expect CAPEX to be in line with fiscal year 24. In closing, our Q2 results give us confidence in our ability to meet our 2025 outlook. We are executing on our gross strategy and will continue to deliver additional value to our customers and partners by opportunistically investing in sales and marketing to accelerate our partner momentum, and in product development on new and innovative capabilities, both across add on and native security products. We remain committed to EBITDA profitability as we continue to drive scale in our business. Thank you for joining us on the call today.

Speaker Change: And increasing mix of deals coming from those partners. So from our position in terms of market tailwinds as well as our executioner on our partner first strategy, we continue to see good demands going into the second half of our fiscal year.

Alpana Wegner: Yeah, and then to, good morning, the South Hannah, to address the second question that you had, just from the investment and sales capacity standpoint, I'd say a couple of things there. One is we have some, as you know, from last year, does some restructuring within our go-to-market organization, and we do feel like we've got the right seller profile today as well as the right capacity to be able to deliver on the top line. Our partner ecosystem, and as Wendy just said, the positive momentum that we're seeing is a more efficient go-to-market, and we do see that that is generating the capability for us to deliver greater sales productivity.

Speaker Change: Yeah, and then to ignoring the self-hanot to address the second question that you had.

Speaker Change: Just from the investment and sales capacity standpoint, I say a couple of things there. One is...

Speaker Change: We have some, as you know, from last year, there's some restructuring within our...

Speaker Change: Go to Market Organization and we do feel like we've got the right seller profile today as well as the right.

Speaker Change: Capacity to be able to deliver on the top line.

Speaker Change: Our partner ecosystem and as Wendy just says the positive momentum that we're seeing there is a more efficient go to market and we do see that that is generating the capability for us to deliver greater sales productivity.

Operator: Wendy will now rejoin us as we begin Q&A. Operator, can you please introduce the first question? Thank you. At this time, I would like to remind everyone that if you'd like to raise a question, please press star for a vote by one on your telephone keypad, and to remove yourself from that line of questioning, it would be star followed by two.

Alpana Wegner: That being said, I do expect that, and you saw a little bit of that in Q2, that will continue to invest in the go-to-market as well as product. Those are two fundamental areas to ensure that we can hit what we want to do from a top line perspective, and from an overall perspective, I'd say sales and marketing, you know, where it came in out of Q2 as a percentage of revenue, is where we expect it to try to trend, excuse me, for the rest of the year.

Speaker Change: That being said, I do expect that and you saw a little bit of that in Q2 that will continue to invest in the go-to market as well as product.

Speaker Change: is a two fundamental areas to ensure that we can hit what we want to do from a top line perspective. And from an overall perspective, I say, sales and marketing, you know, where it came in on on a few, too, as a percentage of revenue is where we expect it to try and excuse me for the rest of the year.

Hamza Fotowala: Our first question comes from Hamza Fotowala of Morgan Stanley. Hamza Fotowala is now open. Hi, good morning. Thank you for taking my question. Maybe when do I'll start with you? Obviously, a lot of macro uncertainty out there, but a very intense threat environment at the same time. I'm wondering, going into your new fiscal year, how are you feeling about the overall macro and spending environment? And then maybe I'll ponder for you. How are you feeling about your position from investment and a sales capacity standpoint to really drive that top-line growth sustainably going forward? Thank you.

Hamza Fotowala: Thank you. Thank you very much.

Speaker Change: Thank you.

Mike Ecos: Our next question comes from Mike Ecos of Needham. Mike, your line is now open.

Speaker Change: Thank you very much. Our next question comes from Mike Kiko's of Needham. Mike, your mind is now open.

Mike Ecos: Hey guys, thanks for taking the questions here. I just wanted to cycle back to the prepared remarks. I think there was a comment that some deals enclosed earlier in the quarter, which benefited subscription revenues. It doesn't sound like it from a macro standpoint, but just wanted to see the positive from that would be, hey, linearity in the quarter improved to a certain degree. If someone was to read that negatively, they would say, hey, maybe there was something macro related that may have weighed on demand in the back end for the quarter. Can you just clarify that dynamic to make sure that we're all being thoughtful here on that?

Mike Kiko's: Hey guys, thanks for taking the questions here. I just wanted to cycle back to the prepared or more.

Mike Kiko's: There was a common fit.

Speaker Change: Some deals and closed early in the quarter which benefited subscription revenues.

Speaker Change: It doesn't sound like it.

Speaker Change: from a macro standpoint, but just wanted to see the positive from that would be hey.

Speaker Change: Limniarity in the quarter.

Wendy Thomas: Good morning, thanks, Hamza, for the questions. When we look at the marketplace right now, we see continued good demand for cybersecurity in general, and then specifically for Tages, the acceleration in our opportunity around kind of legacy, technology, displacement, vendor factors for us, our sales cycles were stable, if not slightly better, kind of within the range of recent times, so we haven't seen a big shift there. And frankly, just given where we are in terms of about a little over 18 months into our partner first strategy, we saw really good performance in terms of those relationships, this quarter highest wind rates, you know, 80% of new sales, increasing mix of deals coming from those partners, so from our position in terms of market tailwinds as well as our execution around our partner first strategy, we continue to see good demand going into the second half of our fiscal year.

Speaker Change: I improved to a certain degree.

Speaker Change: This one was to read that negatively, they would say, hey, maybe there was something macro related that may have weighed on demand in the back half of the quarter. Can you just clarify that dynamic to make sure that we're all being thoughtful here on that?

Alpana Wegner: Yeah, no, it was a positive dynamic from our perspective, which is just typically we see more deals come in at the end of the quarter than at the beginning of the quarter. This is just unusual in that we had some larger deals come through at the earlier part of the quarter. So definitely a positive from our perspective and did not necessarily pull away from what we towards the end of the quarter.

Speaker Change: Yeah, yeah, no, it is. It was a positive dynamic from our perspective, which is just typically we see more deals come in at the end of the quarter than at the beginning of the quarter. This was just unusual in that we had some some larger deals come through at the earlier part of the quarter. So definitely a positive from our perspective and did not necessarily pull away from what we saw towards the end of it.

Alpana Wegner: And anything to read as far as potential sustainability for that improvement in the area, or was this quarter maybe viewed as maybe too early to call a trend just yet? Yeah, I don't see it as a trend at this point. I would say that it was just a bit of anomaly for Q2. Look, as most CSOs would, I would love to see it happen every quarter on a repetitive basis, but it's a little early to call that a trend.

Speaker Change: War.

Speaker Change: and anything to read as far as potential sustainability for that improved in the area or was this quarter maybe due to maybe too early to call a trend just yet.

Speaker Change: Yeah, I don't see it as a trend at this point. I would say that it was just a bit of a anomaly for that for for for two two. Look guys, as as most see if I was what I would love to see it happen every quarter on a repetitive basis that it's a little early to call that as a trend.

Mike Ecos: Terrific. And then just a quick follow-up if I could. I know that we were saying how EBITDA this quarter was impacted by those redundant costs. I believe it was 1.3 million is what you guys had cited.

Speaker Change: and then just a quick follow-up if I could.

Alpana Wegner: Yeah, and then to, good morning, the South Hannah, to to address the second question that you had, just from the investment and sales capacity standpoint, I'd say a couple of things there. One is we have some, as you know, from last year, does some restructuring within our go-to-market organization, and we do feel like we've got the right seller profile today as well as the right capacity to be able to deliver on the top line.

Speaker Change: I know that we were saying how EBITDA this quarter was impacted by those who were done in class. I believe it was 1.3 million is what you guys had cited.

Alpana Wegner: Just as a reminder for the audience, can you help us think about what are the remaining transitional costs from that end of life of other MSS that still need to push out, and how should we think about that over the rest of the year? Yeah, I am happy to say that we've got those costs behind us at this point. As you look at the second half of the year, you will see that we've got no remaining costs from a legacy business, the other MSS. And as you saw in Q2, the revenue had already come down to a very diminimous amount, so that goes to zero, as well as the cost.

Speaker Change: Just as a reminder for the audience, can you?

Speaker Change: Help us think about what are the remaining transitional calls from that end of life of other MSFs that still need to push out and how should we think about that over the rest of the year.

Speaker Change: Yeah, I am a man, I'm a...

Alpana Wegner: Our partner ecosystem, and as Wendy just said, the positive momentum that we're seeing is a more efficient go-to-market, and we do see that that is generating the capability for us to deliver greater sales productivity. That being said, I do expect that, and you saw a little bit of that in Q2, that will continue to invest in the go-to-market as well as product. Those are two fundamental areas to ensure that we can hit what we want to do from a top line perspective, and from an overall perspective, I'd say sales and marketing, you know, where it came in out of Q2 as a percentage of revenue, is where we expect it to try to trend, excuse me, for the rest of the year. Thank you.

Speaker Change: I'm happy to say that we've got those costs behind us at this point as you look at the second half of the year, you will see that.

Speaker Change: We've got no remaining costs from a legacy business, the other MSS.

Alpana Wegner: Thank you very much.

Speaker Change: and as you saw in Q2, the revenue had already come down to a very diminimous amount. So that goes to zero as well as the cost. We're at a point where we've transitioned and completed the wine down completely at the end of Q2, which

Alpana Wegner: We're at a point where we've transitioned and completed the wind down completely at the end of Q2, which, as you know, is a pretty significant milestone for us and really enables the team to be focused on purely the go for, which is very exciting for us. Yeah, and you did enough, but I mean, pretty tremendous execution by the team to complete that transition. This is what opens it up for us as a business to grow and total revenue and sustain profitability with the business that now has turned towards building, go to market momentum and investing in that as well as new product innovation as we've been able to leverage the platform we've built to take on more security use cases with a lot of investment that's already been made.

Speaker Change: As you know, it's a pretty significant milestone for us and really enables the team to be focused on purely to go forward, which is very exciting for us.

Speaker Change: Yeah, and you didn't ask, but I mean, pretty tremendous execution by the team to complete that transition. This is what opens it up for us as a business to.

Speaker Change: The growing total revenue and sustainability.

Mike Ecos: Our next question comes from Mike Ecos of Needham. Mike, your line is now open. Hey guys, thanks for taking the questions here. I just wanted to cycle back to the prepared remarks. I think there was a comment that some deals enclosed earlier in the quarter, which benefited subscription revenues. It doesn't sound like it from a macro standpoint, but just wanted to see the positive from that would be, hey, linearity in the quarter improved to a certain degree.

Speaker Change: with the business that now has turned towards building go to market momentum and investing in that as well as new product innovation.

Speaker Change: as we've been able to, till leverage the platform we've built to take on more security use cases with a lot of investments that's already been made. So great incremental goes after community support us.

Alpana Wegner: So great, incremental growth opportunity for us.

Mike Ecos: I'll be understanding and excited to see that next chapter for Secure Works. Thank you, guys. Thank you.

Speaker Change: Tell me understand, and excited to see that next chapter for secure works. Thank you guys.

Saket Kalia: Our next question comes from Sakeet Kalia of Barclays. Sakeet Kalia is not open.

Mike Ecos: If someone was to read that negatively, they would say, hey, maybe there was something macro related that may have weighed on demand in the back end for the quarter. Can you just clarify that dynamic to make sure that we're all being thoughtful here on that? Yeah, no, it was a positive dynamic from our perspective, which is just typically we see more deals come in at the end of the quarter than at the beginning of the quarter.

Speaker Change: Thank you.

Speaker Change: Thank you. Our next question comes from Sakit's career of Barclays. Sakit's July is not open.

Saket Kalia: Hi, thank you. You have Karly on for a second today. Thank you so much for taking my questions. I think, I think really I want to focus on some of the trends that we're seeing in the industry right now. So first, given the consolidation that we've seen in the market recently, how are you and the team thinking about the velocity of some displacements in the industry right now? And is this direction, is this disruption creating the opportunity for your broader Tegas platform?

Speaker Change: Hi, thank you, you have currently on for a sac at today. Thank you so much for taking my question.

Speaker Change: I think I want to focus on some of the trends that we're seeing in industry right now so first

Mike Ecos: This is just unusual in that we had some larger deals come through at the earlier part of the quarter. So definitely a positive from our perspective and did not necessarily pull away from what we towards the end of the quarter. And anything to read as far as potential sustainability for that improvement in the area, or was this quarter maybe viewed as maybe too early to call a trend just yet? Yeah, I don't see it as a trend at this point.

Speaker Change: and the consolidation that we've seen in the Sim Marker recently, how are you in the team thinking about the velocity of the displacement and the industry right now and is this direction? Is this disruption creating opportunity for your broader take-as-platform?

Saket Kalia: And I also love to just touch a little bit on that time that you've been talking about consolidation spend in the industry, especially on the number of technology partners from customers. How secure kind of positions in that trend, especially now with some of your, your newer products to really benefit from that trend of consolidation. Thank you.

Speaker Change: and I also love to just touch a little bit on.

Speaker Change: on that time that you've been talking about a consolidation spend in the industry, especially on the number of technology partners from customers. How is the care kind of positions in that trend especially now with some of your year-new or products to really benefit from that trend of consolidation? Thank you.

Mike Ecos: I would say that it was just a bit of anomaly for Q2. Look, as most CSOs would, I would love to see it happen every quarter on a repetitive basis, but it's a little early to call that as trend.

Wendy Thomas: Thanks, Karly. It's when they go out to take that.

Wendy Thomas: So I'll speak to the Sim, particularly first, which is that that has been an opportunity where we've increasingly seen customers more than ready to move away from noisy, hard, and expensive to maintain Sims to an XDR approach to detection and response. So that trend is only accelerating, you know, players forging together to try to fight that trend or get scale to invest. You know, we started building this platform nearly seven years ago now. That is a very difficult thing to replicate in terms of the capabilities that we bring to bear to detection and automated response.

Speaker Change: Thanks, Carley. It's Wendy Glad to take that. So I'll speak to the sim particularly first, which is that that has been it.

Speaker Change: an opportunity where we've increasingly seen.

Alpana Wegner: Terrific. And then just a quick follow-up if I could, I know that we were saying how EBITDA this quarter was impacted by those redundant costs. I believe it was 1.3 million is what you guys had cited. Just as a reminder for the audience, can you help us think about what are the remaining transitional costs from that end of life of other MSS that still need to push out and how should we think about that over the rest of the year?

Speaker Change: Customers, more than ready to move away from noisy, hard and expensive to maintain Sims to an XDR approach to detection and response.

Speaker Change: So, that turned into only accelerating.

Speaker Change: Players forging together to try to fight that trend or get scaled to invest. We started building this platform.

Alpana Wegner: Yeah, I am happy to say that we've got those costs behind us at this point. As you look at the second half of the year, you will see that we've got no remaining costs from a legacy business, the other MSS. And as you saw in Q2, the revenue had already come down to a very diminimous amount, so that goes to zero as well as the cost. We're at a point where we've transitioned and completed the wind down completely at the end of Q2, which as you know is a pretty significant milestone for us and really enables the team to be focused on purely the go for, which is very exciting for us.

Speaker Change: Nearly seven years ago now that is a very difficult thing to replicate in terms of the capabilities that we bring to bear to detection and automated response. So that is a trend that for us we will continue to see more and more deals that I believe.

Wendy Thomas: So that is a trend that for us we will continue to see more and more deals that I believe moving to the stages of the results.

Wendy Thomas: When I think about the consolidation trend, the way we designed the platform was also keeping in mind that essentially niche security products would become features of the platform over time. And they would be able we would be able to address with this holistic approach to shielding a customer's entire technology estate with the next year platform. And our IDR launch is a great example of that exposure management or VDR launch and sort of 2.0 launch at that last quarter. There are all examples of the ability for an integrated platform to provide complete protection, but at a really compelling return on investment for customers.

Speaker Change: Moving to Tatea Semler as well.

Speaker Change: When I think about that.

Speaker Change: The consolidation trend, the way we designed the platform was also keeping in mind that essentially niche security products would become features of the platform over time.

Speaker Change: and they would be able to address with this holistic approach to shielding a customer's entire technology estate with the NXDR platform and our IDR launch is a great example of that.

Alpana Wegner: Yeah, and you did enough, but I mean, pretty tremendous execution by the team to complete that transition. This is what opens it up for us as a business to grow and total revenue and sustain profitability with the business that now has turned towards building, go to market momentum and investing in that as well as new product innovation as we've been able to, to leverage the platform we've built to take on more security use cases with a lot of investment that's already been made. So great, incremental growth opportunity for us. I'll be understanding and excited to see that next chapter for secure works.

Speaker Change: You know, exposure management, our EDR, launch and sort of 2.0, launch at that last quarter, they're all examples of the abilities for an integrated platform to provide complete protection, but at a really compelling return on investment for customers.

Wendy Thomas: So in both the consolidation conversation with native controls, as well as the core detection response capabilities to replace SIMs, we like where we're positioned in the market in terms of tailwinds.

Speaker Change: So, in both the consolidation conversation with native controls, as well as the core detection response capabilities to replace Sims, we like where we're positioned in the market in terms of those tailwinds.

Wendy Thomas: Thank you guys. Thank you.

Saket Kalia: Got it.

Saket Kalia: Thank you so much.

Saket Kalia: Our next question comes from Sakeet Kalia of Barclays. Sakeet Kalia is not open. Hi, thank you. You have Karly on for a second today. Thank you so much for taking my questions. I think, I think really I want to focus on some of the trends that we're seeing in the industry right now. So first, given the consolidation that we've seen in the market recently, how are you and the team thinking about the velocity of some displacements in the industry right now?

Speaker Change: Barrett, thank you so much.

Operator: Thank you.

Madeline Brooks: As a reminder, if you'd like to ask a question, please press star for a look by one on your telephone keypad, and to move yourself on line of questioning, it's star followed by two. Our next question comes from Madeline Brooks with Bank of America.

Speaker Change: Thank you. As a reminder, if you'd like to ask a question, please press star for look by one on your telephone keypad and to move yourself not to learn a questioning, it's star for look by two.

Madeline Brooks: Madeline, your line is not open.

Speaker Change: Our next question comes from Madalim Brooks with Bank of America. Madalinula is not open.

Madeline Brooks: Great.

Madeline Brooks: Can you guys, can we? Yes, good morning. Good morning.

Henry: Thank you guys, Henry.

Saket Kalia: And is this direction, is this disruption creating the opportunity for your broader Tegas platform? And I also love to just touch a little bit on, on that time that you've been talking about consolidation spend in the industry, especially on the number of technology partners from from customers. How secure kind of positions in that trend, especially now with some of your, your newer products to really benefit from that trend of consolidation. Thank you.

Madeline Brooks: One day, this question for you. There's a lot of positive signals from the quarter, like endpoint growth, which is up in some more than 9% ARPC up 14%. But then we're seeing ARR, which a pregnant and wrong is majority TGIS is up only 5% and a degradation for the degradation of last quarter. So I guess can you just help us understand the dynamics of bridging the gap between these really good positive points like the endpoint grows and ARPC growth, but kind of why we're not seeing that reflect in revenue right now. Maybe talk through some net retention or return dynamics that could be impacting that.

Speaker Change: Yeah, good morning.

Speaker Change: Good morning. Wendy, this question is for you.

Wendy Thomas: There's a lot of positive signals from the quarter, like end-point growth, which is up to you to more than 9% ARPCs up to 14%, but then we're seeing ARR, which I click on my same wrong is majority pages is up to only 5% and it's a different degradation from the top quarter.

Saket Kalia: Thanks, Karly. It's when they go out to take that. So I'll speak to the Sim, particularly first, which is that that has been a an opportunity where we've increasingly seen customers more than ready to move away from noisy, hard and expensive to maintain Sims to an XDR approach to detection and response. So that trend is only accelerating, you know, players forging together to try to fight that trend or get scale to invest.

Speaker Change: But I guess communities help us understand the dynamics of, you know, bridging the gap between these really good positive points at the end point grows and ARPC grows. But, but kind of why we're not seeing that reflection revenue right now, you know, maybe talk through some network tension or return to dynamics that could be impacting that. Thank you.

Alpana Wegner: Thank you.

Alpana Wegner: So, our good morning and thanks for the question. We absolutely see some sort of leading and lagging indicators in terms of different growth factors. And that's why we look across all of them. Endpoint growth is clearly important given the growth in our managed services partner business model, which is, if you recall, when we. We really count those as one end customer by continuing to grow revenue, which drives our ARPC and our endpoint count according to those relationships. And that's why we continue to kind of break those apart to just give you visibility into the different routes to market that we have.

Speaker Change: So, we're a good morning and thanks for the question.

Speaker Change #100: We absolutely see some sort of leading and lagging indicators in terms of different growth factors and that's why we look across all of them.

Speaker Change #101: Endpoint Grove is clearly important given the growth in our managed services partner, business model, which is if you recall is when we...

Saket Kalia: You know, we started building this platform nearly seven years ago now. That is a very difficult thing to replicate in terms of the capabilities that we bring to bear to detection and automated response. So that is a trend that for us we will continue to see more and more deals that I believe moving to the stages of the results. When I think about the consolidation trend, the way we designed the platform was also keeping in mind that essentially niche security products would become features of the platform over time.

Speaker Change #102: We really count those as one end customer but continue to grow revenue which drives our ARPC and our endpoint count according to those relationships. Then that's why we continue to kind of break those apart to just give you visibility into the difference.

Alpana Wegner: When I think about our ARR growth, we're very confident around the turn we're seeing in getting traction in our partner-first model goes in terms of the partners we continue to sign with global reach. Really high quality sales global reach type of partners, and our investments have increasingly turned towards the enablement and support of those. customers. And as we exit to Q and see the growing pipeline that is we head into the second half, it definitely underpins our confidence and in our ability to see there are in point and expansion in our ARPC continue.

Speaker Change #102: Roots to Market that we have. When I think about our...

Speaker Change #102: and our our girls were very confident around the turn we're seeing and getting traction in our partner first model, those in terms of the partners we continued to sign with global for each.

Saket Kalia: And they would be able we would be able to address with this holistic approach to to shielding a customer's entire technology estate with the next year platform. And our IDR launch is a great example of that exposure management or VDR launch and sort of 2.0 launch at that last quarter. There are all examples of the ability for an integrated platform to provide complete protection, but at a really compelling return on investment for customers.

Speaker Change #103: really high quality, scaled, global reach type of partners and our investments have increasingly turned towards the enablement and support of those.

Speaker Change #103: and as we exit to Q and see the growing pipeline that as we head into the second half, it definitely underpins our confidence and in our ability to see, there are employers and expansion in our ARPC continue.

Madeline Brooks: So you can maybe just one follow-up question there too is of the dynamics he turned, you know, changed as you've gotten to the end of sunsetting your legacy business because I think if I recall correctly there were a lot of customers who were able to transition over to the Tages platform that was giving a nice boost to growth. So is that maybe weighing a little bit on groceries as well, just being naturally at the end of that transition period?

Speaker Change #119: So, you can maybe just one follow-up question there, too, is, um, of the dynamic future, you know, changed as you've gotten to the end of, uh, sunsetting your legacy business, because they think, if I recall correctly, um, there were a lot of customers who were able to transition over to the Tager's platform that was giving a nice boost to growth. So, is that maybe weighing a little bit on, um, on growth rates as well, to seeing naturally at the end of that transition period?

Saket Kalia: So in both the consolidation conversation with native controls, as well as the core detection response capabilities to replace Sims, we like where we're positioned in the market in terms of tailwinds. Got it. Thank you so much. Thank you.

Alpana Wegner: Yeah, maybe Madeline, the South Hannah. I'll maybe share a little bit there on what we're seeing from a churn perspective and where our focus is, you know, just from our overall retention. You know, to your point, be the I would say the preponderance of any sort of carryover from the transition and the legacy customer base is, for the most part, behind us at this point. The we do see just this you know any normal business would we do see some levels of attrition across the customer base for about ARPC standpoint we did see some variability in what we add from a new customer base being at a higher ARPC and the ones that are turning being at a lower ARPC.

Operator: As a reminder, if you'd like to ask a question, please press star for a look by one on your telephone keypad and to move yourself on line of questioning, it's star followed by two.

Madeline: Yeah, maybe Madeline the South Hannah, I may be share a little bit there on what we're seeing from a turn perspective and where our focus is, you know, just from our overall retention.

Madeline Brooks: Our next question comes from Madeline Brooks with Bank of America. Madeline, your line is not open. Great. Can you guys can we? Yes, good morning. Good morning.

Hannah: You know, here to your point, I would say that for ponderance of any sort of carryover from that.

Speaker Change #106: Transition and the legacy customer base is the most part behind us at this point. We do see just this, you know, any normal business would we do see some.

Wendy Thomas: One day this question for you. There's a lot of positive signals from the quarter, like endpoint growth, which is up in some more than 9% ARPC up 14%. But then we're seeing ARR, which a pregnant and wrong is majority TGIS is up only 5% and a degradation for the degradation of last quarter. So I guess can you just help us understand the dynamics of bridging the gap between these really good positive points like the endpoint grows and ARPC growth, but kind of why we're not seeing that reflect in revenue right now. Maybe talk through some net retention or return dynamics that could be impacting that. Thank you.

Speaker Change #106: Levels of attrition across the customer base.

Speaker Change #106: for about ARPC standpoint. We did see some...

Speaker Change #106: and what we add from a new customer base, being at a higher ARPC and the ones that are turning, being at a lower ARPC. There could be some connectivity there that you could make, which is...

Alpana Wegner: There could be some connectivity there that you could make, which is the lower ARPC from a perspective isn't really that the sort of market segment that is looking for our type of MDR services, and those oftentimes can be a nice opportunity for us to share and to transfer those over to our MSSP partners because they are, you know, better suited for what they're offering. So there might be a little bit of overhang there, but we would say the preponderance is sort of a retention standpoint is around what we see is where we get good retention across our customer base is when we've got, you know, good strong deep relationships. We've got the additional ROI and value that we can add to them through our product portfolio, which is very much centered on, as Wendy shared in her prepared remarks, the product portfolio expansion that we are investing in and so gets on. And then I would say, you know, that the core is just the constant continuous improvement that we see across those are platform and our delivery from the SecOps perspective introduction and response. And that's really underpinned by the automation that you see that we're investing in and seeing some of the benefits of that, not only from what we can do with our customer base in terms of retentive retentiveness, but also get a little bit of that benefit, obviously, from the gross margin perspective as well.

Speaker Change #107: The lower ARPC from a state perspective isn't really the market segment that is looking for our type of NDR services. And those oftentimes can be a nice opportunity for us to...

Alpana Wegner: So our good morning and thanks for the question. We absolutely see some sort of leading and lagging indicators in terms of different growth factors. And that's why we look across all of them. Endpoint growth is clearly important given the growth in our managed services partner business model, which is if you recall is when we. We really count those as one end customer by continuing to grow revenue, which drives our ARPC and our endpoint count according to those relationships.

Speaker Change #107: to share and to transfer those over to our MSFP partners because they're, you know, better suited for what they're offering. So there might be a little bit of overhang there but we would say that the preponderance is sort of behind us.

Speaker Change #107: and really for us, the focus from our attention standpoint is around what we see is where we get good retention across our customer base. And when we've got good strong deep relationships.

Speaker Change #107: We've got the additional ROI and value that we can add to them through our product portfolio, which is...

Alpana Wegner: And that's why we continue to kind of break those apart to just give you visibility into the different routes to market that we have. When I think about our ARR growth, we're very confident around the turn we're seeing in getting traction in our partner first model goes in terms of the partners we continue to sign with global reach. Really high quality sales global reach type of partners and our investments have increasingly turned towards the enablement and support of those, customers.

Speaker Change #107: Up.

Speaker Change #107: very much centered on as Wendy shared in her prepared remarks.

Speaker Change #108: the Product Portfolio Expansions that we are investing in and in focus on.

Speaker Change #109: and then um

Speaker Change #110: and then I would say, you know, the core is just the constant.

Speaker Change #111: Continuous Improvements that we see across those are platforms and are delivery from a set-up, prospective, in-detection, and response, and that's really underpinned by the automation that you see that we're investing in and seeing some of the benefits of that not only.

Alpana Wegner: And as we exit to Q and see the growing pipeline that is we head into the second half, it definitely underpins our confidence and in our ability to see there are in point and expansion in our ARPC continue.

Speaker Change #111: from what we can do with our customer base in terms of retentive, retentive, nest, but also get a little bit of that benefit. Obviously, from a gross margin perspective as well.

Madeline Brooks: Yeah, got it. That's that big sense, and maybe just one more ending comment for me here is competitors in your space disclose the number of modules and other products that their customers are adopting across the base. Right? So some disclose three plus modules, other disclosing eight plus modules, and any, you know, qualitative discussions around kind of more product adoption would be helpful. And maybe going forward, it would be helpful to see some disclosure as the platform story takes place around a number of products that your customers are adopting. And that's it for me. Yeah, thank you for that.

Speaker Change #111: Yes!

Speaker Change #112: Got it, that's having fun, so maybe just let one more end in comment for me here is competitors in your space, this globe is the number of modules and other products.

Alpana Wegner: So you can maybe just one follow-up question there too is of the dynamics he turned you know changed as you've gotten to the end of Sunsetting your legacy business because I think if I recall correctly there were a lot of customers who were able to transition over to the Tages platform that was giving a nice boost to growth. So is that maybe weighing a little bit on groceries as well just being naturally at the end of that transition period?

Speaker Change #112: that their customers are adopting across the East, so sometimes, some of those three plus modules are they're just closing, eight plus modules.

Speaker Change #113: Any qualitative discussions around kind of more product adoption would be helpful and maybe going forward with the helpful to see some disclosure as the platforms to retake place around a number of product and customer that are adopting. That's it for me, thanks.

Alpana Wegner: Yeah maybe Madeline the South Hannah I'll maybe share a little bit there on what we're seeing from from a churn perspective and where our focus is you know just from our overall retention. You know to your to your point be the I would say the preponderance of any sort of carryover from the transition and the the legacy customer base is for the most part behind us at this point. The we do see just this you know any normal business would we do see some levels of attrition across the customer base for about ARPC standpoint we did see some variability in what we add from a new customer base being at a higher ARPC and the ones that are turning being at a lower ARPC.

Alpana Wegner: And certainly, as we think more about the number of products that we're launching, we're in that early stages of that this year.

Speaker Change #113: [inaudible]

Speaker Change #114: As we think more about the number of products that we're launching, you know, we're in that early stage of the stage of that this year. It's definitely on our radar to be able to share that information because I think it will be to your point meaningful for, for, for, for, for, for, for, and all of the investors.

Alpana Wegner: It's definitely on our radar to be able to share that information because I think it will be to your point meaningful for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for, for

Speaker Change #115: Episode 2

Speaker Change #116: Thank you. There are currently no further questions at this time, but to me I'd like to turn the call back over to you.

Speaker Change #117: Great, thank you. That wraps the Q&A in today's call, a replay of this webcast will be available on our Investor Relations page at secureworks.com along with our supplemental web deck and additional financial tables. Thanks for joining us today.

Alpana Wegner: There could be some connectivity there that you could make which is the lower ARPC from a perspective isn't really that the sort of market segment that is looking for our type of MDR services and those oftentimes can be a nice opportunity for us to share and to transfer those over to our MSSP partners because they are you know better suited for what they're offering. So there might be a little bit of overhang there but we would say the preponderance is sort of a retention standpoint is around what we see is where we get good retention across our customer base is when we've got you know good strong deep relationships we've got the additional ROI and value that we can add to them through our product portfolio which is very much centered on as Wendy shared in her prepared remarks the product portfolio expansion that we are investing in and so gets on and then and then I would say you know that the core is just the constant continuous improvement that we see across those are platform and our delivery from the SecOps perspective introduction and response and that's really underpinned by the automation that you see that we're investing in and seeing some of the benefits of that not only from what we can do with our customer base in terms of retentive retentiveness but also get a little bit of that benefit obviously from the gross margin perspective as well.

Speaker Change #118: This concludes today's conference cool, you may have disconnect your lines.

Speaker Change #118: [inaudible]

Wendy Thomas: Yeah got it that's that big sense and maybe just one more ending comment for me here is competitors in your space disclose the number of modules and other products that their customers are adopting across the base right so some of some disclose three plus modules other disclosing eight plus modules and any you know qualitative discussions around kind of more product adoption would be helpful and maybe going forward would be helpful to to see some disclosure as the platform story takes place around a number of products that your customers are adopting and that's it for me. Yeah, thank you for that.

Wendy Thomas: And certainly, as we think more about the number of products that we're launching, you know, we're in that early stages of that this year, it's definitely on our radar to be able to share that information because I think it will be to your point[inaudible] for, for, for, for, for, for, for, for, for, for, for[inaudible]