ABST - Earnings call transcript Q1 2022

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Operator

Good afternoon, everyone, and thank you for standing by. Welcome to Absolute Software's Fiscal 2022 First Quarter Financial Results Conference Call. All participants will be in a listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Before beginning its formal remarks, Absolute Software would like to remind listeners that certain portions of today's discussion may contain forward-looking statements that reflect current views with respect to future events and conditions. subject results risks those to these statements. are could uncertainties projected statements forward-looking actual cause differ such to and assumptions, that in Any materially from applicable as in no new undertakes to information, laws. result otherwise, forward-looking update securities any or call Any statements, Absolute publicly obligation today's except revise future be the statements date, and events contained are forward-looking required as of made of of or whether today's Software a by conference may included as

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

Christy Wyatt

thank operator, call. you, for today for joining and Absolute XXXX Software's you, Thank earnings us QX Fiscal everyone,

accompanied high I Promoter SaaS for to the all-time know, year-over-year am strong year. and revenue our is you growth quarter Score proud XX%. the XX well of by of year-over-year ARR a report first achieved XX% XX, above of company. industry NetMotion, in and We also of adjusted and As that acquisition margin of we an quarter, our our adjusted start announce average EBITDA XX% an achieved of Net we including the to this delighted the are results a to of growth

outlook, in us to the my which start remarks. full year strong gives increased will cover following Steven Our confidence year our

issues growth quarter. activations continue we and cloud-hosted the across see observed steady products and of impacted and chip ongoing shortages XX while of in million supply to the partners customers, this to effect we endpoints the reported which approximately business, chain some Turning have our our active

business ARR law growth of of Our international NetMotion strongest lines. and Armour Absolute the Slaughter and across May. one Under and quarters, and government product its include enterprise firm, posted Notable XX.X%, strength the wins both reflecting with year-over-year

business education notable America. in continues to with demand, Our win a see strong Latin

U.S. additional regulatory working through As are helping focused with we support funding makes our customers to partners federal transition. its this the way schools, through system on

the in We have been including working services. SKUs managed additional on development student-specific offerings, education of

NetMotion areas specific go-to-market at products. in I importance: particular As our with our of on we progress integration focus QX, a two look to on want touch our and

First, the the NetMotion marketing quarter the to end Absolute's of smoothly, With has Matthew accelerate functions integration than integration us integrated we Revenue into Officer, organization NetMotion the of Chief QX. his formally business of enabling teams selling earlier as planned. proceeding been Schoenfeld completing sales and his first the at

campaigns a Matthew also joint We NetMotion's positive sales management both the on and Chief and operationalize have joint Officer, messaging processes developed of The Chief teams and begun Absolute's marketing combined delivered have as Officer. Marketing Marketing Joel Windels, announced and go-to-market to the promotion sets. initiated effect see started and customer his pre-existing and also rollout of the force both to sales across as team performance. pipeline the already have we program,

strategy. their first and help for nationwide network to Lenovo the America's our We built AT&T In Absolute new reach XX FirstNet partner of Absolute's strategic saw partners. a NetMotion partners, the partner with global their as one power offering, July, in X,XXX quarter, our reseller also as recently growth of And responders. named adding active continued four the in named total only security program of everything-as-a-service product to expanding solutions thereby launch

program, our Service addition they tool; their products, addition the for of the new making and part phase product resilient, first announced Defender, first Herrema, and to a would working independent of independently healthy map. Zscaler a creates self-healing stronger This product product Explorer, as strategy an application. morning dozen with and Smart the NetMotion a products, Blackberry, on leader finally, step our am their Cortex, focus NetMotion combined our combined a John and including embed or access flexible we Application for base. as entire capabilities installed, with includes to Application to to Absolute business and have and customer Endpoint data catalog, Intune Sprint. to steadily stay effectively updates Trust security and assume seasoned enables Service, responsibility customers to strategy, to helping Microsoft Turning available APaaS, and monetization Other Application platform. Eye we product truly road and partners, Persistence road applications, vendors data working integrated Persistence name we ensure a offering, a integration Complete share of new into unique announced endpoint in security next our Data industry's of notable Resilience as of additional John Alto Plurilock. We made product security And the teams our capabilities our into been opportunity a secure applications I and Persistence of posture two their whose software Zero mission-critical few. this now Microsoft and the announced a the exploration map include: undeletable we a added our Palo as product Application pleased part more that and Persistence announced Persistence experience than customers the our across our

to strong unique market start have before forward us. we As fiscal a opportunity with this year, a look we

the experience. connect era, new anywhere work-from-anywhere is needed the user world entered with to employees As from for a greater what securely

and truly the ZTNA to is of value industry's enterprises undeletable self-healing cloud, realize opportunity to and by to resilient, promise that on working and the Our remote enable providing mobility solution. deliver full only

experience to our self-healing Trust intelligently security will apply the risk network from this to applying technologies connections disabled We that endpoint and firmware controls and access for network. us and network and Leveraging enable will combine unhealthy application endpoint repair to cannot and Zero automatically by category, combined course, the of growth assessment and detect achieve prioritized billion enhanced to from to And of for to be control way fit to to we lock, be is $X.X the principles the able XX.X%. is all wipe ZTNA rate intelligence no conditions. optimal segment billion access broader continue when remediate to other risk freeze annual most by with a grow device the appropriate and to any XXXX, within $X.X SaaS estimated highly risk. applications

been team. have world-class steadily a building We

We both the value have in capabilities we ability this development to and future. arena. to position making in technology unique to the help IP us investments segment go-to-market this and are product and in for rapidly deliver market The significant growing customers

focused For like with the to against plan. our more I today, And details hand on remain to on over it we that, execution financials. would Steven for

Steven Gatoff

year outlook government quarter bookings. afternoon, first, appreciate Overall, the strong in started QX off I'll and a total us. minutes. today: few talk second, about solid in Good Fiscal to updated talk enterprise Fiscal in XXXX cover for across We're We full XXXX, Christy. you through XXXX, XXXX. joining start financial July a you and new topics our this and and our Fiscal like Thanks, everyone. logo by record customers and ARR guidance more driven I'd go X, two our for with which financial a results; to through growth

acquisition investors as basis include provide Christy IFRS the NetMotion's that excludes operations we're financial our our reflects accounting is closed and on our the the In information to adjusted XXXX. any that with reporting results purchase first mentioned, of how the continued As impact manage QX an deferred on measure NetMotion, quarter we revenue. July X, on that business, revenue drive

ago NetMotion year-over-year addition, basis any the are do period an of GAAP-to-IFRS includes the that in but that In in not on factor XXXX as-if-combined comparisons results adjustments. U.S. Fiscal year based

believe adjusted the helps investors and revenue provides website view find can and that Business meaningful financial XXXX business available Report forma we're EDGAR. Fiscal filed We our making pro and time. section on more of our SEDAR that on Acquisition Investor and we You XX the metric the transparent September in results progress this in of and combined the Relations over a evaluate is combined the

on $XX base NetMotion QX the was for for as-if-combined an The on that Fiscal Fiscal year Adjusted deal as in complete QX. prior robust large the results. ARR strong multiyear by million a Now basis was XXXX. revenue was in from driven XXXX, to as well our performance up QX signed XX% revenue growth

recognition being value remaining revenue deals on-premise discussed these accounting to of the result as in recognition we subject be incremental on of prior contract that revenue over million in upfront contract. the IFRS deal calls, of is value revenue when upfront approximately will the As the recorded duration XX treatment. of contract half of ratable deal is the The over revenue ratably $X.X rules the executed. subscription The this in contributed recognized

QX. As benefited I'll revenue a in about talk this EBITDA in favorability adjusted moment, also

impact and Complete important growth previously on that accounting support migrations an revenue the resulting two Core the future will that discussed, As the have of NetMotion we in growth are products rates. also revenue will and process but scalability

recognition to underlying migration to are and subscription arrangements on-prem The agreements in contracts. customer with migration legacy customers results size This first of ebbs is of from subject license the arrangements. dynamic subscription business perpetual recurring that the flows revenue that upfront

second Complete accounting that delivery, fluctuations from to on see subscription its With of migration, life cloud products typical a do in The we dynamic, on-prem revenue. Core SaaS is in cycle, move is is this earlier any not to the the expect which model.

$XXX.X XX% subscription represented our QX, will of ARR and at that strong and the reflected ARR The the revenue. revenue accounting activity and QX. be Unlike an Looking performance in of result the IFRS and in the not basis. government an by for impacted growth XX% which came in revenue, as-if-combined total license of on customers, of recognition on-prem requirements at year-over-year the XX.X% free complexity increase enterprise in from business is ARR quarter, underlying ARR strong million total volatility

grew $X.X year logo basis. which basis, Importantly, we an ARR the an million Education ARR on saw of million, total end QX, at and as-if-combined in XX% XX% the record on came new a as-if-combined both from million, of $XX.X by year-over-year represented prior uptick OEM ARR. up top out XX% the growth at Fiscal partners $X terms ARR fiscal of showed strong On quarter grew growth, basis from nice overall rate. in QX, in ARR a education our a and business closing over also first dollars And performance. approximately sequential of sequential

that deal the XX.X% a expected million, prior sequential the and just as the revenue for upfront or higher quarter, I profitability of in quarter XX.X% adjusted QX stronger the EBITDA adjusted was of accounting revenue. the of to for large on This was Moving discussed. than $XX.X than result

of effects the calls. the QX XX%, accounting Excluding rules, discussed few would investments the EBITDA have the business margin about that in been reflecting adjusted on the revenue incremental we last

said, the acquisition-related quarter we've Absolute from leverage provide. we're in June the the $X NetMotion expenses go-to-market build decrease the only acquisition, been efforts, to at and endpoint that on cash the $XX Backing continuing the Absolute's million ended result Taking cash of a view investing operating is a in of cash the out invest as million in combination a we're that quick in QX. unique Persistence OCF paid sheet, have of resulted balance negative quarter-end that completely and products our look R&D the new of approximately As can to IFRS and would September NetMotion at The XX. expenses, flow. prior

the year Additionally, million, collected lower cash primarily is by the to from more year. contract fiscal longer compared in XXXX, prior OCF being terms average XXXX $X QX prior approximately by

that to forward. and the approximately supports believe of combined leverage will solid enable to and the delever, continue We X.Xx business us profitability profile the going

XXXX. guidance. Overall, base invest revenue continue ratio business two-year As XXXX we of as below our outlook turn expect net the time frame. ARR traction let's fiscal from to our that, a combined results solid we for in our discussed, we're business targeting With we've EBITDA updated growing to in the drive balance operating and model debt-to-adjusted to fiscal and in our a Xx

see percentage our second the half profile overall level year, for as adjusted indicated for previously. to increase as the the and dynamic in that continue consistent We as gross fiscal sales expect XXXX marketing to fiscal the a margin we've and of XXXX, remaining with of revenue in investments with similar we R&D a

platform pulling additional partners our to are and We well opportunities. expect differentiation significant these expansion product support investments drive our further as the to of into us innovation product and go-to-market our channel geographies, presence and lines where as OEM across

outlook our update XX, to XXXX, pleased we're XXXX, ending the context, for that full with so And follows. fiscal June as year

XX% XX% from $XXX million. For support, to are previous-issued of a basis wanted million fiscal the adjusted revenue to $XXX With growth include previous now our appreciate adjusted of to XXXX as-if-combined year to for EBITDA year-over-year of range other any open adjusted and of our be raising guidance our for adjusted in from previous million conversions. based that fiscal that, any XXXX presented we're revenue which range XXXX of based to we're rate revenue XX.X%, combined full adjusted a glad guidance implied be in And closing, and an full fiscal fiscal call approximately XX% accounting to on full are also to This GAAP-to-IFRS XXXX rate to our guidance, on XX%. margin questions. a the XXXX, we not now from and range range $XXX.X growth does revenue, XX%. calculated equates XX%, $XXX.X time guidance or raising growth purchase is and the year we to XX% the Operator? your the year to of reiterate adjustments we company In fiscal for financials to an metrics on

Operator

Thank you.

[Operator now ahead. question-and-answer will Instructions] from Berg the We from session. begin Scott question Please Needham. first will go come the And

Joshua Reilly

Josh our is guys. on for Thanks Hey, taking This questions. Scott. for

Chromebooks, for space. in market the So impacting guys all strength this that PC years, familiar PC in of maybe that surged particularly point. the the I just shortage have faster But in starting shipments think lot is than as how with is offset units really the we're you Curious in of what education the industry, last Chromebook players of penetration couple off, much these is with at overall over in the market? a industry your chip

Christy Wyatt

question. Hi Josh That's a thanks. great

sides, we've we've Chromebook So the say incredibly would on supply high seen I remained volume quarter. – different while seen, I that definitely between some effects and I both we've think Chromebooks chain say, PCs, past this would

of as what we is more so a a And timing tend this. see to result of delay

customer additional could licenses, order and their before receive software of a may larger three-plus distribution of kind a an So well. hardware, as delay impact they have that weeks the placing of

So on the applied differently. seen I we've – of don't the specific know across unique, partner, we've because anything I would effects say, seen the that depending segments seen be sort broadly we've

Joshua Reilly

the Okay. Great. And metrics. then just a question on

So you how going And much strong core following Absolute the in relative of now any curious sway if lands in ARR to give given size that Curious new the was logo a can quarter. business. color us on forward, quarter, can the acquisition. the NetMotion their there's

Steven Gatoff

acquisition our Good of Hey, growth going question. a now that new profile very is answer it's the logo forward. is important part And and Steven.

on is in new the very a model nice of dollar expansion net So lot land-and-expand, we solid be in the part and But really retention focus that you saw logo you a sure. have that business, the to see model nicely of the acquisition forward, both value. contributor, expect driving reasonably come the of a and this of for going we important, it and sides is and quarter. It's

Christy Wyatt

– second same I part of portfolios. they're deal two question those lands, would and between the the your I on was I about the product average would initial size about say the think

it's customer, that to of to starts to tend deals initial those quite Regardless that that that the we attach how after happens expansion and be small. So upsell vary.

Joshua Reilly

super I’ll into back queue. it. helpful. Thanks, Got That’s the move guys.

Christy Wyatt

Josh. Thanks,

Operator

will Adam Please from Raymond ahead. from question next The go James. Tindle be

Adam Tindle

the sales to wanted Okay. Christy, I Thanks. start integration. Good afternoon. on

between that think businesses. point that’s two done the at I surprised already positively we’re this

Maybe in importantly, first of we the this. more driving is two team on you enabled maybe just that for synergies in that opportunity questions are on changes to you now on the combined. And could faster that touch how about around for So what or place go what compensation think could that. entities double-click the a couple incentives and Matthew

Christy Wyatt

Sure.

clarification. one quick maybe So just

the that that and is don’t said the and people kind into had pulled I of the we of integration think integration to end full definitely that integration QX. set done. the were expectation completely we want of accelerating I marketing sales

We December. the almost have end the parallel been our QX, teams in that and of two running until still in had been intention

We I quickly. calendar selling I could that first the perspective, to integrated second-half we the teams we functional ahead from would think believed way plans. we do comp motion distinct, as to the year. integration move more in start come say still and somewhat start a But you’ll are more see those and a end together

So annual we not plans, do plans. six-month

about the think as comp into do say in of we came we’ll this we I the renewals did to lot strategy remain had of of as as of second And know expansion. couple we past the part we’ve a in sort more formerly into versus year. plans We selling so increased go outsourced talked I integrated things how Their our of A reflected unchanged. the separation investment we’ve a have year that. previously calendar that or we that about quarters. half

I as think, make terms on as get sort we well some that of own net comp as to And in-house taking really renewals team evolve of building plans continue I rewarding and distinction metrics. that increasingly, we’re focusing and to in on stronger. seeing think we’ve as retention been the directly, nice growth of that a our as that well result improvement

of two into picture planning. some but So I half the you’ll new those go the comp we think year, as see came more this we complete distinctions sort of are into second the

Adam Tindle

it. Got

questions. follow-up, And just is as through different and Steven of that couple a two just maybe transitions helpful. going That’s a Okay. had NetMotion I highlighted,

to just us to this to impact is if of what all move perpetual point could left much that subscription move, time financials ultimate to of over let subscription, and know maybe you at to is the the how moving move mix the On we revenue? Steven,

Steven Gatoff

Sure.

different So the revenue recognized upfront; XX% the upfront; perpetual, subscription models, revenue is that the on-prem the if is and will, is: subscription ratable. all background is recognized roughly cloud three you is

what that XX%, side the X-X subscription. Core now Complete around last quarter. of of the so to the closing XX%, about was time business percent, we is first right That over book book And roughly business X-X migrated on out talked percent, of ARR was

to second time So magic question is is the what’s a that drive bunch over. was And your frame question, of added. which the part the

customers pushing decidedly not are really We do customer-driven. It’s to that.

we two happen quarters it to to quarters. would see continuing three the customers next that or purport we and will three in some so interest, months say not from continue uptake over the the see that we’ve business. running And to But are we been migrating

Adam Tindle

Okay. what do that customer look observed you churn retaining this How to And like? transition? What made kind ensure you’re process? of have through you do customers they’ve just follow-up, behavior as rates this

Christy Wyatt

I can take that initially. one

high. I pleased think very retention the remain we’re that numbers customer that

don’t a so And expect of that think I churn we lot process. throughout

has of said or new organization. they’re to is to I in sort versus do a this the know I don’t of OpEx licenses we CapEx that think if we’ve running with to customer or model in perpetual the stay one past, how within wanting more leveraging another, but it offer the customers.

currently to only sort licenses being actually the existing perpetual expansion of today So customers. licenses are sold

Adam Tindle

you Thank it. helpful. Got much. That’s very

Steven Gatoff

Sure.

Operator

be Taylor from And from question the next Please Genuity. Canaccord go ahead. Doug will

Doug Taylor

Yes. to with a Thank Good evening. question. you. bigger-picture I’m start going

sizable education wonder that now. installed had have Do in initiatives; aside local believe going discussions recent funds noted to I system I related the of for those $X your cybersecurity-type getting if pipeline a has from You over right got and any the funds? amount billion. that’s for of bill also conversations any you Have going you’ve base you’ve talking deployed? the governments set pretty significant or kind you funding state state through benefit noted some that you’re a local. on – those and to – infrastructure had

Christy Wyatt

as continue we’ve coming vehicles we Doug, federal so ECF and it for Hey the as moving system said, think to right know local. are I and don’t through it’s to business We I the that a education tracking year-to-date. moves, of that play I would funding in customers understanding great the sitting role funding it’s funding state a similar them in do them. sort I say are question. But direct through now. them customers. seen best There as the for that track tracking space we’re are how significant help

Doug Taylor

Okay.

initiative this partners. kind a morning, the platform, You this refresh new Can touched on as of as Persistence a the Application couple evolution existing that on surface should over looking What the milestones, coming next the and out value you of customers? map partners road we announcement it additional us for broaden you of maybe the years? be and your for and prospective for add

Christy Wyatt

Sure.

program, clearly, for X.X ensure are them enterprise folks devices. we just can to remain a familiar with applications our and use the something are who wrong. or over embedded that So heal less software as refresher capabilities goes undeletable themselves for And our in when billion

for so within ISVs from are other also benefit And footprint that can that absolute, that they are two there the not ways BIOS.

is first of The applications. catalog that

ever-increasing So can purchases and Endpoint of applications third-party and customers Resilience repair heal Resilience. that have we growing catalog if an using Endpoint somebody product, monitor our automatically and

what is we is this as second morning, which Application Persistence a announced Service. The

essentially own and this as in program application, is is about so longer-term a the talking we as strategy. on and perspective self-healing Horizon there’s It and whether too and of registered X that of a these other event; us security referring talk the application controls it self-monitoring that devices embedding many what This from to some believe – started they fragile that we already complexity. increasingly kept is comes Absolute because for way are of a that I of piece And with kind our device it’s anchor use Software. their or the capability that to BIOS our can not so

And expect rest revenue continue would that can It’s ecosystem reason available work there’s, is should metered line us. the help to to is to of And new see of set course more critical potentially I of increased should want so very a this to that go continue And capabilities you the you resilient that but What with approach. up us take solutions. of of say, build something for would to time, wrong. clearly security open see the for over to not you we broader partners, set is will a because we capabilities. an

so the part And and that system. of ramping scaling we’re quite we as selective are being

continue So wouldn’t of to about to the we you but see sort expect us in to should partners grow talk more as to short-term I expect material impact business. it it, continue any

Doug Taylor

color. Perhaps Steve. one That’s last question, for fantastic

more You maybe mean, ARR. the through contributions went single is first the the ARR? just repeat the this and Just this in this maybe then large to logo and sales And are just, and other I transactions NetMotion that. that of pipeline deal a bit I to mean, to like describe customers very quickly. there clarify little quarter the you transaction potential And ask whether all, I’ll the new in also funnel. qualitatively

Steven Gatoff

the on And for you impact definitely than because Sure. is revenue. a difference there Happy clarifying, ARR to. thank

it transaction, tag-team a million into it, will And had a was go a just it three-year in large we we’ll Asia-Pac. under and so deal, with in And on TCV. moment, $X Christy of was it a customer

And so it on-prem an was subscription.

is rev half the of upfront taken that transaction And for roughly that quarter. in revenue so as is the rec value

ARR, And The ratable, the comes revenue to the that the from, on annualized impact effect. so incremental that’s is quarter. where contributed though, versus

front. ARR less accounting acceleration And so pronounced. it’s the recognition of on The impacted is much revenue not

nature the being for has of in arbiter ARR ARR that view is significant of that less better a point impact of much it what regard, the on business. And a recurring so and economic

Christy Wyatt

add few Maybe points just a of color on that. to more

managed existing running – service asked as it had a new logo. It’s was customer not actually was is net You the customer. a a an almost who It service.

is in Asia-Pacific. provider managed fact, In service a it

so of is service a a And they’re broad number offering to this that customers.

And are so their their them activations this growing. increasing was as position

Doug Taylor

Okay.

if contributed dollar a strong? also not retention positively the in quarter, logo your new to then which was ARR, then So net

Christy Wyatt

Yes. Absolutely.

Doug Taylor

again Thanks good the results. and a Okay. for clarification congrats on

Christy Wyatt

Thank you.

Steven Gatoff

Thanks.

Operator

go next Please ahead. Krishnaratne you. will come Kevin from Thank from Desjardins. And the question

Kevin Krishnaratne

clarify? was Is million, your A afternoon. for sequentially, are thoughts seeing Good added. of quarter. I’m QX. in a question It Hey, the there little When that XX.X about Good were you And like XX.X versus on I just you QX. team. in endpoints on just it lower million strength there where million apples-to-apples, X from? active looks to there. an the curious addition look

Christy Wyatt

Hi, Kevin.

not for to already It’s it’s So early little the me a excuse my be voice. me. in – losing sorry, process

million, apples-to-apples with not it’s the completely are of meaning active in active the the number endpoints, NetMotion Because huge I endpoints. growth that NetMotion, said, sorry, that say would This versus what is XX in in we if counting year. NetMotion activated million – well. of XX only cloud-hosted contributor nearly So is That cloud into previous endpoints addition the actually of was the side not there are as a number.

and much that would terms seasonality industry different by when So customer licenses. lot that shifting, I built quarter-on-quarter activate between of when the in it know We wouldn’t there’s change of was kind of in a too And that. endpoints. read the into still would represent overwhelmingly majority of licenses they VCR the would active a purchase

in lot would So is enterprise. versus during work education be some happening months areas certain of a an within example not

to So seasonality have projects a tend the market. different IT on versus

much read into the linearity. So too I wouldn’t

I we we’re think what see about heavy continue happy growth that is usage. to steady and

Kevin Krishnaratne

for Got you. Thanks that.

for maybe you remind on then Just question, it run rate million? combined was QX that ARR to the do about parse given given, again? we do you relative haven’t – I guidance, you’ve how know guidance forward, just us trying in the $XXX.X business sequentially. ARR compare to out I’m ARR, about about million. ARR to how how second And $XXX but going we a think guidance to think think Can specific just the revenue adjusted

Steven Gatoff

a first, of part, last leading the reflects is indicator a economics. that think the we overall bit ARR as I see

growth of arbiter we we target, road the And how XX% about we there. the as look sustainable marching so when to towards talk are ARR our

revenue notion of through that particularly would on the We the deals with with other there to the conversation that revenue. acceleration versus Adam the revenue, of is of went have then and guys quarter. had of one quarter of that speak out ARR benefit in So the Doug the a But it bit nature contract, on be some frame light some on will softer that and of we may the the it term long next revenue that. little in over just

one that’s you is And have the of good is in as dynamic basis previous parts how a year-over-year. apologize, had mentioned, ARR published, standpoint So that apples-to-apples growth is business. though, from of I we good provide, is the as-if-combined organic ARR what vector. not each growth for an that, did dynamic We piece then on XX% the both we sequentially. said on product-level the the quarter our Having growth

Kevin Krishnaratne

I the like Okay. is last $XX.X little deferred to bit at year it enough. BAR through looks Fair the a more million, this rev, and look over to – and was it question. it the went was an adjustments accounting

that was quarter this in I next just current think I how mean, million. $X.X the of quarters? about adjustment level do think it we over few

Steven Gatoff

me no Yes. Good you for on else and probably one the call. question and

nature. the XX%, the the deferred see write-down BAR, you’ll in revenue was in you the balance. X-X And of revenue, if deferred of percent, was roughly short-term So into most dive

$XX roughly year. in near-term million first change So was

basis. that quarterly a get And $X million that’s you so how on

of into have in so you come if million to you’d that’s quarter you $X roughly one kind ballpark million $XX say, So would back that. how deferred and of okay, it, a were in year

Kevin Krishnaratne

product early know, release press a use picture. And I NetMotion industry. last ago And saw Perfect. Absolute. I the Okay. for a new-ish this you’ll still where different map the is and got forward, not One combined and be technologies. relatively that you’ve too at products Got looking long you. going road know on product bigger I both one,

wondering, You’ve about who how market to your just adopters, as of question, sort you as who think audience base, about that off do a as client might ones scale to company? see first first of thinking offering. I’m to I’m revenue being unique broad might industry or a logical identifying based do size look wondering, go adopt and with. the just good you as just natural be got very that’s you across the you whether be of customers, early

Christy Wyatt

Sure.

would the candidates – So areas. say in the of I kind early two first come

existing The be first would customers.

customers then they have next we of off connect a curated and that a list are broadly, feedback the and offer in as a user kind feedback some and looking and identified be I together. just of road continue come too of customers out sort But to as those nice for conversations and inflow of us those we to leveraging are of still I’d couple of have call steps opportunities NetMotion’s, customers experience announcement set with access what start say, referenced define to think opting gathering a we nice we early And be customers see other I and would us It’s I who we weeks the moving ago, that you that of interests three work that those part to that Persistence the pulling both would the of together we’ve plans. opportunities going too of more – outside four with a to that. more Absolute for area as sitting who NetMotion customers that through still two and it’s were in products for competitive from shared as connectivity where put been say, customers of So experience, product map. solutions early situations, or of and for what the secure and

Kevin Krishnaratne

the a thanks queue. I'll back Great, lot. hop in

Operator

Markets. ahead. go come Thank from you. question next Thanos Please And the from Capital Moschopoulos will BMO

Thanos Moschopoulos

Hi, good afternoon.

how the guidance impact, that been to worse does to the impact to an a not just business? position gotten you is back would on ballpark in even supply chain that of maybe a back? months, going last given the having probably seems quantify then And Just if it’s imply have three any as directionally that raise it’s over it rough perhaps way you much very like holding for more there

Christy Wyatt

of the to first then guidance. I’ll quantify that, and take to it’s what kind I’d can didn’t part happen. tough Steven of of sort say speak

I’ll maybe kind color just few around of So a points give it. you of

an an result What what seeing see is as effect a timing. more don’t The we happening on first of effect with tend we that on thing is see we’re demand to systems.

it. devices, in mix have effect of time get get take of they being which higher period ready more of So folks as particular they back and one be would And able that number the kind of sort classrooms. – folks have in to they to take, as other they what thought of, where need could cases, where may especially in some were had the getting partner to depending on they see they children and a which education, or originally on do more an not may Chromebooks either PCs in their availability this is hardware we

could on But timing the effect, are. So about and push the not where of that forth weeks, talking months. depending a quarter, happening things you end that’s of sort near we’re back if

the small of as Sometimes just everyone decouple deal, from a the hardware is larger we is want of – can it’s more ourselves thing one that. we’re quickly. the as of software that that sell with hardware I to If relatively a selling unfolds. and strategic Other we part being focus We times, can can But moments, our expansion. But channel a still piece sort happen are remind hardware. overall happening sort kind partners actually type we and to integration sale. are they more OEMs of those it as direct it in opposed of go do upsell sales a of back through on a connect really connected to

new effect involve than effect an it might hardware. the projects on but And less so is imagine, probably new you has that

Steven Gatoff

that guidance, some think a how ahead impact, and so we and color, context point, and it’s the to about massive on And but obviously, a road there’s with Thanos, impact. it’s question, not good Christy’s

Thanos Moschopoulos

that timing, might ultra imply usually a – And with than this typically given the fanatical we’ve different year? that weaker, the seen does that seasonal being education with and bit might what seasonality quarters on be commentary the March December

Christy Wyatt

that leveraging of I what we crystal customers say seeing ball, kind is would are earlier. Without plan the

ready internally order there’s as in what harvest. take expectation what next to kind to are, little funding the earlier Folks we more of getting that as access schools be sources needs it funding might of them for get well have happening done sort refer a because an this that to that year as would for of to thoughtful about be them they longer bit as they So and to cycle is need. a, of there’s work school

So we see folks starting a little bit earlier.

year helpful. So think seeing do little that’s least yes, that earlier, the does bit exist. this I seasonality if we at folks work are a And

Thanos Moschopoulos

It is. Thanks.

kind it similar that least at deal large to look to mentioned deal, back going common Absolute of the deal or sizes initial the seven-figure type mean, commonly? Finally, NetMotion that Would Absolute? of I you sizes. how is in Or to terms like would look sign deals? build not for them of of size, what that frequency comparable the preexisting to that be

Steven Gatoff

the smaller of by The scale business, is us. from half obviously,

and volume the is on relative similar frequency So probably a basis.

they do obviously, we signed, have sign historically, And so deals. this quarter, and seven-figure

of it is on-prem, So When obviously part upfront. the impact revenue it is the subscription is calculus. meaningful pretty a

Thanos Moschopoulos

Thanks line. Great. Okay. guys. the I pass

Steven Gatoff

Thanks.

Operator

[Operator The go be Securities. ahead. Kwan Please TD Instructions] will next David from question from

David Kwan

be the to to recurring licenses, vast been Absolute’s but not having of of I for historically going for example, out Good outside I afternoon. for guess, the broken revenues, I subscription that’s revenue, the financials, revenue? NetMotion assume the the us accounted, that able kind revenues or perpetual see was the wondering from just of majority on like

Steven Gatoff

is license broken revenue, really continue the which be will the known main formerly the company as NetMotion, out. of software two So NetMotion, parts the their business to

under subscription And and the of recurring revenue, software recurring our revenue. subscription included agreement, You’ll with nature agreements maintenance, see a in license. like then the is like financials

subscription will then item license underneath that you’ll in P&L all one and be on you’ll line see So that. included see under cloud revenue and revenue, the

David Kwan

breaking probably of to out And Okay. not be I’m guessing kind you’re going NetMotion separately?

Steven Gatoff

the revenue IFRS the do, in acquisition on financial part basis We on financials. of footnote disclosure, of Well, as NetMotion statements. face an the you disclose the in will our correct the

So that total. you'll in see

David Kwan

Okay. helpful. That's

what Okay. guess rates this seeing And was guess, what out to the I on growth I revenue. – Absolute something quarter, trying break least was I about at between remember I and kind of NetMotion

not I XX% was it revenue, think NetMotion and revenue due year-over-year. was adjusted but up up think I from was the And the XX% XX% – Absolute. to

about roughly I Absolute's does for So in imply, that I math, guess, guess, growth the XX% QX? doing business

Steven Gatoff

way I think that... if math into you you said that, back the the

David Kwan

Effectively, the about XX% of did. XX% what is on I kind

Steven Gatoff

of magnitude assumption. not Orders that Yes. be bad a would

David Kwan

here. that the channel coming Okay. We'd in that then indicate business, the bucked on education another it quarter and to data seemed for nice obviously you guess, have had do seem OEM QX to? tough to but Perfect. there. attribute of some education I a what just bounce-back seen of And quarter that the have guys might you you been market, some points partners trend your out

you see guys So to happened what your in business? curious what –

Christy Wyatt

great Yes. It's a question.

have people last that, digital where seen I systems activity as used. their how all systems, not much and acquiring been And are those through think their first – account needing saw not they're has to of for of we with terms as schools transformation. went raised being bar in fiscal definitely year we the

and for figure relevant has their even stuff track, is. And data them kind those then a go so purchase, and weren't helpful back and retroactively of all the part increasingly of become out our original for to if schools, even activate we where

learning's first get but saw institutions. was educational stabilization of I there of schools a breakage back. many breakage high meaning by think dollars didn't incredibly systems that in rates; how the home lot wave they Many sent

concept manage attributes the fleet And critical of as as of of so scale management increasingly becomes as well to them. this sort they all required visibility

So that as of programs like helping the with a things service. of reclamation are our we some are customers lot larger a

sales them track their to as as them for either which how reiterate school some moment through next of help do semester a actually very of and and are out right? those hardware programs the And them we I get ready to they is our purchases for new students. lot is devices to what A a well we ago, other connected deliver expansion. also something how said new the expansion retrieve the making year aggregate, I'll percentage of or small and upsell continue So next just devices in

some And partners. was so that happening of our would what with be other independent channel of

David Kwan

roughly on comment of that, necessarily Can to breakdown I you kind not going activations your you good the the of a hardware in was about is? are with sales. point. what the say That's conjunction ask lot a

Christy Wyatt

logo that that upsell I expansion, here, break out really where new new easy we really to logo an an upsell you do what have been coming nicely, the and usually in sort be would in. nice but and expansion. – seeing as – look easy breaking partners new don't would and of up we're the of it has take new is of our and indicator, is even at if net Our we indicator don't growth but happening say kind way a net out, right? really – But We that's opposed yes, hardware is that trending majority a attach of of

David Kwan

grow what out And in education the with comps, the be business to maybe the Okay. to guys but do just going in beyond you're next tougher of and the looking last education Do see question. few still government quarters enterprise from year-over-year sectors we've that seen business, to even facing still historically? and you expect line you kind some the

Christy Wyatt

we're the quarter to in accelerated opportunity period space, be enterprise education see continue and demand up, changed well. work as which and the lot and that, still of a a to in education in for the build our there I the coming quarters. we the within last to of expect starting activity do We on opportunity is don't view I think in think has

bit place, of do converge they time. features our level they while into over say of a strategies net broader I of the So in security the use we in believe would do kind little terms a enterprise kind long-term their we is think out ability to that ahead word percentage their but – like of complexity same do I don't of further their education, and maturity, of

view changed So the where versus has I don't think our we when year. started were we

David Kwan

Okay. Great. Thanks.

Operator

I back over conference the turn question-and-answer our to session. for like Ladies this and closing Christy any Wyatt gentlemen, to remarks. would concludes

Christy Wyatt

XX% while XX% I in acquisition of All quarter accelerating with only what today Not did to we following were EBITDA balanced pleased thank NetMotion first us the of able an want margin and we full We did first, so were year-over-year also we the in for continue ARR, growth joining our adjusted profitability you XX%, accomplish. to in right. integration. Well, of NetMotion. but to deliver all with adjusted revenue again

a all We start team, today. strong fiscal as focused we the opportunity. to on year us remain to again have do with a to making a Thank required and joining you need clear for view on investments what the this we realize

Operator

And concluded. attending today's thank you. The conference presentation. has now you Thank for

now disconnect. may You

Absolute Software (ABST) 10 Nov 212022 Q1 Earnings call transcript