Q1 2025 Earnings Summary
- Integrated Cyber Resiliency Offering: The company’s cyber resiliency platform, which unifies cyber recovery, autonomous recovery, and SaaS-based capabilities like Air Gap Protect and ThreatWise, delivered strong pipeline momentum in Q1, supporting a bullish view on future ARR growth.
- Robust Cross-Sell & GRR Improvement: There is clear evidence of expansion in cross-sell opportunities—shifting from approximately 25% to 33% of expand revenue—and a strengthening gross renewal rate, both of which indicate growing customer stickiness and revenue expansion.
- Positive Customer and Market Sentiment: Ongoing conversations with enterprise CISOs/CIOs around resilience—with feedback intensified post-incidents like the CrowdStrike outage—underscore demand for the company’s integrated, secure cloud capabilities, supporting long-term market penetration and growth.
- Uncertain Dell Partnership Progress: The Q&A highlighted that while the company announced a collaboration targeting the Veritas installed base, no significant milestones have been achieved yet, posing concerns that the expected benefits from the partnership may take longer to materialize.
- Subscription Revenue Volatility: Analysts noted a sequential drop in subscription guidance due to a smaller renewal pool and changing deal durations, creating uncertainty over the stability of recurring revenue near-term.
- Delayed Returns from Strategic Investments: Investments in targeted areas such as government verticals and the Asia Pacific region are still building out, which could delay revenue contributions and impact short-term profitability.
-
Cyber Resilience
Q: Contribution of cyber resilience this quarter?
A: Management explained that their integrated cyber resilience offerings—such as ThreatWise (which doubled year-over-year) and Active Insights—have driven increased customer engagement and uplifted deal ASPs, underscoring the momentum in this area. -
Dell Partnership
Q: How is the Dell relationship progressing?
A: Management described the Dell initiative as a long-term effort focused on the installed base, with steady ramping and successful proof-of-concept engagements, though meaningful milestones are expected gradually. -
Subscription Outlook
Q: What drives subscription guidance?
A: Management raised guidance on the strength of the SaaS segment, noting that balanced contributions from renewals, land and expand opportunities, as well as a shortening of term deals toward 2 years, are bolstering subscription performance and improving gross renewal rates. -
Metallic Cross-sell
Q: How robust is our cross-sell performance?
A: Management pointed out that cross-sell opportunities have increased from around 25% to about 33% of expand revenue, driven by solid growth in new, cloud-based workloads. -
Macro Impact
Q: How did macro conditions affect resilience deals post-downage?
A: Management noted that, even following the CrowdStrike incident, customer focus on resilience remained strong, with a healthy pipeline and a consistent push toward secure cloud solutions despite the challenging macro environment. -
Gov/APAC Investments
Q: What about government and APAC market investments?
A: Management highlighted key moves such as achieving FedRAMP High certification and expanding access via partners like AWS, while modest growth in the APAC region is expected to yield long-term benefits. -
Legacy Displacement
Q: Has the pace of legacy displacement changed?
A: Management stated that legacy displacement remains steady, driven by ongoing installed base refreshes irrespective of broader cybersecurity trends.