Mimecast Limited
Q3 2021 Earnings Call Transcript

Published: 3 Feb 2021

[Operator:]

Ladies and gentlemen, thank you for standing by and welcome to the Mimecast Q3 2021 Earnings Conference Call. At this time all participants are in a listen-only mode. After the speakers presentation there will be a question-and-answer session. I would now like to hand the conference over to your speaker today Robert Sanders, Director of Investor Relations. Please go ahead sir.

[Robert Sanders:]

Good morning. Welcome to the Mimecast earnings call for the fiscal third quarter 2021 ended December 31, 2020. I'm Robert Sanders, Director of Investor Relations. With me on the call this morning are Peter Bauer, our Co-Founder, Chairman and CEO and Rafe Brown, our CFO. Today's call is being broadcast live. A replay of this call will be available after the live call has ended.

[Peter Bauer:]

Good morning everyone and thank you for joining us. I hope you and your family is safe and well. It's been a busy quarter for Mimecast and we’ve got a lot to cover today. Before I discuss our results I want to frame at a high level how we are thinking about the future. We continue to navigate the ongoing impacts of the pandemic which is not yet stabilized as we hope for back in the spring. We are working quickly and hopefully to address our recently disclosed cyber incident and we are still in the early innings of our long term strategic plan. And we remain confident and excited about capitalizing on the opportunities ahead. Of course may not initially come as fast as we had expected pre-pandemic we will continue to invest in the right areas to achieve the growth that we know Mimecast is capable of. We also continue to demonstrate the financial leverage that is inherent in our business model through expanding free cash flows. The fundamentals of that model 98% recurring revenue, industry leading retention and high gross margins remain intact. These fundamentals have contributed to our achieving an exciting milestone as we crossed the $0.5 billion revenue run rate.

[Rafe Brown:]

Thank you Peter. I am pleased to report that we exceeded the high-end of our guidance for revenue, adjusted EBITDA and free cash flow for the third quarter of fiscal 2021. Our results demonstrate our ability to deliver both topline growth and bottom-line margin expansion even amidst a challenging operating environment. Before I jump into our financial results for the quarter. I would like to take a moment to review the financial implications of the reduction in force Peter mentioned. First and as you will see when we get to our initial guidance for fiscal ‘22 in a few minutes I would like to reiterate that we remain committed to driving topline growth and expanding margins and cash flow in FY ‘22 and beyond. Second, as Peter outlined while we are eliminating approximately 80 roles today we will be reinvesting some of the savings in growth initiatives that we believe will enable us to reach more customers from both go to market and product perspective, as well as to continue to improve our systems and processes to drive further efficiencies in our business. And finally, please note that these headcount reductions will result in a restructuring charge of approximately $3.7 million in the fourth quarter of fiscal ‘21. Let's now turn to the third quarter results. First, a note on the continuing impact were seen COVID-19. As we have said on our prior earnings calls the pandemic has had a significant impact on our core geographies. Our efforts to protect our customers, support our team and derisk our business have helped us to navigate this challenging period despite our customers facing an uncertain operating environment and tight budgets.

[Peter Bauer:]

Thanks Rafe. It's always been Mimecast DNA to change and it how we’ve been able to grow and thrive for the last 18 years and it's how we will achieve our vision for the future. We have the talent, tenacity and long-term commitment needed to power the next evolution of our business and we are confident we will deliver. In the near term, we remain nimble continuing to prioritize our customers and taking actions to rebuild towards the higher growth rates we know we capable of delivering. Now operator if you would please open the line for questions.

[Operator:]

Thank you. Our first question comes from Matt Hedberg with RBC Capital Markets. You may proceed with your question.

[Matt Hedberg:]

Great. Thanks for taking my question guys. Peter, I wanted to ask you a little bit about the compromise. Maybe I missed at the top of the call but could you maybe provide more details about the number of customers that were actually impacted by this versus the potential number and then kind of thinking longer term, could there actually be of benefit to you guys from the solarwind screech in terms of customers turning to Mimecast for additional third-party email protection, things of that nature.

[Peter Bauer:]

That's good question. Thanks Matt. Okay. So I think what we discussed was in the initial statement was a five or so customers had been targeted by this and we put out subsequent statements. I would encourage you to go and look at our blog and the things we said a publicly. We don't have anything additional material to ship beyond that. But we did as you know go out more broadly to our customer base with some precautionary actions for them to take, another ongoing and continue to be successful. I think broadly speaking when we look at what this represents clearly there is a significantly elevated threat level in the world particularly elevated threat level around public sector and government as a result of this threat factor. What I think it has shown us is that cyber security really requires transparency and teamwork amongst vendors and we continue to be very committed to that and email remains a very significant threat factor for organizations. So I think it really underlines and underscores the importance of the work that we're doing to help customers in particular protect their very significant investments in collaboration environments like Office 365.

[Matt Hedberg:]

That's great and then the other thing that stood out to me I mean you called out the Symantec replacement of the large deal win there. I'm curious which is your largest win ever which is great to hear, could you talk a bit about that Symantec momentum? I think we've all thought that it could be a pretty significant and really long-term tailwind to the business as deals come up for renewal but maybe just a little bit of an update about the broader trends that you're seeing within that opportunity beyond this obviously very large deal?

[Rafe Brown:]

Yes. Thanks this is Rafe. I will start off on this one at least. We are encouraged by the business we're seeing from formerly Symantec customers heading our way when you look year-over-year on for the quarter or even a year-to-date basis it has shown a nice uptick and we continue to be encouraged by what we're seeing in the pipeline. So I think some of those things we talked about long-term contracts that they had with Symantec and setting us up for a renewal or an opportunity when those contracts come up for renewal that is starting to come to pass and that's been helpful.

[Matt Hedberg:]

Thanks Rafe.

[Operator:]

Thank you. Our next question comes from Catharine Trebnick with Colliers. You may proceed with your question.

[Catharine Trebnick:]

Thank you for taking my question. Could you dive in a little bit more into email 3.0 to an email 2.0 as far as the opportunities are evolving and how they lay out and that's what landscape? Thanks.

[Peter Bauer:]

Yes. For sure Catherine. So in the context of our email security 3.0 strategy which is really the framework that we've been working to communicate to customers about how to think about email security and messaging security generally in the modern threat landscape. It's really breaking that down into three zones; Zone 1 being our classic perimeter environment and we've had tons of additional innovation and investment around that and that continues to be a significant opportunity out there in the market. I think with the TDP product and that in Zone 1, we added 800 new TDP deals in this last quarter. So I think that's an important sort of anchor on the story. Then when we look at Zone 2 those are really important inside the perimeter capabilities looking at lateral movement of threats inside the email network, identifying vulnerabilities in terms of the human layer with our awareness training product some of the new innovations that we've delivered around things like safe phish that really enhance the phishing simulation capabilities to make them much more representative of the actual threat landscape today. So those Zone 2 products really important for customers and again in this quarter strong uptake there with 800 new IEP purchases and 600 new awareness training purchases. So that's a really strong part of our email security emerging email security 3.0 play and then of course in Zone 3 some really important capabilities in what we talk about is beyond the perimeter and I think DMARC really is starting to become a must-have capability for all organizations in this quarter. We added 200 new customers paying customers to our DMARC solution. So it's a great framework. It's an important framework and it's clearly really relevant for organizations to think about email security much more as a pervasive multi-zone strategy as opposed to historically. It's a perimeter kind of gateway filtering service. So thanks for the question Catherine.

[Catharine Trebnick:]

Yes. No, thank you. I always need to clarify that when you talk about your wins it seems like you're getting to have more two and three in the win category when you announce these bigger deals. So it's nice to see. Thank you.

[Peter Bauer:]

Thank you.

[Operator:]

Thank you. Our next question comes from Steve Koenig with SMBC. You may proceed with your question.

[Steve Koenig:]

Hey gentlemen thank you for taking my questions. I wondered if you might be able to give us some color on what you're thinking about the breach in terms of its impact on win rates or sales cycles? Any initial indications about how customers are responding and how you might tweak to go to market and then just more generally aside from the incident any changes in your go-to-market kind of tactics or approach this year or greater emphasis on certain products, etc. versus last year. Thanks very much.

[Rafe Brown:]

Yes Steve. This is Rafe. I'll start this off here and thanks for being up early with us this morning from the west coast. With the security I think the direct impact that we would that's worth noting is for a couple weeks we've really devoted the entire company to making sure we're serving our customers, helping them through credential changes and making sure we're just available and so that did have a short-term impact on pipeline generation activities in January. That team is all back to their day jobs if you will out generating pipeline and working on that. So aside from that specific point there is nothing that really changes our initial expectations at least that we're seeing thus far. Now I think when we look a little broader or longer term one of the things is Pete noted at the top of the call in times like this we focus very much on our customer success and on transparency and frankly a lot of the calls with our enterprise customers what we've gotten is great feedback from them that they appreciate that that transparency that going that extra mile because frankly the solarwinds attack has really reminded all of us just how sophisticated these threat factors are and how much we need to work together and collaborate to defend ourselves against them. So I would say for what has been an eventful last few weeks it seems like the general feedback is that they appreciate the efforts we've taken to be transparent with them. To the part of your question about what are the changes going forward and one of the shifts that is certainly taking place within the organization is as we are aligning our resources more and more towards those strategic initiatives that Pete laid out and the first one he called out was that continued focus and investment on the enterprise and certainly in our go to market function that some of the changes that they're going through right now and as we look towards this next fiscal year we'll be continued hiring into the enterprise place whether it's on the rep level, whether it's more senior technical resources and sales engineers to get out there and help with those accounts or how we support those customers from a customer service perspective. That's probably the most profound change to call out. I don't want to take anything away from the rest of the business that's focused on some of these smaller customers but we're digging deep to make sure we're handling the small guys as efficiently as we can and building the systems and evolving the systems to serve them and focusing more and more of those resources on those larger customers.

[Peter Bauer:]

Yes. Thanks Rafe. I think what I would add to that is when a sophisticated factor like this has been so successful on an industry-wide scale, one of the other things that it really underscores is the importance of an integrated security architecture and so I think we're in for many organizations in the early stages of building truly integrated security architectures. So our work and in particular around our Secops virtual conference our work in terms of building integrations to help customers much more seamlessly create these integrated intelligent and highly responsive security architectures with Mimecast being a really powerful contributor to that architecture, I think that's one of the key emphasis for us going into FY ‘22.

[Steve Koenig:]

Great. Thank you.

[Operator:]

Thank you. Our next question comes from Sterling Auty with JPMorgan. You may proceed with your question.

[Unidentified Analyst:]

Hi guys. This is Pat on for Sterling. Thanks for taking my question. In terms of the guidance we appreciate some of the pieces there that you explained. Just trying to understand how much of that 10% growth in the next fiscal year, how much of that is coming from the bookings impact that you mentioned possibly from as well as how much of that is just coming from lower tailwinds from Office 365 migrations? Thanks.

[Peter Bauer:]

Yes. Thank you. So on next year's guidance which just make sure we're all aligned is 9% to 11% or 10% is the midpoint as you noted, we've been talking all year long for our most of the year anyways about the impact that COVID has had on our business and I think that is really the place to focus in terms of looking at those bookings, how those bookings translate into revenue force for FY ‘22. It goes without saying but worth reinforcing that we're very much still in this COVID environment. I did call out that we'd seen a bit of strength in the North American market in December in particular and I think that's encouraging but remember that we get almost half of our business from outside the U.S. and some of those areas are appearing to be a little slower to recover. So just as you well know the SaaS revenue recognition model really puts undue weight if you will on next year's guidance on how the bookings come in for the rest of this quarter and the next just because it gives them full time to amortize into the revenue and that sets us up for this next five-six months being extremely important in terms of next year's guidance and when we look at that with COVID still raging and markets still being a little slow to recover it does cause us to have to consider that the recovery on the revenue line will lag the bookings and so thus will probably impact FY ‘22 as we've described.

[Unidentified Analyst:]

Great. That's very helpful. And then one follow-up you talked about some of the long-term growth. At the analyst day you guys mentioned 17% to 21% growth kind of in that fiscal ‘23 to ‘25 range and just wanted to make sure in terms of do you think that those targets are still achievable given within the time frame that you gave given some of the bookings headwinds that you mentioned for this next year? Thanks.

[Peter Bauer:]

Sure. I think we still think like that mid to upper teens range is the right way to think about our business in terms of the market that's available, our products and the opportunity that's before us. So I think that is quite that remains strong and true for us. I think we gave that guidance shortly before the COVID crisis came along. So what we're likely to see is that it'll probably take us a bit longer to get to that revenue range than we had originally anticipated. What I would also note though that in addition to the topline guidance that you mentioned we also talked about a free cash flow range of 23% to 25% and you're seeing in our guidance that cash flow inflection we talked about at the time is really coming to pass. We've seen in FY 21 the guidance for FY 22 is arguably ahead of schedule. So on a balanced score card perspective the free cash flow numbers I think are showing nice improvement and we're going to get there on schedule or a little bit early and in terms of the top line they are the right way to think about the business but given COVID it's going to take a little longer to get there.

[Unidentified Analyst:]

Great. That's very helpful. Thanks guys.

[Operator:]

Thank you. Our next question comes from Terry Tillman with Truist Securities. You may preced with your question.

[Terry Tillman:]

Yes. Thanks for taking my questions. I guess the first question Peter is just a bigger picture question about the Office 365 opportunity and this pandemic just grinds on. How is that opportunity changing as well as with even the sunburst incident recently what's different now about the O-365 opportunity compared to three months ago six months ago and then thinking going forward and then I will follow up.

[Peter Bauer:]

Yes. A great question. So I mean Office 365 continues to be a significant source of business for us in terms of adding additional layers of security and capability on top of 365. More than half of our customers are using us to protect Office 365. So that's north of 20,000 organizations. I think what this sunburst threat has really underlined for us or clarified for us once again is how significant a target, the Office 365 environment is for adversaries and that while Microsoft is very determined to provide a robust and secure environment there is some level of an intractable problem in terms of securing that environment continuously and successfully in isolation and that I think is really showing the need for additional independent specialist layers of security to help shore up and protect Office 365 so that customers can feel confident and secure doing business with a considerable dependency on Office 365. So we remain bullish about that opportunity.

[Terry Tillman:]

Yes. And my follow-up I'm not sure this is for I'll just throw it out there and then you all can over my ultimate question but if I look at the FY ‘22 guidance I mean how do we think though about the mixes of business and just how much of, are we looking at more of a stair step increase in the enterprise exposure as opposed to the small business and the mid market or is it still going to be a gradual kind of uptick in enterprise? I'm just trying to understand how to think about that into ‘22 and really even into ‘23 in terms of how quickly will this pick up in terms of proportion of total? Thank you.

[Rafe Brown:]

Yes. That's very helpful. I think the right way to think about it be it'll be somewhat gradual. We've been talking about having that highest end of our market at 18% of revenue. We continue to watch how that grows over time but it does grow somewhat gradually and that is we talked on these calls a lot about the enterprise but we have some really strong business with some mid and mid to large size customers as well as even on the lower end of the business. So with the whole business growing the enterprise is we're getting a lot of attention and good investment but at our size and scale you'll recognize that growth on a somewhat slow basis.

[Robert Sanders:]

Operator next question.

[Operator:]

Thank you. Our next question comes from Brent Thill with Jefferies. You may proceed with your question.

[Unidentified Analyst:]

Hey guys this is Joe on for Brent. Thanks for the question. Great to hear about the public sector being strong in the quarter. Has here been any issues with the recent compromise in that regards and then perhaps just elaborating further on the sense of the size and the future growth aspirations in that business?

[Rafe Brown:]

Yes. Okay. So I mean government business and education sector as well remain important target markets for us. We recently announced our FedRAMP ready status on that grid and it'll be several quarters before we have our full authority to operate in FedRAMP but that's clearly a focus sector for us. I think in the U.S. it's a key market but also internationally in the prepared remarks I called out a large international government agency that had had signed with us in the quarter. And interestingly, our government sector business and education grew in the last quarter from 6% of our revenue to 7%. So we feel like we're making good progress through those results there. One thing that we've seen very clearly with this solarwinds sunburst attack is the elevated threat level presented to public sector generally and how governments really have to take the cyber security threat significantly more seriously. I think encouraging signs coming out of the new administration in terms of commitment of resource and skill to counteract this threat and we think it's such an important market A, for us to serve but also most likely a lucrative market on a global basis for Mimecast going forward.

[Unidentified Analyst:]

Awesome and then Peter everything you said on the call was logical and appreciate all the added detail. What gives you the comfort that this is truly a macro issue and a no decision issue versus a competitive issue and people go in with Microsoft maybe Microsoft's good enough in email security?

[Peter Bauer:]

Well, it's a great question. I mean we have operated in a competitive environment for the duration of our history. So we know we have to earn our business. We know we have to demonstrate higher efficacy and keep innovating and keep serving customers more successfully but I think the current threat landscape has indicated that it's really important for organizations to layer in additional specialist security and not merely rely on the underlying application vendors to secure their environments. It's important that they do secure their environments but I think recent events have proven quite clearly that may not be enough and that additional specialist focused security and tooling that can help organizations feel more confident be more resilient with that dependency, with that dependency being on the juiciest target for adversaries being mitigated significantly. So yes again we feel really good about that opportunity but very conscious that we have to message and innovate and serve really well in order to go and continue to grow in this environment.

[Unidentified Analyst:]

Make sense. Thanks guys.

[Operator:]

Thank you. Our next question comes from Keith Bachman with Bank of Montreal. You may proceed with your question.

[Keith Bachman:]

Hi thank you very much for taking the question. I had two I want to ask. The first one is I was wondering if you could give any context or comments on the net retention rate that you see. You've given one of three for Q4 just any kind of color on how that may unfold as you look at the next fiscal year. Directionally does it, how quickly can it move back to something as you get throughout the new fiscal year? And then I'll ask my follow-up after.

[Rafe Brown:]

Yes. So I think the first keep in mind with that net revenue retention number it is a trailing four-quarter metric with most of our contracts being approximately a year. We look back to those contracts and see how they perform. So it is by its nature is going to move somewhat slowly. I think the key here and the key indications that we'll all be watching is I noted that the customer count metric is probably going to continue to run a little bit suppressed for a while as we're still working through COVID but that's an important metric to watch because it's going to speak to that those net customer ads number we'll speak to how we're experiencing some of the challenges out there. You'll note it's stabilized between last quarter and this quarter and so it does feel like we've worked through some of that initial shock and we're seeing some stability in it. So we'll continue to be watching that in the coming quarters and I think that's a key piece. I would caution as everyone though on this it needs to be looked at in tandem. So take the net customer ads number look at the AOV number and that's going to give you a much better view of how the organization as a whole is performing but I think that's a good indication. We would certainly hope that as some of these companies come out of the COVID crisis we saw a lot of down sell and remember we'd really focus on let's keep them as customers even if it's for a smaller stake but as they come out of the COVID crisis a lot of these businesses in the retail hospitality sector and places like that they need people to function and so we're quite hopeful would see as we move through that an uptick in those numbers as the year progresses. Again somewhat dependent on the COVID recovery in the respective markets.

[Keith Bachman:]

Okay. Peter I'll direct this to you and again I missed the very initial discussion on the conference call but if you could just talk about how you balance taking a head count reduction to make sure that you're trying to set up the company for future growth on a durable basis and where are some of those reductions but more importantly how do you balance this as you look at the organization over the next two and three years?

[Peter Bauer:]

Yes. Great question Keith. So we we've been extremely thoughtful about this and looked at our strategic plans and looked at what are the key initiatives that we want to be able to invest more in and then by implication there is certain areas that we're going to be investing slightly less in and so that rebalancing to be able to say how do we double down on enterprise, how do we double down on automation and efficiency for our mid market and our long tail of SMB customers and what are those changes that we need to make to set ourselves up to execute well on that long term plan. So I think that the changes that we've made I mean some of them are difficult it's not easy to make these organizational shifts but they help us to be able to both invest in the right areas of the company but also yield some of the efficiencies and demonstrate some of the strength on the bottom line and cash generation that's inherent in our model. So I feel good about how we've got that balance right and we now set up for FY 22 to just get out there and execute.

[Keith Bachman:]

Okay. All right. Many thanks. Good luck.

[Peter Bauer:]

Thank you.

[Operator:]

Thank you. Our next question comes from Nehal Chokshi with Northland Capital. You may proceed with your question.

[Nehal Chokshi:]

Yes. Thank you. Could you give some color on the U-shaped recovery? What do you expect constant currency growth rate to bottom up throughout the course of fiscal year ‘22?

[Rafe Brown:]

Yes. Thanks. As I noted one of the things that we think will be roughly in this range of the guidance range across FY 22 obviously depending on how bookings go we might have an impact on late in the quarter rates but again with SaaS revenue recognition that revenue growth rate it needs to have bookings activities well in front of the ultimate uptake in revenue growth. So yes I think the right way to think about it is we'll be roughly within that range for FY ‘22.

[Nehal Chokshi:]

And how would you expect a net revenue retention rate to profile throughout that also relatively even at the current rates?

[Rafe Brown:]

I think that roughly speaking and again based on how things play out over the course of the year, I think that's roughly the right way to think about it in approximately this range.

[Nehal Chokshi:]

Okay. And then for my follow-up question of the three prongs described in terms of returning to the rule of 40 or really accelerating back up to the long-term growth rate what's the most important? Which prong will be experiencing the biggest benefit from the restructuring that you guys have taken?

[Peter Bauer:]

Well, I think it's difficult to sort of single them out specifically but I do feel that our focus on the enterprise is clearly one of the very important parts of that strategy that will benefit from additional investment but importantly our investment in R&D generally and our ability to continue to be successful with multi-product sales across the platform. So driving higher levels of penetration you've seen our average products per customer move up from 3.3 to 3.5 year-over-year. Being able to really invest in that and drive that multi-product strategy into the customer base and into new business I think those two are both set to benefit from this investment plan.

[Nehal Chokshi:]

Great. Thank you.

[Operator:]

Thank you. Our next question comes from Shaul Eyal with Oppenheimer. You may proceed with your question.

[Shaul Eyal:]

Thank you. Good morning gentlemen. I have just one question. I know the aftermath or the derivative of the recent sunburst to differ materially from the outage that you've experienced back in I think it was 2016 or maybe 2015 but maybe can you compare some of the lessons learned from that average five-six years ago? What did you learn that could be applied this time because if I'm looking back I think for everybody who covered you for such a long time you actually came out much stronger over the course of the past five-six years. So maybe just a compare contrast for us will be greatly appreciated.

[Peter Bauer:]

Yes. That's a great question Shaul. I think every time we have a setback I think as a company we're wired to learn and to come back stronger whether that's in terms of things we can take on from a product development and R&D point of view, whether it's our own security posture, whether it's our operations but I think one of the key things that we've learned historically is that being very open and transparent with our customers and really engaging with them as part of their teams is crucial to getting through some of these setbacks. And so what you've seen from Mimecast particularly in this incident is how open we've been and as soon as we have information that customers can use to mitigate risk. We lead with that regardless of how difficult or complicated or how much we might worry about the impact of doing that. So we're very kind of forthcoming with that. I think there is a lot of things that one learns when one has an encounter with a sophisticated adversary like this and certainly we are going to absolutely indulge in all of those learnings and look at all of the opportunities that we can extract from that to both develop products on our side as well as sort of improve the robustness of Mimecast as an organization.

[Robert Sanders:]

Operator we'll take one final question.

[Operator:]

Thank you. Our next question comes from Brian Essex with Goldman Sachs. You may proceed with your question.

[Brian Essex:]

Good morning and thank you for taking the question. I really appreciate it. Sorry about if this was covered previously but just had a question on from a geo perspective thoughts on Europe and the UK we've heard in other segments that UK was pretty weak but just from a geo perspective where you saw strength and weakness and what your outlook is given the I guess maybe softer 1Q and then flatter full or I guess a flatter full year guidance that you've given?

[Rafe Brown:]

Yes. Thanks. I think our experience in the UK is in line both the UK and South Africa are very much feeling the impact of the COVID crisis and the impact on the economy. I will say our UK team, I think is optimistic though as we look forward some of this is BREXIT is now behind everyone and we're still moving forward. So having some certainty there is given at least to the degree we have it is giving our sales team some confidence when they look out across the year as a whole. Likewise in COVID with people getting vaccinated I think there is a general sense of optimism but to be sure it hasn't really shown up yet is certainly through Q3 and frankly I think until the COVID crisis is more in check, the UK and South Africa are going to struggle a bit and those are very important economies to us. Where I did note a little bit of a positive is as the third quarter went on in December we started to see some positive momentum at least a bit with some of our customers late in the quarter and so there was again this is Tim we should be moderate here like it but there was certainly some positive indications that companies in the U.S. or North America certainly was starting to look beyond the COVID crisis and getting back to work.

[Brian Essex:]

Got it. That's helpful and again I apologize if you discussed it already but interested in competitive dynamics up market particularly what you're seeing in the pipeline and what you've seen in the quarter, the ability to land larger customers. How large I guess might those customer wins be and is it significantly larger than you've seen in the past or are you just penetrating a substantial segment of the larger enterprise market?

[Rafe Brown:]

Yes. That's great. We feel really good about that enterprise market opportunity. I think in the prepared remarks I called out that we had 2400K plus deals and then also some really nice anecdotal examples of large account wins with tens of thousands of seats some north of a hundred thousand seats. So we think the very large enterprises have sophisticated needs that Mimecast is extremely capable of addressing and that's being proven out each quarter as we add more of these very large enterprises to our platform. So yes, significant opportunity. No particular limit in terms of where we feel we can hunt now as we evolve as a company as we've built our technology and our engagement teams and yes.

[Brian Essex:]

Okay. Great. Very helpful. Thank you.

[Operator:]

Thank you. And I'm not showing any further questions at this time. I would now like to turn the call back over to Peter Bauer for any further remarks.

[Peter Bauer:]

Folks thanks for joining our FY ‘21 Q3 earnings announcement this morning. Thanks for those on the west coast who got up early to join us. Have a great rest of the week and we look forward to updating you in the three months or so time.

[Operator:]

Thank you. Ladies and gentlemen this concludes today's conference call. Thank you for participating. You may not disconnect.