MIME - Earnings call transcript Q4 2021

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Operator

Ladies and gentlemen, thank you for standing by and welcome to the Q4 2021 Mimecast Limited Earnings Conference Call. At this time all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded. [Operator Instructions] I would now like to hand the conference over to your speaker for today, Robert Sanders, Director of Investor Relations.

begin. may You

Robert Sanders

With Peter of Chairman and welcome Bauer, fourth live and March earnings for be after Investor this our call Rafe CEO broadcast being call call XXXX. call Co-Founder, call Good the conference and to the fiscal will Relations. of Today's Director is quarter Robert our has ended live. on full are the the I'm this morning Sanders, Mimecast's me and Brown, year morning XX, CFO. A ended. replay available XXXX

the important the ongoing forward-looking financial forward-looking uncertainties and We regarding impact risks cause from the will make our actual are in XX-Q Commission. global consider on the to in forward-looking COVID-XX statements to that subject with related in to the release are factors of press call. future statements from and security this of These statements, most recent those Mimecast's Exchange factors defined events company. filed We including results incident Securities differ and conference cause and These that and could materially caution pandemic. the actual and in future today's to risk risks the risk further could uncertainties the recent to performance differ contained forward-looking Form statements you those results

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

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

Peter Bauer

and everybody and the you into from 'XX. well. ground as the view us. with I'd full doing fiscal families start I'll against progress the that in three-pronged we you are our them. and I your well takeaways and are as hope to some quarter morning for growth Good joining our thank and for drivers making like our discussion year, strategy expectations a

in cash cash drive line year delivered prior free X% seeing the the order while trends In in address more I to we some revenues to reported quarter an today. customers continued bottom Rafe, call quarter, protection end We last year-over-year values over Mimecast threats continue as threat guidance provides high transitions best share up year terms. believe constant our in touch on the over a exceeded I'll will fourth $XX,XXX, we as deals, I challenging the QX evolve. currency to Before changing market that macro turn in landscape. million increase representing average of positioned the terms. uniquely fourth the we results why of to year six-figure in growth. rose generated XX uncertainties announced that $XXX.X the flow grow approximately is margin over given was to up the are We investing we all expansion to leadership that's in free in metrics. an also million currency are And and pleased $XX And we constant and the we XX% across XX% that won

ran of half decision-making Through it on by we derive economically. are the reflect the year impacted our We broadened where almost being strong profitable XXXX, revenue XX% all, stayed markets efficiently customers. and I We project businesses our to and cash business teams free margin slower our saw We of close double-digit still our delivered and organizations strengthened and international revenue, growth go with to profitably. fiscal and we As meaningful expansion. growth, capabilities our first market increasingly larger we flow in strategies.

flow year and up is $XXX.X constant we revenues terms For drove million, free the XX.X% full $XX.X cash currency in flow free year-over-year margin. came cash in at representing XX% a million in

We with the our of discipline. differentiated increased and be nimble face These down our sell execute our pandemic. platform of results, and headwinds, as COVID continued to in despite of retention underscore ability and durability have significant the the industry-leading churn a model, result business to

continue to yet growth XXXX. recovery, low through revenue a maintaining double-digit We U-shaped fiscal expect

Importantly in we we expected than and net which retention achieved of as fourth flat the that sign a is revenue stabilization. of XXX% better is quarter, sequentially it view

we and as expansion towards rule time drive balance topline expect growth over profitability. will bottom We to of to growth continue work and between a re-accelerate line

market. customers, the we've with automating multiproduct the advanced SMB footprint even stronger create use to We're and expanding strategy. easier We're we're year, Over the platform all to our to and our enterprise selling channel our engagements three-pronged and in of markets. our

quarter of service a quarter. company sector. and of the with progress seat offerings growth X Notable our XX,XXX to build the and We Zone win customers. And win key enterprise market Board our to include and our and organization XXX,XXX or leadership our this A services momentum the popularity to seats steps both these We We're upmarket our This X key and drivers. in added people APAC XXX,XXX ever our our wins highlights. made retailer included for purchased continuing with was continuity some geographies markets. our our and strategy and quarter who both significant users. share in and in professional first our wins services X me employees. our teams. our multiservice move XXX,XXX on Zone largest go strengthen region and secure to public to This our growth and third in private our consistent team largest for Zone three-pronged focus of took messaging global in resources based let underscore the purchased and security to adding included global So further enterprise

grow to in our continue Canada. We footprint

For sector, Canadian users, in XX,XXX Protect example, the expect a an expand for our one the our technology for XX,XXX one international XX,XXX sector a Email company manufacturing XX,XXX in DMARC and public of government And pipeline, purchased fiscal Internal company continue X our footprint Zone In Solution agency organization markets for public XXXX. users. with on solutions users. public our to seats. sector a to We'd purchased Canadian in Security and purchased won Archiving within engagement we a APAC security also based of

We on platform year. quarter strategy. $XX,XXX up X.X We drove multiproduct and services X.X X.X innovate AOV customer and sell continue new existing customers this an to Security to Email consistent to our to last per our average from with up

now products As framework. a solutions reminder, our we in XX have

protection, strengthening DMARC and against and Our as defenses offerings. an and security. acts protection focused offerings through includes Zone cyber threats. Zone include offensive our human Analyzer countermeasure can protection Zone factor protection and fight internal X our threat email back perimeter that exploit gateway which comprises the training secure targeted X our on awareness brand X and email threat actively

training and the quarter, great internal We and email protect XXX adding so new customers traction awareness in fourth have in XXX gained respectively.

Security Our keeping of new workforces solution This well proving remote secure. SMB matching performed organizations, net our on solution popular record Web also their customers. quarterly with is focused

to larger success have to enterprises. upselling continue We

this For quarter example, Sync of our one Recover in nine and of U.S. Privacy XX,XXX our services a global new for of including total & our over with cyber Pack. extensions, zones, across with three added customers headquartered services resilience along the users Continuity, several

with integrations from out also UK brand Networks, new and deal Mimecast's these signed organizations such automation intelligence and deepen custom Netskope, their and IBM allow security partners program relationships. which Sync us February, existing Brand Alto added to win incorporate our Zone-X of and to and have subscription. integrations CrowdStrike, Exploit with existing capabilities In Palo ServiceNow, footwear Recover And milestone, a ecosystem. the Continuity, threat XX box security offering We their technology Splunk. clothing a helped RapidX, as API broader customers Protect reached Thee a six-figure partnerships alliances into & and Security, new now Archiving, prominent and

organization. our seat CrowdStrike our an with the economic America as Netskope, with markets. the at a partnership to a acquisition large see supported environments mentioned partnership our vendor Australia instance, We was in year, North largest For continue customer, to fourth the were the these earlier, and fourth university, deal quarter accelerate during that bookings incumbent in and improved by pleased of quarter our aided win I new of in UK the XXX,XXX

at expect trends to Peer our vaccinations Customer and was of We ramp-up home Insights, to come program, XXXX share the similar geographies Gartner's to an I'm see pleased Mimecast end. other orders Voice a that [Indiscernible] both Security in as QX in choice Wave or ease-of-use Enterprise in efficacy, pricing client as Enterprise our recognized and references as highlighted Information Security. customers' Solutions. the Email Archiving also named Email for a and leader strengths. Mimecast Mimecast stay

Compliance the Additionally, the for of significant Awards Best pandemic borne rise saw ever. in than over XXXX resilience winner is the in email SC in selected Solution. course Mimecast We as important cyber Regulatory more the activity of and was a attacks particular. Cyber

more by this Email XX% XX% most our State than quarter, XXXX. to XXXX point blocked we increasing All in attacks threats recent rose during forward. email year-over-year. activity Security As noted going signs In the of report, more

across XXXX. XX% demonstrating wholesale, The that revenues. malware vertical volume professional threat. industries few our So activity let XXX% that increase a Together a Global seeing saw and highlight me XX% is which was followed verticals, March significant represent we're no most remains here. Manufacturing, retail by most closely these rose approximately behind. February Ransomware in attacked of organization in trends immune. services

be survey more successful is ransomware comprehensive in as XX Our operations attack and State customers has during It data lucrative a threat an companies service. suffered under continuous in found development of Security Email a of an is attack to and than criminals a attacks, active of active XXXX. proven after attack. being and maintain number X suite by for sold recover helps solutions Mimecast's groups prevent that ransomeware

XX.X% based we're access information. in XXXX privileged March at XXXX trend systems targeting XX% these attacks is and employees impersonation with seeing important in types targeted file blocked to Another of employees. of were malicious attacks and

remains leading targeted the these Threat market for Our attacks. Targeted solution on blocking highly Protection the

as Azure, provides the highlight attacker. increasingly and part when Mimecast, security increasingly across We in attack clear and XXX advantages an non-email fraudulent ransomware cloud chain. on impacted In is stacks web email engineering, trusted world that scale Microsoft a sites, into significant phishing messaging an see infrastructures, extremely to and and hyper-centralized multi-vector compromise as including really as computing social Zero-Day attacks an The and used as systems and vulnerabilities, that supply and becoming rise layered of data software compelling of and the coordinated such this software is point. malware environments our industry being hosted companies imperative. to continue involve attacks a recent What well properties concentration target Exchange compromised with remains which chain [indiscernible] standardized homogenous

surveys, best-in-class along the Our and services organizations threat environment increase adding budget third-party like with explore environments. conversations with to Mimecast customers to has secure led and their their prospects, security recent indicate

Our gives security, attacks. of advantage against offerings in integrated an suite defending coordinated these email multi-vector strategy, holistic and X.X customers

acquisitions, landscape faster and bottom expansion. through gain while achieving our anticipate continue believe threat growth as evolving share, we we and positioned and transform do to are line to While and drive platform expand internal we market strong innovation to we continued the

number transitions develop he successfully appointment involving strategies and great agility our over want has we Rafe, a a under and Building potential. will Chief steps Technology an an and and turn He to Now executing in I significant CMO to launch these the Product be Development our to velocity it new announced decision The and Chief scale. and a market a asset overseen a drive our integrated category is of Officer to and leadership high-performing briefly track and our in cybersecurity to product Mimecast earlier. innovation Product combine are our Leger, Marketing Officer, defining team. companies, before achieve of experience as has I Officer incoming Product helped innovator record go Engineering Technology marketing organization our discuss with and in important positioning will to Chief Bernd proven to and planning by us we enable teams. to

I'll transition will leaders I John, of While support great They transition. forward to overseeing over search forward the like to ongoing And end and as make of our advisory basis made who the look it support an contributions with I with underway, is the Group look their to have that, to the month. we great and Rafe. Christina this Mimecast to at on interim turn roles

Rafe Brown

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

Our demonstrate deliver to ability bottom-line growth results our margin topline expansion. both and

our I'd turn some of The markets results core impact by trends to our we're varying overhang as the macro geographies. I core seeing to on on emerge Before touch our on begin had COVID-XX. like to from brought pandemic has some

seeing. quickly we me patterns on touch some are Let of the

in continued saw of business that is in past relationship region. Australian from economy business We COVID-XX fourth Building seeing the observations our Likewise on North between a favorable our operations moving are benefited last economic restrictions. well overall American the the the we recovery our the quarter. our improvements quarter, local and

COVID-XX While year environment as UK, of problematic, the of overall will restrictions anticipate with the and and immunizations South progresses. selling remain restrictions we Europe impact see improvements the the COVID-XX the in in more we expanded that Africa, lifting

currency providing results was constant fluctuations foreign in quarter tailwind growth over that prior In impacted the turn currently positively year dollar Note of the revenue quarter, our revenue improvement Adjusting quarter. me of generated February the we the XX% $XXX,XXX. our over $X.X $XXX.X million for a represented absolute now fourth to rate million currency Let in our by which for terms. prior results. year fourth guidance XX% since

a for Calculated revenue FX million in tailwind. values X currency Bolstering the crossed $X.X XX% were increases generating year $XXX.X constant $X.X approximately May order topline the million, per trend year last customer services our our prior This of in X.X is continued which of organizations. average up we've X% services attributable the our to as across For stands year AOV. favorable revenue threshold larger in customers services at prior $XX,XXX, year after X.X success the of rates billion average all time over currently increasing represents well number up year-on-year for full results, or growth this AOV compared customer to over with terms. currency currently constant the shift base as per at adjusting customer

in consider of revenue XX% to We our seats important base close more net XXXX one now of customers our In the total count this fact, are the XXX respect. customers constitute bringing or with XXXX. XX% added fourth versus recurring should at two customer in quarter, fiscal new XX,XXX. There trends

of at focus First, metric. customer our small expanding year-on-year larger the is net AOV we customer to on is the in look customers selling the increase focus in a on account new versus to segment. the metric, change When change raw majority that going customer naturally the

XX environment new improvement the customer in macro improves environment, economic see is stood period as the Second, earnings We is to metric during better call. Net as consistent net revenue but the expect retention based expectations do shared at the count purely ending customer some as for sluggish it principally This our with the in prior to March account XXX% last fourth opposed than on dollar here quarter, weighing based. EMEA, particularly is quarter metric. our EMEA. important

as seat both XXX% where and well based as upsell. upsell at Looking totaled based upsell we in saw product components strength its price

X% interest churn our Protection as the side, Training, quarter fourth fourth period. Security Web Down On for the Solution. strong totaled of well Internal product in quarter in the Awareness saw sell as and Email our solutions Zone-X

improving and continue macroeconomic stabilization on We sell this will environment are in of seeing churn anticipated trend. down early signs

begin net quarter, revenue this believe retention we we were stabilize to of early certain pleased noted, Peter an is which recovery in to broader markets. indication a of core see As our

derived recognized XX% We fourth non-GAAP of good of as quarter the of goal a of continue a $XX.X same the compared EBITDA totaled the margin travel long-term our this gross year. quarter for margin. gross our discrete EBITDA EBITDA to representing these in achieved In year-on-year basis, driven of an non-GAAP quarter consisting approximately Adjusted We improvements adjusted excluding XX.X%. basis drive year, million, margin XX% an toward improvements net margin Even and step margin million $X points in achieving the COVID-XX margins. primarily quarter result would the we from cost gross through a the organization. approximately saving, been adjusted of resource benefit to operational On throughout efficiencies quarter gross driven cost XXX XX.X% prioritization margin have of expansion our fourth the by prior XX.X% savings. a of prior reductions bottom-line

$XXX.X basis Our or XX.X% in by million full-year year margin savings facilities as the XXX compared prior from year. to cost adjusted point costs. on million calls the improvement discrete given totaled of commentary driven basis $XX.X and came throughout this we've points EBITDA on XXX year, with savings of COVID-XX bottom-line representing an the line EBITDA operation travel quarterly adjusted XX.X% during such the In

line. the to bottom turning Now

Our non-GAAP an fully of on million income million XX.X $XX.X of diluted the operating XXX points basis quarter quarter a reported per $X.XX prior profit or for weighted of based revenue, or share for was million profit the net XX.X% diluted year. $X.X from of average We improvement GAAP shares fourth outstanding. the fourth

approximately total the $XXX,XXX quarter. benefits tax GAAP Our in fourth

full-year was tax Our GAAP expense $X.X million.

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

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

XX%. full-year tax rate was Our non-GAAP

Turning $XX.X of to flows or operating cash revenue. million XX.X% cash flow. Fourth totaled quarter

driven quarter the full $XXX the operating XX.X% totaled and late in Free better-than-expected million revenue. revenue flow totaled $XX the higher profitability of or flow For quarter. XX% or for cash by collections year of million cash

or point flow prior basis year February XXX well revenue, full $XX.X the which over COVID-XX our of free an above free is the improvement notably of million XXXX. totaled cash cash year provided year and in For XX.X% guidance flow free the beginning

As balance balance XX, stands at had beginning from of sheet, of Mimecast of cash the $XXX March current debt of Net year. the on the $XXX cash million. $XXX up million million our

Let me now guidance. turn to

For the XX% XX% terms. million to $XXX.X and growth is or first constant in expected $XXX.X be to quarter of fiscal currency revenue XXXX million between

dollar prior XXXX adjusted an as free reflects is weakening million, Our points EBITDA $XX.X positive first from guidance compared of last on X, to last XXX of cash up year. of and midpoint quarter of at is between for for includes $X.X margin be the to rates quarter from midpoint basis reflects based flow the expected be to margin the estimated impact first at May the basis resulting and $XX million EBITDA points our up of an expected XXX between U.S. the QX $XX million million is exchange XX.X%, and which year. which the the Adjusted in XX%, year. million, from flow Free QX cash of $XX.X

an guidance million to since dollar constant in has leading being midpoint. fiscal million strength terms. was Fiscal effect year. the Turning midpoint XX% $XXX.X early exchange foreign raise to us positively or used in foreign million million of guidance risen $X.X to by total in to $XXX growth call, the $XXX.X the a constant prior in $XXX.X a The million have full fluctuations moving currency in the The impacted in the to between expected exchange rates from fiscal and positively to terms rate terms for of midpoint the and detail, prior full-year business This this revenue XXXX is $X.X resulting of provided XXXX be our of million guidance in impacted midpoint compared of currency our million in XX% $XX.X guidance $XXX full-year by the year. million are at in by our is the in increase $X.X million. rates we million that further tailwind is by estimated absolute seen our of $XX.X midpoint up the in February February

EBITDA midpoint We are million which reflect million basis points our our this prior be prior $XXX.X guidance of guidance XX%, would raising $X.X the At of XXXX midpoint, XX $XXX.X full-year margin between improvement at the to up over adjusted from the and represents guidance. EBITDA year. adjusted an a million

the raising a flow $XXX.X also XXXX XX% revenue full-year midpoint over guidance. XXX $XXX.X flow are our We to prior expectations is million, basis of cash range of point cash reflecting the million This margin to free a a free improvement of at year.

the this midpoint over million $X.X improvement represents As a our guidance. prior

I the million expect non-GAAP would 'XX in fiscal basis approximately note a the total year. tax 'XX somewhat purposes, GAAP be and will X.X% rate for revenue FY CapEx For to of be Full-year XX%. preliminary year FY which $X approximately frontloaded a on modeling that taxes to approximately we of

for resilience. be conclude, fiscal Finally, stock-based to of its To XXXX. demonstrating business compensation is projected XX% approximately the is revenue Mimecast

back We year key are rate business the new fallout. begin economies as and recover retention geographies COVID-XX our helping challenged following seeing by of is which bounce the to upsell stabilize to net a revenue economic

and As fourth to hard meet expectations. is exceed show, working the results quarter team our

As our are we ever from to are FY they 'XX move increasing facing. protect investing the into threats customers we

driving go-to-market teams upsell Our new business. and are

cash innovation our our flow I'll Our on some free in engineering are progress core targets. teams to long-term investing turn are drive product making for to closing Peter that, it and With remarks. while growth to and initiatives we deliver significant driving back

Peter Bauer

Well, thanks Rafe.

a differentiated model durable a high business industry-leading gross revenue, We retention have XX% margins. with and platform recurring and

a and and employees the new our strong your hard from your and growth to innovative foundation talent for Thank every of and to you resilience, have thinking, creative We your execution. organization and build of passion profitability. our at strong levels level work, achieve all

Now, open for you operator please if the line questions. would

Operator

of the from Thank RBC [Operator with Matt first Capital line Instructions] comes Our Markets. Hedberg you. question

open. Your is line

Matthew Hedberg

for really I has in is guys. large the like a for wins. you this Oh, an It's for success focus to new great going sort guys here. sort -- profound recovery. the are curious on it shaping pivot year but that about side? are the seems to to the with of Just year Also, these this It Obviously several the up stabilization how towards been questions. Good of, a including morning. thanks U-shaped thanks account to senior hi, wanted more take see the basis you a be leadership account last approaching incremental addressing large you opportunities? on CMO, years, ask from

Peter Bauer

to is you Yes, thanks year, into this said, over from sales been fiscal in behind invest things so, really the enterprise an Matt, for customers. to entered perspective steadily the we and perspective, here, deliver of years, we as enterprise some to as win rightly opportunity more plan and and a enterprise question. but some that both and Peter Yes, a opportunities made from we’ve last needed experience pulled to place post-sales interesting deliberate also our the have successfully we consistently this few really

for really coming now our our seat XX% us category numbers we've with been now through that’s and XXXX seeing of our revenue. so And from that plus overall XX% exciting in growing to

a clear go brand recognized that I customers. deliver our for this services for absolutely, fiscal certainly has complex very offer being enterprise large as we absolutely and as It a we and year strategy too. that of can needs think it's of so into a part we’re So, types the

Matthew Hedberg

or Mimecast you this that have redundant think thinking kind about little opportunity or That's there in bit Exchange of Microsoft EX of I the hack in skew customer any differently? mean you Are year, a base. on is another I change maybe guys like this behavior customers reevaluating security great. then earlier reminder seeing the And the

Peter Bauer

exactly cybersecurity to with an resilience that in learnt and we it, is think applications real comes have a these risk Zero-Day on unique around need and XXX. defense Exchange what provider Mimecast additional, there your and to and Yes, too. provider mission-critical layering, solely layered that’s is have the again technologies Microsoft there’s to relying be into depth And application independent provider in attacks your on I Office security like Exchange where security

can with it important organizations, that as So, the vulnerability face for cybersecurity, was I of many and e-mail. importance think the Sidney, you you know, of painful reminder an

Matthew Hedberg

Thanks, guys.

Peter Bauer

Matt. Thanks,

Operator

Thank you.

Our from of next comes Goldman Brian Essex question the Sachs. with line

Your line open. is

Brian Essex

Yes, Hi, as implies and taking -- thank I adds you, could and I percentage unpack maybe and that good for could, look dynamics customer a math churn of of of enterprise, some what’s, And kind you of XXXX if if large of seat help wondering correct? that data? question. I morning could thank the at your enterprise total, we XX% heads customers the the that most mid large, if we there you some were us and small the actually understand maybe mean of is customer directionally if within was

Peter Bauer

Brian, thanks the for question.

course, because business. approachable part items, they and larger are they ticket driving Of enterprises, large the the are of

great of strategy had we It’s seeing we’re doing in We’ve Now, you a regions mean essentially that know, of keep look it faster. market. in base other million of $XXX back a the as have faster a we’ve is the I one mind the this growing nicely there. bit lot group up across growing than -- that’s that you're success of and when roughly whole encouraging business. on year, think it's tweak I enterprise that’s that and enterprise the just focus grew quite during the And things the a us, for really we

customer, it's the skewed it, you're account bit you a into big drill value big really when in elements measures dollar customer of So, enterprise highlighting. the because the difference a customer one that makes

Brian Essex

stabilization going guess what's business come the the where primarily competitive towards some Got a you churn opposed highlight the we helpful. some or to number? then still from? out look maybe of might are that of seeing in kind Is of dynamics just maybe displacement it. little driver and And impact as if of I the bit, maybe we it the there? primary could Why just, That's super churn

Peter Bauer

so just transpired, And really customers one is everyone fourth that's pick quarter a what's a ago remind the renewals. Sure. year the and looking metric. I we would all trailing at up thing We're that,

it that. so covering period COVID by is this influenced And full

environment, side saw think first. sell customers down going take talked fallout. a nice down that we make in customer how supporting I signs the the stabilization, a course of side what There impact the time from and on quite a through lot think down serious the sure think to us our and of that's where tough we of a the of choose was us through of but out down we're you're economic I economic COVID about hearing the We've which would up customers lot decisions is, of hit that one we sell churn for sell over year. our sell both over are a to we churn and the sets we upsell seeing coming recovery bit made conscious is a

I that, also are of seeing coming think even the additional buying are move speaks quarter success. started we both not think broader I first which current that elements where seeing just adds up, excited upsell in it about the you economic always see And to customer's recovery, the are to in. in our in but we seat you back but investment our products

Brian Essex

it. you. That's Got super helpful. Thank

Operator

you. Thank

next Kalia Our question Barclays. the with comes the of from line Saket

line open. Your is

SaketKalia

here. thanks to you, question the for is Peter, Hey maybe just my sure for folks, taking make questions asked.

on on just like breach the talk the incident just feel Mimecast further little mirror, question that again SolarWinds asked. demand the it to impact you impacted is whether the rearview that feedback about Now related can any seem Based to numbers customer all? make but in or and at observations the at sure a Mimecast no, you would is

Peter Bauer

Saket. Thanks Yes.

as like will their really handled occur have that with is you to teams really interaction proud have inevitable was and But there prospect and security customers of numbers remained impact and the look process base customer through our pointed our out, So, navigated to through a I think strong opportunities. us this some that way nobody and incident I this. this wants

our situation, at here. leave learnings think the even you'd we variety that of ways you of better, robust experience more that expect able coming were of a Mimecast some out from I get to look take it some think the this. with within I to opportunity on security us teams even think work it handled customer allowed gave side, that positive the I And an to our us we that to closer of even as we this organization from an as organizations

sort impact other we're So, the think the of for forward moving all-in-all I any of that and side speak of -- out it. numbers absorbed

SaketKalia

my just layering to up office for maybe us your how for about of sort next all? you if see have sort in Rafe, you, of the Absolutely. for go there and Can expenses assumptions you thought to year. at great guide of remind followup return EBITDA kind changed

Rafe Brown

Yes. Thank you.

So, usual sentiment we're as the expecting to business than and back we quickly to more can. as try get

here are And we of group getting months in back back have QX, are a work. So although bit office, aware Israelis We'll get we've to in ways duty. our up all also do I of back coming doing anxious certainly in say that, We're travel more regularly us new together. a the by to normal certainly returning back much pace, be office, in numbers the about going the where learned couple that are pleased travel are of to Lexington in very doing Australians back remotely, small QX, more am pilots here to a but costs have today people but just those on, our office. we in a we business the

of bit up of of broadly. I think rest also teams more team that's then course a really So, really in just the again will advantage work of in the and and And for take picking the to but QX, cost little morale steam rates through of side kind normalized just to the that year. buffer are seeing we able more together as important the being recoveries also

SaketKalia

Makes sense. Thanks guys.

Operator

you. Thank

Trebnick comes with question Catharine next Colliers. from Our

Your line is open.

Catharine Trebnick

I [ph] Thank guys. last closed is the question inflection. Investor looks have more excellent you about before year Day, several this at question headed are on, free begin down, taking I trajectory you entire the you on that can One world year flow times print cash in my and some but guess you about like for tough more? Can Thanks. talk talked we that

Rafe Brown

free plan. guidance, targeting XX% percent about just in the Catharine, on And flow we're our Yes. question. behind and year. XX% completed range long a everyone, just noted free us talked reminder cash year thank cash just range as for a We've going with one for into cash our year between you as free our and you we XX% flow the first flow

travel we're come and think savings, the we're and forward business. has what COVID that think showing, we're much to inflection taking I just into thinking So, I it's about how us that the not that very building

good even you schedule. and So, it we're cash free flow perhaps of know the of feeling about side ahead

Catharine Trebnick

Thank you. All right.

Operator

Thank you.

line question comes of the from Nikko. next Our Steve with Koenig SMBC

line open. is Your

Steven Koenig

that here. this you competitive Hey, you Wanted and your in the thanks competitively? you're and that partnerships way and Great. changes questions in in Thanks anything are for what especially congrats to for ask promising comments seeing as might tech quarter one changed on like taking players this upfront, you on consolidation also by looking the toss maybe of well I again my know just the And and the two outlook on with the partnerships, update question. ask Netskope? field change including what really results landscape, us out here will ownership, congrats. in expecting

Peter Bauer

Steve. thanks Yes,

Let me check the partnership side first.

cybersecurity our API an as such of for I the Palo and other Netskope along think Networks, the important with others, leading Alto market, customers integrations that's our area products they Splunk. CrowdStrike, in some leverage

and so those folks channel sales also with able and present partnerships joint engaged to customer marketing some vendors. we're the some and reseller that propositions of value engagements partners our of we're And with those with joint

important business our really I So, obviously cybersecurity and think for positive too. for

threats Clearly, messaging organizations see it's happening. to I and email and assume is Just interest space importance of recognition of the think that and lot and with you the like Look, you're powerful them of validation that consolidation the know announced significant on the to and a [indiscernible]. of deal Quick poses to the potential I something referring recently Point really that in standpoint, a I and space. and known to potentially the generally consolidation have And early And present solutions the we in competitive seen with it's that obviously so resolve but to activity on distraction think M&A these for opportunity and that can to for it's some ball, can at us have organizations. partners too staff From competitors call that. the past in Mimecast.

we're as organizations. alternative seen being think I for perhaps sometimes the credible, larger preferred increasingly

a indeed selling and And so, clearer for shot you situations. in of some know us goal this may those present

of we have a how market, again to going see we the perspective but that in guess positive that have plays in. some that's -- on So, I out it

Steven Koenig

Peter. you, Thank Great.

Operator

you. Thank

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

line Your is open.

Unidentified Analyst

Thanks for taking here Alex Henderson. for the [indiscernible] Hi, questions.

to the did Can for in these improvements And South year. markets It like an comment. [ph] some to Australia. based have versus that the looks? international hawking comment ability support or just EMEA, through to how part is of of the we're earlier seeing on On want Mime's you pipeline America I its you're sounds confidence back Africa, on you North what increases been the seat these seeing rebound the the weaker gives what to and customers

customers So, that that expect that those based back put these you we on coming in is place, to should fair? be previously efforts you will had

Rafe Brown

So, that work What had that companies reduced I'm back. seeing that take us economies frankly other Hiring forces those yes, have We confidence such had happy relationship is a strong on. or up. has to work. people to employees back gives picked these with people we're bringing as see gotten

environment that a of in All translating is those stronger better markets. for us selling into

lockdown, UK, which that now they're And people heavy vaccinated. very the getting do so, listed is are believe we

more seeing up. vaccinations we're know pick EMEA across You

get just dramatic pushes you That's know able continue. return that's There's We work. that's lockdowns get of economy expect in some from of frankly we've state overall exactly a to world behavior right. there back really being get and such office that under on to out to And a what think seen will. and people same to I to impact us the if much very normalcy and asking you the back

when part of question, second supporting customers, the spot are we the about On on. talk your you

a of strengthening relationship. great through there's with had they long back if the last sell and if about that efficacy, investment a think our seat renewals. down term a invested having vastly I relationships, numbers just certainly basis, you to and do think more other will on people reduced we're per sell story, tough helps they that up we there's service on but as going in I are greater an we it ended customers see those our product headcount customer our a year, the come is And upsell each time, to a in there's the realize fact an certainly

Unidentified Analyst

great. from team, one details there engineering could you as getting the What's headcount change under board? what's way far That's product if organization curious just of the lay combination as a management at the then expect removing we positions, a team, just more Is could them on can from if point? already on this there? what And duplicative involved single and into I the to any in communications out

Peter Bauer

thanks. great Yes, question,

communications how organization. achieve what So, we're agile an trying inside from the under of to about can a single point as Everybody a integrated team we clearly been view be strategically. think leader. it's understands I communicated more Excited

a continue to development forward us to growth term new really long we propel objectives. R&D our and as in know you invest folks base and the shift back office, this and into to into as bring it's to use to a people to strongly think a product time I our our company initiatives started get to as structure, together good vision a achieve

a positive think it's very move. I So,

talented to product and with forward them We have closely our engineering I'm this working organizations certainly and of even very management more we team change. with forward looking move a in as leaders

Unidentified Analyst

Thank you.

Operator

you. Thank

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

Your line open. is

Sterling Auty

to Actually this a through What's that the which guys. or want properly. ask looks grown pattern? into at XX near some I to near Hi I June at of like guidance factoring I would year. the slowdown guidance thanks. sure Yes, point but about for has kind that year suggest the the full the wanted It quarter first. make XX%, looking

Rafe Brown

recovery drastic And year. our keep of my we've that talked Yes, calling everyone growth remind rates just that talking then the see Yes. are deferred aligned we'll high U-shaped currency out Sterling, still actual I to know amortized gradual constant and script. about a fairly recognize their for basis, line in on a the on basis. quoted you there, you thank bleed just about into a I rates. the you're throughout revenue percentage such year, a would improvements revenue we on across everyone even and because

we start -- as of U-shaped revenue this need we retention. continue in seeing seeing the would certainly [indiscernible] on know, the speak that does to before QX, the those call the into is get I of we current recovery, quarters will. on to of out $X.X an it going of can currency a you the the work still year we've see constant as need as is, a seeing think full quarter and uptick you you are bottom raise we But as is outlook us our about the that to feeling U. the strength out few areas it take better I through trends if talked with you're finished based We on of what that way that certainly to million, based year about U, on there. net number on well a So really to bottom

Sterling Auty

and you to Peter, or And if back outlook? when manifest half do you think commented the work Understood. both then more begin you it survey it will spend, themselves, done about you've that of there? increases see talking a start increase is to had in to in those See results quarter June security

Peter Bauer

I we've Look, what factors there guidance outlook shared. Rafe that think and seen the certainly the has thanks into Sterling, for question. the

that’s on And our of part can year. what we during this perspective achieve so

days there cycle posing colonial significant new average think to the with in are current shutdown. ransomware. of sort that about to financial for here organizations understanding solutions, the U.S. average. average see over I and pipeline with on ransomware impacting it kind that is clearly desire is is on threats spend of to of includes interesting the really release obviously significant Organizations also how the downtime believe payment XX associated costs ransomware $XXX,XXX I now

appetite is, which key incidents really the [indiscernible] recovery an our these organizations and driving both sure I story part of preventative component one So, has well sales a think you is know, have the make can on the capabilities that in as of motion. to place, that suite as Mimecast impact

Sterling Auty

Thank it. Got you.

Operator

Thank you.

Our of Bank with Montreal. Keith next from the question of comes line Bachman

is line open. Your

Keith Bachman

question, solid and if congratulations I of to I results. direct much set could. you Hi. and a very to a Thank two-part it's wanted you this really Peter on

on As three years, you using think have broader, longer X.X term solutions. to the at call now average right customers you next

of if there if associated does it constant question greater that total up change part years? function like was term greater look is you distribution? is, X% And nicely look at And some a you think could a impact XX provide the year-over-year .What anything with have actually or X.X B look that AOV, step You you of out longer your currency.

that about think kind terms model? we you the of be should look about XX of months, is at that As the the in as XX steady current economic to Thanks very portfolio, next a we much. thinking cadence

Peter Bauer

Keith thanks.

he something perspective So, and that expect yes, seller suites cross to moving additional adds so the steady and how But that a a and mega economic continue. [ph] rates, product on. sees spoke we from model seen and upsell in growth that about adoption is broad perspective,

portfolio. have XX overall know the in as about products may you We

of us adoption. for plenty there's to So, headroom increase

In fact that we've the introduced. that out newer playing across of we modules some are seeing

like quarter XXX So, additional products with and Awareness and along are a IEP purchasing customers Zone-X Training, for that strong XXX there.

the some and encouraging course other XXX customers, additional DMARC, Zone-X of then customers. So XXX Web signs, of Security additional

rolling the out introduced story part recently We'll the and continue of available as of in customers and minds, CyberGraph we has So, in been is seeing Obviously in. that continued that. capabilities products becoming lay North we're those maturing to additional adoption are something out initially America globally.

results to see some expect So from we that. positive

there So, kind plays model from. overall really suite to with continue benefit I monetizable strong the of we category that multiple a has think

Rafe Brown

Yes. And I on. spot model, you just economic mean are on the

the that's of we're by up driven that the strategy elements. talking over part sure customers as but of we've on been And time. AOVs key on driving those larger be emphasis about, to also going a the is upsell really making that's think I course

they approach. of customers making more about talked two products we're hand kind that that when plus that taking the strategy at step than continuing buy ways least on get sure one four we together and expand the As platform these equals we had in change one such to more work the is, or one

customers to So, good that really think much there customers a through drive pricing because going we the be if AOVs. better of products, retention I we another I get who help have And to story more can continue part to understand build that important good combine that's bundling, element see platform packages, out to as and that's then well. rates And we with Right? they of value think key is, Mimecast. of successful, more

care offerings, we them point basic So, where really that our take also new economic and our course we of keep our to we're of customers long important really, are important, new success the bringing at that term in while trajectory customers model. incredibly and realize how

Keith Bachman

sense. thanks. Makes Many

Operator

you. Thank

comes next with Our of the Tillman from line Terrell Truist. question

open. is line Your

Terrell Tillman

in it. questions first Yes, is But reached small it that product for an or strengthen the just I the like my I'll inflection solid and guess has it's you question yes thank help on I been the about results. Peter, more sounds past, about I also know the the successful business Security, point SMB sales? And actually have Web taking this market, point? you at in your and asked talked you job could echo on it

Peter Bauer

think Yes, Web seen it definitely popularity. I you. Terrey, thank in good question, Security increase Yes, we've

category, within organizations for. in arrangement of XXXX the as especially as particularly kind of even point got SMB seat that I to expecting kind we and sub remote look sub hybrid of working out segment COVID, which been category, you XXX at ways secure end workforces their to have are of keep preparing and maybe organizations course at the into continuing seats smaller think a

the customers capabilities as the partner malware solution functionality of email proxy detection, kind stack selected their our to IP already selective of suite. like includes delivered application Mimecast for isolation, capabilities, be interesting interrogation platform. some security shadow particularly our browser a as Web control, part email Security really have interesting same a that we've It's for that that So, around advanced using

think So, achieve SMB can yes, market in over I with Web we time. on we're what the Security quite bullish

Terrell Tillman

I And have one just great. That's followup Rafe.

characterized business it enterprise the well. you of terms In

getting and million of leverage it business. in more enterprise out of or seat $XXX growth? a remind the Could on So, us mode for is investing business you. of XXXX kind like run rate Thank plus you you revenue profitability are what this

Rafe Brown

It's question. great a

those customers that will. at thing -- topline one of present we're enterprise great a is, long-term a the market, we strength lifetime, for company, value. us as that's from goals think if handsome customer a for both as of we discussed. looking approach encouraging they bottom customer is and those strength for customers as overall long-term investment on formulation think like the with of the in that's them, we and look with it think I line real we've feel this think can And we when the help terms driver I really come that lifetime you part the the I at And on achieve is us the like well to those be opportunity

Operator

Thank you.

Nehal question Northland Chokshi comes from of with next Our line the Capital.

is open. line Your

Nehal Chokshi

Thank you.

quarter. the about what So, looks there year-over-year like talk you linearity relative in quarter quarter? bonus where is a really the strong growth accelerating to December Can was

Rafe Brown

with prior very nothing in line was much out exceptional on linearity was it quarter. There quarter, the really in quarters. in the call Linearity to

bigger going quarter, around edges, of have we’re think but translates stronger in strengthening, the seeing into breakout by company COVID just mean, we business. the in economies the hangover. I emerging of get that the certainly way earlier, their that's really future that in in kind impact they’re I those from would it some strength of our as came the that that where talked a activity about geographic And quarters cycle be to later and on on the

Nehal Chokshi

Okay. an here? the and SMB given market point the what’s slowing working utilization And ads mid what are to can seems and sentiment in the your that metrics customer say you is be improving of to automation further

Rafe Brown

channel and Yes, continuing would respect and to going next of want last seen is some I to piece as a strategy relationships customers look you implement. of all work for that on And fully no, think channel there the MSPs relationship. on have and them take key those we’re implementing relying with improve his made laying a to I say going an important and out are so- trends in He's maybe that if is, And few we in of the to you What the at of smaller focusing hire we making year part level. our continue that's sure for improvements take know a leverage of the working we've groundwork it a lot quarters more, projects we’re some leader. first that and we of several just, really respect. to

taking go to and and again with I cycle, Mimecast good are we then of part these going really some really is be efficiently. people how whole services and cash more And in that level this is coming to this in a customers digital to transact going big more broadly, we it Bernd think next focus more to efficiently. his find the really helping with projects help and the much and IT have transact code offerings way a about approach

think it's but track, I focus that's there. to really be So, now multi-quarter going a

Nehal Chokshi

Great, thank you.

Operator

Thank you.

question Jefferies. next with of line the Thill Brent from Our comes

Your line is open.

Unidentified Analyst

Brent. the FX forward trying [indiscernible]? quarters. million there. just there outsized Congrats to the there -- to Joe or lot Hi, going currency on guide passing up bridge any trying to so a billings? packing be strength $XXX on a billings past in following impacted pandemic other lapping revenue or dynamics Appreciate Obviously, guys is that I’m billings, threshold, question. we’ve to in on just constant just you’re is few numbers, bridge seen there current were proud this the the your the revenue Were of for some

Rafe Brown

around as a Yes, it this quarter. remarks as out, no, of called in currency We the tailwind both well this I QX guidance. we've was, certainly and prepared lot in think key that’s got the

need your And in so that I adjust to it account. calculations, take think you into

a We’re calculate are not bit, a trying well. now items, number, so billings you're flow strength. if you’d for adjust normalizing us course -- seeing just that through currencies want pleased kind after obviously against And worked revenue we’re to but came when as the things as line COVID does it that to the of for of on

Unidentified Analyst

it in you being of I last you of the view is you've And any how pipeline slightly lacking the I increased helpful. and year that’s following kind quarter pipeline. but just XQ Okay, think how curious generation the a the to little believe quarter then is security the said bit, focus sense on most touched due on breach, looking? was important of the

Peter Bauer

raise $X.X that. behind confidence best raise constant able on million the ultimately I currency think Yes, revenue no, fact that’s of tailwind number, indicator some the look, our a FX that plus is full-year the have to nice we're

I think best that’s indicator. your

about now, touched we've all on call, out customers we’re that on of we're to on I’d it’s so where As a focused and of sure our was back quickly the last taking all team we’re got The yes that. of year. sales there period we're their very building and care currently all about closing there’s day time making focused no deals encouraging, that jobs going -- say pipeline and I that's building and and a think distractions and good very right

Unidentified Analyst

guys. Thanks, Awesome.

Operator

you. Thank

Our of with Brian the Colley Stephens. question next from comes line

open. is line Your

Brian Colley

question. taking the Hi guys, thanks for

if you terms challenged a for what what the reacceleration just timeline the macro of your, these you're made some you're I’m just then kind the secondly, base that guidance curious that perspective this on that of markets? of I’m in recovery of revenue U? raising the change if kind in has guidance drove seeing raise changed quarter, from assuming or guidance of So curious you're more the international of if And the

Rafe Brown

questions. great Sure,

in of question great would of expecting QX, I see recovery markets in are our so be either Australia and to bit a a certainly likely markets on a engines get gotten seen start just to and terms North kind QX first to have macro of bigger bounce a just start So, kind of end going back, that America that expect we're I’m that what of there in start it’s bit to they in EMEA rolling, their head respect. we've as of basing recovery certainly in and terms entirely

start again would hopefully I markets. see in to QX, strengthening QX So, throughout those

I bargained the if always one that twists caution of take more has has year to thrown than have over consideration. will, would so me would I into last Now, ever for, COVID you course

bases a I terms way that’s recovery, overall remember our of The half and of of I key U-shaped base it’s that our bookings we I the roughly in revenue is revenue half think because more the lot. earlier, that’s America think key. of recognize North timings really to revenue that and of the bit really mentioned just recovery as the matter a

that next said year, the is Somebody quarter most QX the absolutely of true.

is build will a judging there revenue element to a when start little So, of timing to bit up.

selling quickly as solid the be flow the think we’re nice we hopefully of on strength we important that able were of able we’re the advantage a side side take we I here U and you as we and show that sure to thing executing to with shows like the raise make free other is cash the as environment, can. going better to that get build to really

Brian Colley

Got it. to XXXX impact behind bleed going going you is now the do following that of that you into incident think is breach up then you impact the back from or think that so? to just the And security worst mean year, do from guys I that this earlier

Peter Bauer

worst We behind the is us. believe

Brian Colley

Got it. All time. thanks the right, for

Peter Bauer

Thank you.

Operator

call like now not I’m any the turn closing for back queue. the further to comments. showing I you. to Peter over questions would Thank from

Peter Bauer

thanks in great and 'XX results. Folks, results Have time. three presenting all again day. forward you FY full-year our a about QX for our joining to to months’ We us morning this for look

Operator

conference participation. call. Ladies today’s Thank concludes your for this and gentlemen, you

disconnect. may You now

Mimecast (MIME) 11 May 212021 Q4 Earnings call transcript