Varonis Systems Inc (VRNS) 2015 Q2 法說會逐字稿

Good day, everyone, and welcome to the Varonis Systems, Incorporated second quarter 2015 earnings conference call. As a reminder, today's conference is being recorded. At this time, I'd like to turn it over to Staci Mortenson, Investor Relations. Please go ahead, ma'am.

Thank you. Good afternoon. Thank you for joining us today to review Varonis' second quarter 2015 financial results. With me on the call today are Yaki Faitelson, Chief Executive Officer; and Gili Iohan, Chief Financial Officer. After preliminary remarks, we will open up the call to a question-and-answer session.

During this call we make statements related to our business that would be considered forward-looking statements under Federal Securities Laws including projections of future operating results for our third quarter and fiscal year ending December 31, 2015. Actual results may differ materially from those set forth in such statements.

Important factors such as risks associated with anticipated growth in our addressable market, competitive factors, including increased sales cycle time, changes in competitive environments, [spacing] changes in increased competition, the risk that we may not be able to attract or retain employees, including engineers and sales personnel, general economic and industry conditions, including expenditure transfer, data governance and data security software, risks associated with the closing of large transactions, including our ability to close large transactions consistently on a quarterly basis, our ability to build and expand our direct sales efforts and resell our distribution channels, new product introductions and our ability to develop and deliver innovative products, risks associated with the international operations and our ability to provide high-quality service and support offerings could cause actual results to differ materially from those contained in forward-looking statements.

These factors are addressed in the earnings press release that we issued today under the section captioned Forward-Looking Statements, and these and other important risk factors are described more fully in our reports filed with the Securities and Exchange Commission. We encourage all investors to read our FCC filings. These statements reflect our views only as of today and should not be replied upon as representing our views as of any subsequent date. Varonis expressly disclaims any application or undertaking to release publicly any updates or revisions to any forward-looking statements made herein.

Additionally, non-GAAP financial measures will be discussed on this conference call. A reconciliation of the most directly comparable GAAP financial measures is also available on our second quarter 2015 earnings press release, which can be found at www.varonis.com in the investor relations section. Also please note that a webcast of today's call will be available on our website in the investor relations section.

With that, I would like to turn the call over to our Chief Executive Officer, Yaki Faitelson. Yaki?

Thanks, Staci, and good afternoon, everyone. The underlying trends of the business are healthy and we effectively executed this quarter. Total revenues were $29.2 million, an increase of 18% year-over-year and an increase of 22% on a constant currency basis. During the quarter, we had 258 new customers and so the year-over-year increase in the percentage of customers who purchased more than one product.

We continue to have success selling our run rate business, which is based on high volume and low ASPs. We also had one deal greater than $1 million. Our existing customers are increasingly coming back to buy more from us as we effectively prove our value and identify opportunities to expand the relationship over time. As we expected, the situation in Russia we discussed last quarter has not changed and its revenue contribution in the quarter was insignificant and down meaningfully year-over-year.

In the UK, we are implementing the steps we outlined to bring greater visibility and predictability to our pipeline. But our expectations remain that it would take a few quarters to fully take effect. In the meantime, the rest of Europe and the US are performing well.

Let's spend a moment on key trends that are driving our business. Most breaches today involve the theft of unstructured data. In many cases, attackers easily penetrate external defenses and once inside, have bold access to sensitive data where nobody is watching them and, worse, nobody notices the data has been removed until months later. In many other example, it was someone on the inside, a contractor or employee. Where again, no one was watching or analyzing what they opened, changed or took. And these are just the breaches we've all heard about.

There are undoubtedly many others that have not been discovered. It has become increasingly clear that organizations need to modernize their defenses by directly fortifying the controls around assets they need to protect. This is driving the rise of the new category of security software for User Behavior Analytics or UBA. The idea is that UBA software watches and baselines what users are doing to detect things that don't look normal. Varonis has long and successful track record of providing user behavior analytics. DatAdvantage recommendations and alerts are two examples that have been proving themselves for long time.

Our comprehensive audit record of full access to unstructured data, across multiple platforms is difficult to capture and even harder to store and analyze. This is driving a meaningful increase in demand for our DatAlert module an add-on to DatAdvantage. DatAlert extends DatAdvantage alerting capabilities so that IT security teams can immediately begin to detect the things they are most worried about mass (inaudible) modification, (inaudible) that affect files or (inaudible), administrative [gulp] changes in previous [calation], administrative access to user data, and (inaudible) attempts.

Was there an IT group integrates DatAdvantage or DatAlert with a SIEM, or SIEM receives alerts directly from Varonis, they immediately make progress in solving their business problem of securing unstructured data from attackers. For example, in Q2, Sonora Quest Laboratories purchased DatAlert to complement DatAdvantage for Windows, DatAdvantage for directory services and data classification framework. Sonora Quest wanted usage analytics to detect and alert them to suspicious unwanted user activity from both insiders and outside attackers, should they get in. The customer stated that DatAlert was quick to deploy and its ability to execute automatic responses when it detects malware like Cryptolocker was specifically appealing.

In addition, in Q2, a new Varonis customer Oldcastle materials, the number one integrated construction materials company in the US. They purchased DatAdvantage for Windows, Data Classification Framework and DatAlert. Datadvantage, along with data classification framework, will help the company take more proactive approach to information security and ensure only the right people have access to the most sensitive corporate and customer data. These solutions will also improve the efficiency and automation of annual SOX compliance audit work and improve storage utilization by helping OldCastle identify stale and inactive data, improving data storage management.

Also, now that it has DatAlert installed, data access events would be effectively monitored, audited and analyzed Oldcastle's IT staff would be immediately notified of any anomalous behavior occurring in their unstructured data, whether from the outside or from employees on the inside attempting to remove data from the organization and without permission from Management.

DatAlert is also an important piece in our go-to-market strategy of providing potential customers with an express risk assessment.

As you know, we have always done evaluations as part of our sales process because they help us immediately showcase our differentiated capabilities. Express risk assessment go a step further enabling our teams to let prospective customers know where their unstructured file data has security holes and provide valuable insight on their current controls around unstructured data, what they have the most of, and what they know the least about.

DatAdvantage and DatAlert immediately fill a huge void in their unstructured data controls just by turning them on. While still in the early in the roll out of the express risk assessment, we are receiving positive feedback on our ability to provide answers to key question the C-level suite and the board are asking such as, Where am I exposed? And how do I lock down my data without impeding productivity using just 30 days. This expands Varoniss positioning as a partner that has far more than detection. We also become an important part of the company's investment in prevention and fast recovery.

Our long-term Outlook for Varonis remains bright. We're in the very early stages of what we believe is a huge opportunity and our investments in building awareness and adoption are taking hold. Our products are critical to our customers as they look to manage and protect human-generated data, a growing issue across organizations large and small.

With that, I will turn the call over to Gili.

Thank you, Yaki. Total revenues for the second quarter increased 18% to $29.2 million. Growth was driven by the success we're seeing with our land and expand strategy and consistently high maintenance renewal rates over 90%. License revenues were $16 million. This represents an 11% increase from the second quarter of 2014.

Our maintenance and services revenues were $13.1 million, increasing 29% compared to the second quarter of 2014. Looking at the business geographically, US revenues increased 22% to $18.1 million or 62% of total revenues. We are pleased with our results in the US this quarter. On a year-over-year basis, we were impacted by a tough large deal compare. If you were to normalize the impact from Q2 this year and last year our US growth rates would have been more in line with our historical averages.

As a reminder, given our size, we can see growth rates fluctuate on a quarterly basis based on the timing of deal closures and therefore suggest you look at our growth trends on a multi-quarter basis. EMEA increased 21% to $9.20 or 32% of total revenues which we believe is a good growth, given the strengthening of the US dollar on a year-over-year basis, as well as the impact from Russia Yaki talked about. Rest of World was $1.8 million or 6% of total revenues.

For the second quarter, existing customer license and [first year] maintenance revenue contribution was 41% versus 38% in the second quarter of 2014. Our land and expand model is delivering results and we will continue making investments to broaden our relationships with existing customers as well as increase new customer additions. As of June 30, 2015, 43% of customers had purchased more than one product family, up from 40% as of June 30, 2014, further validating our focus on innovation and expanding the use cases for our products.

Before moving on to the profit and loss items, I would like to point out that I will be discussing non-GAAP results going forward unless otherwise stated, which, for the second quarter of 2015, exclude the total of $2 million in stock based compensation expense. Please note that the detailed GAAP to non-GAAP reconciliation can be found in the tables of our press release which is available on our website. Gross profit for the second quarter was $26.4 million, representing a gross margin of 90.6% compared to a 90.1% gross margin in the second quarter of 2014.

Sales and marketing expenses were $20.6 million or 71% of revenues for the second quarter of 2015, compared to $16.7 million or 68% of revenues in the second quarter of 2014. We are making measured investments in our go-to-market initiative to drive our growth. R&D expenses in the second quarter were $7.3 million compared to $6.6 million in the same period last year. This reflect our ongoing investments in innovation to enhance our existing product and launch new products to expand our value, total addressable market and competitive position.

G&A expenses were $3.2 million or 11% of revenues compared with $2.5 million or 10% of revenues in the second quarter of 2014. Operating expenses totaled $31 million in the second quarter compared to $25.8 million last year. As a result, our operating [loss] was $4.6 million for the second quarter which was ahead of our guidance compared to an operating loss of $3.6 million in the same period last year.

During the quarter, we had financial income of $402,000, primarily due to foreign exchange gains, compared to $74,000 in the same period last year. As you know, foreign exchange gains and losses can fluctuate. Our guidance does not consider any additional potential impact to financial and other increment expense associated with foreign exchange gains or losses as we do not estimate movement in foreign currency rates.

Our net loss was $4.4 million for the second quarter of 2015, or a loss of $0.18 per basic common share, compared to a net loss of $3.7 million or a loss of $0.15 per basic common share for the second quarter of 2014. This is based on 24.9 million and 24.5 million basic common shares outstanding for Q2 [2015], and Q2 2014 respectively.

We ended the quarter with 850 employees, an 18% increase from722 at the end of the second quarter of 2014. During the quarter, we managed out underperformers, while also making measured investments in our business to support additional innovation, new products, and sales capacity in order to drive sustainable growth. If we look at the balance sheet, we ended the quarter with approximately $104.9 million in cash, cash equivalent and short term deposits. In the first six months of 2015, we use $5.4 million in cash for operations.

Moving to guidance. For the third quarter of 2015, we expect total revenues of $30.2 million to $30.8 million, or approximately 18% to 21% year-over-year growth. We expect a non-GAAP operating loss to range between $4.3 million and $3.7 million, and non-GAAP loss per basic common share of $0.18 to $0.16. This assumes tax provision of $100,000 to $300,000 and 24.9 million basic common shares outstanding.

For the full-year 2015, we continue to expect total revenues in the range of $123.6 million to $126.7 million, representing year-over-year growth of approximately 22% to 25%. There is no material change related to the impact from the US dollar against the foreign currencies we operate in since we last gave guidance in May. We now expect our non-GAAP operating loss to be in the range of $15 million to $13.5 million, a non-GAAP loss per basic common share of $0.65 to $0.60. This assumes a tax provision of $650,000 to $850,000 and 24.9 million basic common shares outstanding.

With that, we would be happy to take questions you have. Operator?

Thank you.

(Operator instructions)

John DiFucci, Jefferies.

Thank you. I have a question for Yaki and a follow-up for Gili, Yaki, it was nice to see the growth in Europes improve and gradually improve like you said you expect it to. But the Americas decelerated a bit. And even though in your commentary I think you said the US is doing really well. You have had some lumpiness in growth in this important region, but how should we think of it? I guess how should we think of it in the context of this quarter, but also going forward?

Hi, the right way to look at the trends is on a [mighty quartile] basis. And, you know, we had just a bit of a tough comparing in the US. Last year we had a deal that was much greater than $1 million. Our business is based on -- the (inaudible) business is on the (inaudible) business and the US performed very well.

We build a very strong pipelines and we feel very good about the overall US business. We start in Q4 and then in Q1, if we ever see pipeline so overall, we are always doing very well and all the leading indicators of the US business are very healthy. The US is performing well.

Okay. Great. And Gili, DSOs gapped up a little bit to, from our calculations, around 89 days from 81 in the previous period. Was there an increase in some large deal activity, which typically are more back-end loaded or just more back-end loaded than usual? And I guess how should we think about this going forward?

In Q2 last year we closed and collected the very large deal that we have during the quarter, (inaudible) collected it after the end of the quarter, the deal that we had more than $1 million. And our deal [so] this quarter is actually lower than we had in Q1. It is, we think, the normal range, nothing out of the ordinary and collection continues to be strong.

Okay. I'm sorry. I guess I'll take a look at our math here. Maybe we are doing something wrong. Okay, thank you very much.

Matt Hedberg, RBC Capital Markets

This is Matt Swanson on for Matt. Thanks for taking my questions. You guys talked in the first quarter about a focus on sales force efficiency, and then you talked about it again tonight, about trying to shed some of the underperformers and add headcount more carefully. Can you talk to us about how that process is going and maybe just kind of the scale of the churn of how many reps we're talking about? And then how you look at managing sales force capacity moving forward?

Thought from the end, minding sales capacity is just critical component of us fulfilling our potential and talking about a huge market opportunity. You see that in the second quarter there only were 258 customers and you see how the base is buying more product, you know, we have just a -- it is some of our salespeople that are not doing well. We are managing them out but it also was a product of focus.

After the first quarter, we just wanted to make sure when we are keep investing, everything is working and we can execute in lockstep and this is what we've done. So it's just primarily making sure that all the education programs are working very well, all the new middle managers are doing everything in the right way, that everybody engaging with the channel and they are executing the programs in the right way, just to make sure that we have a very effective go-to- market plan and we know how to capture the market opportunity.

We just need to do it at scale. It is still a new market, so the sales force is selling primarily based on evaluations. Just wanted to make sure that they are doing it together with the [child] partners to make sure that everybody that are on board know how to do it very well. Please mind that in the last two years, we grow the sales force significantly. We just want to make sure that everybody is pushing the flywheel in the right direction.

All right. Great. And then you talked about the go-to-market strategy. Is DatAdvantage still always the product that gets your foot in the door with the new customers? And then this is a really good quarter for that license and first-year maintenance in existing. What's the most common product that comes in second after you land with DatAdvantage?

There are many products in DatAdvantage. DatAdvantage for Windows, UNIX, SharePoint, now we have everything, 365 in the cloud, so there is many DatAdvantage. So really, once we go in, we starting to expand on all the platform. One of the things that we are starting to see is that we said -- we started off to doing (inaudible) people and a lot of based on the operational ROI.

But what we started to see, really, for us in the last couple of months is that the customers will spend very well inside those (inaudible) problem. Understand very well that the people are trying to -- that the way that attackers are working, it's all working employees -- think about wiki leaks or Snowden. Or someone steals someone's credentials and they are looking up their data like Sony.

And in this case, they are trying to attack, they are trying to take a -- files and emails. But with they express the risk assessment and also with DatAlert, we really catching the attacks. So we have always very strong (inaudible) suspect with compliance and making sure that where you have all the controls in place. But now we, in the last couple of months, we're just starting to see that we are playing very much to [puhl] security use cases.

You know, I have, in malware, I have, you know, like -- or things like a trip (inaudible) they are trying to take data out. Someone is phishing and stole someone's credentials and with DatAlert, we catch it, and then people immediately want to know, well, they have critical information, and is drive many new licenses. So it depends.

But really all of our licenses are selling and it just depends on the customers, and what they need. But it's just (inaudible). Usually if you need one of our products, eventually you will need most of them.

All right. Thank you.

Melissa Gorham, Morgan Stanley.

Great. Thanks for taking the question. I just wanted to follow up on John's question on the revenue by [GO], specifically what's happening in the UK. You noted some execution issues but also, it seems like you're making some changes. Can you maybe just help us understand the changes that you made in the quarter? And then how much work needs to be done, because you did see a rebound in that revenue line items. Just wondering what you are seeing today?

Yes, so the UK performed well in the quarter, and this was our expectation for this quarter. We just want to make sure that they will be able to do it consistently quarter over quarter. And as I said, the main indicator for the health of our business is just the (inaudible) business. And make sure that we hire the right salespeople, that the middle management and senior management, they are doing the right things.

And we are in the right direction. It will take -- but it's something that will take us a few quarters to fix. As I said, Russia is completely frozen. And most of the other markets in Europe performed very well for us. But we need to remember that historically we have a great business in Europe. There is many good customers, very good distribution, and great sales teams.

So Europe is doing very well for us and we also have a great team in the UK. But we are fixing it, and this quarter the UK performed well and I think that they are doing all the necessary changes to perform more consistently.

Okay. That's helpful; thanks. And then could you maybe just talk about sales cycles? Have you seen any change at all as enterprises are maybe becoming more familiar with technology? And has there been any change in who you're talking to, maybe more security use cases than you've seen in the past?

You still don't see any change on the sell cycle, but you see awareness. What we see is that we are educating the market, and we have -- starting to have many customers. Starting -- people understand that it's a big problem. I think every time, what we see is you have many breaches and a lot of fear around it, but now organizations really sit back and just evaluating what they need to do.

So you have the security technologies that have been here for a long time, like the fire walls, the IDAs, the IPS and others. And some, obviously, you have seen but now the user behavior analytics in data protection is big. And what we see is that people really understand that they need the [data believe and approach] to use behavior analytics, and this is what we're doing for a long time. And what I can tell you that it's still affecting sales cycle, but I will tell you that more and more customers and (inaudible) coming to us and it's becoming a more strategic conversation but coming from the business.

So I think that in the last three, four months we can say that the business people are worried about their data. (Inaudible) legal departments and both want to know what's going on with the data and the data that is most exposed is down structure data. So definitely, in this sense, we feel that there are much more meaningful strategic conversations.

Okay. Great. Thank you.

Srini Nandury with Barclays.

(Inaudible) actually. Thank you for taking my call. And this is for Gili or Yaki. Can you talk about your $1 million customer this quarter? Is he a new customer, existing customer, what did he buy?

Just an existing customer; a very good customers of ours. Just more licenses.

Okay. Any comment on your (inaudible) and typically your vendors? How soon of a (inaudible) buy a new (inaudible) purchase, how soon do they come back to buy [Asian] product] and so forth?

It depends. But, usually they are buying one or two products early on; they see the value; they realize that they have the problem. There are many platforms that post unstructured data. There are many use cases like classifying the data and other security use cases and they keep in mind the other product. I can tell you that it's a very unpredictable cadence, but many of them are coming back and they are buying more and they seem (inaudible) a consistent trend.

We have more customer, (inaudible) them are coming and buying more products. And usually also they are starting and expanding, which is another trend. You are coming in and it's starting -- they are starting small, understand the scope of the problem, how they are going to really use it, and then they -- then they are expanding and also committing more (inaudible).

All right. Thank you.

Raimo Lenschow with Barclays.

Hey, guys, this is Andrew on for Raimo. I just wanted to ask about -- so Microsoft, it seems, has been giving more granular control over identity and access management. And I know that you have multiple flavors of DatAdvantage, but have you seen that change the competitive environment for DatAdvantage for Windows?

No, not at all. Everything that they are doing is really driving us. It works really well. So it's cementing us. And what they are doing is primarily in the cloud with a huge (inaudible) for us. So we are an analytics company. We are taking the (inaudible) data and we normalize it and analyze it for many benefits. And what they are doing is just making us -- make it much easier for us to (inaudible) the data from their platform. It's a huge service that Microsoft are doing for us. We are grateful for them.

Great. Thanks.

Scott Zeller, Needham & Company

Hi, thanks. There were a couple of questions earlier about security and I thought I'd ask again on the same topic. So, when we talked previously, you've talked about how once you got into an enterprise with sales process, there are a couple of use cases that come out of an evaluation? Are you noticing any changes at all in the interest amongst those couple use cases that come out, people gravitating towards security? Is that changing at all?

Yes, I can say that it's still preliminary, but we see the people more and more gravitating toward security. And to elaborate a bit on it, early on we were doing many evaluations, so people are doing this manual governing steps and we are showing how we are automating them. And now they're much more interested in the output. Show me my gut. Show me my risks. And not just -- and you need to justify your purchase, you don't need to show this is how many FTEs, you need to do it manually, this you can do manually.

So it's more of really a risk problem. Then show me the risk and how fast you can solve it for me. So definitely this is why we started to do the express risk assessment in them. We just -- it's more geared towards the security on how you are serving them.

And can you (inaudible) us, Yaki, again for the investments you're making in sales and marketing, what exactly are the types of investments you are making?

It's just capacity. And [shadow ]programs. And marketing and (inaudible). It's just all of them, making sure -- now we need feet on the street and leverage from the partners and know the right marketing programs, you know, just the volume and direct marketing, all of it. They all sell their marketing agent investing in all the moving parts.

Last question I have is regarding EMEA. I know there's a question earlier about this but, as I was looking back at last quarter, your comments are that France is important and that it was performing well, but it seems you're less concerned overall about the EMEA regions. So France has been strong, I'm taking it, but what else in Europe improved if France has remained strong?

UK did a good quarter, but this was our expectation. The issue is just to make sure that they have performed well quarter over quarter. You know, now we are entering a -- the third quarter, but the (inaudible) it is a bit challenging in [all], but normally there is very good business in Europe.

And we have very good UK team and we feel fairly comfortable about the EMEA business. We just want to make sure that we are doing all the right things; that it will be consistent, primarily in the UK, because it's a big market for us, we have concentration in the EMEA business, it is primarily -- you know, the UK and France are the lion's share of the revenues and we just want to make sure that we do not have hiccups with any of this market.

Thank you very much.

Michael Kim, Imperial Capital

Hi, guys. Can you talk a little bit about the opportunity in the federal sector and the CDN (inaudible) obviously a pretty broad-based program and specifically your visibility around orders under the (inaudible) for the [C-mass] aspect of it and then a follow-up behind that.

It's a big market with a lot of critical information. Now a lot of awareness to data security and data governance and we've been holding investments to be well-positioned to capture market share. So we have a good team, and -- in federal and we're investing in putting all the right resources and programs to make sure we can be successful.

And are you seeing any enhance in the urgency after the OPM breach and the cyber security [sprint]? Is the focus on the CEM increasingly or what are you seeing on the federal side?

It's still too early to say. So, you know, and this is also the most important federal quarter, so I will be able to shed more light in the next earning quarter.

Great. And then on Office 365, are these migrations primarily from existing customers or are these new customers as they migrate to Office 365 is creating an opportunity for (inaudible) to gain initial penetration with those types of customers?

You know, many, many customers are using 365. What we see is that the unstructured data, by and large, most of it is still on (inaudible) and the data that you -- it's very interesting. The data that is going, many times, to the cloud, except the [female] it's -- now that it's a new set of data, you know? It's like if you had (inaudible) there is five system in SharePoint and then, you know, five -- then SharePoint was a not very (inaudible) of data and the five [shelves], you know, grew super fast and also they did the SharePoint and this is what we see here.

It's, for us, just another platform that people collaborate and you need to protect data. So the advantage is supporting every (inaudible) device, Windows servers, UNIX servers, and Web servers and SharePoint. We also support the cloud. We just [announce] a platform for us. We are [agnostic to other] data users. We just want to make sure we add value to our customers and protect data, regardless if it's in the cloud or on point.

Great; thank you very much.

(Operator instructions)

Greg McDowell, JMP Securities.

Hi, this is Rich (inaudible) dialing in for Greg McDowell. Thank you for taking my questions. I wanted to start off again going back to geography. What happened in the rest of world geographic segment that saw revenue fall from $2.2 million to $1.8 million? And I know you said Russia's in EMEA, so what were the drivers out for that?

We are in the early innings and we have small investments in these -- we have small investments in these markets and, and it usually take us time before we have just a consistent revenues. And we need to get to more scale and more feet on the street, more distribution, I will not read into this.

Okay. Got it. That's helpful. And in terms of you guided up on -- you beat your own guidance on operating income for the quarter. You've guided up for the full year from prior operating income guidance and then EPS guidance. What's the driver here? Is this sales sufficiency and then kind of controlling headcount or are there other factors here?

No, I think that we see a path that directs that we bought two -- in the last two years will become more productive, more directed coverage of the market. So many of directs would be focused on the 1,000-plus users, but we're going to keep an invest for [growth]. And also we stopped a bit just to make sure. We always explained that we are very measured with the way that we're investing.

So want to make sure that everything working according to plan before we are keep it accelerating. And after the first quarter, we just wanted to stop, make sure that everything is -- we are operating according to our plan and we are going to keep hiring the second half. But everything we are doing we are doing in a measured way.

Okay. Great. And then just one last question and I'll jump off. But I know you don't normally -- you don't, on a quarterly basis, disclose ASP, but just looking through the math, it does look like ASP has been down again this quarter. Is there, I guess, any additional color you can provide on what's driving that?

And so the ASP was in line with the work we expected it to be. And many companies, as Yaki explained before, start small, but over time they are making large commitment to us. There are many companies that have spent with us more than $1 million of license revenue. They are just doing it in a measured way, and this is how we've built our business model to be based on a high-volume and low ASP so we are not dependent on large deals. And we're very pleased that we added so many new customers this quarter, because we know that once they are on board, the up-sales work very well for us and we are able to expand across the base.

Okay, great, very helpful. Thank you so much, Yaki and Gili.

Thank you.

And we have no questions holding at this time.

Before we end the call, I would like to thank all of the employees, customers and partners for their continued support. Thank you for joining us today and we look forward to speaking with you soon again. Thank you.

And this does conclude today's conference, everyone. We thank you for your participation. You may now disconnect.