RPD - Earnings call transcript Q4 2018

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Operator

Good day, ladies and gentlemen and welcome to the Fourth Quarter and Full Year 2018 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to Neeraj Mahajan, VP of Investor Relations.

You may begin.

Neeraj Mahajan

Thank you, operator and good afternoon everyone. full us results discuss financial in the quarter joining financial fourth outlook you first operating XXXX. and addition and appreciate today RapidX's to quarter for We year fiscal to our me CEO; Jeff and the our CFO. and today Corey Kalowski, are With Thomas, on President our call

being We This presentation website be live wire along at audio broadcast it have with press call and now following is the an until the our over earnings company financial available February investors.rapidX.com file. metrics posted is distributed updated and call webcast release and on investors.rapidX.com via XXXX. at our XX, the will replay

and assume may to risks. be such the forward-looking except this by Securities materially Actual of this performance. The not from information considered our contained to on applicable today quarterly to indication results beliefs, be and conference on and results including extent currently the circumstances a filed not without provided implied differ obligation with our conference subsequent forward-looking Form future materially and yet information performance. and our recent risks of by discussion in about regarding operations timing and should differ from update those and to statements including These based that reports required XX-Q these for future of on such and on contains not outcomes Actual in objectives does As uncertainties, business the statements contained in the as predicted and statements presented the call future financial results available considered call reported have will current and us. and events or law. number are occurred, reminder, of information statements the Exchange on most the RapidX an events report expectations any statements certain expectations light Commission. forward-looking limitations, results should may a due or timing be

metrics we and be Our Reconciliations our found guidance presenting commentary incremental I'd of advised primarily questions, we the At results today release. in the in or offer be quarterly results prepared will between in press call your business stated, these that with Please XXX. maybe and in turn not comments non-GAAP provide and accordance over update an greater responses earnings of this onetime our may detail non-GAAP times GAAP can like be may unless additional to and will to today's insight in be nature, otherwise dynamics to terms into the results. in may future that, to With our Corey. or provide metrics. we or ASC

Corey Thomas

afternoon, Thank earnings full quarter you, fourth RapidX a you XXXX Thank great our XXXX. Neeraj had everyone. good year joining all on a and fourth today capping quarter off us and strong for call. very

pleased acceleration our in the of offerings. We particularly are with cloud-based the adoption

exceeded our another and of accelerated customer again and For sixth forward year vulnerability point over product, management. years XX% main challenge with the company. transforming the one of improving operating growth was RapidX At ago, ARR leverage. undertook In RapidX few of primarily, company perpetual with that revenue by on-premise the our quarter growth ARR our new driven row targets churn, continued strong success in platform strategy. to of and reaching growth growth, the XX%, lower a We look

than of year. the has advantage years rate. products running, over our transformed a RapidX of this higher than percentage major Our way new and total InsightIDR. we operate platform increase margins customer successfully and we in growth. VM. IT world came InsightVM improving as sales grew introduced QX leverage with to in stretched we has with a address vision driven from InsightConnect now comp-based much would the easy inherent the to our the are from with and InsightAppSec and to our company to to grown this two five taking two in the last easy a in solutions our XX% from leading effort the And in highly years more and our security at cloud-based Since of years upsell pillars over to force, highlighting drive platform, while SecOps of to deploy and has are do in to do where SecOps product organization order ARR customers, then have so this three did think transition. who make more delivered all operating XXX for less a launched we adopt, our and importantly, and we to To $XX,XXX our Insight $XX,XXX committed model. platform per and XX% have transitioned and of an XX% but cross-sell. in without build ago is teams years, half ARR increasing. been ARR. platform. of We grown leading entire this revenue last teams other was complexity complex last and a a tireless more customers the our importantly, terms Along creating multi-product to Recurring from up not for ended are XX% possible Insight customers Today ASC Over revenue four been consistently than XXXX operating XX%. X,XXX with Under This nearly the true

call, proud QX XXXX that of set and team our in during a of very I'm goals, goals. XXXX Now XXXX for before XXXX our recap these earnings about talk XXXX exceeded quick goals the Analyst a company the ambitious let's goals. outlined At and we of we do our Day

XX% of an XX%. first Our XXXX goal was grow number delivered we ARR by in to exceptional growth plus, and

expand to the large Our footprint, to our our grew in have Last our to proving second goal the still expand base to opportunity again products digits was by base. we marketplace. year customer customer continue and double that a win

our we also investments which was drive goal making while did profitability third to growth. operating to Our improve

Our almost ASC under improved XXX by operating non-GAAP basis XXX. margin points

thus what on While we we feel not our getting very we're far, are achieved frankly, laurels started. good resting and have just [ph], we about

the model focused are behind value to With the customers drive completely and lifetime long-term value us, transition our we our add higher on RapidX. strategy and business cloud-based to platform for largely

We have big aspirations.

our let XXXX. turn main Now goals us for to three

first and continue have we XX% four represents stages expect provide together XXXX. but XX% of foundation our Our long-term all opportunity, we each levels on focus ARR are with and which a top the The and of we of maturity rate engines growth. strong a different grow of ARR in goal growth market end significant on drive to to growth they are platform; insight markets again largest is the strong, now our in in healthy of to forecasting us XXXX the to and we plus VM in are remains at operate growth, the meaningful in XXXX. InsightVM product, for

in and continues second We continue within offering, this We new clearly customers. automation to our innovation triple ability to ARR XXXX our at differentiates growth saw making highlight flagship market customer product. invest largest solution continued product our growing see remediation us which we add strengthening this including fastest and adoption to the this product base capabilities from gain digit our in and the share IDR, competition. and

to expect continues solutions the are one see to strong protection to trend our third in most strong IDR comprehensive InsightAppSec, driving of applications we to monitoring testing, pillar in XXXX. growing by demand. the AppSec secure We applications. growth for this We and need deliver these expect fast challenged adoption, and XXXX. continue Customers modern provide for continuous

we free-up XXXX our security of bringing provincial but and automate the the QX orchestration, scarce glue in completed automation security and the connects response Last response native least, ability that InsightConnect; in our task not is of tCell the other security and cloud resources. application SecOps the next-generation to detection products addition, In capabilities solutions acquisition first all with integrated one to portfolio. market and

are While still it's early the we this and the excited product is about potential. market really overall innings, in

optimize customers customer our is make easier our Our to our economics. second to goal for adopt platform continue to and it

we believe are of great scratching surface ARR per strides, just customer. that we While the potential making are we the

a and InsightConnect for To loyalty our very more limited and customer rates retention agents a great our the ability But a assets will of task resources. next-gen and [ph] maintain. investments customer per be expect multi-product deploy, of the huge with to consume they with a differentiator A significant was also offerings to multi-product higher have our and product optimizing competition products, versus coverage and unified we SAM an rates it's of of they to large us. higher win add adapt our retention their within institution. our more was ARR automate but use potential under was enable security the publicly to traded to platform customer. deal we through InsightVM satisfaction. is As looking legacy our market With with organizations, the higher to our more solution. on many resonating customers products, We'll number sales multi-year packaging drive customer that assets customers InsightVM we assets to portfolio on drive InsightIDR lead customers. highlight for easy more and higher are this strategies This network making pipeline to of most installed a already example adapt which seeing to product large reach are financial replace Like to monitor clinched

only customers all to A portion success adapt value move have currently feel a of use of action customer by growing able our making drive lifetime and a InsightVM who because our other ability click to across Our the simple expansion for our should in it customer be products may confident customer goal at hassle-free. to seen we very friction of button. We is in base. and product

[ph]; growth business. the to drive Our leverage our and sales ability economics of third confidence improves to business and as for us the gives operating scale we continue to long-term. leverage in in model our is and underlying this drive our XXXX goal saw In

long-term profitability. every throughout path expect make enter stronger our on upon as we we strive established conclusion, basis, sustainable improve We we business. the cost path company With exit time We in cloud on our gain XXXX year. intend the growth leverage structure investments a company believe to history. a software high any to a and to our XXXX, in efficiencies than profitably to it non-GAAP we we're as In will a on as we XXXX to have this at obtain ourselves

our to to for operating and ongoing Jeff? solve let I markets and Jeff would of call for key commitment challenges. levers driven that, CFO, growth solutions SecOps customers are all their a platform like me We partners by with With many the to in our over have turn strong thank Kalowski. designed end to employees, RapidX.

Jeff Kalowski

Thanks, our Corey the We're strong and performance metrics. results quarter with pleased afternoon, that in fourth on exceeded everyone. guidance very good with all

believe as As a Corey sustainable on itself cloud we growth company RapidX high a software profitability. established mentioned, path has to

ASC Before we and as last XXX. operating would XXX quarter's comparing details results in our time XXXX, the on have I release to basis; fourth in growth XXXX our XXX results the under therefore, ASC quarter our and basis both, discussing ASC discussing meaningful. that we under earnings ASC business, ASC as a in rates X, year be strong We've key we included be results prior and for press and I our XXX we've trends not XXXX, results remind don't other modified of the been adopted these and want full all comparison today. January our on for an retrospective each XXX, year everyone begin of year-over-year When reporting will

revenue a We to XXXX, in growth. QX from revenue a have exceeded XX% with our over goals QX will ASC revenue set results model that XXXX, at QX the recurring We significant ASC beginning and of under XX%, now and with of under of services platform, revenue. under operational we them. financial our be revenue QX With for key XXX. in year At regarded XX% levers was we product all of XXXX under million recurring our delivered a in growth XXXX and XX% decline from ASC ASC XXX, in We Insight up products for forward, we of high we was least four XXXX, XXX. XX% up growth. XXXX despite our Moving bar $XXX multiple a again for total for under successfully ARR Also on XXX. feat in ended recurring transitioned XX% the

drive further the all, strong high-end business while delivered investing a income also our guidance upside We growth loss to $XX million non-GAAP of the on All reporting of in long-term operating the year. in very scale. a operating in

grew quarter was million, ASC our an for on to fourth first XX% XX%. quarter revenue increase turn year-over-year an XXXX the basis. XXX of results; revenue and by Let's Total fourth $XX.X recurring

North total revenue quarter. the Rest XX% of Looking of America growing World year-over-year. and year-over-year at business geographically increased XX% in of revenue XX% XX% QX, in comprised contributed fourth the revenue,

on recurring support drove a and focus XX% revenue Our in increase maintenance product by and decline in revenue our a services revenue. offset

to revenue improvement ASC revenue prior year compared loss [ph]. reclassified customers on platform, period. million migrate the of product maintenance was XXX perpetual inside the loss million fourth quarter an As basis, in Non-GAAP is a to $X.X $X.X operating the to an in

a quarter to million improved loss fourth margin $X.X the period. loss Our last non-GAAP for of compared of loss the XXXX. was QX $X.X to million of in Adjusted QX year of in a prior EBITDA loss XX% operating a for from a year XX%

results discuss will XXX of high-end Total was quarter on I million basis. $XX.X an above ASC our fourth Now, the revenue guidance.

the billings XX% balance end XX% experienced was of recurring of $XXX.X driven a slowdown was ARR of came revenue strong into expected, towards in bookings, favorable from revenue revenue revenue and the services product quarter, revenue XX% forecast value remains professional annualized product sheet very the revenue, shift once the increased broad-based of at we total the total revenue The our our as in and quarter. a high, revenue ARR bookings our beginning again by a deferred XX% across to months and Visibility our months bookings. move Security. IDR model. increase Application QX. XX the again Our and bookings, as in for recurring million Average With in of performance. XX VM, the $XX.X was at growth fourth of renewals prior saw from quarter top by length ARR once shift the XX% We growth from significantly in well one-year Calculated year for months we down XX% strong was year-over-year contract with slight of as the towards billings, and from of fourth an XX a length total average million acceleration QX decline period, for new on contracts contract year a driven business towards an customers growth subscription-based full strong our XXXX. reported

during capture a going this our billings mix trend benefit last of will and prior As remain transition revenue. reminder, a believe don't a a we recurring as are they don't over meaningful subscription of annual this to comparison we forward. on few the the range periods anticipate higher lengths Based growth quarters that contract in

by Our X,XXX with customer but count year-over-year we ended increased QX customers globally. XX% more than

Our as services-only in in the the high Insight product customers increase customers. saw decline customer platform growth of of a number despite our customers by an driven of reaccelerated we non-recurring growth the growth

new bookings which upsells per customers, customer see the and continue is $XX,XXX increased improve result, QX average our continues up a from to year-over-year. As strong over we to cross-sells. Overall, base to ARR in XX% customer and

fourth this in renewal and rate at of was strong growth a reflected renewal the remained the our Our XX% high in XXX%, quarter expiring rate ARR.

more services Professional decreased due non-GAAP result XXXX XX% total to and services. gross a XX%, product revenue on from to achieved bookings margin margins We're on the QX cloud QX XXXX revenue, non-GAAP Turning towards as XX% lower improved services platform. sequentially, XX%. higher to well professional in from slightly as QX stabilization of margin focus gross margin benefiting scale we in gross Product more was from in strategic lower a a with our XXXX. in up shift as our as product margins; up XX% non-GAAP margins ARR to

QX of decreased almost to realized expenses professional points XX% of in basis fourth XX% During were We've in revenue. and in while and sales quarter higher R&D leverage revenue, higher of XXX in reflecting QX XXXX marketing of QX. ARR. than G&A with fees. growth line since meaningful sales were marketing revenue, continuing show expense expenses the to XX%

for balance to of loss in was operating million. XXXX. to QX was in XXXX. non-GAAP $XX.X opportunity QX $X.X the a tCell guidance of share QX to the such compares X.X% strategic convertible and a as with sheet negative our per also paid was of our loss quarter well extend our XXXX. QX In then investments a strengthened of $X.X guidance. offering which $X.XX million continue our and with loss acquisition in growth enable to X% a a million will ahead proceeds improved EBITDA Adjusted $XXX.X follow-on $X.X net We ended of well operating cash of ahead compared we $X.X XXXX of Non-GAAP us for These $XXX.X we and to fourth to loss notes XXXX, make Our negative the offering. cash, million as margin million, equivalents investments to million, this million; QX

cash million cash flow collections. $XX.X which QX Our from operations was reflected strong

for XXX. will Cash million, to summarize under $X.X loss $XX.X was $XX.X loss was professional operating a high-end XXXX. Cash provided impacted million shorter year I from recent revenue EBITDA the and Adjusted XXXX of operating Now, year and of our and was operations results EPS services bookings. a full the Total beating $X.XX; rapid XXXX flow shift subscription non-GAAP in a was compared non-GAAP by guidance. was $XXX.X by loss a most million. activities decrease to in the contract million, revenue for million year ASC lengths, full all $XX.X of was

positive profitability a business. speed subscription model growth for is However, and of strong transition our to at a the which long-term we the

XXXX. to by expectations the in XXXX. over to of recall Now we expect Day to say XX% ARR growth end we the moving through Analyst as in set again growing ARR during and happy be to at on be XXXX, XX% our XXXX, XX% might growth you We're achieved guidance; CAGR ARR of

For to $XX.X anticipate the of XXXX million total $XX.X range range $X.X QX be loss operating be to we million. in We the revenue in to non-GAAP anticipate to of million loss $X.X million $X.XX million. non-GAAP to share which anticipate an shares per $X.XX on anticipated is for $XX.X the net QX weighted of be We outstanding. range in to based average

year the midpoint. of XX% in be at total XXXX $XXX of range which $XXX million, to to we For growth the anticipate million is the revenue full

be We a from XXXX. is improvement operating million breakeven to income meaningful in expect in XXXX the $XX non-GAAP lost which

diluted investments investments and to for and outstanding sustainable larger shares business. our levels of represent full non-GAAP any non-GAAP believe weighted expect anticipate As XXXX improved additional represent Non-GAAP net much into investments. net XXXX XXXX to income projected support quarter net net a XXXX. shares which will weighted XXXX Corey non-GAAP a mentioned, these full The interest business the invest net to basic We delivering in largely projected outstanding outstanding average we we'll continue be income on the $X.XX profitability full year we expect year On based upside We shares projected shares GAAP for on represents per the make anticipated beyond. outstanding income. given The shares our back of given weighted the loss. first average and income average $XX.X million is year loss share an scale a basis for and outstanding. for cash diluted

flow operations in from expect We be XXXX. again to cash positive

but and that, and be result towards will a support, As and growth, decline any the cloud leverage for our your improvements open subscription driven significant hence these With and and we're and in this shift call realized appreciate substantially expenditures XXXX. in revenue, the business. consolidating facilities we'll will moving this and questions. year conclusion, flow Operator? significant the strong we negative a in RapidX quarter by global ARR In another cash of was for reminder, free year, time as our XXXX headquarters capital

Operator

Markets. first Capital [Operator Rob question Instructions] comes Owens Our from of KeyBanc

Unidentified Analyst

This is Rob, for Liz on thanks taking for [ph] question. the

of expanding there? expand the You products ARR this versus what quarter. and deals multiple know, strength Would include love to hear IDR with new percentage really nice in Thanks. on -- VM starting to

Corey Thomas

didn't I give can wanted and Jeff in joining and us, the team a to it. detailed thank call. breakdown We for tag you I

the underlying of growing the key VM I think yes, you're getting is of answer to are and that I we we business questions are. think one absolutely that is outside the

just call, QX had in of where I if came the this with is by at shared quarter management a look itself. on we of think our ARR, outside you I XX% in healthy Insight way new management, very new One the almost of ARR growth of that vulnerability vulnerability

about perspective, been our all within very performing And have are a so has from very, the IDR business areas and business, driver the well, of largest the healthy our we -- outside different you think business VM product that of both if VM.

Jeff Kalowski

again we customers which customers, that drivers point we our also X.X. have three grew upsell, new products the rate. for and I'll XXX% all three our this out Yes, and this quarter, platform rate higher cross-sell segments just and have average, than quarter, and our of group renewal customers growth; overall Also, are nicely is by evidenced

Unidentified Analyst

how And love quickly And into for expectations that XXXX? just would how maybe then, is Thanks. an being I acquisition the factor incorporated? tCell on update is

Corey Thomas

have overall [ph] we security application with daft in traction our great solution. One, a

acquired protection. actually As is one where inclusion out, built stage as you last to this tCell application platform right a the of monitoring companies and both, year and overall to security pointed at position cloud at looking end model AppSec our us leading really in-app we're for significant not in of the incubation it's tCell we and year. testing, contribution have we now,

build a really customer offerings, value proposition demand. actually product used the per strong and new out the we our habit, on new As as building focus [ph] we and case

at So not come years that in in expectations it's for but into back heavily subsequent year. see our this you'll

Operator

Our of next Saket question from Kalia comes Barclays.

Saket Kalia

slightly that year. it about with lot again. the asked Can renewal rate, a one And renewal about question you it's that's you whether lot X-handle a maybe consecutive see and the it's what but quarter think XX% I quarter last to finish Obviously, to -- was at [ph] you; drivers of item interesting a of nice sustainable? talk to and are rate. just rate two so that not here, Corey, quarters questions my expiring taking improved for Thanks with but a starting another your nice renewal in view? was look to talk so

Corey Thomas

I there couple a is think Yes, drivers. of

thing when continue at every last product the and the first line offerings, in expect, foreseeable product the of mind, you improve one we and is So will their to renewal seen underlying there. them and rate fully look and consistent we've that my each for performance future

to Now of about drivers are, what there question get a your couple drivers. is the

think most individual The important of each first and the I the is what's the of renewal lines. rate product

is And shift continue one that The tail have we're than impact as is; there. slight renewal [ph] out another most XX% at rate, When important share our confident you so well, taking is mix overall one you ASCO rate you fundamental we're can shift; and into what's on the a quite have that much because improve. drivers. is XX%, the so, the perpetual grow offerings. on are and imagine, renewal renewal thing our just to deals had to historical the look X-year would two products last our highly to last at all happy fact at product that get to more what's not other is and We customers we things like that product the second growing the the of one that sort really we're what's pay can which about mixed higher maturity actually are mix really businesses in established year, want the based but the have a from those rate. mix underlying they come the growing the related, after are When attention market; still but of if which

fundamental so as see the continued and rate your the that. answer to our opportunity a on rate improve fundamental focus do shift. for with to overall products, [ph], of going mix really up lot is renewal we renewal; to have The clearly renewal question; come to we So main they

Saket Kalia

outperformed it that Got for for laid out we're on seems putting Jeff; we based well. full-up in out we've that XXXX. clearly, helpful. as little it, a the for that's like Maybe here my guide expectations And going faster you our XXXX, you're really

we framework want to out And have framework the 'XX, so than model out a out bow to for put for original question, a better we we've guide to about how put ended that I on 'XX. that put think back expected the XXXX now open bring long-term do it that and

Corey Thomas

Yes.

So XXXX At Saket, Analyst exceeding and think goals. a revenue we $XXX out which Day, laid million XX% a at ARR our I we $XXXmillion. growth CAGR are yes, was

clear and than to it's So have number. that specific go those Rather be a give exceeded. up will numbers

get do Our But and what those get to more rather want than the the is feeling right numbers those we that giving half is correct, for you visibility through have XXXX, year to update in numbers second specific are anything now. up. go

Saket Kalia

very it, Got helpful. Congrats again guys.

Operator

Stifel. Our next Talpaz question of from Gur comes

Gur Talpaz

My into you're quarter. in tone really growth if question a AOR look question again for calling XXXX. here next few is, XX% number, years this you plus here, striking First great really, growth confident a XX%

to say So what the that kind today to XXXX kind gives end confidence especially know of a very after delivering of you you of as the number? strong of sort very, --

Corey Thomas

strong end have end you markets; very end-markets. very, I make really, doing. we're most healthy every we and strong your thing we're difference, includes strong that and really would easier if and I what have markets to a is, first much important aspect team's actually in say think and actually of performance the actually and It's healthy for

demand, in those end we demand clear thing customer we established customer state The actually markets have clear strong we're have and customer actually that second preference. is increasing so

how health how that, about we And overall forward. so built the think see that business allows us about strong a grow opportunities gives and and our customer have great our actually I we us last goes that in to customer pipeline; the and the ability we question, we economics we're that foundation do seeing, this do to And great previous think go say we to year environment, as a overall is to we've our look and think about out [indiscernible] how think and future. the do

Gur Talpaz

for another one you. Corey,

said for as InsightConnect; may view to products You the do about easier adoption; upsell itself mechanism talked you it solution think interest; a customers of adopt a picked how to for you of a for but meaning you you them go bit that how about both additional something outside do my now as call pull-through IDR and if InsightConnect on that InsightConnect is VM and Connect and kind AppSec, VM? for adopt and will

Corey Thomas

shops, it the to ongoing these IT If immediate organically problems. the so of the and modern is is and in about moving but SecApps, productivity it finding message them big people, pillars people, general think you but what bringing the improvement. our summer then security think is expand evolution to value has you're brings InsightConnect the is we opps people people delivers of around most one environment; in together And allows constituencies table value IT what [ph] -- it what this to IT solve multi-year that from it projects additional different

we like it, InsightConnect allow behave, a that's when customers in problem we're be and that make at customers more security want So the that and to platform organic to and my InsightConnect for case. think to want what our the problem and to it customers making -- that way of of I to increasingly the some and that we're customer, and investing the to solving and are lot that's easier systems expect core pace want if behave, economical the I combination that's how you cross-sell be opps enhancements upsell; about we way be my of our to solve solve

for for other increasing forward, and to environment. but yes, whole we we'll to actually years, us frankly, for our expect adopt work our easier and our and in draw jobs. do not for go so, our And over customers solutions, ability importantly, next is do see customers make tighter we together, their our of several it them do year as their productivity with more multiple for solutions integrate this the again, that to solutions And how we just purpose

Operator

Markets. And question Capital Hedberg RBC from comes our next of Matt

Matt Hedberg

and -- wondering, of aren't I'm you you customer? growth expectations but scanned could what strong sure kind sort figure that it's of Corey, VM, great. in being there customers speaking, right us of to roughly ballpark you kind help an guys hard networks about your Is talked generalize just XXXX, understand percentage that's for I'm average now? see of a in more

Corey Thomas

Yes.

average it's job customers management, doing adding so a at which So new and in of at to -- is is, XX% those say of assets customers management. our rough because if good increase. a fluctuates. would that under of now come under have What rate a seen think it actually assets you new we're rough about add is roughly steady very it lower to number estimate we've tricky on the Right a I actually estimate

mix some we're environment managed a has done tremendous new mature continuing very being done customers. add a customer tremendous currently team our -- but a job that's to in of frankly, So customers. our And we've of

Matt Hedberg

or good continue That's things Can great, AppSec; detail that to. to of is think been seems lot rates customers kind there what about some AppSec? tax upside certain from driving but that's follow-up, about hear, there in partners the in on with fantastic talked talk you to a little really Are more little as bit And of to continues a you more I mean, guess are higher strengths? AppSec hear it we doing we I guys has great obviously bit channel maybe a the I what's seeing to IDR a just resonate that. of then that

Corey Thomas

there that rate. extraordinary mean, underlying many adding great, an that extraordinary most just we the is fundamentals at an love just the is thing that about and I are pace applications are and things of -- AppSec; things people we about but is one love important

you is, historically second the but it applications, lagged awareness is those has have to secure the actually curve up that -- is fast. thing curve The awareness catching

So where secure they have we're world. the you applications platform one to and we a that of and the actually applications aware we [ph] our have that's of great space application-security-testing out lots the added, ranked that's and steadily security being those portfolio; people platforms, increasingly a started applications need best And dash mix. from in combination building

where deploying security a become the G-sale actually people [ph] of to the we're started in to think come is and and The from the strong of from. lots capabilities you where that's leader in of that, lots I actually demand we I'd cloud why part strength big is are out which investments last we space overall great the general add positioned we future thing bought and place momentum that's of So and very applications the in reason a and we see say area. a think overtime, make well that continue

Operator

Michael Raymond from our [ph] from question next James. comes And

Unidentified Analyst

where winning? to drilldown you're all, bit percentage of you InsightIDR terms First in I can of more just ARR and the little with, faster, of assume you're would who competing and rest see check. I you're growing you business, And who wanted on with the that a in

Corey Thomas

and I'll it, place very of actually VM proposition generally and about qualitative great more to consistently like ability enterprise more managing actually that drop so Yes, broader with actually of of was is overall if number course talk growth seen now that quite [ph] value and it's and market detect easy, to dynamics was with by the Qualitatively, the traction I'll our in and obvious and Jeff and big The is expanded can to goal continued suddenly tag SIM approachable, market happened productivity with a we about making did really the disrupt happened in a to years and much InsightIDR, the a talk so efficacy respond much it innovation you our of there. it that, over customers. team that mid-sized attacks. some complex first have to couple we've has large we've of there. the back look What resonated we're

expect been area. future in and we of we've happen large evidence space steady mid-size year a we're growth that last enterprise that both, a the space significant And quarter the at had last actually seeing in if so and and the which look increase enterprise to that, has you especially

Jeff Kalowski

continued growth ARR year-over-year. it Michael, past, as the triple-digit and on IDR reported in being we So have to grow triple digits

Unidentified Analyst

And on get then, on investment that just the a if I can follow-up side.

that say level for now? that be going about breakeven, keep you You're you investments prioritize where year. are at next talk high Can incremental the -- right where to you

Corey Thomas

we back, mean, the think to a data step cloud is So company. SaaS we've we're be actually to come of security the primary have focused high-growth a migration. parts SaaS to We take opportunity the and I the on hard profitable cloud

to our which we really economics investments better will And make on and continuing the over actually time. where drive customer better, profitability focus so will actually on are customer experience, which focus our

that simply we're So areas three on. are focused there

and on that need The customer last the product at base we allow allows focusing actually more on channel customers types it enable partners is our experienced the real have to them is lower and investments through drives in to range the packaging customers lots want We're every benefit channel achieve The products investing continuing address flexibility we've and will overall customer it that, first are to And the future. pricing of ecosystem continuing the And and per that that the maximizing of that's for compelling better What and ARR seamlessly Similarly, our customer both up-sell. costs of systems to it. want, the that provides that one cross-sell outcomes selling they our just and outcomes engagement a at they giving our them And successful. value continuing want specific actually geographically expand quite level. great much past. those grow investments is a grow systems in really lifetime look around overall and around allow have point momentum think get to that and growing to for is focusing customers' that the the that's improve to of that thing to at we're business. and We can time and us and cost they channel, the that get partners customer lower is want to when about we're grow investment wanted, then makes growth management. we're world, it us to way they customers. overall have actually systems us and a We it to the and profitability in in when maintain the them is well at overall sale experience, a customer at base price profitability. be the easier by for the the and more better processes of customer larger we we customer economics in by and customer, our to a technology that it this future, the into

Operator

you. Thank

comes from Blair. question next of Our Ho William Jonathan

Jonathan Ho

afternoon. motion? new as sort trying or products customers you're not with add-on cross-sell to of the good just and them as Hi, to I non-VM of that serve sort just start this or entry to up-sell to VM of whether existing wanted is and primarily part customers, win see still points as

Corey Thomas

the we SGA our add they we're question; would I actually base. is IDR point of VM AppSec, introduced entry there's momentum what that products or and slightly customer point. points to automation, right new effectively an so our always entry have IDR, of customers, which recently is products has all security with new go IDR service, acquiring thing like with been installed And many and AppSec serve whether going we'll say, in sort an where on, It's different of a even half or actually the with new now, entry IDR. IDR starting see orchestration we're the customers. VM I'll is or a customer nice add but them to great all all Early into rates, of was customers say and half at

for per effective very us, lots of and so in which expand overall it's model actually strategy we to customer customer. confidence have very, ARR our continue why is a And adoption to visibility

Jonathan Ho

whether uncertainty about from to or fed of the you as some maybe are Brexit, market? filtering global I given regions just it's of the macro, various mean, And of security there in your any the down areas all out that either at spend or from concerned noise the like

Corey Thomas

to time. demand that What the the there SecOps because being work right it I experts that now see pay security, broad we for we you globe. to have. and all that's on can mean, tell down economics tightly and know see much attention for offerings a how we and I actually careful is will at recognition we is you be more we what the

to all budget a whether that there. second trying budget, thing that fund get need. to actually So right the that need finding that to today actually we people customers, funding out we're they're is ways And strong recognize are there's or going have now, or see

lucky this we it's So need. as say now. is are What would that I environment space be a to where a healthy see a fairly people in

over time organizations how even you they're saying, the kind your a for want may ways this this is doing actually value. been because So solutions constrained, get to that are exactly while, -- people over that's I exactly I've which what to do time, budget finding be for had be space to they fund in is of

Operator

comes next Alex of Our from question & Henderson Needham Company.

Dan Park

Park This Alex. is on Thanks for actually my question. Dan taking for

features, the interest? within on innings, early and orchestration still an and is So customer but starting maybe could inside you drive I and this additional VM know update some it's to provide if implementing automation IDR,

Corey Thomas

Yes.

which really actually the had InsightConnect, of demand, benefits add. a of us. establishing is for was those evolution value may for two recall, -- new is One a market you who the that strategic primary So our

sticky and VM things. The are made mean, inside InsightIDR. specifically a differentiated, customers. products lot those significantly second solutions, three really for benefit more was big actually third, our a it our I And existing

turn. So about those each in I'll talk of

good And but so though about in have have one, pipeline, a we seeing good it's ASPs very launched via we're launched optimistic -- and still early, future we're adoptions early we innings. very adoption, seeing and and even the Insight momentum healthy InsightConnect, very, we're

a just that The their differentiator the with stuff have that the under-constrained. to InsightVM used that our areas it the much with but and years InsightIDR sticky or out, very actually and whole proposition we because will it both customers platform than VM, of can under-resourced how it differentiator, customers offerings capability strong the about it couple the these and or a and I you that sticky been take automate on can things. environment how just respond reflect conversations and that, had move it, we deploy XX%. environment, increasingly many can more existing assets meaningful to renewal but better where is have beyond people InsightIDR, make faster clear to extraordinarily XX% fast InsightIDR actually actually is are vulnerabilities it very, why two make immediate turns investigate to we've I SIM-VM resources my much, We're ago. The don't go a the quite We've is things, in is and seeing these these I to manage The evolve What are and overall. because the of management and we the do of each make demand for space, well do customer to far expect, I XX% I increasingly that second, have capabilities, fact for continue a much in when more that that nice to with has the still we is of that released a is market how it then threats proposition under and and for focus is thing in win. continue that capability happy today. add it's Likewise, early rate, capabilities, our next just the with value resonating it in customers they to higher of actually we seen platform environment the the for

Operator

next Morgan Lisa Stanley. question Franchi Our comes of Instructions] [Operator from

Melissa Franchi

the wondering what underpenetrated like modern those talked you technology address it's customers starting you extent about maybe do more your what's cases? well InsightVM called into management customer you're OT? into Corey, use or you see to base. to IoT extend feel ITF, like I'm being And to have vulnerability today

Corey Thomas

customers deviation who new great job do of in. a So We one, wide adding customers. we actually come have

that What expand in customers, can very customers who high rate. with to is find rate. we and a in, a lower expand also So come come

with for while a course, in of So customers lower. penetration customers high seeing levels we're of that and have coming us been

the adoption across great We also see landscape.

So the their their network see. includes actually rest end actually way them see applications, center core of we IoT assets, customers are, actually We're in excessively that environment operating their and priorities the customer data then actually on their focused that environment. a is points,

cloud and products Two, feel we on gain covering were greater great see the Three, we actually we strategic, uptick that we're today today solution infrastructure. solution, environments, where important, it's what core and So in the the way it's we strongest have what for is where the adoption deliver that we have cloud the covering applications we overall exposed. actually one, feel great and future, are in environments. see in adoption we is that, is strongest actually

advanced have we're application -- operating having the space, OT. and We there. and today, the to and VM security, have of IoT and we mature our traditional and the the actually And IoT and of in to in efforts the look process coverage we're competitors, expand most at continuing process of

Melissa Franchi

are talked are you resource sort about as you? on enterprises you're you're what enterprises, this just follow-up, it like extent then constrained you And larger that investing enterprises? large but seems that what maybe adoption in to And traction of seeing also opportunities a versus some talk you've you're in focusing in Can coming about well. as -- to opportunity having

Corey Thomas

Fortune XXX. seeing the XX% still first traction. We actually roughly foremost, we're of a and So significant have

sort coverage, great gas and like we the large industry. an sector, whether We sector, some footprint, oil where the enterprise of enterprise-wide finance technology that sectors, have have all a have brands the you amazing frankly, look actually that at across

InsightIDR. actually marquee adoption has And with over and The parts to of in our time. bias in offering. and seeing growing adoption we're InsightVM we different more is of off area enterprise And started oddly have started been So which now steadily rapid segment, than which continue is right is and and frankly, last of a actually with the application track more offering, our any that that enterprise solution, security market. enough, the InsightConnect our get course, the in other heavier

the segment. enterprise have of a products are as sort we're ensuring customers. we that and have actually about customers focus, the always question that we been the the midsize your and all focused traction our perspective, the actually well and large across momentum on as To enterprise of sure we from needs of needs the successful, meeting exceeding to and make are the we'll continue enterprise So

introduce We're get we business. allows anyone a start always, when adding Now to well. we where new customer, our really that like and because now good and building like then up, working customer core with offerings, that have at customer that's a product is sustainable we're now and that something we successful at the rapidly recurring capability, just just actually extraordinarily expand. target what the who's expanding And about build disciplined with and with we're customer out we we're you great InsightIDR long-term stage quite you

Operator

question-and-answer you And and This participating today's conference. ladies you. session. conclude Thank does in today's gentlemen, Thank this concludes our program. for

day. great a Everyone, have You may all disconnect.

Rapid7 (RPD) 7 Feb 192018 Q4 Earnings call transcript