“Our team has a very clear mandate: we have to scale margins. We feel that we have the right setup for that. If you think about our MDR business, which is our fast-growing business that historically has had less contribution margins at scale than some of our other businesses, that is also a business where we expect gross margins to expand.”

In context

“Corey Thomas (Chief Executive Officer): Our team has a very clear mandate: we have to scale margins. We feel that we have the right setup for that. If you think about our MDR business, which is our fast-growing business that historically has had less contribution margins at scale than some of our other businesses, that is also a business where we expect gross margins to expand. That was a big part of Kenzo’s thesis—that we can deliver better service with better efficiency and better cost leverage. We are excited by that. Delivering our customers a better experience and doing it more efficiently is good for our investors too. Both myself and the management team have a mandate that we have to expand margins over time, but we are willing to make tactical investments to make sure we are doing it the right way. It was absolutely the right thing to do this year, as we saw the tsunami of cyber risk hitting customers, to make sure that we were properly staffed in our MDR environment to manage and respond, and to deliver a great quality of service, which leads to long-term retention and expansion. We know that we can do more AI automation to handle some of those soft services over time. We feel very good that we made the right decision to make sure customers are set up well, and we are managing the business to expand margins over time.”