MIME - Earnings call transcript Q2 2018

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Operator

Good day, ladies and gentlemen and welcome to the Mimecast Limited Second Quarter 2018 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will be given at that time. [Operator Instructions] As a reminder, this conference call is may be recorded. I would like to transfer the call over to Robert Sanders, Director of Investor Relations.

begin. may You

Robert Sanders

Campbell, are earnings XXXX Mimecast's Director the and ended. second A call is after fiscal webcast. CFO. Tonight's of Investor Co-Founder, the Welcome two hours this September call XX, of tonight the on ended call With Sanders, live Chairman being Peter Bauer, conference XXXX. live quarter our Relations. to me has broadcast for and our CEO, Peter available call I'm via of replay call will Robert be

risk course of further in important statements in regarding cause These could the in risks the that forward-looking the Securities this of future conference this During risk factors from to make with call, caution that filed actual those call. Company. forward-looking future press financial and and could recent actual forward-looking materially statements. differ We the Exchange we results results release defined statements the forward-looking Commission. the the These consider Mimecast's are subject to most uncertainties to Form those will statements to are XX-F events you differ contained and today's and from in cause performance materially factors

Bauer. future update I'd Peter consider to be We non-GAAP Mimecast's date. analyzing can when obligation call of today based to encourage performance. of is measures or and to we result November release we The a in website. this intended non-GAAP included call, statements on is measures our assumptions to all both our are in substitute as certain of no to of X, in we be of over reasonable like call GAAP from, measures. now will forward-looking new believe this section reconciliation for, to this information measures and GAAP Relations Investor you the today's Peter? present we a to XXXX. results, Any These found the non-GAAP During these statements turn events. to isolation are as which financial make considered A GAAP not be or superior press date undertake

Peter Bauer

Thank you, Robert and welcome everybody.

be results we you this I'll business commentary results We evening. and on are key highlight our On seeing call, give of some in our the what delighted to tonight's are market. with sharing

share talk specific I'll multi-purpose from and as talk about then our the operations where share into in are offering stories and quarter regarding Mimecast exciting winning selling I I'll our solutions. Next, bundled news about archive customer cloud and are And we will with past some recent Germany industry to I'll illustrate having there. successes some today. move calls we

of customers, than financial better our our results expected This to customers. that performance of will pleased performance, million currency. high-quality turning a our guided and was mix Peter grew range, XX% XX% about very well of reported in deliver as we aided of base as again constant and new talk So, to revenue are $XX.X strong retention as by our exceed more detail quarter year-over-year sell in results. second Campbell up

system and across exploited, was profile in highlighting borne all headlines. were geographies. organizations contained news vast dominated and quarter front marked data email. and second another email across of high So, Deloitte a firm of page We our looking sizes broadly period corporate professional observed headlines SEC targeting industries the of private while email at threats agencies, of cyber-attacks the services customer The system and trove trends, by Equifax government industry

to recover Adding defenses an and both organizations solutions municipalities overall were the and that ability healthcare Mimecast universities, attackers sophisticated their to is in for are recovery and of effective borne and exposure is the providers organizations services compromised headlines, spearfishing the increasing. threat by need email of ransomware cyber reduce attacks. including Beyond Awareness gain layered event way the successful. data

customers, Today their the time XXX the provide XXXX of to to investments. This option we XX% the assurance represents data IT this another witnessed quarter our Microsoft archival customers. continued the Continuing was XX% have and cloud. Office of to for we IPO, years that first selected XX% ago the security, migration of uptime So, Mimecast second our two quarter of the their steady customers which saw at enhance our compares XXXX. of to pace than of represented in clouted more just trend in the all of sizes

Suite Office to G addition see Hosted we XXX, migrating offerings. customers Exchange and In to independent

the applications the based those concurrent cloud solutions Now to of to with support cloud, seeking are organizations movement applications.

challenges and One migrate cloud and compliance is customers applications as created consolidate secured a offering To archive, data help to the of customers safeguard Mimecast long-term valuable multipurpose repository leading the need tools. storage to see we e-discovery cloud to this, launched those facing do services a they biggest the within the the management, industry data today.

functionality Mimecast helpful with have of several increased our for GDPR be compliant. to archive e-discovery the a case cloud also seeking Over for includes archive new delivers which companies cloud and services. and our of power cloud to broader quarters, expanded the performance professionals the of past cloud approximately, set archive, API we Mimecast our integrate functionality is expanded the review is

these by archives an having application. archive and For served today conversation with believe search email archiving their we Mimecast applications customers is force there set into over directly review to com a see deployed With archives who our dot can their solutions, XXXXX example, sales Mimecast opportunity with of up APIs. histories diverse users through now our CRM integrated

Petya recent am and our one significant to I see to the of the most NotPetya that's Rabbit, archive, and of enhancements encouraged Bad like sync recently customers WannaCry and attacks most adopting Now multi-purpose recover. - with proliferation ransomware

and Mimecast's zero cloud to email the this equipment. and additional paying without to is cloud data customers potentially Now Unique cloud services recover rebuild across and hybrid of entirely with environments data recover this archive on-premises archive ransomware enables our on-premise from from damaged service criminals. to multipurpose attacks ability and do

believe named the being execute Mimecast a Now improvements deployment Enterprise have and ability XXXX service with to I these that years contributed Archiving Quadrant. our once in Information enhancements Magic leader many again of consistent over Gartner's to highest

this X from X gives customers. validation to to the and recently to SOC the and successful our our Gartner, standard serve Type attestation that external of also all attestation achieved we addition ability larger announced we've clients In demonstrates confidence to completion this

sharing in remarks, with services my are to into As of opening tonight the I expansion you very of noted our market. excited details additional German be we local

our believe And in Michael this are operations. services. research Munich us benefit Our joined there brings Germany and these between adding employ European service Mimecast would I'm from Heuer, has pleased that we organizations as XX to over to support, Michael XX,XXX opportunity, XXX experience To who sales years act Germany in data XXXX tells language people. Mimecast of lead leadership in satisfied will our local operations. and the prior online centers hub of are central his roles from coming with XXXX. at executive With requirements German European Data two customer Group. for Akamai Acquia, BT a addition and residency announce

or customers. we industry. due across common the regulations, to share aligns the having specific a the other of with in industry. We requirements needs have demands Finally, to our data believe go-to-market sets program protection markets can our success of with end specific some industry customers certain operations of I'd the arise that needs like These to are requirements

second Services more the healthcare, in face. government specific industries by effectively sets developed So, services challenges momentum quarter and witnessed these that include with retail adopted the sectors, organizations Healthcare often in to with healthcare, customers industry globally. in Notable Mimecast Pack secure our the messaging. we've serve legal, customers with solutions healthcare we've align financial, that was

having market help success, the solve. of and to Now illustrate with the problems customers like wins. share To in a I'd few we you types the we're

customer. long-time First employees retailer email off, based stores SaaS a globally, a with XXX California first-generation and security XXXX

looked this defenses. organization enhance and their struggled attacks with Now viruses impersonation to

While secure And the services broader continuity solution. this to archiving range adopt internal protection, our customer for a initial the addition replacement chose and messaging threat services. email Mimecast's of included to our our an customer and a protection of that after and of in even gateway, added platform our was experiencing target this, engagement

email content requirement key this internal organization important and for differentiator for Mimecast to malicious an also So, the from Mimecast's protect a customer. ability the in was

Now Microsoft effective to solution platform security customer company consider internal operations protection and their without handling layers enhance for add and additional was led to several and leading employees. customer to networks. compromises XXX their and our Office with malicious deployed transportation their central our this experience compelling in for URLs of methods a services sought decision Mimecast. global based European of had more a attacks some This mailbox XXXXX and URL successful This to and and company impact user been had

security Additionally, legacy and POPI, had an are global and also with help operations. healthcare HIPAA across organization as GDPR been email such chose to employees Mimecast with their comply using African [ph] XXXX various regulations, SaaS

While to and and skill-set initially breadth were to like share. news a very factors Jerry Independent our growth. key in and additional Elliott bring satisfy Juniper, simplicity ability I'm IBM welcome piece of Director. engagement, Mimecast. pleased solution board a to our experience to selecting company archiving powerful Microsoft the our our at of Jerry's support the security to future as requirements to One an

well as summary, in perform So, to very we continue a company.

combat to threats. the addressing market are constantly We innovations evolving with

service for addressable industry preservation and pleased to possible. focus entire cloud in like long-term buying and multipurpose our partners achieved, our is for expanded groups customer as that thank our Our Mimecast solutions I'd unwavering the and leading and Germany it I'm making process. for data the put market, and results the industry We organization package we've simplify with the we as down we roots archive access. remains

let over CFO. Now Peter you to me Campbell, hand our

Peter Campbell

an both which second Peter. adjusted of exceeded again end fiscal In $XX.X this over XX% of growth second and high XXXX to guidance year We quarter EBITDA margin revenue the second of EBITDA representing our as represents you, currency fiscal the the was reported generated and revenue our Adjusted million, of XX% once Thank range. in of $X.X X% million, of constant EBITDA XXXX. of quarter in XX% compared quarter adjusted XXXX.

existing second the the additions segment. sell, in XXXX market, all from from quarter enterprise strength the our well as core impacted first in success sell to to market our in as of with strong as geographies The value, mid had customer up We away deals increased during in quarter. was retention saw Net benefited which our and in quarter. continued micro well and the up customer sales enterprise customer positively large XXX and as mix order strong increase This the period. new customers, line an base in average customer large shift

to important increase small micro is a and represents has impacted customer note customers net related this churn which at churn seen churn customers that small revenue additions. have customer our X-McAfee continues We in very unchanged to X%. our It

we Our when which XX,XXX and gateway like is buy from new customers, now are Approximately significant our internal are Demand of the on using product TTP as with TTP deployed of buying family and customers a in represents customers. with products our customers protect. XX% opportunity TTP expand add total targeted email Service protection. continues new our both existing they XX% threat

customers and Recover our seen in Sync Internal XXX was Email also Internal August. products, in & February Email XXX customers have buying have now Sync Protect was Recover. like using Protect, & new and which launched using customers We which We launched

revenue with could and more customer. base our products to of is more introduced The are We users, results represents increased multiple time the we sale of multi-product, services with on existing per of incremental and bundles When base. customers architecture, selling with us products multiple the our continue also X.X product number our to an positively purchase with by now $XX by offerings, of tend to XX% multi-tenant or current our products customer customers stay our four base, services. impacting has our across Product percentage customers this margin the product The ARPU customers year average products higher. of longer. our last across than of double expand customer

and quarter. drive TTP higher strong Up remains continue XXX% with sell at of to is retention consistent especially our number. retention products, last revenue Our revenue a

our prior Now and in expenses of period, over XXXX. the with higher XX% the let's Gross than benefited and These profitability. reported data ongoing from reflective margin GAAP platform. are timing XX% the certain in turn second Mime/OS center recognized investments. in an the improvements We gains quarter a gross the was of improvement to margin of year-over-year efficiency cloud of the consistent quarter anticipated

margin the the operations. in margin, As expenditure fluctuate anticipate German can the range our XX% gross to operation while scale. XX% timing German a to we of to margins data quarters. we We gross gets roll to be ongoing several out in over support centers, Gross expect nominal the due our next reduction our to

as of and partly reduced from a of quarter efficiency in the the sales seen million, million year. same time, to XX% Second XX% XX% is revenue in of revenue an percentage result initiatives. prior compared the second increase of XXXX, result up in marketing operating expense quarter X%. compared revenue decrease was year, the Sales certain a GAAP marketing a of revenue and R&D the expenses $XX.X same adjusted we've of were from XX% $XX quarter driving expenses last for and in was the to year. XX% the The XX% At gains and expense marketing expense EBITDA. of G&A to investments partly the seasonality in of prior of

We for second remainder of end Adjusted million. EBITDA $X in high in year. expect investment sales our was value guided at above $X.X the our increase the the in to and $X marketing to range the terms million of of million absolute quarter

Our increase anticipated, The global discipline some revenue timing now due XXXX. marketing was spending is higher which second the occur to XX% operations. quarter versus next we X% of expenditure in margin adjusted expect and in our of across EBITDA quarter focus the than to

option Second flow impacted our tax exclusive GAAP weighted based $X.X expense $X.XX was and was or basic was quarter average on loss $XX of $X.X nil loss of new the which $X.X million the free or quarter net quarter. We out shares This Non-GAAP to reflects for per fit facilities. stock expenditure million net and outstanding. capital million cash per generated share the million income share. in $X.X in effects second GAAP diluted net related by of million related

along have our fluctuate equipment have timing As fiscal data center, new we this free in to from of facilities payments of decided this one-off cash investments. on approximately can year with to flow and million. impact the a of quarter-to-quarter previously $X expansion forward which German other on year, to expected flow mentioned, pull cash HX is of based and the capital rollout The

the to Turning balance sheet.

million of in investments securities, months. September $XXX.X As XX, Mimecast marketable cash million including XX and maturities with had of $X.X

relates Massachusetts. Lexington, first our half Our in new of equipment property headquarters and increased which million $XX million U.S. by $XX the in to

leasing We have not acquired this the building and property. are only

build-to-suit However, as this under asset sheet. we an accounting our recording rules, balance will be on the

We useful the expect to amortize this asset over estimated life.

for for Now, I outlook would third like to turn our the focus update quarter to the XXXX. guidance and

range For the of XX% constant of $XX.X range $XX to in XX% revenue currency expected the revenue to to XXXX, growth million. is to is expected the third and of million be in quarter be

the guidance year impact and quarter of million Our the as based compared of of to $X.X million $X.X on currency. XXXX of related range the the is October $XXX.X to positive expected in weakening U.S. is range million. growth to in third or XX% XXXX exchange $XXX.X in dollar million XX, is for to to From revenue XX% a of Adjusted million includes constant be prior EBITDA rates $X.X be year. the to perspective, expected the to a full

gave the guidance in impacting this rate rate fluctuations weakening impacting an to estimated of are million guidance an exchange million. the exchange fluctuations annual August, relative this the dollar we estimated Foreign are to U.S. prior related Relative by $X.X the to pound. negatively foreign by positively guidance $X.X

EBITDA to expected nine of takes our in and of year, quarter, the is and last year. be half the the pleased range to high of End this towards million progress with million I'm this the demonstrating EBITDA. Our Life to summary, $XX.X long-term adjusted continued both EBITDA resulting half second linearity second in expected tougher resulted sales in of growth the of revenue in $XX.X Adjusted achievement In goals in adjusted in XX% compares third account rate results particular, XX%. into quarter which our McAfee in of

growth the business. that balance through profitability We our measured continue investments and drive to

expect product We gains are drive investments. opportunities and are our excited confident from the we about both quietly new and to about expansion geographic these

open with to I line time to please would poll So, Operator, and for for questions. thank you the your you our question. first that, like can your

Operator

Thank John line from comes question you. [Operator of the of Our Jefferies. Instructions] first DiFucci

is open. line Your now

John DiFucci

mix proof you this a know, if don't don't guess [ph] put Thank see - that's the you. space and especially archiving security, given in And seeing there certain continuity. security results, lot up guess change sort any it, look nice given any buy, peers seeing do but I too. know as all, there to especially I they demand you of as into and in results you in broader usually to what your security that and results. what first security two and the guys, you I is areas a - maybe demand? for are email you customers new other question. at maybe But in the you like see broad you away - point out typically I - providing bid soft also sloppy have from reported in movement solid of you're Are but with the are have seeing

Peter Bauer

Yeah. thanks. John,

So, accent. you from here, if tell Peter couldn't Bauer the as

of like archiving comes we right, the business from portfolio that or demand across other well security, you're benefit resilience as from and cyber our as resilience So, both continuity. some teams

in in see Threat pretty our that quarter-over-quarter, can across consistent customer demand mix And offerings, We've new consistent change particular Targeted any you our portfolio. the demand in pretty a a seen of our for haven't We advanced adds. in security the - seen product. Protection

high that. and the with the environment place large at has address where issues, to in had I there a a in centrality of public from know think market to think them we're I you to right number we're operating been products of email be able some number so these that breaches, still profile we're a benefiting

John DiFucci

Okay…

Peter Campbell

I'll just add John.

a that of generator as in inbound out investor the products comes and number for customers us, demand continuity and particularly line. has deck kind security know, you well when are been You buying of Threat our all archiving are Protection the good growing know know you'll you Targeted TTP that see security

of far not are one the between movement that. certainly is concerned, as you security particular of the we're know So, seeing in TPP and but others, as front inbound demand a at

John DiFucci

I just couple just great. hear. happening there. that there. up noise great Okay, to is out competition, things it's are of a out That's there a had on and follow [indiscernible] some

really thing solutions And have One market customers reengaging of about that in that been if the solution. if and organic see recently them are about And increased vendors just Orchestria cloud I you're of as that They - am very any I categorized the of any CA And its seeing and competitive then typically these of working Life you and/or talking in announced legacy benefit that. email from End you two the discussion vendors, any Cisco. large scenarios? wondering with curious also or the Siemens cloud presence, presence guess increased another archiving - on security know, your solutions. I'm from are

Peter Bauer

Yeah, great.

So, handful Orchestria, we've the of inquiries John, got CA coming in. a on

end the know, a has space financial right deployed I spaces. services we been much not It's great that think traditionally deal. the a that you played regulated some highly solution of of the industry and at more top

as result us. expect that significant off grow the that, a we business. to expecting it know, for in seen in you security help some But be the to and or - legacy Then of successful us not to that and pick up fall on will business haven't to partnerships, profoundly the solutions from a So, capabilities over platform. customers we those we're in customers continue be the again, used performance any you change that transition customer we helping experience describe email as vendors our or space, some

John DiFucci

Great. Great. nice And Thanks job. a lot guys.

Peter Campbell

you. Thank

Peter Bauer

Thanks, John.

Operator

Thank you.

of the JPMorgan. question Our next Sterling of from Auty comes line

is now open. line Your

Ugam Kamat

opportunity the What can our strong Ugam Auty. and over guys. of further, Sterling But seeing something corporates. are seeing you for opportunity gaining see or there are is on maximum solutions Kamat Definitely opportunity anything beyond This corporate, amount I there level the the results is the that trying the mean, go just how government do like taking you that verticals? those are to go within traction in to the especially universities. Thanks Hi, are further those for you products board. you huge across question.

Peter Bauer

Great.

we business, the of So government Africa, those lot in Ugam, very period do UK, do a we've time, selling in we've markets And sold more quite in we've here traction some successfully a started of very markets into into a pick the also particularly find educational well over the the business market. partners South of lot we organizations quite customers. that as international so in and are Australian local we that and government up adept to state certain US those education at of got

they credentials, partner we teams. successful of facing we with So see and would attackers customers a finding really the trying talk out been don't - and of targeted have expel that those very that that facing been of large we've within environment. trade need and They organizations defenses. that for as that have capabilities for lean their commonly our Where cybersecurity have very also IT helps with are definitely corporate the - you us I They of what lean the targeted similar we about would many to to to they kind are base. data types to built large-scale being the customer these corporate other issues same that they've the think they've is need organizations very

them for those really our use which very solution very is types for to of easy for and relevant and affordable comprehensive, is so, these organizations really reasons. And compelling

Ugam Kamat

And currently XX% you Do at customers are happening? of see your until the point years almost if that color on in your on could growth you adoption product. I deepening some we could I That see would the we we time are Targeted using think it? of helpful. Protection, Threat like off seeing you solid really heat some or your mean as of throw What was Perfect. secondly that pipeline it out roof with kind

Peter Bauer

Sure. Sure.

all, with So up. - know XX% you we're take XX% think first I of very happy

We see our going quite and continue to customers, that purchase think customers our time. more to we more existing continue and of for existing product that's some

to a You that the I we we we aren't the away that sell know, think that are of our fact, know, lot from because know, our additional add to and still product, opportunity new of need add protect think to deals products. threat internal I'd developed. to that new comes going family more see eventually you threats existing that becoming products biggest of in And are customers, as But customers. it all going These customers particularly with you with TTP really email internal opportunity they're even also normal. the for like

of huge of out very We're customers. still you at hundreds a - opportunity penetrating what know there's beginning thousands So, there. are the and hundreds of

have yet customers penetrated, XX,XXX, this these many like protected, we in haven't many that of them of of are don't many have many, thousands We customers aren't hundreds solutions of there place.

we opportunity that TTP continue better. develop of on large, growth product So, TTP be it'll existing very as even we to is it for top that product, and and the build the think

Ugam Kamat

congrats Great. so solid a you on and Thank much quarter.

Peter Bauer

you, Ugam. Thank

Operator

you. Thank

line Sachs. Gabriela Borges comes next of Our question from of the Goldman

line Your open, is now

Gabriela Borges

how industry Could there you're selling. little Maybe Congrats Bauer, differently more of talk question. couple the a I'll you what on the for Thanks and the doing afternoon. results. that start process a you prepared taking Peter mentioned about Good on times remarks came Thanks. about? with bit my in

Peter Bauer

Gabriela. Thanks, great. Yeah,

So, all amount verticals. a we the business seven of markets or eight fact, do, that identified specific significant in of fits our that in we into global a

theft Healthcare we ecrippling sectors. information to are the feature at the And unique specifically prepared some requirements relevance there within one have damaging we And within remarks, common the would offerings capabilities subjected on or so, is healthcare. about service unique that and some was what those pretty of attacks. has deep any fairly operation cyber-attacks, been one verticals, pretty spoke looked that those lately

IT, amount itself we drawn IT we solution were well these do inside how that's to of investment to that teams issues. mode so, that our available organizations they that security that the help deal And see those organizations optimize terms quite lean lean felt with in again healthcare, to resource of

secure that. we're compliance our got works seamlessly And functionality messaging technology. we've to our some great So, DLP some encryption specifically focused very healthcare really with on HIPAA in good regulation that and

educational verticals And activities sales across that expect with types promotional selling some types of seeing organization additional with somewhat of focused capabilities our so, we we success training we of some out some And campaigns, materials, to some those together and good we're go. roll put as propositions. similar product and additional

Peter Campbell

deck. their and I think is that's segments across just of all the add and to the regions. in But in all that sectors mean, to sectors that Pete's know, goes customers comment. relevant we diversity all Investor sell all it I this see product we you to and also in

Gabriela Borges

as approach And that I this expand a into. your [ph] is talk maybe would you as congrats into on to Germany, that launch a of you. little bit first That's imagine about market think European in the expand helpful. follow you picked the And if the just a may, of about phase Thank up non-UK, Europe. why piece size part relative small to opportunity? should I How we further could

So, I level the talk your strategies would well? Thanks. high at about love to as

Peter Bauer

absolutely. Yeah,

in based typically But company. of the a So that and a for out much some are of we've selling customers sort doing that activities UK of being as business actually, our countries inclined represented to sort us those brought are we've have of Europe service buy partnerships more opportunities. UK that being is years been through into inbound through and some and number - that been a

a partnerships and Germany, into took share We and, in but specifically so go revenue Benelux the initial it's really German country also we've is leverage So, selling is because and building over open directly and those decision we more building the feel play served and Nordic subsidiary relationships by the and continent. an a be to as that broader the needs opportunity to German some that generating that us some a European a in into gives market, have there. much And to that it and team had regions that success the sizable a market and significant to on customer a time. central market the is

we saw the about mentioned I you and prepared the that this in people. so we So, XXX organizations XX,XXX looked at employ - know, I XXXX when think remarks, between market,

So that's good market. very a

that as You central across you know, sweet broader spot. Europe right well. And looks and one know, expands number Mimecast the in quite you when nicely climb starts know to

It's a about a look ramp forward contributor up. excited on strong And good the market to the we're team really we key building us. business it on years - we that to as investment there We're a ground. our So, being that. for the over

Gabriela Borges

helpful. you. Thank That's

Operator

Thank you.

question of next Matt Markets. from the Capital Hedberg RBC Our of comes line

Your line now is open.

Matt Swanson

This is to GDPR? we're like or those on maybe Hedberg. make kind on you getting additional from sense GDPR Matt actually for be have slightly. Matt Swanson what implemented today forward customer the would was who percentage if it And talking out need with investor do put Thanks. again standpoint, sounds a about ahead to of CapEx of have previous compliant Does just do this then purchases? and Building conversations it German would on that this question, anything

Peter Bauer

Great.

of there, negotiations and on the Europe of of implementation timing in of important now, two the So, that one obviously things the right guess move GDPR. the decision in the the pretty in then terms are Brexit other and going investment the one is the to I

drive tell very is for those market. we our compliant not up know, certification thinking The kind sort that of of give or breakdown opportunity think So, difficult of timing a to of organization informed in capability. both local will you is that German it help specific with setting it's And towards earn any GDPR because can isn't an explicit who of who that and themselves. terms

one So, that or of readiness something meet organizational some capability education. help think developing I naturally come in that it's some customers - process, there's solution technologies to stages buying market and together around and we're we're regulatory achieves, that in obligations particular product GDPR. a their business not Again,

ours like solution, demand technologies, generally preventative which like creates security both for naturally product measures span specifically that Protection supportive our that think with well solutions we as data Threat for So, management a the as environment Targeted and email. archiving

Matt Swanson

Is you And hard with just I if get exact lately then be more, because happens the to about all breach guys ask build, to it? to may great. and mentioned there's and think we've to those there so conversations of been the answer this kind been many. seeing reaction high-profile of an then one customers maybe start could breaches to when from the pipeline That's a a timeframe way when kind

Peter Bauer

that. the we and think that we it's back and know, able be a extent that you know, new they to know, if attacks Peter You think to few up discretely But mentioned normal come years, disclosed, you I some track as Campbell publicize. might they went these I

I be the think a So, specific it's just to to demand difficult to landscape dealing of that very track event today we're able nowadays. part with and a specific reaction

Matt Swanson

time. your for you Thank right. All

Peter Bauer

you. Thank

Operator

Thank you.

line of the from next question Catharine comes Trebnick of Our Dougherty.

open. Your now is line

Catharine Trebnick

quarter taking very for really question good. nice you Thank my and gentleman,

So, sized many up One on door the the knocking you you XXX,XXX? deals? questions. is Thank any the us looks it newer deals then And Can awards on moving market. with discussed the of seems quarter like pipeline how your color flush this also you closed opportunities and how above two give you.

Peter Bauer

Hi, Catherine.

number in the of of in which the freshness the effect can customers you see AOB will. smaller bigger those We're come future the seeing as shift of is last customers couple are We're see sub-XX are effects entire a bigger seeing in But little - kind that, our of across - there's was shift continuing AOB. in, mean, we micro-customers the that of affecting really those of we effects new certainly and a We're there. we the not what a talked those come of customers base, larger have more the as of I or quarter. call you a pipeline XXXX talk our effect this just quarters things if are, that's larger but couple both we to kind coming past seeing to see of this that mean, to on larger of deals XXXX bit We're board. affecting of a yeah, board. is it. that. our customers. continuing on So movement seeing I we so having We're we and quarter of number

base effects about XXXXX are those you entire talk when fairly significant So the customers. of

that. larger them we're competency products. keep sell key only large and forever our the kind of which base, know, customers not - middle new new We're affecting is of seeing to them customers you that seeing selling So, also but the we're up a our

we we a bit are So, a up market. seeing of move are

and the moves. affecting as pipeline of to of We that's really we'll more to are talk those keep it can't AOB seeing kind you that I know But effects. talking the future

Catharine Trebnick

I Thank you No, my for understand. question. taking

Peter Bauer

Thank you.

Operator

you. Thank

from comes of Alex Needham. Henderson the next line Our question of

Your line is open. now

Dan Park

for This and quarter. for Alex. on taking question Thanks is my Good congrats Dan the on great afternoon. Park

previously reach So, mentioned you just SOC proof to in just larger was I you especially could elaborate standards landscape, you I if allowing the attestation wondering competitive point. had the on know, to regards X customers.

your Just moving of expectations your want to get sense forward?

Peter Bauer

bid certainly continue invited to to be larger We great. on Yeah, more opportunities.

that I that our Targeted across the Quadrant recognized market, unique And capabilities Gartner recognition of Archiving. offering. we leaders on of been momentum once the Threat think have about have being placed had the again from the Information capabilities for Protection we've then the that and a top the are at we Enterprise platform

of of of of customers put competitors types of sort larger market as capabilities, we happy end we're having in are those I think and showcase that opportunities the the some very our larger we we're top some look that opportunities competent in that those to some mid-market today. of successes there continue at at and front very with

Dan Park

Okay, great. Thanks.

Operator

you. Thank

of Klasell from question next of Our [ph] comes Tim Northland line Securities. the

now Your open. line is

Unidentified Analyst

question. Yeah. taking Thanks for my

touch yours. Sync seeing & doing looking begins you to you quite on there customer isn't I incoming they obviously know, you you business often quite that's how back are wanted Recovery. at how Just offerings maybe getting initially the onboard to protection about and Recovery need that coming Microsoft's Obviously, and maybe the what you know, entire there an seeing of quite so existing & you. addition But that. to same well, mentioned are your on that your customer realize are Obviously, who Sync often congrats is doing for well

how often often Sync So operating? it i.e. customer is is Recovery XXX Office how like customer an & and new

Peter Bauer

Sure.

we of now So, we've this the end first end had is that product. XXX quarter August. - using We September at product. this that customers have We the launched of at the

So, of and about potential future product. excited that that we're the pretty

time this in early. point very it's You at know,

probably early as breaking it's that gate. new to it's had a And information for But we existing customers coming, acceptance in our sell expect of be continue pretty it's line, to non-XXX, it's additional whether XXX, broken contributor that out haven't product where archiving We good out product that is whether we'll customers. kind It to whether additional or it future fairly the a kind. our good of to tell. of some look quarters, we product at out

Unidentified Analyst

Okay, great. Thank you.

Peter Bauer

Thank you.

Operator

And the our Barclays question Capital. line of Kalia Thank next you. Saket comes of from

now is line open. Your

Saket Kalia

Hey, guys. Thanks for taking my here. question

Peter Bauer

Hey, Saket.

Saket Kalia

Hey, Peter.

qualitatively customers, your the of last maybe And just trended? of year. the again do Obviously rates couple maybe email how I just those pipeline that with win on attraction email about situations - bigger the them of next, guess quarters, you. talk the Bauer, from the sort those back the the it of looks Peter start of you in some very to nice of Can through AOD, rest how at gateway gateway. types looking know, customers You coming of types

Peter Bauer

Great. Yeah.

a frontline McAfee customers then have is perimeter, opposed in gateway really there engine, of that defenses principally is solution. The security of that's of with on the part as two a the the solution way on infrastructure, So is further the really deployed being edge it's to their sort one where as on back ways which as being and other on-premise a cutting and kind - of opportunity solution. that of a policy mail router

So the more End of of [ph] given timeframe which is sagot off. the pushed those dynamics solution that Life you know, and much and of

cloud momentum some comp much big You a as and or perspective know of moving the based had Obviously, migration kind McAfee Logic customers logo also the we of old significant some from a MX that volume. more the opportunity. see real slower

to definitely is the a helped onto sign and different customers this So McAfee gateway onto type of slightly over Mimecast solution Mimecast. but - we opportunity, with from migrations them continue

Saket Kalia

Maybe it. for Peter you Got Campbell. That's helpful.

around going EBITDA we about you see a think very in operating help just how I maybe were bit, we know, little below it But understanding You maybe just aren't particular? bounced operational. Can the beat. then those taxes couple felt items all understand that a well us solid think there And should those? line, the forward like that non-GAAP taxes

Peter Campbell

Sure. Sure.

And globally, our you that the which provision mere reduced So NOLs. to our first that the GAAP cash relates mainly all one we tax think know that that South provisions then has taxes to tax income operation the some the cash because been off, pay of I to is - profitable up African enterprise, income for we're amount paying time. of amount

entity, entity that African in provision And grow our with to you tax expect cash as to provision and South pay in tax non-GAAP revenue. mainly so we relates our relates it that that to the line

excise our provision our tax in use of a regions non-GAAP U.S. entity. and Our benefits versus is function tax particularly of NOLs

to exercises share of taxes we are or function related non-GAAP That a NOLs in we particular So is use whether that option a any tax paying not excess region. benefit to really cash provision. related

know, We that I'll straight next for fat of to excess versus have turn enough NOLs of expect the one excess tax in able and region offset one benefits. on affect either excess tax tax either to the our be how these to each payable NOLs much years. versus we non-GAAP you of use $X.XX those we future That'll depending one. that, we benefits we amount $X.XX in taxes to NOLs apply able to to or can a we're benefits of tax cents, how on do amount benefits, on that much of EPS excess depend days any that so of say But The that couple use the use I by couple the amount quarter.

Saket Kalia

much. Thanks helpful. very That's it. Got very

Peter Campbell

Thank you.

Operator

back call any hand this the I'd over Peter no remarks. at to Thank further Bauer to I'm like closing time. questions you. for showing

Peter Bauer

of look Great. about evening. call the to a three to you Thanks you in We've enjoyed Have forward back set results through results. months' evening. joining to for we great our presenting next everybody this being take our and time

Operator

gentlemen, in That conclude program. today's and Ladies today's thank for does you participating conference.

great Everyone day. all have a may You disconnect.

Mimecast (MIME) 8 Nov 172018 Q2 Earnings call transcript