Cobalt, a leading provider of cyber resilience solutions, reported a strong finish to fiscal year 2024 in its Q4 earnings conference call. The company saw a 10% increase in total revenue to $223 million and a significant rise in total annual recurring revenue (ARR) to $770 million, driven by robust growth in its subscription and SaaS offerings. Cobalt also celebrated achieving profitability and the successful launch of a new product, Cobalt Clean Room Recovery, while maintaining a debt-free balance sheet and substantial cash reserves. Looking forward, the company anticipates continued growth, targeting a total ARR of $1 billion by the end of fiscal year 2026.
Key Takeaways
- Total revenue for Q4 increased by 10% to $223 million, and full fiscal year revenue grew by 7% to $839 million.
- Total ARR increased by 15% to $770 million, with subscription ARR up by 25% and SaaS ARR by 65%.
- Cobalt achieved profitability and ended the year with no debt and $313 million in cash.
- The company expects total revenue for FY25 to reach $904 million to $914 million, an 8% increase year over year.
- Cobalt launched Cobalt Clean Room Recovery and completed a strategic acquisition to enhance recovery capabilities.
- The company plans to repurchase shares and lower the non-GAAP tax rate to 24%.
- Cobalt's long-term goal is to achieve a total ARR of $1 billion by the end of FY26, with subscription ARR representing 90% of total ARR.
Company Outlook
- Cobalt anticipates subscription revenue growth of 21% in FY25.
- Gross margins for FY25 are projected to be between 81.5% and 82.5%.
- Non-GAAP EBIT margins for FY25 are expected to range from 20% to 21%.
Bearish Highlights
- The company did not provide specific details on the expected ASP uplift from its cyber resilience offerings.
Bullish Highlights
- Strong Q4 performance attributed to the adoption of cyber resilience offerings and better execution in the field.
- Successful conversion of incumbent customers and penetration into new customer segments.
- The company's hybrid approach is gaining traction, offering flexibility for workload protection on-premises or in the cloud.
Misses
- There were no specific misses discussed during the earnings call.
Q&A Highlights
- Cobalt expects the integration of its recent acquisition to contribute to growth in fiscal Q2 and Q3 of FY25.
- The company is selling its technology into the C-suite budget, reflecting alignment with customer budgeting priorities.
- Cobalt is focused on building a pipeline for its cyber resilience offerings and has seen success in selling these capabilities.
In summary, Cobalt (ticker not provided) has demonstrated strong performance in its Q4 FY 2024 earnings and is poised for continued growth with a clear strategy focused on cyber resilience and recovery solutions. The company's financial health, innovative product offerings, and strategic acquisitions position it well to meet its ambitious long-term targets in a world increasingly concerned with cybersecurity.
InvestingPro Insights
Cobalt's recent financial performance and strategic initiatives are reflected in several key metrics and insights from InvestingPro. The company's commitment to share repurchases aligns with management's confidence in the firm's value, as indicated by the aggressive buyback strategy noted in one of the InvestingPro Tips. This proactive approach to capital allocation can be a positive signal to investors about the company's future prospects.
InvestingPro Data highlights Cobalt's impressive gross profit margin of 82.03% for the last twelve months as of Q3 2024, which supports the company's reported strong Q4 performance and aligns with its projected gross margins for FY25. Additionally, the company's revenue growth of 4.11% over the same period and a more robust quarterly revenue growth of 11.14% in Q3 2024 underscore the momentum that Cobalt is experiencing in its market.
Investors considering Cobalt's stock will also find InvestingPro Tips valuable, such as the company's ability to cover interest payments with its cash flows and the expectation of net income growth this year. These factors, coupled with the company's debt-free balance sheet and substantial cash reserves, suggest a healthy financial position that could support Cobalt's ambitious growth targets.
For those seeking more in-depth analysis and additional insights, the full list of InvestingPro Tips for Cobalt is available at https://www.investing.com/pro/CVLT, including 12 more tips that could further inform investment decisions. Remember to use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription at InvestingPro, where you can access a wealth of data and expert analysis to help guide your investment strategy.
Full transcript - Commvault System (CVLT) Q4 2024:
Operator: Thank you for standing by, and welcome to the comparable Q4 FY 2024 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press the star one again. Finally, a reminder, this conference is being recorded. I would now like to turn the conference over to Mike Melnick, Head of Investor Relations. Please go ahead.
Michael Melnyk: Good morning, and welcome to our earnings conference call are Michael. I'd now like Head of Investor Relations, and I'm joined by Sanjay Mirchandani from both CEO and Gary marrow, Campbell, CFO and earnings presentation with key financial and operating metrics posted on the Investor Relations website. For reference. Statements made on today's call will include forward-looking statements about combo future expectations, plans and prospects. All such forward-looking statements are subject to risks, uncertainties and assumptions. Please refer to the cautionary language in today's earnings release and conference calls. Most recent periodic reports filed with the SEC for a discussion of risks and uncertainties that could cause the Company's actual results to be materially different from those contemplated any forward looking statements. Combos does not assume any obligation to update these statements during this call, Campbell's financial results are presented on a non GAAP basis. Reconciliation between non-GAAP and GAAP measures can be found on our website. Thank you again for joining us. Now I'll turn it over to Sanjay for his opening remarks. Sanjay?
Sanjay Mirchandani: Thank you, Mark. Good morning and thanks for joining us today. Q4 was an outstanding quarter, capping a breakout year for cobalt and setting the stage for fiscal year '25 and beyond. We ended our fiscal year with continued strong momentum across all primary KPI.s highlights from Q4 include total revenue increased 10% to $223 million. Total ARR rose 15% to $770 million. Subrsciption ARR increased 25% to nearly $600 million SaaS ARR jumped 65% to $168 million. Can we close the year with over 5,000 SaaS customers, and we did this profitably. Our Q4 and fiscal year results shine a bright light on the critical role combo play in a world dominated by ransomware attacks and cyber threats. Organizations need to know that when they are hit, they can recover. This is what we empower our customers to be resilient and pickup. Our financial results speak to the multiyear journey. We started five years ago when I joined combo, I said the company had great bonds with a strong financial foundation and best in class technology, and we had a tremendous opportunity to unlock a new level of growth within the company. With that goal in mind, we reinvigorated our brand and go-to-market motion, strengthened our partner ecosystem and expanded our routes to market, and we double down on comp, of course, drives innovation. To that point, we launched a hyper-growth SaaS offering that is one of the fastest growing of its kind in the industry today. And we transformed our business model from legacy perpetual, the modern subscription and SaaS. We did all of this while focusing the company to sustainable and profitable growth with some notable results over the past three years. Since fiscal year 22, total ARR increased at a 15% CAGR subscription ARR grew at 31%, CAGRr and ARR from a hyper-growth SaaS offering more than tripled. We consistently delivered profit margins of 20% or better. We generated over $500 million of free cash and returned over $600 million of cash to shareholders through stock repurchases. I'm extremely proud of what we've accomplished and would like to thank our customers, partners and employees for their trust and commitment to cobalt. Our job is only getting more excited. In November, we shifted our company and everything. It represents the cyber resilience. As I alluded to previously, the biggest challenge organizations face today, the unrelenting breadth and scale of cyberattacks. We're talking automated, intelligent and state-sponsored attacks. These attacks with immense pressure and CSOs, the C-suite and the Board to rapidly recover and be resilient. This is exactly what we enable with a combo of cloud cyber resilience platform, Sucampo cloud. We offer autonomous recovered so that customers can recover the environment at scale, customers can proactively perform health checks and detect anomalies and threats. They can utilize our AI technology to enhance the recovery process, and they can secure and recover their data across any workload, any infrastructure and from any location to any location, all at the lowest possible TCO. one of our marquee clients this quarter is Albertsons (NYSE:ACI) Companies, a Fortune 100 grocer that migrated the retail. I wanted to strengthen the cyber resiliency, amended combos, unique and differentiated platform to provide additional security recovery, workload protection and cloud integration. Last year as a particularly difficult year for hospital systems as cyber and ransomware attacks nearly doubled with the risk of an attack. Top of mind, a large network of hospitals in Latin America was concerned about their ability to recover from a cyber attack with Catapult. They have peace of mind that they can easily and quickly recover, have hit with one platform. They can manage their on-prem remote and cloud data, and we protect an immutable copy of the data, which is critical for recovery. These are just two examples of why we're winning in the market and are frequently chosen over competitive offerings. But we're not stopping there. We're taking recovery even further with Kampo clean room recovery. Yesterday, we announced how this new and unique offering empowers organizations to be ready to recover. By providing a clean, isolated and on-demand recovery location in the cloud, they can spin up as many workloads have been. Clean-room. Recovery also enables users to proactively to the response plans so they can quickly recover when bad actors Striker building on these unrivaled capabilities. two weeks ago, we closed on the acquisition of a products. With this technology, customers will be able to rapidly discover, rebuild and get that critical cloud applications and production infrastructure fully operational as an outage or cyberattack with the dynamics and public clouds. This rebuild will take minutes or hours rather than days or weeks after all in the unfortunate event of an attack time is money by marrying tar balls, extensive risk readiness and recovery capabilities with the product is cloud native mobile capabilities. We help customers shorten recovery times after and attack. This takes cyber resilience to a whole new level. In closing, I believe we are the best company with the best people and by far the best platform for cyber resilience in the industry with cabo cloud, we believe that we can offer the most comprehensive enabled platform for CSOs and CIOs to work together. It was engineered with a hybrid enterprise and mine to enable customers to manage their resilience across any workload environment. All cash available as software SaaS or both. That way if our customer suffer an attack, we helped us to confidently and quickly recovered their business and stay resilient. We believe fiscal year 25 will be zero year for cobalt to continue accelerating our growth. With that, I'll turn it over to Gary to discuss the numbers and provide more insights on our forward outlook. Gary.
Gary Merrill: Thank you, Sanjay. As Sandy mentioned, we closed the fiscal year with strong momentum with all of our key primary metrics coming in ahead of expectations. Our cyber resilience platform and related messaging is resonating in the market in our team, executed in the field, driving another quarter of double digit revenue growth. I'll recap Q4 and full fiscal year '24 results before discussing our outlook for fiscal year '25. As a reminder, all growth rates are on a year-over-year basis unless otherwise noted, total revenue grew 10% to $223 million, driven by a 27% increase in subscription revenue, which now exceeds 50% of total revenue. Subscription revenue growth was fueled by increased contributions from our saas portfolio and solid double digit growth in term software licenses. Our software revenue growth reflected a healthy balance between renewals and our strongest land and expand quarter of the fiscal year. Once again, we saw improved close rates in over $100,000, increased 13% as we close and accelerated volume of larger deals. From a geographic perspective, the Americas and International region had strong performance with those regions posting double digit term software growth. Our Americas region delivered its best new customer acquisition quarter of the year as our cyber resiliency platform gained additional traction in the enterprise market. Q4. Perpetual license revenue was flat sequentially at $15 million as perpetual licenses are generally sold in limited verticals and geographies. We expect the headwinds from perpetual license sales to diminish in fiscal year '25 and beyond. Q4 customer support revenue, which includes support for both our term based and perpetual software licenses, with $77 million flat sequentially and year over year. For the full year. Customers for revenue from term software and related arrangements accelerated to 47% of total customer support. This compares to just 40% in fiscal year '23, and we expect customer support revenue from term-based software licenses to become the majority of our customer support revenue in fiscal year '25, driven by the attach on term software license growth. Now I'll discuss ARR. Q4 total ARR was $770 million, an increase of 15% year over year, which reflects the underlying strength of our business when our revenue was presented on an annualized basis, subscription ARR, including term-based licenses and SaaS contracts, grew 25% year over year to $597 million. This includes $168 million of SaaS ARR, which jumped 65% from a year ago. On a quarter over quarter basis, Q3 to Q4 SaaS ARR growth was impacted by $2 million of foreign exchange headwinds as the US dollar strengthened primarily versus the euro in fiscal Q4. On a constant currency basis, we added approximately $18 million of net new SaaS ARR in both fiscal Q3 and fiscal Q4 as the underlying strength of our SaaS business continues. New SaaS ARR contributed two thirds of our total ARR growth for the full fiscal year 24, and that there are now represents 22% of total ARR compared to just 15% a year ago. From a customer perspective, existing customer expansion was strong with Q4. Saas net dollar retention of 123% being benefited by both upsell and cross-sell activities. Now I'll discuss expenses and profitability. Fiscal Q4 gross margins were 83.2%, an increase of 30 basis points sequentially, reflecting the healthy mix continued SaaS gross margin improvement. Fiscal Q4 operating expenses increased 13% to $139 million, reflecting higher year-end commissions and bonuses against a record revenue quarter. We ended the quarter with approximately 2900 employees, which was flat sequentially and an increase of 4% year over year. Non-gaap EBIT for Q4 was $45 million. In non-GAAP EBIT margins were 20.2%. Our Q4 free cash flows grew 18% year over year to $79 million, reflecting continued growth in SaaS. Deferred revenue and strength of our Software and Subscription business typically include upfront payments on multiyear contracts. In Q4, we repurchased $50 million of stock under our repurchase program. Now I'll discuss the full year fiscal '24 results. Total revenue increased 7% to $839 million, driven by double-digit growth in the second half of the year. We are pleased with the acceleration in total revenue growth throughout the fiscal year, and we expect our business momentum to continue into fiscal year '25. Subscription revenue increased 23% to $429 million, crossing over 50% of our total revenue. Fiscal year '24 operating expenses were 61% of total revenue compared to 62% in the prior year, demonstrating operating expense leverage in our responsible growth model. Full year. Non-gaap EBIT grew 11% to $177 million. Non-gaap EBIT margins improved 70 basis points to 21.1%. Moving to some key balance sheet and cash flow metrics. We ended the quarter with no debt and $313 million in cash with approximately $100 million in the United States. Full year fiscal '24 free cash flows improved 20% year over year, reaching the milestone of $200 million. For the full fiscal year. We also returned $184 million to shareholders as part of our share repurchase program, representing 92% of free cash flow. Our average price of shares we repurchased during fiscal year 24 with $74. Now I'll discuss our outlook for fiscal Q1 and the full fiscal year '25. With our subscription software evolution can complete, we are now focused on accelerating our total revenue growth rate while continuing to generate strong free cash flows and provide. For fiscal Q1, we expect subscription revenue, which includes both the software portion of term-based licenses and sense to be $116 million to $119 million. This represents 21% year over year growth at the midpoint. As a result, we expect revenue to be $213 million to $216 million with growth of 8% at the midpoint. At these revenue levels, we expect Q1 consolidated gross margins to be in the range of 81% to 82%. We expect Q1 non-GAAP EBIT margins to be in the range of 18% to 19%. Q1 operating expenses will include approximately 200 basis points of investments related to Ally fiscal year sales kickoff that occurred earlier this month. And our normal appearance at the RSA Conference in May to the West did not incur in the prior year. Our projected diluted share count for fiscal Q1 is approximately 45 million shares. Now I wanted to give our initial outlook for the full fiscal year '25. We expect fiscal year '25 total ARR growth of 14% year over year. We expect subscription ARR to increase in the range of 21% to 23% year over year. From a revenue perspective, we expect subscription revenue to be in the range of $514 milion to $518 million, grown 20% year over year at the midpoint, with strong contribution from both term software licenses and SaaS. We expect total revenue growth to accelerate and be in the range of $904 million to $914 million, an increase of 8% at the midpoint. Moving to full year fiscal 25 margin EBIT and cash flow outlook, we expect gross margins to be in the range of 81.5% to 82.5%, inclusive of the accelerating contribution of our SaaS business. We also expect non-GAAP EBIT margins to be in the range of 20% to 21%, including a Q1 event costs that did not occur in the prior year. And seven focused investments to accelerate our revenue momentum. Operating margins to be seasonally stronger in the second half of the fiscal year. Compared to the first half, we expect full year free cash flows of at least $200 million. Our Board of Directors recently increased the authorization on our share repurchase program to $250 million. We expect to continue with our existing practice of repurchasing at least 75% of our annual free cash flows in fiscal year '25 w e are also lowering our non-GAAP tax rate from 27% down to 24%. We believe that a 24% hit rate expectations over the next few years. Given the current cyber market tailwinds, the predictability of our large and growing subscription revenue base and our execution momentum in the field. I'd like to discuss our next major milestone. Today I'm excited to share that as we exit fiscal year '26, we expect to see total ARR of $1 billion with subscription ARR representing 90% of total ARR, including an accelerating SaaS contribution ranging from $310 million to $330 million. For additional details and trends on all of our key metrics, please take time to review our investor deck contained in the investor relations section of our website. Operator, you can now open the line for questions.
Operator: [Operator Instructions]. Your first question comes from the line of Aaron Rakers from Wells Fargo (NYSE:WFC).
Aaron Rakers: Yes, thanks for taking the question and congrats on the solid results. I'm curious as we as we think about the guidance that you've given for the full year of on your ARRI., particularly with the subscription side, I just the growth in subscription in general, how would I characterize the renewal opportunity, right? Relative to the kind of the new subscription growth that you're expecting? Any kind of framework of the base of renewables relative to new would be would be helpful clarity of our fixed bearing?
Gary Merrill: It's Gary. Good morning. I think thanks for joining us on. I'll start off and take your question. And yes, we're really pleased and excited about the momentum that we had in the business and looking forward to accelerated revenue growth of net revenue growth will be driven by subscription revenue. As you know, that contains both our software and SaaS in that. And with the momentum that we see, we will see a balanced contributions between our land-and-expand business and our renewal business. And we will see incremental renewal tailwinds again in fiscal year, not to the extent that we necessarily solve in fiscal year 24. Okay. They are they will start to normalize as we get into' 25 and beyond, especially since our term, our average terms are down around about two years now. So the consoles will go up, but the percentage increase will be less than we thought of in FY24. And we think that most of, you know, strong balanced between land-and-expand anywhere else.
Aaron Rakers: Yes, yes, very helpful. And then as a quick follow-up, I'm just curious when I unpack the guidance for the full year in the prepared remarks, you talked about kind of a diminishing headwind related to the perpetual business in the mix shift towards subscription component or term within the customer support power. Like when I look at the guidance, it looks like you're implying maybe a 4% or 5% decline in those combined, call it mature slash declining the new pieces of revenue over the last year. I feel is that conservative? What would we expect that that's not how much conservatism you're baking into that? Those pieces of the revenue guide
Sanjay Mirchandani: With the tailwinds we've seen are starting to diminish, I think thinking about somewhere between flat and low single-digit decline, Aaron's (NYSE:AAN) kind of what you see reflected in our guidance. So I would expect that perpetual business headwinds were now and that run rate of, you know, $12 million to $15 million a quarter. We expect that customer support line to be that low single digits, probably hovering around roughly a $300 million for the full year. So what you'll see is those tailwinds now have essentially been eliminated and is there more roughly flattish to slightly down. So that's basically what we see and that's what's implied within the guidance.
Operator: Your next question is from the line of James Fish from Piper Sandler.
James Fish: Thanks for questions and great and the fiscal year, congrats on how much of the additional investments as we're looking at our margins kind of coming down. Understanding there's some of that stuff here that you guys have historically not participated in, but you guys are getting more active in which case I'm sure you're seeing I'm not in a new CMO is pleased about, but how much of the additional investment are more on the indirect channel side? And how should we think about the percentage of the business coming via is indirect sources? Now?
Gary Merrill: It's Gary, I'll jump in and take this one as well. So from from a margin perspective, and what we've guided to was roughly say, flattish in the guidance, and we continue to see that acceleration on the top line in place. So you'll see the impact from the from the SaaS business. Our metallic business continues moved to accelerate and that Hydro down propelled them a slightly different margin profile, which we which we absorb. And then when you move down to our backs and some of the investments, a good chunk of the investments are what I what I call it out on the prepared on the prepared remarks you guys as it relates to some of these events, especially, we're excited to up to attend our site just early next early next month. And when you move past some of that partners and the ecosystem is a huge focus area for us that during the year, some of the work that we're doing in the ecosystem, especially with the hyperscalers and actually tied to some of the clean room up functionality and announced that we made should really start to propel momentum and ecosystem leverage for us as we go. So it's not only the hyperscalers, but it's also the alliance partners that are out there as well as leveraging security partners in building the integration with the security partner in this port security partner. It does system. So just if you could call it that you have is that that investment and focus into the ecosystem is a big driver for us in FY25.
James Fish: Makes sense on just a quick hallmark. one, continue to go over any contribution from U.S. plastics in fiscal 25. And Vijay, first, you obviously a big merger occurred towards the end of your fiscal year. What are you guys seeing from that combination at this point, from either a customer angle or a partner and goal in terms of the impacts to Copart (NASDAQ:CPRT) two combo?
Gary Merrill: I'll take off and we give it some of the others. So first as it relates to operating. So we're actually really excited because it gives us optionality and brings us even further into the world of cyber resiliency, guys. It's a young company. So within I'm not a lot of not as employees, probably about 25 25 customers. So as we start to build through that integration here pretty quickly, we'll start to see contribution probably, you know, in fiscal Q2, fiscal fiscal Q3. But fundamentally, what it helps us do is really built bringing rebuild into the combo cloud is a major your competitive differentiation for us because as a customer rebuilds from a ransomware attack going from recovering your data to rebuilding and recovering your applications is a game changer. We think in this environment.
Sanjay Mirchandani: Yes, for the for the merger that I think you're alluding to on it date was announced. We got calls from prospects who are existing incumbents for them and asking us to sort of help them understand what the optionality was. Since then we've converted several of those from incumbent customers at the competitors over onto onto our platform. And there are many more in the pipeline. In fact, partners partners feel alienated on this and have come to us asking us to serve with regard to new ways to work with them into and with their customers tomorrow, we're going to you're going to see of a campaign that's going to be quite good as they go to customers between us and a partner, really helping them move away from from from the competitor. So it's all good for us. We see it as an opportunity. There's a lot of uncertainty and uncertainty doesn't make customers safe. And so we're going in the combo cloud and really helping customers to see a safer future.
Operator: Your next question comes from the line of Howard Ma from Guggenheim Securities.
Howard Ma: Great. Thanks, Sanjay. Can you talk about how compound cloud, how the portfolio can you talk about the portfolio and demand drivers and how and how that will continue to evolve as you march towards your fiscal 26 targets that you laid out today? In particular, some of your peers in this space tended to prefer a cloud-first approach. If you compare that with cabo strategy of giving customers more flexibility in terms of where they choose to protect their workloads, whether it's on-prem or cloud, can you talk about how important is this hybrid approach to achieving our long-term targeted? Thanks,
Sanjay Mirchandani: Great, for good therapy to Howard. So you know, the way we are looking at the next eight quarters and beyond is about the customer and putting the customer safety. First, our entire capability, even company, which was originally data protection, has pivoted and been enhanced food and combo cloud for cyber resilience. And at the heart, cyber resilience is a customer's ability to recover in the face of an attack. So we continue to flesh out our capabilities and we don't separate out artificially like some of our competitors do on-premise workloads from cloud workloads because eventually in the hybrid world, workloads will move and they will live in different places at different times and in different clouds. We think that the heart of everything we do with a hybrid foreclose, the broadest breadth of workload that a customer could ever think of we will cover events. If you look at the architecture that we have, it decouples storage, you know, from well under control plan, and that gives customers that additional capability of being able to run anywhere right anyway, that is what matters. And that gives them more insulated more than if it makes their their architecture more insular and more secure. So between the architecture and the amount of innovation reporting into the amount of innovation we're putting into our backup compounds are platform. All of this will keep us newbuilds that as we move forward, we will be the question about, you know, plus first versus not everything we do is place. We've moved over four exabytes of data conservatively in the last couple of years into the public cloud, okay? Our ability to do things in the cloud is second to none because we use native capabilities. We don't stage and we don't move things into an appliance before we move into the cloud, like some of our competitors do. So we're very confident on the architecture. We're very confident that everything we do ends up somehow in the cloud architecture was read builds through metallic incomparable cloud over the last couple of years to be totally cloud-native. And with the acquisition of a products, we take cloud native to the next level with application level care rebuild of which makes our resilience portfolio even richer. So probably more than you wanted, Howard, but you'll see why we're so excited about about where we're going with this.
Howard Ma: Thanks, R.J. I mean, I think we always want more data center or from. Can you talk a little bit more about the product acquisition just mentioned to me, it seems like the ability to rebuild upon applications and configurations seems pretty unique in, if you will, a product we use, I guess, going to be used most with the most commonly used third parties that applications United, I guess salesforce ServiceNow (NYSE:NOW) and Workday (NASDAQ:WDAY) is the world or is it more for custom apps or the Boston? And if this will be, will this be a standalone skew or just integrated into the platform?
Sanjay Mirchandani: So it 's the latter is the complexity comes with it. So our core our core SaaS metallic platform covers a lot of these ready-made, if you would SaaS apps out there, right? So we know how to do those. But at the offices of the world for dynamics or what have you so that that goes through a more standard ability for us to protect with with cloud native apps as customers migrate more and more of the app into the cloud, managing those apps and giving them the level of resiliency and ransomware protection that we could get a more traditional apps gets harder and they use native cloud, native cloud native capabilities as they move their workloads into the cloud. What chronic study is discovers. All of those assets that they have that make up an app tells you a very clearly what is and isn't protected brings it into the fall. And then whether you're doing it for practice or you're doing it for real allows you to rebuild that application step-by-step very quickly. It's, you know, cloud-native apps can be tend to be persistent and less Couple, if you will have been traditional apps now to where it really where the rubber really hits the road. Howard is, you know, in our experience, and we've done this many, many times when our customers breached and this is trying to recover from at a time about a third of it, the time roughly plus minus is on bringing back the data. And once we've got good clean validated data from us, they spent roughly two thirds of the time beyond that, bringing back apps and verifying apps. And now with this capability with chronic, we hopefully can give them an end-to-end solution on the platform with resilience and ability to bring back their apps of very quick. Now the way it's going to be delivered to market for the through the summer. It's going to be as agile as it is available at all in it as basically two SKUs today, you can either take a basic scenario where you can take an enterprise-grade skew when and roll it out. It's very simple itself discovered that runs the field. And over the course pass to some are we going to bring more of the the combos Magic Intuit (NASDAQ:INTU) and enhanced more of the capabilities. We've got a very rich roadmap in front of us. I'm going to talk about it right now. But rest assured that lifecycle management and policy applications around broad datasets when you're trying to rebuild apps will definitely make its way into the product.
Operator: Your next question comes from the line of Eric Martinuzzi from Lake Street.
Eric Martinuzzi: Yes, I wanted to better understand the outperformance in your Q4. It sounds like you're just basically versus what you're expecting for Q4. We had a little bit better performance or maybe execution on the term agreements side of the subscription. But could you narrow that down maybe by geography or vertical eight points to call out there?
Gary Merrill: Hey, Eric, it's Gary. I'd like to talk to you this morning is related to Q4. And as you mentioned, we're really pleased. There was there was an amazing quarter for us, capped off a really strong year, okay. And we saw immediate benefit from some of the cyber resiliency offerings that we announced. Going back to our shift event that we had this past November, we announced kind of our platform approach with a few different tiers and and expecting that some of the benefit from our new cyber resiliency, packaging pricing and functionality. And we saw immediate benefit in the quarter. So very pleased with how quickly our customers are adopting that functionality and what it's doing to help drive us predictability and momentum in the business. You tie that with better execution in the field and our execution been in close rates and ability to deliver against numbers end up and close against the qualified pipeline ends up in a very strong quarter. From a geographic perspective, we saw performance across both regions, both our Americas region agents as well as our European region. And if I had to call out one thing in specific, the penetration we saw in the Americas on new customer was all of the strongest quarters we've had in quite some time.
Eric Martinuzzi: Okay. And then taking that Q4 performance. And then just looking out into 2025 outlook, the pipeline, I hesitate to kind of boil it down into a world of the DR versus cyber resiliency button. What are you seeing in the pipeline as far as maybe cyber resiliency as a per
Sanjay Mirchandani: This is Sanjay. It's I don't think we're at this point releasing the mix shift. But the way I like that characterizes system are in really three states fundamental of their assets, their data assets and even application assets, moving that to a highly automated DR capability and scale capability to be able to start just by bringing back your workloads is about bringing them back, verified scale. So can you kind of automation, AI capabilities and then extending that all the way to the ultimate sort of capability, which is recovering from a cyber resilience? We really believe in cyber resilience to have a foolproof recovered. Now that also means that you connect back in on the perimeter partners on the defense side effects. And so it's a deep integration of security capabilities, AI capabilities in automation and obviously our core, which is about our ability to win back customers to life in the two through protection. So, you know, it's early for us in if you would in a in a skew, you are product based delivery model. But needless to mention, every customer we speak to want to be on the right-hand side of that of that capability with the cyber resilience, our goals with our partners is to move them through that journey just as fast as they are capable of absorbing what it takes understand.
Operator: Your next question comes from the line of Jason Ader from William Blair.
Jason Ader: Thank you. Good morning, guys. two quick questions. one is some do you expect a term to grow double digits in FY25? And then the second question is just on the data security Splash, cyber resilience, branding. And I know you guys have had pushed this concept as well as rubric and others. Are you starting to see more of your technology being sold into the C-suite budget versus the CIO. budget? In other words, is the branding aligning with the reality of how customers are actually budgeting for your technology?
Gary Merrill: Yes. Jason carry out with the first one, and I'll pass over to Sanjay to talk about your of your second part as it relates to contribution in FY25, we built now a very repeatable business model with recurring revenues function. And so with that, that will get contribution from within that subscription line, we will get strong contribution from all three resorts that those sources would be our renewal business. Our land expand business on the terminals and the highest level of acceleration will be tied to our SaaS business. You'll be able to model it. If you just kind of take a look at our saas ARR where we end of the year looking at a pretty good sense for what our SaaS contribution will be, which would be very strong again. But it will be complemented with them with good growth from the term software licenses as well and Saga pass it to you on the second part .
Sanjay Mirchandani: So the short answer is yes, absolutely CSOs, um, we have vested more see sales in the last six, seven months and probably the prior two years only because their requirements have increased. And it's not just about perimeter security. It is about recovery. And recovery traditionally has lived with IT. So Ofcom, all cloud platform, bridges. And we think a very unique and what we do, the needs of a classic Cecil organizations, responsibilities with a classic IT infrastructure organizations, responsibly the data protection, we bridge the two. We also have rich CIS and non-CIS, which is very important to capabilities. You need more unification. We also integrate with the perimeter with the lifestyle of Palo Alto (NASDAQ:PANW) with a lot of dark Tracy, we integrate with their capabilities so that their intelligence is that into our capability that our intelligence has been impacted. But there's so it is a unified platform for both security organization and the IT infrastructure organization in most companies, and that is very appealing. So it's not a pivot on one side of the other recovery as a team sport when you get paid and time is of essence, we believe are the only platform with the capability to get that out to get customers back up. It was last year.
Jason Ader: And then just a quick follow up to Sanjay. Do you foresee the industry starting to see consolidation? Peter, between kind of your line of business is open backup and recovery and and cyber resilience with more traditional security companies who some of our the on the Symantec (NASDAQ:GEN) Veritas, you know, a decade ago concept.
Sanjay Mirchandani: I don't think I'm following your question for you, but perimeter security, IT consolidation by what we call legacy backup convergence between security vendors and traditional backup vendors. Yes. So there is no resilience without core security. So over the years, we have filled all all of the required zero Trust type market. Taxes plus plus plus into our technology to make the data that we protect more secure and more verifiable undercover. What we've also done, which I think is unique to us to us is what are competing with the traditional security players were integrated with the traditional security players because that is therefore take. But the recovery is a team sport, like I said earlier, and you need to have the intelligence to make sure that the data that shows that to restoring this recovery is actually clean is actually the way you wanted. And so that having the threat intelligence out of the risk assessment and having all of that integrated into our capabilities with partnerships and some of it, our own makes the platform more robust than anybody else. And we know what we're really good at and we're going to and we protect customers' data in a difficult world. We said that for many years, and we continue to put that at the heart of what we do. That doesn't mean we don't partner.
Operator: Your next question comes from the line of Rudy Kissinger from D.A. Davidson.
Rudy Kessinger: Yes, thanks for taking my questions and congrats on the strong numbers here. I know it's still early with cyber resilience, but could you talk about maybe the expected ASP uplift, you know that you expect in some of these deals? And in when this year, should we maybe start to see some material contribution from new business standpoint from cyber resilience?
Gary Merrill: It really is very good morning, and thanks for and it's still early for us. So we're not right at the point where we're going to start giving maybe specific contribution in uplifts. I will say though, that during the quarter, we already sold hospices. So our results for its reflect contribution as well in some of our own results relative to export patients are related to that to the that contribution. And we're building pipeline. And that's the key point. And it's more about building the pipeline and built and taking our customers through that journey from where they are today to ultimate cyber resilience. So it's not just you go from here to there. It's a journey and we can do there that multiple ways they can build that over time. We have other bundling and packaging options that they can go straight there. And with some of the functionality we released with like cleaning room technology today, right, we're giving them the opportunity to build that on through through that journey. But maybe Sanjay pathway.
Sanjay Mirchandani: I'll just give you a an observation of data appointed customers that have been reached completely gravitate towards the cyber resilience, messaging and capabilities because they know what it takes to recover and it is hard. So are our cyber resilience capabilities in the platform, CIS and non-CIS a very appealing. We'd like Gary said, we've already seen some success. The pipeline is building and all the conversations we're having with customers gravitate towards how fast can we get to be really resilient. And that comes with two things are an incredible ability to recover, which which we bring to the table. And with our unique innovation on clean-room, it's our capability, as Gary mentioned, your ability to test your readiness as often as you walk across all workloads so that you are truly ready for that, that attack if it happens. So again, it's a it's not yet the packages newish, but the desire and customers and understanding of where they need to be isn't that especially when different. Rich.
Operator: And that concludes today's Q&A session. Now would like to turn the conference back over to Mike for closing remarks.
Michael Melnyk: Thanks, Balu, for those. For those of you who will be out at RSA in San Francisco, we're going to have an exciting boots with exhibitors, and we'll have our executive management team present as well as the number of our field personnel. So we hope you can join us at RSA next week. As a reminder, a recap of the call, we have a presentation posted on our Investor Relations website, and you can reach out to me with any questions. Thanks for joining today, and we look forward to speaking with you soon.
Operator: This conc ludes today's conference call and enjoy the rest of your day. You may now disconnect.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.