ABST - Earnings call transcript Q4 2021

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Operator

Good afternoon, everyone, and thank you for standing by. Welcome to Absolute Software’s Fiscal and 2021 Fourth Quarter and Annual Financial Results Conference call.

Before beginning its formal remarks, Absolute Software would like to remind listeners that certain portions of today’s discussion may contained forward-looking statements that reflect current views with respect to future events and conditions. Any such statements are subject to assumptions, risks and uncertainties that could cause actual results to differ materially from those projected in these forward-looking statements. Any forward-looking statements contained in today’s conference call are made as of today’s date, and Absolute Software undertakes no obligation to update or revise publicly any of the included forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by applicable securities laws.

is the please and section also refer company’s MD&A, on these relating of be information Absolute XXXX statements on and forward-looking to which available more on assumptions, and EDGAR. uncertainties risks to the Software’s SEDAR For website available will now the appropriate August everyone p.m. X:XX I’d remind conference is at that also like being XX call this to recorded today, Tuesday, Time. Eastern over now Executive would to Wyatt, the like I Chief to President Officer. call turn and Christy Please go ahead.

Christy Wyatt

everyone afternoon, for Good Operator. thank QX you full today you, Thank XXXX us joining and Absolute and for fiscal Software’s conference year fiscal call.

Joining for After I Chief long-term Financial will robust Absolute endpoint our full as on was and remarkable Officer, call, reviewing call our resilience by strategy. – today’s a shown focus to what in On me roadmap is results, on our start year accelerated we year this year Steven then with remarkable our growth another for Gatoff. a quarter, momentum. we of and year cash XX% million. a we strong in for and was margins With XX%. EBITDA with $XX we year year at growth record Year-over-year, the adjusted achieved look In revenue Absolute. continued of transformational $XXX the finished million flow growth ARR revenue of QX, XXXX ended strengths and of ARR full with record as nearly

above we For million end top the revenue our a of the outlook. total realized year, in original $XXX

for growth met reflected And continued in our in results we growth achieving every XXXX in that in In XX most profitability. better on company’s say year. outlook in with fiscal or balancing our discipline of fact, our metric, key Rule full quarter I’m pleased very the our We year Commitment than – XXXX, exceeded every objectives. delivered to the notably

Schoenfeld on were effectively and included positioned moves a markets shares of for step the our long-term as to talented as a on Chief Persistence and executional new Edward on senior to acquisition work of U.S. to and Senior momentum growth the strategic and anywhere the Absolute we’ve us Absolute in additions strong modern This Global with offering Matt through as raising of shareholders investment joined suited focusing NASDAQ, increasing able mid-year. as of learn Revenue course, who a with Service, Officer, as leadership NetMotion capitalize era. capital In our Gatoff, President team continued Vice to Choi that product our make listing Steven with parallel, including focus, perfectly we Financial Alliances accelerate our high the Officer visibility us to team the complementary enabling from As Chief result our well growth. into of

on of year. carrying year me the this some a through Let share into few contributing momentum and core the our to thoughts dynamics

While we’ve this trends benefited where a year focused from our was pandemic, during commitment delivered to results. the certain execution

at the the category our environments. tremendous past over our our our passion helping realize and talked have extended leadership and value We length across products resilience, and endpoint customers through of for use our year their about

strategy year seen this our well well as new as at and through new of are all ARR when net as where and as success the the see of expansions. additions the net segments adoption logos, increased you results really strong can You – both seeing We’ve capabilities. business across look in we improvement increased usage

groups Application we utilization as landscape and usage of with risk Persistence, increase more education in as of Absolute of features, in often a these an and the financial XX% in because and customers. an In out, across healthcare in geolocation, regulated higher Application usage advanced utilization see a the web usage our XXX% Reach. the XX% accelerated services particular such and enterprise stand segments, like saw adopters the early As of these industries we Persistence example, deployments increase and increase of

scores nearly Healthcare, financial customers net adopted As of seen higher significantly of these services, from our Application Application also of groups. Persistence. with FSI XX% Persistence, In have for having a all adopt nearly it. example, we our healthcare customers result, promoter XX% and continues utilize used to

year We reach successful FSI these a as also partner customers ecosystem. in average saw of scripts three customers. very often our our times year leverage nearly portfolio our as was Fiscal XXXX

steady adding increasing new VPN, Next-Gen several our XX%, and updated growth Web through sell XX as pipeline, And Program expansion programs, impact than new acknowledged was partnerships Partner Broker launched XX%. integrations customers by by we during Guide, well Access Lenovo Reseller ecosystem our Cloud delivering well with continue before programs as expand as Also momentum our our partners as the Secure adding Gateway, demand Netskope as ever to as within Device base finally, more business extend in of MSP initiatives to fiscal within existing ESET new grow Controls. our channel continued partner OEM and and Our Persistence to fueled our customer XXXX, we versions titles than Ivanti year customer reach base. resulting well program including star a Antivirus Channel and five significant rating the Security XXXX and Intelligence and Application more News’ and with to Endpoint broaden year, our reseller our partner resellers. This year throughout in Security positive and shared FortiClient

continue our Social future have Corporate inaugural our the We for to published we Responsibility commitment next generation. a building as Report, also

amazing team proud of back we Absolute for am look As at I the produced. year, the results they very the

customers potential our our and on quickly to technology, of are the partners. our and value demonstrating We capitalizing

quarter. two in into several industry. PC affecting our Overall, little in with the we continue that we saw growth. for deeper and including shortage to growth Now, strong ARR effect thirds delivered expansion growth see and a fourth PCs of represent the trends, year-over-year across go growth pandemic let while as the in Government what the ARR economic new macro me partners we of COVID global slower licenses sales, some face seen demonstrates for a and our is and steady even calling are global business solid segments. tech Enterprise segment OEM PC the have the to Analysts directly sold continues on

the in secure strengths customer hybrid of the and core enterprise serve new shifts both sales Absolute in because face renewals continued the constraints, some segment are COVID across of large particular and of slowing organizations existing demand, normalization, with up quarters. demand remote environments. continue some shows we funding systems The education amount delays supply strong Our demonstrate and of this as they to some past work same to and in here. long-term chain in several of and over and also their how slightly growth segment choosing and quarter though Customers velocity our alignment strong and expect a continued post-pandemic see result

and our of is on focus work customers will as the mobility the to as the navigate industry. that both learning PC Our continued continue the shaping the growth COVID expectation pandemic effects business steady well remote drive and the as in dynamics

differentiation may enterprise in world had itself, fiscal investments unique able the post-pandemic offer modern where be of enabled Absolute as well those complexity to move see being unique control at hardware the and success XXXX. be. Absolute to these devices and and the of and into scale, to secure control to Fundamental devices by lowering administration. always the to a has the solution will organization’s very fiscal accomplishments requirement connect, Our continued be the workforce any XXXX devices manage able of customers manage to manage, able while we to position cost in regardless be

the and will from market acquisition we is this work way secure security over recently With affecting up Solutions a XXXX. CAGR have Zero expected years Zero XX% now position demands work NetMotion, highly connect Trust between the user negatively reported on interest SASE meet focused is experience. era Trust the XXX% of Access together a XXXX new and Gartner differentiated and to reliable in create and grow postures. access to five and Network the devices that ability to we of reliably anywhere in The persistent at without

how by initial I’m experience the integration work integration. to the affirms date deliver and all organizationally approach, to combined these the keen our in potential within certainly teams new and development now reactions affect highlight the encouraged pleased already transition with to quickly all of moving organization. teams learn rationalization consider moving to shared more Our very are how fronts and that back interest this the are engineering say are developing on and we that a and on have We deliver we’re roadmap July processes. systems through planning Matt I’m that Schoenfeld having have hard integration on and towards with team and on have potential. integrated. two engaged teams office to our X, These clear transaction track efforts. and work together close been required companies the to at NetMotion the value go-to-market

we process you year on more through see our updates As through to move the should this progress. expect thoughtfully,

market As we and accelerate on before XXXX, are the trajectory. to opportunity embark working growth capitalize fiscal us on our we

work positioned to and require in differentiated multi high device environments. and and a solution We our visibility world the remote as industry deliver are well resiliency customers a to manage education

Steven. turn We’re over plan, I’ll our With you continued growth with in expect well and organized focus invest company the on now on to execute to to balance. call be able should to that, the

Steven Gatoff

was XXXX more talk made go-to-market few year portfolio. Good back appreciate challenging support accelerate the acquisition like significant We teams we year transformational product We’ve we’ve overall, Christy. Thanks, some everyone. despite progress our you office this for cover a companies, few through topics past these I’ll the including Software, your three with expanded joining we’d and and incredibly the But across a to and us. pandemic. record been now NetMotion where about Fiscal platform to busy you saw with months afternoon, revenue our growth ARR and integrating Absolute times now. minutes. the efforts in Central

XXXX talk financial First, fiscal and results. our through QX

dynamics Second, that update business. And profile third, the just on NetMotion and acquisition through growth fiscal financial XXXX, for you which last month. color on some the and outlook of the provide started our go of closing

the in year fiscal up at Fiscal EBITDA June to growth our disciplined and XX.X% That a ARR operational management and $XXX.X in fairly the strong by was we for million revenue total subscription performance Revenue end the the $XXX the or of XX, model ended million, as of guidance from of XXXX with in and year. up million highlights the guidance several XX consistent our start the of at closed XXXX through that margin approximately came over to XX% bookings high range also The million adjusted year, results. level Let’s that this XXXX the XXXX. XXXX. XXXX a record $XXX in the our $XX.X saw exceeding pandemic. with prior the of X% at Total at of of recurring a year previous past bridge XX.X% that is $XXX above June just XX.X% saw course, we range in fiscal strength showed significant ARR fiscal fiscal year XX% for higher the fiscal year-over-year, XXXX we then impact The reflective strong growth and incremental our of on in year, from also well, million ARR of growth to revenue to performance in above factors that came QX revenue. expense through strong XX% driven was out and the acceleration overall

driven, underlying as that year remote the fiscal the for was the year. as $XX.X COVID. vertical fiscal you education, districts the know and strong through ARR from up of their were bookings through demand accelerated the school million, access ended by education onset Looking with XX% Overall transformation strategies at and a with the being at the prior XXXX digital by needs year far strength of core so performance the year,

been year-over-year, large of governments to dynamic Importantly, grapple endpoint into and boards bit we space are this like levels solid continue retail, product and through market, programs. growth we the and their device were Matthew school leisure, to plans, expanding accelerating see our scale and on activity bookings all populations, to tending capabilities more making on a somewhat market a the enterprises focus muted operate as ARR managing CRO, and great at and From working talk to we services compensation an changes he’s as to with and as to the that know managing other such as in productivity infosec additional light Strong government driving as we when headwinds bullish We’ll trajectory array aimed were such management growth and greatly It’s that engagement systems initiatives travel the fiscal both in consistent I’m but $XX driving customer go by in XXXX. nice expect in hit a showed management ended upticks targeted fiscal about in with growth we XX% year which financial through the verticals moment. investments by growth, million, the QX Schoenfeld, move segments pandemic. of you customer and growth. our saw new fairly Enterprise and XXXX up more sales their sales to enterprise hard methodology the now in in of of consistent and complexity at to great we’re Nonetheless, more and healthcare, year. efforts. selling go

revenue for year, up from the in past quarter the ARR X.X% this from ended up XXXX, and on Focusing XX, again, XXXX fourth reflective quarter, of quarter $XX.X at the our fiscal million, June year. prior the growth prior now the came of last strong XX%

While factors. the education dollar really a through two ARR basis of was year on up and almost It XX%. fiscal as XXXX, relatively grew a sequentially flat ended result well

to and necessarily that at delays our modestly many robust It XXXX. from this purchasing. chain. some didn’t receiving the shortage was while harvest supply supported time fourth enough second, Funding the impacted dollar of global ARR First, education customers because from Federal semiconductors, devices fiscal quarter the about and coming season more basis it heard XXX QX, districts, growth way relatively in in strongly that lower the we U.S. of still support but retention its in Administration, customers XXX%, education XXX% states Biden a impact our in for saw And was on the Schools by make down of net to unfavorably for XX% some up down with of points the from

to shift and education that continue getting And was as earlier, we That of education do the a ARR trajectory back to education’s we said structural in believe time, I levels demand their to more we see the higher some digital that’s growth. levels few in business long-term where off continue quarters XX% expect of highs pre-pandemic. it As transformation will we activity process are sustainable XX% remain previous than normal, a of solid. said, growth for and see

fairly the Looking basis, in while consistent COVID $X.X headwinds. the year-over-year and over the QX enterprise basis ARR year on enterprise despite dollar dollar and ARR, rates a on remain at a growth percentage was increase in the growth largest ARR increase million sequential a in

of The As in the drive QX Accordingly, has came year is unique our of With growth. margin topic about income acquisition let’s historical operating and second move historical XX%. some generation, financial filing EBITDA business in color the we’re our discussed. showing fiscal we’ve out coming P&L to and discussed, sector the the looking in upcoming on growth Finishing capitalize around government talk strong rest levels. and to to close been in as through the and results. of enterprise NetMotion dynamics statements investments leverage, operating the our the to central good space activity on and excess position Christy with and an continue sequential our endpoint our and growth adjusted provide the that, and improvements

and we’re terrific acquisition business fit As of the to platform. we’re NetMotion pleased to excited you it know the adding and value and a very about be prop it’s

the also de-risk long-term position transaction diversity As revenue the us our high further markets and announcement, acquisition SASE same with us ZTNA in and our time, new growth support the the drive compelling to meaningful May provides trajectory. that we and talked At long-term helps about the acquisition growth growth, that profile.

stockholders. NetMotion As million our from sheet. finance was cash Partners Benefit We became through U.S. $XXX million We loan balance the capital owned the benefits to which subsidiary wholly the in a Street we cash acquisition therefore capital term be cost the $XX process for Absolute of the the from the company all to two, in that’s transaction out set over $XXX structure and strategy long-term financing ultimately carry a the a needed. disclosed a we ability stay Software. to transaction important company million the a and provided and successful; acquisition structure competitive us through, the structure set of three offers believe to financed acquisition that out One sustainable and if

some to that with terms structure company baskets deleverage unattractive on having So to value. structure us financing term of three allow forward. short-term. the with believe three, stockholder provides as we move the capital the for there’s we optimize and go no flexibility And of pressure the and follow to benefit All loan in our unnatural

combined enables to Importantly, that’s at we supports a strong ratio going that X.X leverage to the EBITDA net us two to times adjusted a target two the forward approximately de-lever in year attain of the below continue profitability profile times believe and our debt with business timeframe. closing, to

in As past place. cash month, you saw this dividend in quarterly remain payments announcement, the our

now July unit. platform are company and are this and include statements a and VPN XX, SEDAR filing accounting portfolio are are separate work as segment. part financial as or the quarter. year. offerings the run bar or forma Absolute purchase report price business profile, our of acquisition The of these IFRS The the today, Because info, product it is XXXX it was XXXX. a of to feel we NetMotion and business is and get filing acquisition pro provide That XXXX. ended statement to we’re and the get profile, will information on some benchmark financial you acquisition Before just with audited the just progressing insights of business a and the for the IFRS to as standalone dynamics X SASE when fiscal Canadian Among we financial and into to regulators with fiscal a financial year statements providing into and combined June that a launching we’ll company, our ZTNA, XXXX well. single on calendar to we order and one later financial will integrated the for our into being overall the reiterate our produce financials Next-Gen in not business XXXX other NetMotion be operations NetMotion companies on closed The want on bar the business underway is contain a meaningful for addition and

expect, will As adjustments, you normal accounting of statements there financials. NetMotion’s would to revenue, an write down be of and financial U.S. the including the purchase IFRS anticipated conversion Canadian our GAAP deferred

While want rules the provide it’s we understand see necessary to and influenced filing not yet the color did we business get historical the course, the growth of and what some order that in today. feel revenue completed, takeaways provide coming key accounting a it on to better context have from to their as to for

in of going approached quarter customer is of key subscriptions, migrations that not the that do from XXXX. The financials levels those around One NetMotion large that to continue on-prem expect reported out the in forward. in is first rate function on-prem perpetual of with accounting the rules that’s revenue migrations of outsized licenses direct occurring things call very growth XXXX year XX%. revenue to message we to calendar growth the strong This growth historical calendar revenue visible main a was numbers

of conversion expect state that more concentrated the customer rate. don’t returns to company a and large growth level as migrations we trajectory As steady

two resulting products. will impact their the call, on is the revenue revenue an and that the their that expansions of has discussed support May also of And business we in rates. As further on growth important the accounting process of NetMotion scalability

the and an is the recorded They GAAP roughly subscription XX% revenue is treatment this from to of When by under migration model maintenance The signs agreement XXX of June is evolution the its a only and base license license agreements. revenue historical is roughly ASC from the an arrangement, NetMotion arrangement base of perpetual as life the XX% signed. of had existing which new arrangements. to were XX, agreement ratably is revenue first in, P&L recurring subscription NetMotion customer a to contract now the customers move for half of sell software model customer accounting contract The to subscription customer period this the value of agreement. software over licensed subscription in of as software total the subscription upfront its XXXX. under to of the the new value remaining the subscription governed taken

pandemic ahead into look Given with to thoughtfully our moving customers supporting XXXX. the sensitivity and them ongoing fiscal of nature the as and we

annual the XXX revenue acquisition point that arrangement on-prem fraught June at well, of arrangement that is cross-selling. treatment accounting subscription plans new point, and comp sales about is essentially successfully on-prem growth but our cloud incentivize from announced and NetMotion a finish we In with of and we expect a more While and we’re business. historically legacy the migrations launched the transition people we’re month on-prem resulting the my same NetMotion’s from earlier an that the drive hard rate more is going customers, to closing saw bullish On the this talked prop together to product From on similar Absolute’s from worked same a is transitioning revenue rate believe installation. or NetMotion. the accounting we revenue group of product to to welcoming the about, in case, not past standpoint, year, its maintenance migrations concentrated growth the revenue as level not we a dedication the and this out We ratable only Christy basis. integration we value terrific that To May. NetMotion treatment historically customer the the of from ASC to to don’t as make a Absolute’s began normalized stated the the SaaS results employees, even growth outsize a on The team in from service NetMotion in delivery as that is transitioning the cloud acquisition last speaks when second upfront effect.

to already finance business core support continuing and HR. and hard organizations have We’re integrated the work and accounting,

focusing systems We that, forward for reporting calendar on financial integration of turn go early let’s our live We and the outlook year in the expect our our that XXXX. With progress ahead. have resources ERP coming course, to and to to multiple in quarters. look on

As you the fiscal passed, our July know, acquisition. we the began new on just same the that that closed X year day we network, XXXX NetMotion

in our We long-term of business our and signs ability demand position have confidence and firmware trends capabilities capitalize embedded to that’s continuing in our the in to on and prop. growth both unique value the our market, the for show

Now, the ZTNA offerings. and with all our Next-Gen more enhanced VPN

and our model We areas XXXX from expect sales through our our with for gross marketing as business consistent investments and steady And in growing fiscal a base results solid fairly we We XXXX. continue the invest two we profile anticipate XXXX. to in drive margin fiscal fiscal ARR to XXXX and in see in consistent development. products SaaS revenue margin overall fiscal

so of And of investment year we percentage and sales market. products in first half into a new in as far the increased as expect some the our fiscal marketing drive the revenue, we

we this, XXXX at. this for product as is second the how internally, with with, how this half the trajectory of us tracking guidance accomplish We’re is our for from view and we run also innovation fiscal revenue company will stockholder revenue metrics towards that in we planned consistent revenue that M&A, period-to-period, a and driving from it With XXXX be include to deferred and economics and differentiation. we’re year revenue basis. providing how organic believe the further that yet R&D, growth to in the To we not on the investors also that fiscal with to providing with percentage of revenue management This price be the means our that we’re underlying for visibility drive accounting down adjustments impairs purchase increased in platform the planning an interests, of does our look fiscal on we’ll compensated. adjusted line aligns completed guidance complexity focused comparability to be the write add basis This period-to-period. and presenting as investments

to context, for business that fiscal trajectory the we’re with so follows. guidance the pleased provide full for longer year and XXXX, the as And June of XX XXXX, our share view outlook ending

to assumption And implied growth We’re setting to full an out setting revenue the million. the full margin in to $XXX initial for XXXX forma This forma of that million XXXX full not pro the which that calculation of conversions. note. growth million. be XXXX topic does XX% you revenue for math for companies combined last $XXX combined this on of adjusted accounting, rate adjusted approximately or calculated GAAP we out, guidance company year on we’re revenue fiscal in guidance XX% further revenue to combined XX%. fiscal include the to approximately rate initial adjusted purchase and One on revenue, $XXX of order any based equates range revenue to initial model to year adjusted is or year adjusted is wanted guidance In out our fiscal range XX%. of for help be based pro EBITDA fiscal fiscal of to XXXX adjusted company XXXX Note this revenue the adjusted IFRS adjustments to

indicated when to way. financial and continue our high we deck couple drive to sheet, information provides business low with the quarterly the in friction we in we a metrics a quality investors look introduced quarters and earnings As ago, transparency

of stock-based the we implementing face compensation item income in that financial SBC, initiatives our report statements. line these company separate expense had the of involves one how Another statement. disclosed all Previously, the we’re on together one in

MD&A. expense with consistent SaaS compensation year the sales peers, financial marketing, which our stock-based statements, and see reporting to respective item occur, fiscal G&A, bifunctional and is SaaS line the in QX periods This goods, presentation in same items face to the in footnotes have the R&D be SBC the still comparative that presented on in of comparable this order change you’ll have presentation important the and to info. note for community. As in to of cost line in detailed is It’s the meaning of which SBC now conform is of a and reflected P&L they how reclassified info functional XXXX been present comparable just to the is you the more

reporting glad you questions. further look and efforts time in continuing we view to reporting, to quarter. company transparency, and consistent to our support your driving that, We area our disclosures forward keeping for SaaS we’re be of practices your to our with look to continuing and With a each Operator? peers. with We’re simplifying this our and appreciate call open apprised the at

Operator

Instructions] you. Thank [Operator Okay.

question from please Walkley Mike, ahead. from go comes first Canaccord Your Genuity. Mike

Mike Walkley

Great. of revenue XX% taking walk my for you to strong, you’re growth maybe the us and puts laid to that segments you’ve through numbers Absolute a adds guidance close different and revenue through, NetMotion congratulations us XX% forma for and thinking walk and I strong Again, Steven, just growth? takes combined out about Can how just to us? help maybe for what your that year. maybe the pro type Thanks to for NetMotion you guess, for business question

Steven Gatoff

on it. usual, and Sure, team we’d Christy be I think will happy I as to tag and

that And that I not products that. dork Mike platform. the folded our a But they’re segments. about to like sound think, part being fantastic finance key actually they’re I is hate are into

our there so have a disclosure we’ll And combined them products, each talk separate will NetMotion. it’s business, be reporting on the the footnotes for to some material that we on be as be acquisition in revenue quarter, won’t will because that we’ll reporting

driving in historic basis. the two companies. growth of So you’ll you ARR are each really nice see the a is But that have of for strong that books business premise on that

trajectory fairly move through are but growth on a that both And the fiscal contributes fairly XXXX product we sets. then conservative so business. taken we’ve the approach, to as bullish with And

enhancement, so remarks And customer were two we on the buckets And we the as incentivize, together there. in of more year as product selling from something comp ago, really their a we’ll with far them then so the are as all synergies exit base and of year, right into launched the likely. products there’s financially development of the or next good to then and that And showing synergies that this businesses new closing marrying into plans far versa. IT obviously and see vice not falls into and existing up until two product and really around important. synergies Persistence our P&L, are and There that the is that time, mentioned Connectivity putting that the at cross-selling takes moment the and

how so that. our internally been came have And thought planning and just that’s obviously going off with we guidance. We about through

way. feel And year, so and to thoughtful expectations set good the about a in wanted we

Mike Walkley

follow-up that quarters? about maybe just And this, little vertical? Thanks. several supply more for, these are impacting sounds And quite of the to be they’re shortages. a are shortages impacted given for color these thinking is did ongoing PCs but also you within education by also going guidance constrained just Great. all been a It’s PC some like how at strong,

Christy Wyatt

bureaucracy them we system. touch the of kind the COVID in was moment, one sort those it one would season thing on more So, did there I in the of are flowing how to was that around while that for and be of through sort money and first had flowing, the really I we saying call take piece seems about of been the funding sort although it, eventually steps. of of a harvest normalize was the education it, We is think think within thought all influencers, components the Mike

how of seeing to has still coming think quarters. So, work of very the demand, changed that’s view kind I we’re anything don’t strong my going in through

past, this people side, PC. a as are On PC with purchasing where in and about the see to licenses that software the in we if tend we’ve combination talked

enterprise on affecting a customer. when or And existing environment. expansion And activating business that moment, don’t their is with devices. after see it we’ve licensing we devices about within So, land existing a expand how customer we quite a we then our talked bit mostly

we that from on new see you other. I’d somewhat there some sort part. that, of what the so net was logo and in And a quarter. Where some And don’t saw connected to it and we expansion And impact one unique chain we the little education say was segment nothing any to past bit distributed of this that enterprise; saw across of is supply direct business. might think that’s on I shortage that see PC

Mike Walkley

Great, thanks.

Asked to I’ll more of you the both line. one question pass kind and then

just us can kind to forma full consider seasonal NetMotion. year help us, in of the embedded some of guidance, year towards you cadence trends pro the remind full any us since Just of that quarterly guidance, for haven’t to a especially seen are

loaded then laid the bit, more OpEx a these steady R&D you back kind front think, targets? end increases? some EBITDA on throughout do increased That has be Thanks. expect adjusted loaded? Steve, might to And of investments terms the end you to year? more be seasonal maybe margins how how Or sounds little like of in of out but So, that just any are trends?

Steven Gatoff

Awesome the takeaway. questions. nailed key you And Yes. it,

the EBITDA first the to product of margin the [ph] compared more of bit a have revenue you we margin the bit a R&D year so gross have a and expect half adjusted said, we little in it’s – year, reason little engine aggregate set half a that specifically profile our little Adjusted marketing we have in EBITDA higher the second bit more steady in half main the in as in bit higher, about, And up EBITDA really So starting in first to margin, sales lower. year, expect margin is as little you little the the and year. of talked to our sorry, the bottoms an will invest we through first well. a bit but kind a and half, percentage of as expect fairly as of investment for years, and then, prior but dollars the

be EBITDA half a the in And lower. massively little so be a not little the bit to bit year, lower but back adjusted of expected

Mike Walkley

clarification quick and up year, in just starts future or exiting I years? pick the but two And opportunity on the to guidance, just fiscal ahead, current past cross-sell line, between invest the to also the know into really the it’s companies really great to big yes think for fiscal year and

Steven Gatoff

getting is I basically and is keep getting cross in training sales an and armed teams on have standpoint, have of on your it, and not year. the is answer and and each plans place they all so out just we trained move certainly very are we’re from the as on day the people that’s today operational and products, to least saying actually can assumed right. and diverse conversation the other’s large year, to which in them on not but in But is cross-selling, focused really the a comp we educating Yes, assumption pickup this point be first at fiscal of bring think The short half topic, because accelerates them that in. that the

Mike Walkley

Thanks taking questions wishes success integration. with best for for Great. and my the

Steven Gatoff

Mike. Thanks

Operator

from James. go from Tindle comes question Raymond next please ahead. Your Adam Adam,

Adam Tindle

thanks. on of I ask a maybe NetMotion team Good strong call finish to congrats afternoon, and accretive characterize has Okay, the wanted can key a year. to to spread. Christy you and the Last on tag fiscal Steven metrics. number

or entity the to XX% days you’ve for XXXX is margin forma of growth about how low wondering last your in the that XX like of XX%, is I’m to guidance teens change, what about past. Rule talked growth, This initial revenue that You the or XX. leading commitment your something you and outperformed pro double-digit EBITDA Rule fiscal more and obviously, this migration acknowledging surprise that’s the over strengthens XX. elevated metrics have it that a learned high call new

just you’ve I’m that too past So unpack days. there maybe over XX some there’s much or some level reading learned is changes if into the this of conservatism

Steven Gatoff

the Most we the that get and of moment, no and quarter-to-quarter. dare and the revisit would disaggregate the team’s important information. as has true. beginning say what holds And been a to and And surprises a to think together still business just news. I through go setting and no we said, The with guidance approach the bad guidance to tremendous coming we is conservative integration taking approach year tied been to has which sharing how really offer to takeaway we and year thoughtful, of fiscal expect in I’ll I the economics

And lot of is revenue historical said was of kind out accretive both some outsized that see had accelerating of that the wanted of economics of se, offer the for XX% goofball guidance, And so really to still seen that but line because as that’s in top really that call we the around we of and of right, what revenue growth, upfront, non-recurring a we financials as per which as stands that’s this so far bottom line, on that kind degree. mindset business. the the on the we’ve on the accounting to on drove

and really revenue color or that synergies not the rate in our And normalized have as speaking to to with the in saw baked gave state based on of and to of it adds profitability. the business and numbers adds we that growth what still edge use was quarter so last the some, on were then that some rate, when believe was case we that on growth we nominal the steady still and provided run rate it math based we our announcement,

Adam Tindle

mechanics out did comp I that the and get And the be that’s let’s analysis tomorrow’s, visibility want getting maybe that. you it just some a sales very any of helpful, might or of cross-selling, level ask news, plan any figured the behind That’s can you’ve here, it. unpack done customers now dollars on that way on for shared clear. I that into? Got some synergy also question table to you’re

Steven Gatoff

Sure, sure, we’ll tag that.

plans comp obviously, go to instead now straightforward. wanted folks NetMotion sales our on vice-versa, So to resilience. we sales incense fairly really in And sales sell force really We in bring was to folks it NetMotion wanted bring deals.

far be as, overlay, almost as And a so we attached so an and paying deal. you plan conceptually the really twice for would compensation

sales right? you example, customer, they get – core it’s feel a this, Greg, full product, almost complete the our like NetMotion not as little so, deal. we’re reps So it’s for commish some their on a hey, oh, a a they good can like credit for if small at closing for got really And side, paid doing product little get

can well, they thought transactions So that we sure an wasn’t that to how was through of also part of these for paid that achieve comp half comp to and plans. their year, they as a folks it of wanted folks, as nice that or that’s have make have at looked we it like it get and feel can they the the for the quarter

Christy Wyatt

thing I’d is only add decimal points. may that data The to be two

The against the second plans selling half. half first and first set is, comp our we

fiscal So place the in plan two we’ve is that quarters. the first really within is, second for then small them. we’re the nuance put incenting And

in but the retiring of there’s not commission terms So exactly connected right. quota, a same,

And bit but out been we’ve together, a both pieces. reported quota incented we’re So asked think out overlap. don’t on I to folks lot those that. thoughtful sort that them of quite about all there’s But across mapping little are get we a bring of we to across the how we’ve of sort customer the as you of there, financially their about there’s additional of platforms think a whitespace, to customer right, when we there think sort take I complimentary of we which of footprint if is But some area completely about in this. whitespace part mobile, of us, that is a a overlap. nice some support talk that lot

office The up-selling of over for last and our the we we’ve thing them about today, complimentary, as sales sort also connected. as I’d first half some add as within time, functions the running are selling but of is, about So, talked first point and right, assuming, back the when go-to-market we fully the the this product but teams organization parallel at expansion running year, started accounts. talking we’re integrated still integration, are are existing transaction

nice And so business of top slow have. what some not find either opportunities we’re to give the we’re to lot on of they already side down, them a but new trying getting – accelerators

Adam Tindle

Understood, Thank that’s both. you helpful.

Steven Gatoff

Thanks.

Operator

Scott comes ahead, go Please Scott. from Needham. question from next Your Berg

Michael Rackers

Berg. Scott Michael for today. Rackers question my is for Thanks on This taking

and some made few have drive over changes customer past revenue to guys retention you So, solid higher the quarters.

some churn quarter? the in improvement give on us revenue net the color can have gross rates, We retention but you

Christy Wyatt

I’m can total. investments partnerships in of had as as think a give happy some improvements some out report on the and And quarter But we’ve that. in, the talked report we renewal seen to renewals don’t we’ve about made Steven comments nice we the we of of I around start but we’ve some process. did you the past know, a this the we’ve out in rates, of then about jump result few formalizing the the

go across to year I across see do is to think the of is, what more, and continuing and all we the next going continue segments. out you’d selling function expect tiers efforts we’re into different as build renewals to to separation we’re more all

us we’ve when I we business about growth the gotten has our our probably within into going new And think ARR so it’s best area the by the the a lot or is we over how think the very segment kind can’t And of right? talk with we’re that’s weeds a getting attention. in we continue Without to to company. within with about the year the place closer where which think sort other that that and happy within initiatives we of on of the various different customers, which of this us pay increased made connectivity hold. of some past our much taken just areas, of helps have investments sort things I think also, customers, about I I part feel

Steven Gatoff

enterprise around as blocking Michael, Christy on from two well what it renewal rate. good expansion and Christy the that Yes, and through expect to And full nuts expansion and year some continue improved. said, of as Obviously, A far plus XXXX that. lot outlook we the through see and as is said opportunity to pieces. as fiscal move you nailed our so just the renewal really and the has how business been as base real as we bolts has tackling the

Michael Rackers

Right. more me. from one just And then

should impacts you bit the little quarter, So, you what a moving and on Revenue just mentioned in expect changes earlier, new talk you forward? we Chief Officer the bookings a brought quarter can of type during about fourth

Christy Wyatt

happy And I’m Sure. too.

the though first into Matthew put year until not started even end, weeks of him July. the actually we role before did the two So

give team. Sean observe and fiscal end kind an we so the And the Matthew sort start the of out year. to And had of actually with connect continue of opportunity to

of it’s of in July. clearly think happens was our it’s the whistler whole company virtual. in it do sales But also I week – years, normally, last couple by third been been third followed We kickoff fourth that of the company for week and the kickoff,

that’s of leadership very, is think sort additions team. And Matthew key because own so his in made why several a very new I short time, running. into ground He’s period impactful the hit of

practices his site now management and going growth of earlier, some inspection force around out team a his couple days As leadership he strategies. with has pipeline Steven some through for pointed best and work off of

I in of time. he’s had a think period very impact so short tremendous a And

for a Now, into I that running the dotted the line teams NetMotion, one that moment sales are mentioned though the ago, reports part, two even Sales also in parallel, Head of Matthew. just

already he’s we earlier together strategies of the both sides two working inclusive as sort halves really talked So, with on of sort and those cross-selling about of well.

period So very a big impact in very short of time.

Michael Rackers

That’s much. me. all for so you thank Right,

Steven Gatoff

Thanks, Michael.

Operator

[Operator Instructions] David Kwan comes Securities. from David, ahead. from next Your question TD go please

David Kwan

Good afternoon.

you a can side, bit customers? the Once things of slowdown change and term? the quarter, with also of education more guess, looking grow then the on the any could timing for trickle wondering Do the segment? kind you the enterprise seen And of it line quarter? business taken at kind education Certain Do you sounds the longer visibility roughly have over guess I expect the your have And that normalize saw that funding? while I that this a as like since in of it here? government still pick a up? you end education maybe to was down just to issue fun, when Just see is, it

Christy Wyatt

Hi, David.

their that our think we’re sort We did signal a at point through some to education this forever school We changed. period be don’t growth thing. know that was wasn’t I every going pandemic did going for where clearly of hyper So, has view transformation. on that

is that components there’s in the mentioned I think to think a what comments, I three education. as in we’re I actually seeing

and education their new ready is where Some I the that get how are and think this are it a is them year. it figuring for devices all out school folks busy time of post-pandemic in to normalization, –

collected some them of Some them, didn’t. of them

lot a are a we activity And in still seeing that of so of lot and demand space.

to of expect We it by through that or supply view see see has pop do growth strong to saw new to see XXXX it – changed. visibility continue starting progresses. before. we they can chain was to we started it earlier. don’t about up don’t of into growth Some rates deploying devices to that in rate is sort to a little year our settle what had dynamics to think as closer But through FY QX the with and impacted going sort to the closely of hoped the demand the we watch talked to terms to back sort all we go we’re bit I normal, we how of QX I I say of

David Kwan

refinance potential that the side, debt of like to bank prepayment helpful. penalties, I your hopefully can talk maybe about And stuff debt. got options that’s down just the No, with on maybe road, is any was wanting some you’ve curious options debt look the get cheaper that? What

Steven Gatoff

give debt in comments carve structured or nice we penalties, debt. are us of or not that mentioning, a whether us other have bunch non out that would a some flexibility baskets lot there of Hey, so or David. onerous outs were the types cheaper and terms Yes, cash otherwise, swap of we to conditions it’s financing, paid that that and allow equity, we prepayment

said, financing we’re said cash who well the we over on meant And the we sustain is we managing what on the of in what as what And capital pay and time. focused can over the notion putting so long-term. place a we structure leverage really as whole that package we, meant coordinators

structure over we is economically be will thoughtful to some leveraging attractive. that this amount be what about of but where is want very cap it the And really something makes so most sense, de time,

a XXX. there’s penalty. way, your takedown any not beyond is prepayment at big baskets And So at by then one, the onerous Mark,

so it more even attractive. becomes And

David Kwan

you Can the about still you’re you to rate, are hedging what planning That’s then and continue talk exchange assuming our question foreign program? helpful. And on guidance. last

Steven Gatoff

our on basically, yes. day we Sure, We current forecast exchange rates. philosophy is

on rate we is. So, not the speculating what are

like our extent to right headcount is or do affected so expense favorably, XX consumption chunk in expenses, of market. model, we currency what and expense, our the though, And of the a unfavorably, a On or else Canadian amount everyone mostly on profile, we headcount, it would we base biggest headcount, of plus USD changes next get our big we GBP. large functional, have percent have our

And forward so we currency, we that lock we’re have forward contracts, rate. very so buying where simple in budget

much over time pretty our lock really our we vast standpoint, majority would OpEx expense an the from of and fluctuate P&L revenue in the that of the So market. economics with it’s of

David Kwan

thanks. Perfect,

Steven Gatoff

sure. Yes,

Operator

Your Please Moschopoulos BMO next from Markets. Thanos ahead. question go comes from Capital

Thanos Moschopoulos

back budgets can Hi, in coming conference months? good afternoon, terms EBITDA in of in guidance, to you of terms normal whether you’re what clarify, going and the and assuming the tradeshow that’s

Steven Gatoff

Thanos pleaseclarify, the of… we can terms clarify

Thanos Moschopoulos

what assuming front? kind it guidance are are on tradeshow of levels that EBITDA so brand Yes, is typically implicitly, budgets, travel you’re assume that pre-pandemic conference, that your

Steven Gatoff

Yes, question. good. Good

earlier this We’re talking actually about today.

you would have a year from come is past customers, XX% to still conference from You a plus, sales XX% saw for it pre-pandemic, So, be. kickoff, T&E a still we some budgets of remotely There’s starts virtual people back close still a to right? asked little but spend money. less, President’s for it it you still was to Club, what spend which assume so what costs normal a have and still the everyone costs obviously events but that to it of anywhere and else have bit, nothing XX% happen, some

as move nothing super assuming way back in work all year. that, its we’re so QX right and to our we meaningful And we know. profile through now as the that Obviously starts

Thanos Moschopoulos

you with And recently Alliances backgrounds. Great. interesting obviously hired

guests of approach on with Persistence as what it Service? general and on there a the focused So maybe update Thanks. be expand terms is in just will

Christy Wyatt

too. Happy Sure.

product, as of Persistence worked said year, from on our as opposed talked to the were through to on we some since the over to that under program, the very mobile relationships, we’ve had broad, fulfilling shifted a focus had the of more very a banner going the very where Edward and the side. us comes Samsung, pandemic visible Alliances catalog sort So, within similar slightly Application of especially about lot role he we

to he’s sort of as dialogues I some of what think, going Persistence so and establishing very those in taken for formalization responsibility on do reaching Service period been as put and formally to out around as or program, a broad really short how program. relationships is the in lot further as a that already, And of of a sort time well around

So with of is work product but technology, in level. a really the has number continued continued to we’ve partners, taking the work, it background, taken the the to on we’ve right, this I next about small who think

more we’ll we you all back update So the to as go and through come have that. on year hopefully, on

Thanos Moschopoulos

Thanks. helpful. That’s Great.

Steven Gatoff

Thanks.

Operator

question from Kevin. Kevin the comes next from Krishnaratne Your Please ahead. Desjardins. go

Kevin Krishnaratne

there. Good afternoon. Hey,

thoughts existing be and increases, flavors sort models, think can an from expanding offering to on that the customers, various different of whether they’re the for of product, you NetMotion there expand Just in the of opportunity, in it, different XX-XX? potential customers, pricing year. versus it of whether within terms, about on, of and about do there current the that customer endpoints trying see the regards and one with the with Can question just that’s, you to understand I’m new you kind various for are land Absolute talk what about, for different product So, mix you number see that maybe existing me NetMotion with that growth guess then to what Software’s and coming pricing your is for trying tiers talk might where base, base. levers, we the assumptions I’m growth the I that’s understand

Christy Wyatt

talk it’s Hi probably we’re time lot it spending looking early about something I although pricing, think to a a is Kevin, that little of at.

the think First on in I steps, sort changes, to the channel it of sales at a with of our of sides, I couple of probably value structure that is kind look in and journey of takes as within. on of well some the training right? both especially pricing amount this place up the And OEM time, all, I the as channel solutions. of would bringing think new kind there terms of those

is is lot pass cross-selling, of first going the really So, you’re to think see there. I And right is. there it really potential a

don’t then And opportunity a to core we an of had we period example, – customer area quite we that our mobility and to customers base, haven’t across about for capabilities able time product. adversely, haven’t connected So have is now to well. an talk in being to offer as which mobile some units, we their

our as just they think so XX,XXX about I customers quick X,XXX customers. to XX,XXX And – I a customers refresher, mean, had

So, approaching I combined. XX,XXX think we’re

take is we one course, likely we kind do device our And At do you all of third, intelligence the around from from user that things The think the interesting How that’s be connect how this view of the data, platform? from we that network start second – and think if bring the once that, happen. going steps, when into through what’s more right? what would on inject the across And piece core the and we of of what do we the integrate where enterprise. common I I and they’re product. actually core – of to into doing

kind we us you’re see go the through months. next going to the that’s so journey XX of go And as through

of but talk sort until and combined pricings a I’d the roadmap, said, further a thinking. we big, out as come little and those about So, milestones are I there back say are

Kevin Krishnaratne

maybe Okay, just clear bit to be there. a

isn’t really two the So the I mean, later in cross-selling year. expecting between much your on the way until of guidance in

about there product, think NetMotion opportunities accounts. So, talk is can maybe nearer has then I’m is NetMotion within about X,XXX just like, trying the the multiple within – thoughts NetMotion with bundle upwards. pricing think just NetMotion. Absolute Software different moving to be pricing trying where your see tiers on about could and much Absolute like the within we I’m something that expansion you itself, those within customers, there And natural just talking to about not progression between term those

Steven Gatoff

Yes. We’ll, Sure. little a it. on taking bit

not on the both for set bullish but has the revenue takeaway till, it’s of Similarly, adding the of run point, not profile each base any products, been being from your the on are mining, thing. to just been has in really kind land-and-expand so But cross-selling, the way counting the has year complete, which a of you historically, of not end growth and on now the really model So material a been the to two. nice we’re And spot their trajectory the essence, just growth right is that existing we’re nice NetMotion got businesses new is on, customer to also logos. product the middle quarter between from blend products.

diligence of the we management learning and the And team and the approach part customers. and was company with attractiveness so doing CK that to with when working their were

And expansion and ratio answer it’s renewal core MDR so the is, have upsell, logos. customers of existing if as really blend nice well both a rate short a of as new

Kevin Krishnaratne

very the great. I’ll Okay, pass Thank Thanks line. much. you.

Steven Gatoff

Thanks, Kevin.

Operator

and We that this questions conference this today. further thank concludes and for are disconnect ask time. Ladies participating at you no please There your your lines. call gentlemen, you for

Absolute Software (ABST) 11 Aug 212021 Q4 Earnings call transcript