Cross-sell and net retention expansion via multiproduct adoption

“A recent report noted that we have more hyper cloud and mission-critical workloads available, which presents significant competition. It's important to stay ahead of customer needs and be prepared for the workloads they wish to protect, and that is precisely what we are striving to accomplish.”

“If you look at our SaaS business, which is around $130 million in net revenue retention, world-class net revenue retention rates typically fall between 120% and 130%. I believe 130% is on the high end for what we can sustain, particularly as our base continues to grow each quarter.”

“The smaller ASPs is kind of part of the plan because we have a velocity business where we land smaller deals. We have marketplace business, which a smaller deal. We have MSPs that bring in smaller deals that we expand over time. So, it's a mix.”

“Relative to the 130% of net dollar retention, as you think about the drivers of what drove that from an upsell versus cross-sell, about two-thirds of that comes from upsell.”

“However, we're now seeing more than 2x growth on some of those mission-critical or the emerging workloads that we see whether it's sales force dynamics, threatwise, hybrid cloud, databases. The dollar value of those are now up 2x year-over-year.”

“It is driving our growth and performing well, allowing us to acquire hundreds of new customers each quarter. Our integrated security capabilities within our delivery platform, Metallic, are also doing well.”

“Now, in introducing with the new cyber resiliency offering, we're setting ourselves up for that cross-sell opportunity as we get into the next fiscal year.”

“Overall, I anticipate the renewal population next year will be larger than this year's, but not by the same substantial amount as we saw this year.”

“We see that a third of our customers tend to have more than one product out of the door. So, there's good traction.”

“So there are some logical bundles that we offer customers today that just make sense together like Cleanroom and Active Directory or Office 365 and Active Directory.”

“The number of SaaS customers utilizing two or more products increased by 45%.”

“Due to the complexity of their requirements, this segment typically demonstrates a higher rate of multiproduct adoption than our overall SaaS base.”

“As I mentioned in previous calls, we will continue to lean into this cross-sell motion in the coming quarters.”

“It's early innings. You heard me say last quarter that this is the first quarter we're actually really focused on it as a company.”

“Additionally, our security SKUs grew double digits quarter-over-quarter, contributing to that cross-sell and made up 20% of our net new ARR.”

“To summarize, our first half results are evidence of strong market demand that we believe will continue throughout the year. Thanks to our leadership in innovation, our growth-focused investments, and strong execution, we are well-positioned to continue taking share of the expanding Cyber Resilience market.”

“We saw solid momentum across our identity and resilience offerings such as Air Gap Protect, Active Directory, Cleanroom, Cloud Rewind, Risk Analysis, and ThreatScan, which collectively grew double-digit percentages sequentially and represented almost 40% of net new ARR.”

“We were encouraged by the growing ARR contribution from our non-employee risk management, machine identity security, and data access security modules, which more than doubled from the same period a year ago.”

“In summary, we believe we are well positioned to win the next generation of identity security because of the depth and breadth of our platform, our enterprise scale and our willingness to listen and respond to market needs.”

“This includes migrations of on-prem customers into net new SaaS solutions, where we typically see a 2 to 3 times uplift on their ARR spend.”

“So, historically, if you look at our NRR, it is mostly coming from cross-selling activities of customers consuming additional products more so than seats.”