MIME - Earnings call transcript Q2 2021

Due to licensing restrictions, you must log in to view earnings call transcripts.

Robert Sanders

Good evening. Welcome to Mimecast Earnings Call for the Fiscal Second Quarter 2021 Ended September 30, 2020. I'm Robert Sanders, Director of Investor Relations. With me on the call tonight are Peter Bauer, our Co-Founder, Chairman and CEO and Rafe Brown, our CFO. Tonight's conference call is being broadcast live. call available this call the of ended. has replay will after be live A

forward-looking future the when statements statements future make materially additional could will We regarding uncertainties to results The of risks uncertainties differ Company. COVID-XX cause to creates actual financial those events statements. the These statements. subject making forward-looking in forward-looking are from and that forward-looking performance the and pandemic

the Exchange to SEC factors guidance release and to are Commission. providing statements faith with recent a the recommendations. on risk in that in defined filed We factors These on most you Mimecast's those call. differ in results with forward-looking today's are further Form We basis could contained and caution good consider this from actual Securities press risk important aligned XX-K cause conference the materially

obligation our in reasonable as statements Xnd, of this website. be section update we future provide superior new events. We our is be non-GAAP statements to are isolation During GAAP the and to or are no information for that these result not believe make this of can for GAAP to today's the of date Relations non-GAAP which reasons non-GAAP the to measures based call found today of GAAP measures. measures from, be press intended both XXXX. of call, included considered this in Investor we as The in results. A forward-looking is of to or These release, substitute non-GAAP information November reconciliation representation Any on a undertake we'll and our assumptions a date. financial

call turn Peter over to Bauer. like to I'd the Now,

Peter Bauer

guidance pleased customers. with amid for our this delivered everyone with of range solid XX% million, to continued pressures joining that our quarter, that's we execution COVID-XX revenue second quarter year-over-year pandemic. we strong the high us. flow Good we added thanks end in growth and relating our EBITDA free and part due XXX to drove of $XXX.X share and the large I'm new to results cash up at you afternoon, In approximately

will business focus and both share With I details how about from market you work you later affecting we're COVID-XX performance we're a to the customers, financial call, the to the on impact perspective. protect want in landscape outlook grow and through a take threat our and While the with road Rafe thinking the about and more customers ahead business profitably. doing our of our

of posed pandemic we've actions sizes accelerate pressures the and we all of some including In growth. our across to taken Mimecast. companies the for know, As are all the industries challenges of market has muting impact particular,

of project to we smaller can focusing on all As the services, ensuring control. we decision-making segment, we customers, of on earlier the line. while by our offer additional context. impact we how of in out, elements the in out expanding the right of business plays Analyst set the we're care running confront build that slower on them, our them our in the business focused Though this February. enterprise efficiently we same model, achieving and described in economic long-term customers remain has the important and now especially an the We Rule value steps best to impact selling timing and innovating potential our Day capabilities, Winning challenges taking this bottom with thinking time as while XX that the new to the we which COVID year targets taking at profitably the the are

positive hires hiring. that we're our to reducing expect example, impact we advancing have for overall but So on enterprise strategic continuing we're strategy,

tools, hybrid office we we as we're growth expect allow of and also to long-term. and engage end, we to successful in work also people a we structures to that and environment, remote collaboration time, the more work line, strategic over real often bottom which events, rethink a how cost meetings related have initiatives. balance and These enable in working return to virtual us expect evaluating remote that we have to and savings investing the estate shifted R&D how many shift with build how we given where further normal to towards To be using other We savings continue been customers. the durable drive work while

building execution cyber industry in of and continually the the are the line Through anticipate to we leadership consistently needs delivered changing our strategy, growth. We top successful of threats. platform nature customer by evolving have our

customers. As blended of the as attack social chain, that attacks, and engineering, hosted as sites, as involved on we infrastructures well messaging used seen and malware properties have web non-email protect have systems and to part our email the cloud to fraudulent ransomware being innovate rise continued phishing of we

offerings and Strategy customers an in of integrated blended X.X and these gives against email messaging holistic attacks. security suite Our defending advantage

seven framework As portfolio our we've ago. product our reminder, solution in a years over versus five products XX expanded now

technical especially cyber a threats. Mimecast fights organizations. Recently CrowdStrike's elevated our against actively joined leverage Partner in customers Elevate and focuses resilience, as offerings integration including Partnering factor. X and Program our strengthening Brand and email cyber Mimecast role targeted and that and countermeasure the and can investments email comprises over utilizing benefit protection intelligence Our perimeter on an security DMARC Zone secured defenses Zone shared threat in act threat our gateway also their Protection protection current TTP larger X offensive platforms. joint internal Analyzer APIs. X from include enhancing threat human through awareness back training exploit Zone deep has detection which to

up market the Our sustain such Canada long-term position in success. expansion sector partnerships Mimecast and space Central significant public opportunity and market the are and platform recent enterprise Europe, as will

Health quarter. In seats. seats and the untapped suite one of included this Department the XX,XXX say Zone a for sector broad that market XX,XXX of public X markets, view of for UK purchased Given and purchased and thousand a agency a Zone X,XXX our government good global footprints saw international X archiving our a seats, actually purchased experience, progress Justice as we for we Department large

also US, and in this FedRAMP upon US status we additional well opportunities approval, significant which the quarter receiving public capitalize full sector open will We on. believe achieved this ready to up we're positioned very

and regional results the quarter extends engagements federal, around show, this local our As winning agencies this US beyond the world. opportunity competing with is government forward already and Mimecast

commencing of Europe sizes, Central storied employees. growth it our quarter our SMB large also this the country including We X fast of so in we successful data and view We Zone existing included in making who this In vast especially growth found number longer-term Mimecast region. well last to the week the Mimecast for enterprise the penetrate also potentially We market. all new drive This again as customers residency growing expanding Europe a make Canada, is in services quarter. watchmaker engagement in pit With virtual of believe cross-selling market customers fastest accelerate Central archiving datacenter and commercial across to Central to cutting continue our this offerings. dynamic option our in of region. XXX% to Canada and purchased data drivers Montreal. Toronto Zone operation We a hosted given positioned on both believe process and progress ribbon and strong were over on store with Mimecast and significant many customers will service organizations, Canadian customers to Europe X,XXX very upselling minds a and ability X our the growing

archiving value newest Zone offerings pleased highest example, offerings for XX,XXX and X deal. X are power multi our their driving of added company instance, employees targeted good This current services our in help investments is figure as think for our In of For the innovate are as engineering simplify returns. I'm our and based to recover customer in a and extensions US a really broaden a on customer. and additional Zone example and platform financial resilience that the for X, and vendors to subscription. X,XXX construction services to multi-service our service a and we've see well consolidate cyber our made another platform to six the of added one security resulting employees US IT X

our additional for Enterprise Quadrant excellence These is sixth as Rafe values. reason belief customers and Mime us this expanding our verify archiving increased in Magic explain, leader the year row. Archiving higher now will upsell engagement another adopt and will customers enterprise services order in for drives identified to And customers results Now Information in greater Gartner's that drive as enable average in a in cross-sell. our up-sell share a

in large SMBs turn security me acquire let platforms. switching efforts to Now, that enterprises increase penetration are and to

customers. enterprise large win to continue We

international for an firm employees. and XX,XXX quarter this example, For services X Zone purchased X professional

Symantec, and X even other with to consulting and continue X We example, communications a defenses, secure service ensure messaging to X,XXX also with service continuity previously service experienced our uptime providers global for acquire when Zone downtime. employees our customers purchased firm

XXX we continuity Office are for a an Office event on In time. such XXX. was running those customers as than of offline fact, resilient Mimecast witnessed period recently more simply naked

XX% trending to results is market continue target the improve. to now long-term quarter drive believe implementing initiatives line of we gain are our as top While XX%, our traction below we conditions and second growth will that

operating selling our environment, customers details to we So and results. I'll cross new customers existing the of a And review we're it market challenging efficiently to and in Rafe to profitably. summary, over amid are that, with turn Rafe? adding and up-selling with

Rafe Brown

our flow you, quarter for I'm pleased XXXX. free Thank exceeded and fiscal we revenue, the high for that report to EBITDA end adjusted of second cash the of Peter. guidance

both continue and to margin challenging deliver expansion environment. growth line to operating our a demonstrate amid results line ability Our bottom top

to financial of derisk a there our in challenges that Despite When to of take work business. into March, are our two had of extensive at understand to moment will ability our to the I our allow lessons on our Before in a results the to important business we core the jump number COVID-XX undertook of great about learned deal like the to our hold ongoing a pandemic quarters, our discuss and and the past review take customers, impact our to efficiencies we disposal business. support build believe remotely protect team us levers we I for began markets an quarter, our our what into would business.

our believe long-term in For can improvements and example, driven we event travel, marketing budgets. we facilities, drive

responding demands closely of to pandemic. are ensure business headcount We the prolonged also now we increases managing are this to

for in our noted, tirelessly Peter ever of increasing deliver work world-class protection As customers we to face risks. the

as and of the our are rates team continues reaccelerating, top As and our and health safety seemingly infection priorities. COVID-XX remain our impact customers

year XX COVID-XX for revenue $XXX,XXX X% to FX were all prior over X.X time generated our with October terms. quarter, improvement an the quarter. larger services $XXX.X turn clear our in services also over quarter. at at million, Calculated $XXX,XXX, as strong growth these at increasing year organizations. the improvement prior year compared to customers XX% currency by Despite This continued attributable this year, results approximately to for success impacted we base, AOV increases financial of providing it that our line guidance across since up positively Adjusting as of the rates, our favorable of year-over-year or the services our customer values for which top dollar now created at in the August, second absolute Let's average over the is results, currency $XX,XXX order shift represents results. rate prior stands currently in second tailwind, foreign in X.X quarter terms. number per trend bolstering in constant stood is felt In results currency our a customer well constant of fluctuations per challenges XX% the in for customer, Note average last that AOV. second currency

two we upsell impacted As earnings was in the significantly generation COVID-XX pipeline over of fiscal new activity and the last the noted by early year. months calls,

an on to timelines expected the impact QX business. there convert our pipeline Given to be we to bookings,

thus a by off its added quarter. pipeline, larger the our bookings where lead in generation current and We will systems activity XXX now approximately into fourth acquisitions would rebound show count. has of entering into which typical came Looking enterprise the from customer second quarter, approximately in sequential lows customers our official recent XXX improved merging pipeline at suggest our times at accounts

having As on smaller is pandemic our customers. we an the quarter, outsized noted COVID-XX impact last

when segments However, customer we prior net compared decreases all see did the year. across in additions to

ended XXX% to COVID-XX September quarter the XX see these for As Net expect count we to run four our period for the pandemic the retention with metric totaled the new net continues, revenue expectations. at continuing in near customer term. levels approximately line

on customers by totaled our margins, margins. an recognized increases EBITDA clearly non-GAAP have progress we XX.X% gross even in On COVID-XX quarter thus in million interest achieving which same of This DMARC year. our savings Down margins. our expansion estate been XXX% of points of to operating components, to discrete well of margin by from added improvements to quarter, year. end computation, EBITDA strong goal customers these a points basis our our Zone adjusted customers. second approximately the XX.X%, the achieved of of our its run economic email XXX a representing Returning stated prior goal margin XXX XXX cost which non-GAAP consisting the as prior reductions, challenges at $XX.X totaled X quarter travel expanded the or million to savings, line executing We awareness efficiencies of in from speaks solution, progress which representing margin resource our million Looking up and would $X.X adjusted through our our real long-term the totaled as are down Zone sell cost EBITDA up added towards as XXX of gross gross margin and prioritization top prior our net second bottom churn compared training by of significantly this derived continues quarter driven $XX simultaneously which and protection, the internal delivering over growth improvements, solutions sell in X% in customers, basis, This our approximately sell EBITDA for gross added compared throughout primarily XXX a result Adjusted quarter reflects driven margin second of helped line rate, the as the expenses quarter XX.X% facing. most driven year. basis the the benefit X the the year-on-year in footprint. operational excluding the improvement XX.X% expansion XX%

the XXX year. to non-GAAP from bottom second prior XX.X% turning quarter for improvement million our $XX.X an basis Now or was of points the line; the revenue, operating profit of

for per the fully income net shares $XX.X non-GAAP $X.XX XX.X was based Our share quarter million or diluted weighted diluted average on outstanding. million

non-GAAP the Our for tax rate was XX.X% quarter.

$XX.X million we full-year changes We of of number again our rate to operating net on now the of of quarter are or profit diluted tax diluted GAAP million a average weighted implemented second modeling have global XX%. structure, reported shares for we outstanding. As XX.X non-GAAP share, a fully the approximately income $X.XX per based

Our GAAP quarter. in tax second charges total approximately the $XXX,XXX

expense Third quarter $X expected be to is approximately tax million.

$X GAAP Our tax to be million. currently full is approximately estimated expense year

toward the in collections we XX% of million expected line flow build XX% free again totaled long-term cash second profitability cash flows bottom revenue. our flow; than to model's deliver better operating higher as by $XX.X to XX.X% or Turning $XX value million cash quarter, of ability cash Free margins. second or to of jumped flow to our for quarter the driven demonstrating XX.X% and by quarter revenue, business goal

September challenges million $XXX sheet, up current our the of environment. the significant from balance cash of year. economic Net current $XX cash million on stands Mimecast giving $XXX beginning to As at million of manage balance a the XXth of had the debt, the strength of

$XXX third the to currency to quarter and constant turn revenue or be million of now is guidance; XX% for me million XXXX, expected to growth Let XX% between terms. in fiscal $XXX

to point, quarter expected estimated XXXX with $XXX,XXX travel quarter for of the strengthening compared be to guidance cash million US At of is and exchange and the the third from as little third we resulting very flow million. to Free year. $XX are resuming fourth. this in the based assuming $XX third on impact million. approximately $XX be the quarter, is between October dollar an Adjusted is rates prior EBITDA XX, Our negative travel of the expected includes in for the

negatively details, the XX% currency between to million year impacting in rate midpoint. effect prior XXXX was August full constant at early exchange fluctuations and the an expected or foreign fiscal this be to growth guidance to million guidance is Adding XXXX $XXX.X The rates million $X.X provided $XXX.X million $XXX.X the compared in the are Turning fiscal fiscal the in terms. revenue prior year. estimated by in to XX% year; for

guidance positively This We of $X are midpoint resulting being to decrease year $X.X million absolute $XXX.X currency tailwind our is dollar exchange the to by million by $XXX from in $X.X million impacted continuing terms up million. decreasing the the full rates by our since million of year $X full COVID-XX. in million our in that used terms call moving guidance risen impact of of midpoint foreign constant due August in the has of

are to $XXX.X the or full-year guidance point guidance, EBITDA a accomplishment million to we $XXX We the toward efforts. significant over the enterprise represents adjusted continue back in hire At XXXX million. resources go-to-market prior an and and between to raising half improvement million development year shift this midpoint, of support a product the to ongoing our XXX basis as and key our $XX.X enhance initiatives to plan even

expectations revenue the prior it of guidance the turn results call Mimecast grow macro full-year improvement a that, business free bottom some we its flow before to raising with over $XX line delivering demonstrating the free also for are second With cash to margin challenging up guidance. Peter pleased our we points million To of closing resilience prior a back midpoint over basis to expansion. open questions. million, are XX.X% is to point and XXX I'll August. reflecting This remarks and margin cash continuing and the an conclude, at $XX.X to quarter range is environment, in year of the our XXX despite We the flow provided XXXX basis improvement

Peter Bauer

Cyber more Thank than you, is important Rafe. resilience ever.

model. and We have technology business platform predictable an industry-leading a

believe email architecture to market us disciplined, customers growth As cloud and service opportunity additional to There other towards And market for needs, trends very security that we remains we share. market come. uniquely email profitable execute for and let strong for large we shift near-term, In capture and the environment. to nimble positioned shareholders, within open the for right consolidate believe drivers taking position we and years growth us their are to in have even a favorable to deliver the now the place deliver. right we a our in Operator, remain please will discipline lines tighter team value with control questions. actions strategy

Operator

you. [Operator go first Thank And question our Instructions] Eyal Please from ahead. is with Shaul Oppenheimer.

Shaul Eyal

XXX performance your you, the good February or metrics Analyst likely now during beginning on improved you've Back while Thank seems RSA the my outlook. right gentlemen, in afternoon the on Two of Office end, your questions Peter provided ancient and congrats Rafe. about customer some Day? history, ongoing platform? how you've have Can under changes maybe that base you since Mimecast a follow-up. And that any us that I penetrated into and customer Have shifting is. success penetrating base Day about continued talk you them to the see seen and landscape to Analyst

Peter Bauer

Shaul. of market XXX. we of in great. some certainly the Yes, in the size Yes, to available Day Thanks, February, us Analyst the at so outlined Office

us reminder, today Office a to XX,XXX organizations addition as XXX investments Just more secure. in their over make use

what continuation to with their base position and February and project economic for certainly that since making of the bit simply Office organizations some they've seen and continued we've during customer improve and sticking organizations time well of our got Having of a theme a a quite we in generally those X. to I that, we've new is security, being. slowdown because said pressures, in that decision build think decisions a little implement systems what COVID with seen organizations are make XXX

Shaul Eyal

the Got archiving but offering metrics product it. provide also Peter, of hard the offerings, prepared versus from the in archiving sort color it, course kind quarters it's mentioned your being the the you for bundle remarks I speaking unbundled got about of And whether can unbundled know bundled a you've highest value maybe incorrect, maybe out now? it's generally to with or of bit few during wait just mostly the quarter going provide of us archiving past the over to or little

Peter Bauer

Great.

we attachment of archiving greatest So solutions as an other ours. see alongside probably of taken uptick the

management archiving learn archiving customers with eDiscovery, legacy So, our the set that. about as requirements of can of because looking through getting may diverse and for data along the cases range a archiving opportunity security solution from then to the email business. compliance use us come do to that out storage they security alongside And resilience even

the offering we kind So deals our typically sales new large deals. picking quarter. of archiving during And quarter, customers be certain capability Recover enterprise Sync those business often offset. also have situations XXX logo tools security and added last typically the have the archive & up power We called additional Recover point are this do and Again quite to this buying then a minority & of with with last extension an situations motion. are Sync where bigger the from purchases along we standalone used we those archiving & customers are would archiving to view of added Sync be Recover XXX Archiving

our there. nice growth So archiving in business

Shaul Eyal

much. Got Good it. so you luck. Good job. Thank

Peter Bauer

Thanks, Shaul.

Operator

Thank you.

question Our Please Hedberg Markets. Matt RBC with go from next ahead. Capital comes

Matthew Hedberg

wanted I ask in which some were great little more there, obviously the also sort Continental know guys have lot a about certainly UK, bunch taking Central a that years. to you there And the more bit guys. be then of invested couple ask bit guess exposure I you update the a wanted for Europe. particular of to I on helpful UK know hear, as to well. question expectations on for would past region. of Europe, more a I datacenters There thanks guys about I is my Hey, really comments positive over

Rafe Brown

Yes, thanks.

getting we're long-term is much coming actually locations, are bit team, our there. in established more opportunity European smaller a quite scratching to Central some still off great see operations of feet of the I extent Central them we think their to a in mean base coming really So just the with together but We our it's pleased it under with to Europe, and quite there's a surface them execute. nice

So a come. years growth this to driver for should us for be

Turning on also to hearing are we're a lockdown to bit a UK COVID, there the right the due complicated now of Brexit That of said, of house. a featured the strength seen the through out he the were went call side going nice dealing they're deals, we've because in is of some with now on which we call. number -- Peter's UK, situation it's but couple in back that a on

So has rest ball despite world team of much done hustling and there the moving like keep the out challenges. business is some to shorter-term the forward these be to the of

Matthew Hedberg

thought That's there a huge is both was on of highlighted were a good that. great. certainly maybe well progress globally bit it more that hear the sector like was here this And Clearly, you market abroad, the US I then there the it guys public some to things in call and as as on success. great one sounds it quarter

sort market, Just when rate look terms important to another health kind at could your be of Day? years, driver couple long-term of in out that a that of talked we growth how you Analyst the of about of of

Peter Bauer

these with dedicated the Public FedRAMP them base. having we customer a ago. I the Sector status now going public infrastructure, agencies, And I as opportunity for sector really give they above working besides there and excited that that public we sector we're up are North grid solid internationally Matt, some a so clients. looking public FedRAMP security with in about certifications our international that around base American that are started to sector number really datacenter confidence make think over people ready progress this our are obviously supply and time to remarks providers that markets that's particularly that number infrastructure acceptable what cyber just called beyond out major Well, building their of is client for having and in on are the in building be sector public the that certifications of our chain Yes, specific wins prepared to

ring sort we're really in So think of and effect of to that up that additional increase to there's greater an have we quite our lot actually teams. spend and a ourselves halo setting for of spend opportunity the access around

Matthew Hedberg

That's a sector. sides hear really guys. and both lot, both Europe on Thanks Continental good to public

Rafe Brown

Thank you.

Operator

Thank you.

Our next Kalia Please question ahead. with Saket Barclays. go comes from

Saket Kalia

Okay, Sales on I you hired my Channel strategy through Hey And about great. Peter, recently. here. for channel going think questions just your for think Head what a Can us of currently? you roughly forward? the you the of channel taking maybe percentage is guys, new refresh thanks coming how you, business

Peter Bauer

Great. Saket. Thanks,

appointment yes, to weeks that's Officer's Kareeni recently on my for announced us, is channel Revenue a couple So he running new Global ago. team we Chief sales John who [ph] now a started of

our entire that has it's our So a mix actually obviously channel total base mix, a percentage And in terms is history. some high across of quite our today. of business that done as channel through

gone directions. with that and looking and the we in refine on we've over pleased is done of really that we've couple recruit couple new of initial channel our into a progress the a new years direct been to as So as sometimes part partners of business markets really channel last develop the and basis

enterprise, On space the a partners. that room is terms and we probably the we've programmatics as those with of the MSSP market type of continue of how we but there. improvement in considerable up one have where hand work the And then and secondly for the looking growth down market what progress MSP at partners, number in to we right with channel that help made demonstrated are partners us

So the about with opportunity we're the channel excited that on market. both of ends

Saket Kalia

you. quarter. my maybe of EBITDA Great sense. lot the this to follow-up a makes That for see beat Rafe,

margin implies for there quarter? travel but know terms I in down or about some just quarter come later hiring down that bit in seasonality in pace to the next of is expenses consider on you guide third drive a bit, the little a starting would talked margins think here this year, I sequentially of to maybe anything maybe of little those

Rafe Brown

Yes.

the year, enhanced the which we following of the is know. increasingly expect the focused as as quarter we on hiring quarters, next if our of back up things there half big is the raises the in of as as -- Pete also on that's in more travel you As well And of resources very probably side have priority to couple projects, called making at funding activity annual us fourth start course. just sure year we the the our that the And the things key finally touched of and much out enterprise house, in for some numbers look beginning heads noted, preparing then we're as targeted for well. free R&D some to in on some kicked on strategy side of the some the for you a quarter, so do go-to-market this

Saket Kalia

again, it. taking Thanks, my questions, guys. Got for

Peter Bauer

you. Thank

Robert Sanders

you. Thank

Operator

Thank you.

Montreal. go next comes Our from Bachman Keith of with question Bank Please ahead.

Keith Bachman

Hi follow-up bottoms? is that's question My the your XX a be question. before question, does calculation I you've do And latest a was months could. bottoming revenue a just first bottoming I your wanted is your to that have retention so on specific, little actually When rate basis, rate XXX, it's if pretty and bit. that you little to know guys, part process So excuse related this drop I get was unfold different. a my net increase I bottoming retention actually going is a and more it bit that to net quarter on see thanks for corollary thought and might us growth taking the to how thought your me, my good sequence, it forewarned

Rafe Brown

for Yes, no thank that. you

hitting here we this still how makes where are of Certainly of way coming retention I now rates details the on the right on do is be particularly we've looking virus pointed them you've the quickly it sell trying to hard. the a pressure through sit at that humbling exactly the to be can and expect we as number try virus up really year those the picking and virus metrics as like side. think who rates What a we and is of is down is transparent challenging, like quarters, coming the people that revenue net out come the over markets will things going forecast go. consistently as to is approached as there to

that expect view with will that the along quite be a line start get in we quarters, that we so front. to gave on hopefully I gradually be cautious the working better a with to the hopefully virus earlier in And guidance recovery to we'll virus that we have of coming see through the think but

enterprise customers, rates, question it's think down drivers out new whether or on versus there, legacy taking fundamental in away broader products getting markets our up sell place are market the expanding our in I whether from players. the going it's some those your to churn growth revenue of business

side that on positive you we're our keep We of house clear them move in will we'll that the to need along. just fundamentals place. eye proof we on points So hopefully seeing get if the are sailing and as

Keith Bachman

that might up of the the of that same there couple XXX that at be some win do seeing companies you're just any standing Okay. me is solution that, second iron to scales think rate, or one -- And net ask there anything, for question the in emerging with rate, the net same? why of the win XXX excuse next stays that or me, be I you and the not Microsoft add wanted that other dimensions Thank change it adds or security are with does indicated Well, perhaps than within about it the on the different you XXX it my pipeline in retention like feed couple win reasons into competitive a talk you Peter, customer in the rates? can words of can rates congratulations suggest rates your Is you Canada. let the the ceremony ribbon then b) that those situation a) just is opportunity you more might and XXX on that win around you situations. the kind seeing cutting quarters. But, in win differences abnormal associated rates? Are you'll net and

Peter Bauer

city Yes, our one thanks, Keith. of Yes, we data your got and centers.

Keith Bachman

Yes.

Peter Bauer

consider we would two more ads one being, think there. we more remember, things so things for Yes, adds, now. like are upmarket sure, at two okay, focusing So customer to customer I play, but

that a those customers down terms order and some and more bigger through of would average market, of we So seeing that we're value. of logos some focus accumulated bit of seat you're have flowing in work a seeing counts through greater less little our on where with

are economy project I -- the perspective. new there little bit is of there COVID think secondly are a in many organizations that a standstill a from

on account-by-account for And through basis an geographies, is in sectors sure. certain so challenged pipeline velocity momentum, and certain

I impersonation comprehensive is around or does proposition, other our XXX guess wrapper are think supplement to a of which factors that comprehensive phishing Office but broader an reporting protection, is environment. problem for capabilities, spanning issue, and I capabilities, through. shielding of coming impact bad tactical API those XXX the question then terms that coming Yes, Office things sort into interesting security of the downtime, not compliance wrap security a reality just mail value data covers when around well Office those web the issue protection recovery integrate models customers' to appetite? in also that at XXX from So all XXX a environment, and capabilities sophisticated capabilities of that allow really security, and

think we proposition the cycle of a grade out Office we as and solution value demand XXX confidence a have playing are for very an enterprise that's in lot that that that in base. compelling being I seeing the

Keith Bachman

Okay.

your short don't is So like answer? feel win are rates the changing,

Peter Bauer

think impacted as but COVID it's yes. niche are I as believe players, a So I the for that competitive of impacted described, rates I sure, as don't result of I win a think result

Keith Bachman

Okay, thank you.

Operator

Thank you.

question next go comes with Please Securities. Our from Tillman Truist ahead. Terry

Terry Tillman

Rafe. and Peter Thanks, Yes.

questions from two me. Just

enterprise I comments one think on of the was the of in side. First terms

a in as an year? kind or new then of does improvement into And bookings you the resources come we are terms in go-to-market an does will verbal interaction I XQ, expectation to the kind I up freeing start start calendar improving that of seeing just start In sales from? the just or or where that that are some up you of, going get seeing from freeing these monies follow-up. investments conversation, suggesting just guess, Are have confidence of a recovery some coverage

Rafe Brown

around started comment on off the the specifically activities to in more -- in pipeline seeing that early generation enterprise. pipeline centers on back what what the rest. the popped QX, the and generation around bigger really that's activity see across organization in activities deal we're dropped board. the we Clearly What is Yes, quickly than

months we're seeing activity. now into that. of so We're couple And good

that's mature do deals, indicate longer some take deals think come sequentially this fruition, a to pipeline I to see us see to confidence that what's so year. those that would start should to we enterprise we And of but and deals that bit more later that should giving activity start coming

Terry Tillman

call your Thank to out, something product? but of maybe relates just question either in Peter should hone to want some I could kind just on else love or had we research that suggested our to MessageControl products, that that maybe hear you. And than interesting something it would up they add to if perspective product more the quickly. that's know you'd I don't of picked Okay. as kind emerging or has on up actually emerging a right an to start traction emerging

Peter Bauer

Yes, that's great question.

lot across there the new of and this portfolio, of saw and new out product, offering expanded has product and out additional proposition quite great portfolio XXX X. obviously the XXX signs new new the customers too. with the in making think value Zone was another adding of some the which we the yes, part that's is DMARC web components well, X XXX security new customers I called the brand training And to customers, see think there. an Zone contribution awareness base our doing customers quarter, Rafe Each and I it it encouraging a obviously built to XXX way good potential So, last IEP we've and

within expansion be and is out also signs MessageControl feel showing product technology message we building certainly and that on our can ultimately is providing database that the an nice will graph working revenue insight we're out cyber that and well Mimecast busy on flow and time organizations. the using we and and differentiator too. we a the something and to for built the add technology that of our in new additional to generator We complement think efficacy that graft think over into is good how time base rents So customers strategy additional platform potentially too machine is learning

Terry Tillman

Thank you.

Operator

you. Thank

from next ahead. Sterling Please with go Auty Our JPMorgan. question comes

Sterling Auty

of in Central in remarks I'm guys. in about be their are or for look to those to of additions Yes, answers customer addition terms how your acquisition to terms going strength the supposed comprise size market, Europe What what net like then all talked should foreseeable customer about mix the In saying that's future, some of the other thanks. sizes. around up profile? if customers is, that Hi, XXX prepared customer questions, curious you in but

Rafe Brown

And still customer you're correct? by talking count,

Sterling Auty

Correct.

bigger so words, value percentage consistent? or up, other in remain larger average order go there customers So should of because are a that profile those is the

Rafe Brown

Yes, I'm within.

the smaller is customer So, but as about elements both of customer we talking course, customers, accounts and you're the impact have on AOV's. this, raw biggest both at look number often of to the the the

will and to products being So if two sure to bigger of customers. base customers, one selling expect larger trend more deals you sold progresses, our making working our we're continual we driving we're and as towards up-sell to would from the year perspectives, including

out, this and a trend what if will, takes think -- been I So pace see out seeing the battleship really the look as in kind that moves and turns for well. that it we're reporting business is time the we've those but play next we as few of to over you quarters that's to

Sterling Auty

Thank All Got you. right. it.

Operator

you. Thank

Our Please ahead. next question Sachs. go Goldman comes with from Brian Essex

Brian Essex

talked hires or better just lower follow-up. hang taking we into then matured you're aggressively ability given what do in to or reaccelerate those the some think into drive kind where growth bottom would penetrate year? for we've going year do as question. afternoon force. thank and think Europe you'd the at Hi, hire the Last and we forward Peter, heading ahead in you're about think to next accounts as question you about time profile you pace into quick fiscal revenue you're have your better sales profitability and spoke what and -- next that's how had line, then kind year a seen next for you the opportunity pandemic a more this you pandemic on going the hiring rate you a might adjustment good highlighted? of How of And opportunities you the you that strategy maybe to that and like happened not throwing any with of should enter like to and might you and then maybe better to hires terms year the of that fiscal that

Peter Bauer

Brian. great Yes, question,

where and think like for that overarching in starting growth the where slowing our hunting the part up we've after mentioned market product we solution to the opportunity, then opportunities, during kind those traction particularly philosophy off. and that little I mix strategy, that with on and that Central these well for around line. hang us is from COVID and workforce going I at that that really growth bottom the hiring and portfolio sure a around making executing to our here the what expanded -- this do be the here realign the in. or of X.X multi-product So has doing challenges and crisis, are strategy that Europe so And some best security we've economic opportunities softer. there And framework to how the gone get expanded executing we're this and looking But to that geographies laid that think got email on before broader has are this optimizing we'll by big we opportunity be crisis and and of flowed by during move growth all enterprise big really back benefits do also informed that naturally is And I of invest that how we areas some been mix. are a benefit in of getting seeing from bit efficiency down

those make we'll to forward grab those we fiscal. next that So move able stocked transform hold of we're most of and into to sure well as opportunities the make be

Brian Essex

quarterly guess, there savings that margin expansion can I your generated environment as remote maybe next Rafe, that you be the by a is you the in Okay, way environment maintaining what that's might in what year? we be a helpful. for might might And quantify expand and there is think levers operating in

Rafe Brown

Yes.

these then, there and we've that shortlist next we'll to which bit on quarters real a the platform. timing think time bunch we has been we've we bit there But gross last over especially found is with be of with about. so able talked particularly with that kind for the toward And that of obvious success opportunities certainly that savings starts a giving March refined. is quite here much estate are travel call margin guidance frankly few continued and of up year the And environment, trying things like very little things as for -- can more of kind not a think well out of environment, start So savings more we We same then normal be more We and work hybrid to are before you're once out kind of are events. bottom COVID work use and a start unique uptick on broadly to G&A to the for our towards right time we situation, lot things margin that to a to a savings flow. think we more getting efficiencies XX% throughout efficient future of began good is out those those every going continue more think can had that we're targets We of It's for for are hopefully the we room we think to XX% organization cash this lastly set to back drive those long-term if will there say we over fundamentals you when efficient. free mind in that get scale. all continue for we XX% the good virtual line enter would of travel the maintain environment. into a the drive even but something can into I

unique of of working environment what world's come get we've this we can a take So environment best through of and hopefully, it. a as both to from we kind learned this coming out

Brian Essex

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

Operator

you. Thank

go question next ahead. Jefferies. is with Please from Our Thill Brent

Brent Thill

Thanks.

mentioned wanted count, mentioning in think Just million. around XX to today million, I you February the clarify you're seat XX

growing stat. looks just than wanted faster clarify to seats it that customers, So I like

Rafe Brown

pardon Yes, that wins the over big count as customer know announced me, seat if behind them. very some very Pete numbers large calls last few have you

And as of so are see up that some we from market to helping. to large are start we again these continuing benefits very move customers nice some real

Brent Thill

directionally those you're of pipeline, that because now the be one it to pandemic customers on many like during to say, now in seeing. the they the time a to just more curious to a I us Are hands, on back those focus is you're think refocus is they're I've cloud and of you best customers around of some of kind starting could coming was was their look, And decision. see more customers coming about numbers Okay. to I back you may Microsoft heard their that another ultimately have there of went different if going really number then to the think effectively pipe some very feeling got this Google, thing what feel the have talk that little how actually customers I'm that some impact are and kind versus not transitioning you seeing those that objective, they're a they're architecturally was back time and and the you? realizing

the be a was we're then, and that to one the I going get may becoming think that just they race back they that trying of I they on, get can? to hearing have in So may field had what they something just -- might time reconcile to in be actually had example now

Peter Bauer

are I many the there think market, Yes, of yes. pieces different

pandemic time getting addressing was sometimes on that reorgs enabling certainly distracted make issues. in are new unable their infrastructures -- to of those and other those working right went that. I catch there are a projects changes equally mixed significant of that still of we're security the amount like really by bag some were challenges think hit, up seeing remote Office all XXX, because It's moving, already those with companies those of the fragments us are by market move some the a there or and forward, playing will terms of different were

So there idea to to continue them dissipates they're I hard it's amongst think show, thought may certainly of as pent-up visibility this. all the to is alluring but crisis a be the little preferred our help and working we're projects, and to an the over that organizations some launch sort bit pipeline back make even when and with we're build maintain to that the sure provider distressed ready more demand

Brent Thill

Thank you.

Operator

Thank you.

Our next Colliers. question from with Please ahead. Catharine comes go Trebnick

Catharine Trebnick

year state sales have local gotten you the in a doing you government Thanks. of really someone FedRAMP versus Nice ready, guys. Hey, new about there? centers is, could question you quarter. and outline And taking you data opportunities remarks Canada terms then prepared talk did for on for go your Thanks right? hired to What you are and North force your federal government? ago and follow-on the had the you after question, my know America

Rafe Brown

really opportunity in Canadian and significant just terms in up is in but so sector market GDP Catharine, large target, which as thanks. of the Great, the organizations solid SMB broader can not go is and sector, public there, suite. that terms well, private we

sales and good about up have the their with local team So we is we on opportunity Canadian that and the our work there doing feel differentiation capitalizing services.

grown. you preliminary we're sales sort US the a local access, create organizations. and of the journey. milestone towards opportunity the our around public will FedRAMP the is Ready business opportunity of sector the some already but of has terms We're of still to more state bring along working which of even that market said some as today operate, that's team In capturing education -- and that ATO

So that well so due and area to got weren't happening line a much as we've economically of more ATO for timelines bit build we'll We a out. as what's spend Mimecast. the preemptively in continue little to for sites

Catharine Trebnick

All you. right, thank

Rafe Brown

Thanks, Catharine.

Operator

you. Thank

Our Joshua comes Berenberg. with Tilton from Please ahead. question go next

Joshua Tilton

Hi, guys. taking for my questions. Thanks

just on quick to question. two profitability ones the Just wanted from follow-up I me.

travel to this we quarter. you it's look like to to look for in fourth the going year, second doesn't have half, of the ounce expected pick when the up remainder quarter last the So

So into that travel of and in all you the home if the going the year? don't way work is about think customers, bottom QX to meet expect line we the to be we should end from

Rafe Brown

out that can and Yes, We're it we we're the model is were We there, business. think modeling I consistent. so you putting the they'd is our in -- again, would answer. hopeful how got traveling short be that this see

Joshua Tilton

a then X great one Okay. like on looks the just And terms me customer they had Zone of more quarter addition. products, from in

this like for the do and situation? balance year a to this we number? So for relative it And changed then have the expand type NRR last quarter? land upsell your just of how at XX% all the to Is remainder clarify, since expectations

Peter Bauer

the new getting customer are combination Those good so So, yes, X so and upsell, reflect getting on interest. there. -- a count both Zone that two numbers, products does they're that's

is on loop the it is get the sales business. you whether becomes this new traction, things think for look find to products very team we I with accustomed new of upsell them, or as they positive this one selling

you're -- seeing where that's So I those traction think what's that there.

last [ph] what XXX% be that quarter this still are modeling of are on XXX%. we're on retention out detail and a XXX% betted revenue the mentioned and course quarter, with terms in pleased I numbers, In still the talked I we net net we at we revenue to retention about overall

Joshua Tilton

could in, sector utilization and datacenter think infrastructure? maybe we the more even candidate new increase of if you That of was one the the going just squeeze I helpful. some then do as about gross this margins forward maybe how And public

Rafe Brown

Sure.

we out best I an target that to in year back margin when self-there the five in set is -- way gave to we February gross XX% our to targets, out that think view timeframe. for our three X% range is the X% long

nice hard but somewhat that really a to the and showing has lot We gradually. the work and upticks continue So we've some paid will had up. off over improve of time, think team of

Joshua Tilton

appreciated. Thank you Well guys. very much

Rafe Brown

You bet.

Operator

question Markets. from Thank is you. Nehal Northland And with ahead. go Capital our Chokshi last Please

Nehal Chokshi

you. thank Yes,

quarter seeing or help the phishing talk about threats? some that last you want address more you've with opportunities call. now. the of in you're MessageControl for MessageControl You terms hinted got potentially Can Zone advanced to a Just now with talk X bolstering of how technology that to about

Rafe Brown

Yes, great.

MessageControl the start pieces quarter, of acquisition two quarter. last so closed So start start -- last of we the of to yes, at the that, the the at this

time bunch the And the into in it And period a become can part of really architecture our we're offering as and the technical of using working of standalone more bolster meantime work enterprise at and then so offering. a Looking of for core merge how life in so and a a as that mainstream its to some that opportunities product platform, supplement the to differentiate that continuing that and in.

and we great team keep and posted part we great bring out of progress in you and quarters. Mimecast are that have as terms them technology, will So excited of in we talented product to subsequent capabilities

Nehal Chokshi

the have MessageControl of APIs Thanks. the is better What control cloud are a mousetrap, to of smaller some leverage I approach. that was going believe able with as sort that players I ability email these being of touting same utilizes providers the to

you the leveraging So, and bring utilizing towards of approach the will the API our there? continue to of X you mechanism Zone MessageControl in that IP that utilize some have delivery IP

Peter Bauer

that there are and the as messaging capabilities as offerings Obviously, the of us. capabilities around the others. some and around So model the made to have be but bring require to for having MX capabilities we of option of compelling continuity API that, interesting other full haven't be that in-line an that and certainly benefits the secure like change encryption into that able the any well a deployment announcements of model doesn't interesting the or traffic we Mimecast one an is weight is record considerable and

deployment described yes, ones that that, think like you we opportunities So are provide them. there to the models alternative

Nehal Chokshi

Great, thank very much. you

Peter Bauer

today. office Controlled

Operator

no questions in continue we And with sir, remarks. your queue, you you. further the Thank can closing have

Peter Bauer

Great. Folks, and and my much staff, worked to little the in ideal would to conditions call really our security customers not appreciation who thank to results our important is that world you like today. general. to a express very really they just resilience cyber probably and for hard to joining appreciate under deliver these I our

good efforts from customers and happening we you stop the in and so speak that, about Mimecast our business their their bad again and work. in appreciate you Thank quarter's things continuing partners we'll appreciate another our in with of to And And We organizations support and to to build our world. to night. time. the good

Operator

this today's participating you gentlemen, may and disconnect. and concludes Ladies conference. now Thank you for

Mimecast (MIME) 3 Nov 202021 Q2 Earnings call transcript