Mimecast Limited (MIME) 2017 Q1 法說會逐字稿

Welcome to Mimecast's earnings call for the fiscal first quarter of 2017, ended June 30, 2016. I am Robert Sanders, Investor Relations Manager. With me on the call tonight are Peter Bauer, our co-founder, Chairman, and CEO, and Peter Campbell, our CFO.

Tonight's conference call is being broadcast live via webcast. A replay of this call will be available two hours after the live call has ended.

During the course of this call, we will make forward-looking statements regarding future events and the future financial performance of the Company. These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements.

We caution you to consider the important risk factors that could cause actual results to differ materially from those in the forward-looking statements contained in today's press release and this conference call. These risk factors are included in our press release and further defined in Mimecast's most recent 20-F filed with the SEC.

During this call, we will present both GAAP and non-GAAP financial measures. These non-GAAP measures are not intended to be considered in isolation from, a substitute for, or superior to our GAAP results, and we encourage you to consider all measures when analyzing Mimecast's performance. A reconciliation of certain GAAP to non-GAAP measures is included in today's press release, which can be found in the "Investor Relations" section of our website.

The date of this call is August 8, 2016. Any forward-looking statements we make today are based on assumptions that we believe to be reasonable as of this date. We undertake no obligation to update these statements as a result of new information or future events.

Now, I would like to turn the call over to Peter Bauer. Peter?

Thank you, Rob. Good afternoon and thank you all for joining the call today. It's very exciting for me to deliver our fiscal year 2017 first quarter results. We'll share the details with you in this call, but in short we've outperformed on all metrics in every one of our regions and are thrilled with our progress this past quarter.

We're operating in an exciting market right now, with customers looking increasingly at migrating email to the Cloud, especially with Office 365. They're consequently looking to leverage the Cloud for advanced security, continuity, and archiving, too.

At the same time, organizations continue to be attacked relentlessly via email. [Ransomware], whaling impersonation attacks, and URL spear-phishing are persistent daily dangers. Organizations are finding that their current email security arrangements are just not effective in protecting them against these threats.

And so, in this past quarter we saw another 1,900 organizations choose Mimecast to protect them. Our integrated suite of Cloud services is proven effective at protecting customers against these advanced threats. We offer a portfolio of services that's extremely relevant today, and we're gaining market share nicely.

Now, our integrated suite increasingly represents a meaningful competitive advantage for us, especially in the mid market, as customers look to simplify their management and achieve a lower total cost of ownership. We see a huge market opportunity for our suite that's both a pleasure to use and extremely effective at protecting employees, their data, and IT infrastructure.

While we have innovated relentlessly, several legacy vendors have lacked our focus -- Intel McAfee being a key one -- and they are now exiting the email business. Their customer demographics matches Mimecast's customer demographics very closely. So, this is an exciting opportunity for us, and we believe Mimecast has the best product and service offering for McAfee's former customers.

As many of you know, years ago we took the difficult task of building a pure Cloud-based architecture, one code base built as Mime OS. As a result, we're able to deliver better security and a fully integrated solution. Mime OS enables our scalability, our rapid innovation, and our rapid response to new security threats, as well as our superior customer experience, from administration through tech support to end-user engagement.

This superior experience drives our extremely high enterprise-class retention rates, and it makes it easy for customers to buy more services from us. So, we are very happy to report an increase in our revenue retention rate again this quarter, now up to 110%.

Let's look at some of the numbers, and then Peter Campbell, our CFO, will drill down deeper. We exceeded the high end of both our revenue and adjusted EBITDA guidance. On the top line, we grew 32% in constant currency quarter over quarter, and new customer adds were extremely strong.

Now, the deep multi-tenancy of our platform designed to cost effectively onboard and serve a very large number of diverse customers -- especially important considering our vast mid market opportunity -- has been an important long-term bet for us. Over the last six months, we've averaged 140 new organizations connecting to our services every week. This has ranged from large complex global organizations through to simpler smaller ones. Our ability to provision services quickly and cost effectively with smooth levels of investment is a powerful capability.

We believe there are over 570,000 organizations employing between 20 and 5,000 users in the US alone and perhaps over a million organizations of this size globally. Now, that represents a large market opportunity for which we have precisely the right architecture and delivery model.

Now, as we've said before, our integrated architecture makes it easy for customers to choose Mimecast to solve additional problems; for example, using more of our portfolio of services by adding archiving or secure messaging or continuity. All of these services benefit from a common initial connect process and get managed from the same administration console.

Since our founding, we've had conviction that as the world moves more and more into Cloud, we all face more -- not less -- security and cyber resilience challenges. The perimeters and the internal boundaries and the physical infrastructures that IT and security teams have been able to rely and focus on are fast evaporating. New risks and threats are appearing constantly, and organizations are scrambling to deal with these issues and avoid the disruptive impact that they can have.

So, we built our architecture to be extensible and to provide us with a platform to solve more problems for customers over time. Recently, we released a new version of our administration console, AdCon Version 4. This introduced easier administration capabilities to our customers, and it gives us a user interface technology layer that can speed up our delivery and integration of additional product capabilities on Mime OS in the coming quarters. We look forward to sharing more of the benefits of this technology with you in the future, too.

Another aspect that we are very happy with is our recent investment in go-to-market capability and capacity. Now, we've attracted some really excellent people to the Company, and we've given them the resources to execute. We believe our team is just scratching the surface of our growth opportunity with these results.

And the strength of our go-to-market investment case is very clear to us. With 1,900 new customers this quarter and the growth in revenue retention, it is clear that our investments are paying off. And we are thrilled with the rapid rate at which we are building market share.

Our network of channel partners continues to expand: 44 new partners transacted with us for the first time in the quarter. In fact, over three-quarters of our new customers came through the channel in Q1. Now, that's reflecting the growth of our new partners and the continued traction with our established channel relationships.

Now, with regard to Office 365, today 16% of Mimecast customers rely on our services to protect and enhance their Office 365 subscriptions. This percentage has increased steadily from the 14% in our fourth quarter and 12% at the time of our IPO in November of calendar 2015. By providing layers of security, an off-site data archive, and a solution for uptime assurance, Mimecast makes customers even more successful and secure with Office 365.

Now, let me give you a few examples of customer wins and deployments in the quarter. Firstly, a US pharmaceutical manufacturer needed protection from business email compromise, or whaling attacks. The customer was using Office 365 for email services and recognized the need for additional protection from advanced threats. They looked at three leading providers, including ourselves, and we won because of our ability to protect better, particularly from business email compromise, or whaling.

Secondly, a US sporting goods retailer with over 400 stores, they selected Mimecast in the competitive bake off against a leading next-generation email security vendor as well as a legacy on-premise data archiving company. This company needed to replace their legacy on-premise archive the first year, and they were evaluating Cloud archive offerings.

As part of the sales engagement, they also evaluated Mimecast's email security services, and they quickly realized the benefit of our fully integrated service. Now, they were able to solve multiple issues, including protection from advanced spear-phishing threats, as well as implement a robust secure messaging platform along with archiving, and with all of this delivered seamlessly from the Cloud and a single management console.

Thirdly, an Australian oil and gas company. They were using on-premise hardware and software for email security and archiving. Again, they faced issues maintaining the performance of their email archive, and they were looking for a Cloud-based solution. Our global presence, including local Australian data centers and support, was an important consideration and central to their decision to deploy Mimecast.

Now, finally, I'd like to highlight a customer who added Mimecast as part of an Office 365 migration, a large global media group with tens of thousands of employees. They set out to evaluate our Cloud archive services. But during the evaluation process, they migrated their core email service from on-premise, supported by Symantec's former MessageLabs solution for security. They migrated core email over to Office 365 with no third-party solution in place to complement their Office 365 deployment.

Then, the company experienced challenges, with spam, phishing, and whaling attacks, and these email security issues accelerated the conversations with Mimecast and led to an evaluation of our security services and ultimately us being engaged to enhance the protection offered with Office 365. Our Targeted Threat Protection solution was a key differentiator, due to its completeness and its ability to defend effectively against targeted threats.

So, in summary, Q1 was a strong start to what we expect to be a strong fiscal 2017 for Mimecast. We grew global revenue organically by 32% in constant currency and by over 40% in North America.

We expanded our partner network. We delivered on our cadence of technology innovation, with AdCon 4. And we continued to win with Office 365 customers by pairing our Cloud services with Microsoft's. In total, 1,900 organizations adopted Mimecast's security, continuity, and archiving services in this first quarter.

We exceeded our guidance for both revenue and adjusted EBITDA, and we're executing well against all our key performance indicators.

And with that, let me turn it over to Peter Campbell, CFO.

Thank you, Peter.

Q1 was a great start to the year for the Company. Revenue growth and adjusted EBITDA both exceeded the high end of our guidance range. Revenue growth was the result of the addition of 1,900 net new customers across all geographies, strong renewal activity, and increased upsell into our existing customer base. We also delivered adjusted EBITDA above the high end of our guidance while continuing to invest for growth, demonstrating the inherent leverage in our model.

First quarter revenue grew 32% on a constant currency basis year over year to $41.5 million, above our guided range of $39.5 million to $39.9 million.

Revenue grew 24% on an as-reported basis over the first quarter of 2016. Headwinds in the South African rand and the British pound negatively impacted our growth by $1.4 million and $1 million, respectively, for a total foreign exchange impact on revenue of $2.4 million.

I am pleased to report that our revenue growth accelerated sequentially in both constant currency and on an as-reported basis. We saw strength in all geographies and across all customer segments.

We saw normal close rates in the UK with respect to new business at the end of last quarter and, although very early, we have seen this continue through the beginning of this quarter, despite the geopolitical impact of Brexit.

The North American market continues to be very strong for Mimecast. In the US, we achieved revenue growth of 40% for the quarter. Additionally, as of the end of Q1, our US region represented 46% of our global revenue, up from 41% for the same quarter in the prior year.

Of the 1,900 customers we added this quarter, more than two-thirds of these customers came from the US, showing continued momentum in this region. We are in the early stages of penetrating the US market and expect to see continued strong revenue growth for the foreseeable future.

Our total customer count is now over 19,900. The investments we have made in sales and marketing have created increased reach and awareness for our leading-edge technologies and contributed to continued strong customer additions in the first quarter.

Demand for our services is coming from customers of all sizes. We are seeing more large customer wins than in previous quarters. At the same time, our network of MSP partners is creating increased demand for our services in the SMB market at an even faster pace.

I want to take a moment to update you on our average order value. At the time of our IPO, our average order value, or AOV, was approximately $9,200. We said then that we would update you from time to time or if our AOV changed.

At the end of Q1, our AOV has declined to $8,500. This is due to two factors. First, and most significantly, currency impacted our average order value. This accounts for about two-thirds of the decline.

Secondly, the strength in our MSP channel has brought us an increased number of SMB customers. The addition of these customers also impacted our average order value.

At the same time that we are adding large numbers of customers, our revenue retention continues to increase. This quarter, we experienced 110% revenue retention rate, ahead of the 108% realized in the first quarter of 2016 and the 109% we realized last quarter.

This continued improvement is a combination of maintaining our exceptionally strong customer retention and continued growth in upsell. It is a significant gain, representing very strong renewals in our existing base and sales of additional products into that base.

In addition to our investment in sales and marketing, the three elements that drove our accelerating growth in the quarter were: the movement of companies to the Cloud, specifically to Office 365; success selling our products to the McAfee customer base; and sales of our advanced threat protection products to new and existing customers.

During the quarter, the number of our customers who are using our services in conjunction with Office 365 increased to 16%, from 14% last quarter and less than 12% at the time of our IPO. This percentage adoption is highest in the small customer segment, with 19% of our smaller customers using our services together with Office 365.

Additionally, we are seeing new business come from customers switching off legacy providers like McAfee. I mentioned earlier that two-thirds of our new customers in the quarter closed in the US. This is driven not only by our large and under-penetrated opportunity in the mid market and the increasing threat environment, but also by the opportunity created by customers looking for a solution to replace their McAfee offering.

Sales of our Targeted Threat Protection products continued to enjoy strong demand. During the quarter, over 1,200 customers bought this service, and we now have more than 4,600 customers who have purchased it.

We saw increased demand from both existing customers and new customers. Almost 40% of our sales of TTP in the quarter was to our existing customer base, and we now have 23% of our customer base using this product. TTP continues to be a strong driver for new customer acquisition, as we offer the most advanced solutions to deal with their email security issues.

Once we acquire a customer, we keep them for a very long time. Our unit economics are very compelling. As customers buy additional services, the margin profile of that customer increases, as does the likelihood of renewal.

We still have significant room to upsell into our existing base with TTP and other products and expect to see our customers continue to invest in these advanced technologies.

Now, let's turn to expenses and profitability. For the first quarter, we recognized a 73% gross margin, which is up from the 70% recognized in the same quarter in the prior year. Gross margin fluctuates due to the addition of hardware and employees to onboard and serve our growing customer base. We anticipate our gross margin will remain in the 69% to 71% range over the next several quarters.

First quarter was another quarter of investment for us, with operating expenses of $33.1 million, as we continue to invest for growth. Specifically, we are investing in our sales force and marketing initiatives. As a reminder, we recognize commission expense in the period in which they are incurred. We do not amortize the expense over the life of the contract.

We can see that our investments in sales and marketing are paying off. These investments are increasing awareness of Mimecast and enabling us to capture more of the very large market opportunity in front of us.

While we recognize the enormous opportunity to grow our business, we have been mindful to extend our resources in a sustainable way. This measured investment approach should enable us to grow in a large market for a very long time. As a percentage of revenue, we expect to continue this level of investment in operating expenses for the first half of fiscal 2017 and anticipate seeing gradual leverage sequentially.

Adjusted EBITDA in the first quarter of $1.9 million exceeded our guidance of $0.3 million to $1.4 million. Adjusted EBITDA margin was 4.5%, which reflects our investments in R&D and sales and marketing. Adjusted EBITDA was positively affected by the additional revenue generated by the large number of new customers we've been adding, as well as the timing of expenses related to servicing those customers.

I anticipate adjusted EBITDA will remain positive in each quarter of fiscal 2017, even as we continue to invest behind our go-to-market expansion. Our three- to five-year target for adjusted EBITDA margin is unchanged and remains in the range of 20% to 22%.

For the first quarter, GAAP net income was $0.2 million, or nil per basic and diluted share, based on 54.3 million weighted-average shares outstanding. Net income was positively impacted by the effect of exchange rate changes in the British pound at the end of June.

We have inter-Company debt balances from our operating subsidiaries to the UK parent Company. With the drop in the pound at the end of June, the subsidiaries are now able to repay their debts to the parent Company with less local currency, resulting in foreign exchange gains on these inter-Company debt balances.

The net effect in the quarter was a $4.1 million gain in foreign exchange below the operating income line. We are in the process of capitalizing certain of these loans and do not expect to see significant movements on these balances, going forward.

Our non-GAAP net income, which reflects our GAAP net income exclusive of the effects of stock option expense, was $2.3 million, or $0.04 per basic share, for the first quarter.

Looking to free cash flow, during the first quarter we generated $3.7 million in free cash flow. This was higher than expected due to the timing of equipment purchases and payments due to certain suppliers, which drove higher accounts payable as a result.

We expect to continue to generate free cash flow for the rest of the year. The amount can fluctuate based on the timing and payment of capital equipment and other investments.

Reviewing the balance sheet, as of June 30, Mimecast had $108.7 million in cash and cash equivalents. Total debt was $5.3 million at the close of the quarter, of which $4 million represents the current portion of debt.

Now, I'd like to turn the focus to guidance for our second quarter of fiscal 2017 and our outlook for the full year. Regarding revenue for the second quarter of 2017, we expect revenue to grow 30% to 32% year over year in constant currency, or to be in the range of $41.5 million to $41.9 million.

Our second quarter revenue guidance is based on exchange rates as of July 31, 2016, and includes a negative $2.8 million impact from the strengthening of the US dollar compared to the prior year, as our international customers renew their subscriptions at generally consistent pricing but translated into dollars at a less favorable exchange rate. Approximately $0.5 million of this impact is related to the South African rand, and $2.3 million is related to the British pound.

Regarding adjusted EBITDA, we expect this to be in the range of $1.6 million to $2.4 million for the second quarter. This is consistent with our continued strategy of investing in R&D and the build-out of our sales and marketing organization globally.

Now, from a full-year perspective, we expect revenue to grow between 29% and 31% year over year in constant currency and to be in the range of $172 million to $175.6 million. We are raising the midpoint of our guidance by $0.8 million for the year, despite the fact that at current exchange rates we are seeing a $7.8 million negative foreign exchange impact in our revenue forecast.

When providing guidance, we have taken into consideration the geopolitical and macroeconomic uncertainties around the world and balanced that with the recent strength we have seen in our business, including new customer adds in the two most recent quarters and our high retention recurring SaaS revenue model.

We expect adjusted EBITDA to be in the range of between $9 million and $11 million for the full year as we continue to invest for growth, especially in sales and marketing in the second half of the year, but consistent with our strategy of sustainable investment.

We expect to show continued progress towards our long-term operating margin goals in the second half.

In summary, we had a very strong start to the year. Our revenue growth accelerated this quarter in both constant currency and on an as-reported basis despite the impact of currency fluctuations. I am especially proud of our retention rate, a reflection of the value we are delivering to our customers.

The addition of 1,900 new customers in the quarter is evidence of the momentum we have seen, where customers of all sizes across the globe are choosing Mimecast to be the protectors of their most important assets. We feel very confident about our ability to penetrate what is a very large market opportunity and to grow sustainably at these levels for a very long time.

So, with that, I would like to thank you for your time and open the line to your questions.

(Operator Instructions) Matt Hedberg, RBC Capital Markets.

Well done on the quarter. I'm curious. You guys spent some time talking about the McAfee customer base. I'm curious based off of your analysis so far, if a McAfee customer --? Or, let's say a legacy McAfee customer was spending $1 with them. Do you have any idea how that dollar spend changes upon conversion to Mimecast?

Matt, that's a great question. Peter Bauer here. So, when we think about the opportunity, it's rumored to be between $80 million and about $100 million in McAfee dollars, based on their subscription. We're definitely seeing McAfee customers signing up for Mimecast and paying more in many cases, subscribing to additional products: perhaps not having had archiving and adding archiving; not having had Targeted Threat Protection type services and adding that to their subscription; or buying our continuity bundle in with that, as well.

So, without putting sort of specific numbers to it -- I think it's a little bit early to tell -- we're definitely seeing the opportunity at a nice multiple of the $80 million to $100 million of the McAfee base.

That's great. And then, focusing on TTP, it's obviously doing well. I think you mentioned 23% of your customers using that. I'm curious, though. If you look at this quarter with your 1,900 customers, do you have an idea of what the attach rate is on net new? I think you said a lot of them have been to the existing. But I'm curious on the attach for right out of the gate for customers?

Peter Campbell here. Good question. So, we're seeing about 60% of our new customers in the current quarter buying TTP along with our other security and other products. So, if you're looking at the 1,200 customers we added this quarter, over 700 of those customers bought TTP, and it was a key product attracting customers to us in the quarter.

Great. Thanks a lot, guys.

John DiFucci, Jefferies.

My first question is a question we get a lot and you guys probably do, too, given your exposure in the UK. I was glad to see that you guys hit it right in your prepared remarks about Brexit and saw normal close rates in the quarter. But we're more than a month past the end of the quarter. I'm just curious if you've seen any changes at all in your close rates?

And, I guess, what would a more fragmented regulatory environment mean for your business in the European region?

Good question. I'll take the first part first. Looking into -- we're about one month and one week into the quarter and we haven't seen any change in close rates in our European region. It continues to remain strong for us. So, as far as the impacts of Brexit, we haven't seen any impact in terms of closed business in the region. It continues to be strong.

With respect to a fragmented regulatory environment, the European nations have always had their differences. We're kind of -- well, we have always been well aware of certain of the kind of regulatory issues, particularly around data protection and things of that nature, that you need to be aware of when you're operating in the EU.

And so far, with respect to what's going to happen with the UK separation from the EU, it's a little early to say, but we certainly have been and will continue to be on top of any of those changes.

Okay. Great. And if I might, a follow up. You guys have always had enterprise-class retention rates which sometimes sort of surprised some people just because you have exposure to across the whole spectrum of the company sizes. But to see it creep up like this, I'm just curious -- which is great to see, but it's a little surprising. Is it more due to greater attach here? Or, are you seeing a little bit of an uplift on your sort of retention excluding upsells?

That's a good question. Yes, we've always had great retention. It's something that we've been very proud of and continue to focus on.

The economics of our customers are very high. The customer lifetime value is very high. And I think at the root of that is the service we provide and our ability to retain those customers.

That has been maintained at -- if you take away any of the upsell, it's been maintained at the rates that we've had in the past. And the sort of the creeping up of 107% to 108%, 109%, and now 110% in the most recent quarter has to do with upselling additional products into that customer base.

So, the downsell and the churn numbers have remained relatively the same, and the increase that we're seeing is a function of selling more products to our existing customers, and both things that we're quite proud of.

Great. Great. That's all very helpful. And excellent job, guys. Thank you.

Jack Rohkohl, Dougherty & Company.

One quick one on the McAfee conversions. Can you give me more color on the types of customers moving over? Is it faster on the smaller side or the larger side? And are you seeing it being more SaaS customers moving over or on-prem customers?

Jack, thanks for that question. It's definitely accelerated on the smaller end. The smaller company is able to make more nimble decisions and shift providers more quickly, less planning for them.

It's also much more on the SaaS side, because those switches from a SaaS to a SaaS environment are really easy to make. And we have teams of people that are very efficient at shifting policies across and helping customers to migrate very seamlessly over to our platform.

Great. And just one more question. Has there been any change in the competitive landscape? And are new wins still coming from mostly just displacing the legacy on-premise equipment? Or, are you seeing more competitive bake off wins?

Great. So, we've always been good at both. We're successful in competitive bake off wins. We're also very good at displacing not just legacy on-premise technologies, but also some of the older, or first-generation, SaaS email security offerings. So, I'm talking there about things like Symantec's MessageLabs offering. We've been very successful at migrating customers to us from that as well as, obviously, McAfee, which is pretty well known. But the usual suspects, in terms of taking customers from on-premise equipment like (inaudible) port technology.

Great. Nice quarter, guys. Thanks.

(Operator Instructions) Heather Bellini, Goldman Sachs.

This is Shateel Alam, filling in for Heather. Just one back on McAfee. I was wondering how the AOV for McAfee customers compares to the $8,500 that you stated overall for the average? I'm assuming it's lower.

And then, also, in terms of that $80 million to $100 million opportunity you mentioned for McAfee, how much of that have you factored into your fiscal 2017 guidance, in terms of wins?

Good question. So, with respect to the AOV on the McAfee customer base, we're seeing that more in line with our existing AOVs, both with respect to kind of new customer acquisitions, and sometimes higher, as Pete mentioned before, with respect to McAfee customers buying more than one initial product out of the gate. So, we're seeing some strong AOVs coming out of that base.

With respect to factoring that into our guidance, we have a history of winning customers from legacy providers. We are continuing to do that. We haven't factored in any one, specific legacy provider wins into our guidance.

Okay. Thanks. And then, just one follow-up. Your customer adds were huge this quarter, and your adds tend to increase throughout the year. I was wondering how we should think about your customer adds trending throughout the year and if it should increase like that?

That's a good question. We're certainly very -- we're very proud of the number of customers we added this quarter and last quarter. I think it shows the strength in the model and the strength in the opportunity. It is a very large market opportunity that we're right at the kind of early stages of penetrating.

With respect to our customer adds for the year and kind of looking at your model, I would kind of take a look at the guidance that we've provided with respect to revenue and factor the customer adds in line with that. And I think you'll be able to kind of build your model off of that basis.

Got it. Thank you very much.

Saket Kalia, Barclays.

Nice result. Sorry, I joined late here. So, apologies if this has already been asked. Obviously, given the UK exposure, can you just talk about whether you've seen any impact from your UK customers as a result of Brexit? I think we all see the FX impact. But fundamentally, are you seeing any change in buying behavior as a result of that change in the region?

Just, Saket, to iterate, what I had highlighted is that, although it's early days but it is one month and a week into this quarter and also we had the week at the end of last quarter, we didn't see any change in buying behavior.

And you asked a slightly different question. You asked about customers. So, we didn't see any change in buying behavior from the new customers that we added and have been adding in this quarter, and we also haven't seen any change from our kind of renewing customer base with respect to that.

Great. That's really helpful. And as my follow-up, on TTP, 23% of customers adopting the solution really just in less than a year for the product to be out is very impressive. As you look at that base of roughly 20,000 customers, how many do you think are true candidates for TTP? Is it all of them? Or, is it a particular profile that you're seeing attach to the product more? Just maybe trying to size what the opportunity could be for TTP, going forward.

Saket, great question. We have pretty strong conviction on this, and I think you're right in terms of the rapid adoption of it. It's sort of affirming our conviction that this is really a product that every customer should have. Every customer needs it. These are issues that are affecting customers of all sizes. And in our view, it's somewhat irresponsible for a customer not to have it.

And so, we've developed it as a very seamless add-on. We've made it very affordable for customers to be able to have this kind of protection as part of their Mimecast service. So, we think that the opportunity exists right across our entire security base.

Got it. That's it for me, guys. Thanks very much.

At this time, I see no other questions in queue. I'd like to turn it back to Mr. Bauer for any closing comments.

Thank you, folks. Thanks, everybody, for joining us on this call this evening. We look forward to sharing our next set of results with you in around about a month's time. But thank you for your interest in what we're doing here.

Ladies and gentlemen, thank you for your participation in today's conference. This concludes the program. You may now disconnect.