So the used case and the personas are very similar. We’ve been finding that our offerings have had quite, excuse me, have had success for quite some time. And we’re really just leaning in a little bit more with a more of a specialized sales and go to market team there, because what we’re finding is we were not necessarily marketing or selling to that mid-market enterprise, but they were buying from us. And in 2023 we really began a little bit more of a focused effort to talk to that persona, understand what that persona needs, and setting up a sales and marketing motion that satisfies their needs. And so it’s been a success overall, that part of the business has been one of our bright spots, for sure. And as far as your second question on the line, there’s not really a line, if an internal IT department is choosing to manage their own digital assets themselves then N-able will provide them that software.
The benefit of our tools and the same thing with our MDR offering, is we allow MSPs to co-manage with these customers. And so if you’re a CIO of an internal IT department, you can choose to use in our central RM platform or Cove data protection. And then you can bring in a MSP to augment. So both your internal team and your managed service provider, your IP consultant, both can have eyes on glass and see the same environment. And so what’s happening now, Matt I mentioned with Jason’s question that I always refer to our TAM, as the X axis on the services and the Y axis is the size of the customers. And because of both our direct motion to internal IT departments, but also as a result of MSPs landing larger and larger customers, our TAM is increasing, that Y axis and the size of enterprise that enable servicing is getting bigger and this concept of a co-managed environment where a CIO is saying, hey, look, I have my own IT.
My own IT staffing issues, let me pull in an MSP to augment some of these services that I need. And I can do so and actually save some budget as well. And so we’re finding that to be a healthy formula. So the fact that our platform allows both MSPs and internal IT departments to either do it separately or together in a co-managed model just really resonates with these personas that are both trying to solve the same thing, doing more with less, keeping their digital assets protected, productive, and so that their workforce can do so in a collaborative manner. So the personas are similar and our platforms are perfectly really built and architected for that type of persona.
Matt Hedberg: That’s super helpful John, seems like a nice incremental catalyst as well next year, as you kind of continue that motion. And then maybe one for Tim, NRR I think it looks like it ticked up maybe 100 basis points on a constant currency perspective from Q2. Obviously, this it’s a trailing 12-month metric. But, with that slight improvement how do you see that perhaps trending into Q4, I mean, could it move up a little bit if there’s a little bit of Q4 budget flush because obviously there’s an impact on maybe 2024 as a result of that, but just kind of curious on your thoughts there?
Tim O’Brien: Yeah, on the trailing 12 month, it was slightly up I would say. On the quarter it was pretty consistent Q3 versus Q2. I wouldn’t say historically we haven’t seen like a budget flush end of the year from an MSP perspective to lend to any type of unnatural acceleration from an NRR perspective. And as I would say, as we think about NRR and Q4 I would expect it to be fairly consistent. It’s been a pretty steady metric, we did get a slight increase due to the timing of some of the price change in Q2, that will live with us kind of through the second quarter of next year. But we aren’t modeling any significant change from an NRR perspective quarter-over-quarter.
Matt Hedberg: Got it? Thanks a lot, guys.
Operator: Thank you. Our next question comes from Brian Essex of J.P. Morgan. Your line is now open. Please go ahead.
Brian Essex: Hi, good afternoon. Thank you for taking the question. And great to see the incremental operating margin expansion. Maybe on that point, Tim, if you could help us understand some of the levers behind some of the cost controls that you had in the quarter, it looks like operating expenses actually declined sequentially, which initially looks like it might be seasonal but then when we dig into some of the I guess drivers of that, some of them may be different. Maybe you can help us understand what levers did you pull in the quarter, how sustainable are they, and how you think about operating leverage as we kind of start to look into 2024?
Tim O’Brien: Yeah, absolutely. Looking across the P&L, I think we’ve touched on this historically. But we see leverage opportunities across kind of all three aspects, whether it be G&A, sales and marketing, and R&D. If you look at 2023, we’ve made a bigger investment into R&D strategically to drive new — an accelerated pace of new product being introduced to our partner base in 2023 and beyond. I expect us to be able to get leverage on that incremental investment that we made in 2023 on that line. G&A again, that line has been pretty flat since we spun the business out. And continue to expect to get leverage there, over the short, medium, and long-term. And then the last piece is sales and marketing where I would say, we’re always scrutinizing and making sure we’re getting the proper ROI from a sales and marketing perspective, breaking down our spend into deciles, and optimizing where we see the ROI is not up to our standard.
So, that’s a continuous process that we’ve looked at, kind of since we’ve been a public company, on the sales and marketing front, and we expect to continue to do that. But stack ranking the opportunity for leverage across the P&L, I would say one — as G&A. Two would be in sales and marketing, and three would be in R&D, but opportunity on all three, nonetheless.
Brian Essex: Got it, that’s super helpful. Maybe if I could circle back on MDR, to follow up. Any sense that you might have in terms of any pent up demand and how long you might be — you may have been, I guess, seeding your installed base for that and what you anticipate ultimate penetration rate might be?
