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01/10 16:57
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call indicates strong financial performance with a 14% ARR growth and a 10% revenue increase. Despite a slight decline in gross margin, the company maintains a high adjusted EBITDA margin and positive free cash flow. The Q&A section reveals positive market reception and strategic focus, with promising growth in MSP markets and new product bundles. The share repurchase program further boosts confidence. Given the market cap, the stock is expected to react positively, likely within the 2% to 8% range, reflecting the overall strong financial and strategic outlook.
Annual Recurring Revenue (ARR) $513.7 million, growing at 14% year-over-year on a reported basis and 12% on a constant currency basis. Growth attributed to strong operations, record bookings for Cove, and adoption of Adlumin security solutions.
Total Revenue $131.2 million, representing approximately 10% year-over-year growth on a reported basis and 8% on a constant currency basis. Revenue outperformance driven by higher-than-forecasted foreign exchange rates and strong operations.
Subscription Revenue $129.9 million, representing approximately 11% year-over-year growth on a reported basis and 9% on a constant currency basis. Growth supported by strong customer adoption and operational performance.
Customers with ARR over $50,000 2,540 customers, up approximately 16% year-over-year. These customers now represent approximately 60% of total ARR, up from 56% a year ago, indicating increased wallet share.
Dollar-based Net Revenue Retention Approximately 102% on a reported basis and 101% on a constant currency basis, reflecting strong customer retention and expansion.
Gross Margin 81.8%, compared to 84.7% in the same period in 2024. Decline attributed to operational investments and changes in cost structure.
Adjusted EBITDA $41.6 million, representing approximately 31.7% adjusted EBITDA margin. Growth attributed to revenue outperformance and operational efficiency.
Unlevered Free Cash Flow $33.3 million, with CapEx at $6.8 million or 5.2% of revenue. Reflects disciplined capital allocation and operational efficiency.
Cove Data Protection Solution: Cove now protects over 3 million Microsoft 365 users and recorded its highest bookings and net new ARR quarter ever. New features include a smart notification service and advanced Linux restore capabilities. Cove achieved 25% year-over-year ARR growth in AI-powered enhanced restore capabilities.
Adlumin Security Operations: Adlumin, an XDR and MDR offering, showed healthy ARR growth. Expanded integrations with ITSM vendors and enhanced threat detection capabilities were introduced. Threat hunting activity increased over 100-fold.
Unified Endpoint Management (UEM): New vulnerability management capability launched in April, addressing vulnerability exploitation issues. UEM solution automates routine tasks and improves efficiency, with a notable customer win leveraging AI-powered chatbot integration.
Channel Expansion: Expanded into broader channels, including resellers, system integrators, and distributors. Added more resellers and strengthened relationships, with a notable deal with a large UK reseller. Reseller pipeline nearly doubled quarter-over-quarter.
ARR Growth: Surpassed $500 million in ARR, growing 14% year-over-year. Total revenue was $131.2 million, representing 10% year-over-year growth.
Profitability: Achieved 32% adjusted EBITDA margin and $41.6 million in adjusted EBITDA, exceeding guidance.
Customer Growth: Ended the quarter with 2,540 customers contributing $50,000 or more in ARR, up 16% year-over-year.
Cyber Resilience Platform: Focused on delivering end-to-end cyber resilience through unified endpoint management, security operations, and data protection. Platform approach reduces vendor sprawl and closes coverage gaps.
Go-to-Market Strategy: Aimed at expanding presence in mid-market companies through channel strategies and reseller partnerships. High-impact presence at industry events like RSA and InfoSec Europe.
Cybersecurity Threats: The worsening threat environment and increasing complexity of cyber threats pose significant risks to businesses, requiring constant innovation and investment in cybersecurity solutions.
Economic Uncertainties: The global economic environment and foreign exchange rate fluctuations could impact revenue and financial performance.
Competitive Pressures: Competition from large-scale competitors in the cybersecurity and data protection space could challenge market share and pricing strategies.
Regulatory Compliance: Adhering to evolving regulatory requirements in different regions could increase operational complexity and costs.
Supply Chain and Operational Risks: Establishing new development centers and integrating acquisitions like Adlumin could pose operational challenges and risks.
Customer Retention and Expansion: Maintaining high dollar-based net revenue retention and expanding customer base in a competitive market is critical but challenging.
Technological Advancements: Keeping pace with rapid technological changes, such as AI and machine learning, is essential to remain competitive but requires significant investment.
Revenue Outlook for Q3 2025: Total revenue is expected to be in the range of $127 million to $128 million, representing approximately 9% to 10% year-over-year growth on a reported and constant currency basis.
Adjusted EBITDA for Q3 2025: Expected to be in the range of $36 million to $37 million, representing an adjusted EBITDA margin of approximately 28% to 29%.
Full Year 2025 Revenue Outlook: Total revenue is projected to be in the range of $500 million to $503 million, representing approximately 7% to 8% year-over-year growth on a reported and constant currency basis.
Full Year 2025 ARR Outlook: ARR is expected to be in the range of $525 million to $530 million, representing 9% to 10% year-over-year growth or 7% to 9% on a constant currency basis.
Full Year 2025 Adjusted EBITDA Outlook: Adjusted EBITDA is projected to be in the range of $141 million to $144 million, representing 28% to 29% adjusted EBITDA margin.
Capital Expenditures for 2025: CapEx, including capitalized software development costs, is expected to be approximately 6% of total revenue for 2025.
Unlevered Free Cash Flow Conversion for 2025: Expected to be approximately 68% of adjusted EBITDA for the full year.
share repurchase program: As part of our capital allocation strategy, we began executing on our share repurchase program, reflecting our confidence in the business and the opportunity ahead.
The earnings call reflects positive sentiment with strong subscription revenue growth, increased customer base, and healthy cash flow. While gross margins declined slightly, the company is investing in AI and operations, indicating future growth potential. The Q&A section highlights confidence in ARR growth, successful acquisitions, and strategic product launches, all contributing to an optimistic outlook. The market cap suggests moderate stock price movement, leading to a positive prediction.
The earnings call indicates strong financial performance with a 14% ARR growth and a 10% revenue increase. Despite a slight decline in gross margin, the company maintains a high adjusted EBITDA margin and positive free cash flow. The Q&A section reveals positive market reception and strategic focus, with promising growth in MSP markets and new product bundles. The share repurchase program further boosts confidence. Given the market cap, the stock is expected to react positively, likely within the 2% to 8% range, reflecting the overall strong financial and strategic outlook.
The earnings call reflects a mixed sentiment. While financial performance shows solid growth with a 10% revenue increase and positive EBITDA margins, concerns arise from declining gross margins, regulatory challenges, and economic headwinds. The lack of a shareholder return plan and significant debt also weigh negatively. However, the optimistic guidance and positive reception of the Adlumin acquisition balance these concerns. Given the company's market cap, the stock is likely to remain stable, resulting in a neutral prediction for the next two weeks.
The earnings call summary shows mixed signals: strong revenue growth and optimistic guidance, yet declining gross margins and integration risks. The Q&A reveals potential headwinds and lack of clarity on key initiatives, which may cause investor caution. The company's market cap suggests moderate stock price sensitivity. Overall, the sentiment is neutral, with no strong catalysts to drive significant price movement.
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