Absolute Software Corporation

Good afternoon, everyone, and thank you for standing by. Welcome to Absolute Software's fiscal 2022 fourth quarter and four-year financial results conference call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on a touch-tone phone. To withdraw your question, please press star then two. I would also like to remind everyone that this conference call is being recorded today, Tuesday, August 23rd, 2022. I would now like to turn the floor over to your host, Joo-Hun Kim, Vice President of Investor Relations. Please go ahead.

Good afternoon, and thank you for joining us today. With me on today's call are Christy Wyatt, President and Chief Executive Officer of Absolute Software, and Ron Fiore, Interim Chief Financial Officer. Before beginning our formal remarks, Absolute Software would like to remind listeners that certain portions of today's call may contain forward-looking statements that reflect current views with respect to future events and conditions. Any such statements are subject to assumptions, risks, and uncertainties that could cause actual results to differ materially from those projected in these forward-looking statements. Any forward-looking statements contained in today's conference call are made as of today's date, Tuesday, August 23rd, 2022, and Absolute Software undertakes no obligation to update or revise publicly any of the included forward-looking statements, whether as a result of new information, future events, or otherwise, except as may be required by applicable securities law. For more information on the assumptions, risks, and uncertainties relating to these forward-looking statements, please refer to the appropriate section of the company's most recent MD&A which is now available on Absolute Software's website and will also be available on CDAR and EDGAR. I would now like to turn the call over to Christy Wyatt. Please go ahead.

Thank you, Julian, and good afternoon to everyone joining us today. I am pleased to announce a solid fiscal Q4 to close out what has been a truly transformative year for Absolute. Fiscal 2022 was our second consecutive full year operating as a Rule of 40 company. We exited fiscal 2022 a different company than we did exiting fiscal 21. On an as-is reported basis, our ARR is now 210 million versus 123 million ending fiscal 21. And adjusted EBITDA is 56 million, up more than 75% from the prior year's 32 million. On an as-is combined basis, we saw ARR growth of 16% annually with increasing strength in the enterprise and government sectors of our business at over 17% at the end of the year, up from 11% at the end of fiscal 21. We saw our customer base exit the year at more than 17,000, representing a cloud active endpoints population of more than 13 million, an 18% increase over the prior year. In addition, our NPS scores across our products are at record levels. For the year, we achieved total adjusted revenue of approximately 210 million, representing more than 15% growth year-on-year, and we delivered adjusted EBITDA margin of 27%. We exited this year with solid, balanced, profitable growth, and while we still have more work to do to accomplish our long-term goals, we are confident we can deliver another rule of 40-year for absolute. We have now nearly completed the integration and ended the year with a common platform and a common product strategy. We've made continued considerable progress on our persistence platform and ecosystem, and our go-to-market teams have made great strides in building out our security selling teams. Our acquisition of NetMotion is working. Our OEM and VAR partnerships and the investments we've made internationally are all paying off handsomely as well. We are undoubtedly in a better position today in every respect than we have been during my time here, including growth, profitability, product scale, and go-to-market. This is thanks to all of the hard work of our employees through fiscal 2022. I am more confident than ever in the unique opportunity in front of us and our ability to impact the market as the only provider of resilient self-healing security solutions embedded in over a half a billion devices. Throughout the course of the pandemic, we had firsthand knowledge of the strains being placed on organizations as they had transitioned to working from home. We also witnessed the increase in the number of attacks and successful breaches elevating the threat risk within our customers' environments. We knew these pressures would accelerate the need to modernize network architectures to ensure employees and devices remain connected and secure, even when outside of a secure office setting. Organizations are increasingly aware of the compliance drift between what security applications they have purchased and installed versus what is actively protecting them in their environment today. And it remains our belief that both IT and security teams increasingly recognize the need to strengthen both cyber defense as well as cyber resilience to ensure the company is better protected from increasingly sophisticated breaches. We introduced one of our first product integrations when we incorporated our application resilience technology with NetMotion's network resilience capabilities. Now rebranded as Secure Access, our network access solutions uniquely give organizations the ability to support remote worker productivity with an engaging user experience while improving the security posture with its Zero Trust capabilities and bringing the concept of resilience into the high growth Zero Trust market. Throughout the year, we've made remarkable progress on the platform. Across both our Secure Endpoint and Secure Access portfolios, we have brought new capabilities to customers. including enabling them with ransomware recovery tools, alerting end users of a possible attack even when other tools are also under attack. Our application resilience library now encompasses over 60 industry-leading and critical endpoint applications, and we have leveraged our unique data and intelligence capabilities to deliver insights for endpoints and network insights, data visibility products that enable customers to track and analyze critical health and performance metrics across endpoints, users, applications, and network connections. We are making solid progress within our absolute persistence as a service program, having seen our first licensees commercialize and begin to ship actively self-healing solutions. In parallel, we continue to make progress, migrating our services to the public cloud, thus opening the market even further for our solutions. Fiscal 2022 has been a significant year of milestones as we execute our vision of leveraging persistence, resilience, and intelligence to enable an ecosystem of intelligent, self-healing security products. On the go-to-market front, a significant focus for Fiscal 2022 was to integrate and build a world-class security-focused selling organization. I am extremely proud of the team's focus and execution driving momentum for both our secure endpoint and secure access portfolios. And I am pleased with the progress we have made. Our customer success team delivered the best retention metrics we have ever seen across all of our products, which contributed to record levels of enterprise and government net dollar retention. And our continued investment in our OEM and distribution channels was a key driver in growing new logo ARR by 70% in fiscal 22 versus fiscal 21. Through the year, we maintained strong momentum in our international ARR growth, which has been a key pillar of our growth strategy. As fiscal 23 is well underway, our focus is shifting to demand generation in support of accelerated growth. In Q4 fiscal 2022, we began significantly expanding our SDR teams to improve lead gen pipeline while also investing in an expanded team of cybersecurity and cyber resilience experts available within our professional services offerings to expand our engagement with CISOs at larger enterprises. This team has deep domain knowledge and experience in cybersecurity and cyber resilience and are working with customers as we grow our offerings and solutions. We continue to make great progress in our FedRAMP certification work, and we expect lead generation activity to increase in advance of receiving a full certification, which we hope to see later this year. Looking forward, we are excited about the opportunity ahead of us. There is no better evidence of the progress we are making in our transformation than by looking at how our customers are using Absolute products today. As an example, a large professional services firm with over 100,000 endpoints expanded its relationship with Absolute in the quarter, seeking to improve their security and compliance posture and reduce operational costs. Leveraging Absolute's persistence ensures that all of their devices have been patched to minimize vulnerabilities and decrease the number of their non-compliant endpoints at risk. A global mid-market investment bank is now adding Secure Access Cloud as a key component in their network architecture. They are an existing Secure Access on-premise customer that is feeling the pressure of increasing numbers of Work From Anywhere employees and the ever-growing threat landscape that comes with it. This has required them to modernize their network architecture by using secure access, which also includes leveraging the cloud to cover their branch offices more cost-effectively. And finally, a European financial services institution selected Absolute Secure Access as they were moving away from their legacy Citrix environment and had already begun their ZTNA journey into the cloud. An existing Zscaler internet access customer, the customer ran a careful evaluation process comparing secure access and other solutions, including Zscaler private access. They chose Absolute to run alongside their Zscaler internet access because of user experience, rich data insights, pricing, configuration flexibility, and cost. These three very recent examples demonstrate how our customers are using Absolute in ways that address their most current and pressing cybersecurity needs. The great work we have made on the platform is also beginning to be recognized in the industry as a whole. Earlier this year, Gartner recognized Absolute in the Market Guide for Zero Trust Network Access, and just last month, Forrester named our self-healing technology in a report featuring top capabilities needed in the new work from Anywhere era. Customers voted Absolute on G2 as one of the top 50 security products of the year, and Absolute was recognized by G2 as a leader in endpoint management for the 10th consecutive quarter. At this year's RSA conference in June, Absolute was recognized for two categories in the Global InfoSec Awards, the most comprehensive endpoint security solution, and for being a market leader in Zero Trust. With the market moving directly towards us, the industry is beginning to recognize our unique capabilities around resilient Zero Trust. The evidence is starting to show in our sales pipeline. Our coverage ratio has never been higher, at least in the years I've been here. And we are seeing deals that are larger, more strategic, and involve some of the very largest global institutions. Because of this, we intend to continue investing in growth through fiscal 2023 while maintaining our status as a Rule of 40 company. Before handing it over to Ron, I want to share with you that the personal enthusiasm that I've expressed on this call is really only matched by the tremendous energy and momentum inside the company right now. After multiple years of a pandemic-induced absence, we held our annual company kickoff in July. Considering the circumstances, we actually took the opportunity to invite the entire Absolute Employee population to Vancouver. The theme of our event was No Limits, and we took the opportunity to celebrate both the tremendous progress we have made as well as to focus on the opportunity ahead of us. It was well worth the investment, as it energized and united us in a way that no Zoom meeting ever could. The company is energized and focused as one team focused on achieving our goals for fiscal 2023 and beyond. With that, let me turn it over to Ron for the financial details.