Tim O’Brien: Hey Jason, this is Tim. Thanks for the question. Drilling down on the RMM business, in terms of what we said, historically, in terms of size of the business, we don’t just go to the size of the underlying kind of product lines within the business, but we have given color on just kind of stack ranking them and just how to think about the components of the overall business. So RMM is number one. Data protection is number two, and security is number three. And the combination of data protection and security is bigger than RMM. So they’re all sizable product lines within the business.
Jason Ader: Got you, okay. And then on the RMM side, it sounds like it’s sort of a continuation of some of the pressure on device growth. We’ve heard sort of in the market, that there’s also been a fair amount of pressure on pricing, sort of per device pricing. And I’m wondering just what — how have those dynamics shifted over time, I don’t know if it’s a competitive situation where some people in the market are kind of bombing the price. But what I guess, what is the strategy to grow RMM in a week or macro environment, let’s just assume that we’re going to be in a sort of same tighter environment through 2024, how do you guys counteract maybe some of that pressure, on device growth or on pricing, I don’t want to put words in your mouth but if you could comment on the pricing environment there and then also just what the strategy would be to grow RMM in a weaker macro environment, putting aside the strength that you’re seeing in DP and security?
John Pagliuca: Thanks, Jason, hey, this is John P. So when we — one of the reasons by the way that we don’t really disclose revenue by type is we look at the broader opportunity from the LTV of the MSP. And so if you think about the opportunity on the NSP, and I know you’re familiar with our Investor Relations deck, we typically say, hey, per device that’s around mid $20 per device type of opportunity. By the way, now with MDR that opportunity is now in the low 30s, right. So that’s why we’re so excited about MDR. But when you think about the stack, RMM depending on what offering they have, that could be $1 to $3 of that $30 back up and data protection is a material piece. Security is from an opportunity stack point of view, probably the largest one.
And so what we tried to do was focus on the word adoption, as opposed to just revenue by RMM. And so for us, this is not too dissimilar to some of our competitors, where we’re looking to land and get the trust of the MSP. Historically, the front door coming into N-able for MSPs has been RMM. And so that’s when they would come in, and then we would go and add and cross sell from there. But now with data protection, we’re finding a different rhythm and a different pattern. We’re actually landing with Cove and now we’re cross selling into RMM. We hope and expect to do that with MDR, as well. That will give at least three, potentially four different lanes or avenues into N-able from the cross sell motion. And then we can begin building that trust in that value with the MSPs to get that stack up to about that $30 per device or $30 per user per month type of opportunity.
So for us, the focus really is not necessarily on the RMM revenue, it’s on the RMM adoption, but more so it’s on the N-able MSP partner relationship, so we can unlock that 30 bucks. If you take that $30 and you smash at times the roughly 8 million devices that we have, and multiply that by 12, you get that $2 billion to $3 billion opportunity. And that’s where the — that’s where the real the game is going to be won. For us it’s all about landing the customer regardless of what path and then through trust and showing the value of the platform and how we can help them with their TCO, their total cost of ownership and help with their efficiency play add more and more services to the MSP. So that’s really the strategy. And a slight — the slight, I’d say evolution there, three or four years ago it was, hey, come in to N-able through RMM, one of our two RMMs, today it’s coming through one of those two leading RMMs or through data protection.
And then tomorrow it will be through MDR and other types of security offerings. So that’s why we’re excited on how we think about the overall $2.83 billion opportunity that’s just within our customer base today.
Jason Ader: Got you, makes sense. And I just want to understand sort of the evolution that you just referred to, is that evolution partly due to the pricing over the last five plus years that $1 to $3, that that’s actually been coming down and therefore you guys have had to sort of broaden or is there something — or is it just more the needs of the market have shifted?
John Pagliuca: I’d say this, the stack, the opportunity stack has gotten larger, right. When I think about the market, I often refer to it as the X and Y axis. And on the X axis are all the services. And if you’re a business or any company, if you have one service that you’re going to market with, well, then you are laser focused on particularly that price point. But as we add services and the TAM increases by the X axis, well now you have a little bit more of a strategy as to what you’re playing for. What we’re really playing for are making sure that we’re lending the MSP and helping them add more small medium enterprises. So you’re willing to take a different cost mix for the different offerings, because you’re not just focused on one offering.
It’s one of the benefits, I’d say of becoming a bigger, more of a platform story, adding data protection, adding security, we now can focus on the bigger LTV. So I don’t think it’s necessarily that the need for RMM has diminished. I just believe that that tech stack has gone up just by itself. I’ve been in this business for about 10 years, that tech stack might have started about $15 or so years ago. Now that we’re adding things in endpoint security, we’re adding things like managed detection and response, we’re adding things like Office 365 backup, the value of the tech stack continues to increase, which somewhat changes the strategy and the tactics that you want to go and really acquire those customers because they’re of a more value to you to land them and grow them.
Jason Ader: Makes sense, thanks. Thanks for that. Appreciate it.
Operator: Thank you. [Operator Instructions]. Our next question comes from Matt Hedberg of RBC Capital Markets. Your line is now open. Please go ahead.
Matt Hedberg: Great guys, thanks for taking my questions. John, in your prepared remarks I believe you said, that having a direct relationship — a direct IT relationships with certain customers could make sense. I presume these are fairly large customers. Just wondering if you could provide a little bit more detail on that strategy and sort of where do you draw the line between letting an MSP handle everything and more of a direct relationship?
John Pagliuca: Hey Matt, thanks. Great question. Yeah, what I was referring to there is that internal IT department. And so if you think about our offerings now, whether it’s our Cove data protection offering or the remote monitoring and management, those used cases are very similar and scratch a similar itch with the internal IT department, especially where there’s more of a robo framework, remote office, branch office folks are working from home, they’re in a hybrid environment, different geos, different offices. And the IT professional is under the same type of scrutiny and performance issues as an MSP. And what’s that all about, efficiency. And an MSP or an internal IT department has that same need where they can leverage our tools, our platform via our automation and do more with less.
