Magnet Forensics Inc

TSX:MAGT

Earnings Call Transcript

[Operator]

Good morning, ladies and gentlemen. Thank you for standing by. Welcome to the Magnet Forensics 2022 Second Quarter Results Conference Call. [Operator Instructions]

Listeners are reminded that portions of today's discussion contain forward-looking information. In some cases, forward-looking information can be identified by the use of forward-looking terminology such as plans, targets, expects, estimates, forecasts, strategy, intends, believes or variations of such words and phrases. In addition, any statement that refers to expectation, intentions, projections, or other characterizations of future events or consensus contain forward-looking information. Statements containing forward-looking information are not a source of facts, but instead represent management's current expectations, estimates, and instructions regarding future events or consensus. Any such statements are subject to risks and uncertainties that could cause actual results to differ materially than those projected in the forward-looking information.

For more information on the company's risks and uncertainties related to the forward-looking information, please refer to the factors described in the Summary of Factors Affecting our Performance section of the company's MD&A for 3 months ended June 30th, 2022, and in the Risk Factor section of the company's Annual Information Form dated March 9th, 2022, posted on SEDAR. Although the company has attempted to identify important risk factors that could cause actual results to differ materially from those contained in forward-looking information, there remain the other risk factors not presently known to the company or that the company presently believes are not material that could also cause actual results or future events to differ materially from those expressed in such forward-looking information. No forward-looking statement is a guarantee of future results.

Accordingly, you should not place undue reliance on forward-looking information which speaks only as of the date we met. The forward-looking information referenced in today's discussion represents the company's expectations as of the date hereof, and are subject to change after such date without obligation to update any forward-looking information, except as required under applicable securities laws. The company reports its financial results under IFRS and all values are U.S. dollars, unless stated otherwise. This morning's call is being recorded on Wednesday, August 10, 2022, at 8:00 AM Eastern Time.

I would like to turn the call over to Mr. Adam Belsher, Chief Executive Officer of Magnet Forensics. Please go ahead, sir.

[Adam Belsher, executive]

Good morning, and thank you for joining us today. This morning we released our 2022 second quarter results, which you can find on our website at magnetforensics.com. It was a strong Q2. Revenue was up 41% to $23.1 million, compared to the same period last year. ARR was up 49% to $73.7 million at the end of Q2 compared to the same point last year. ARR is an important metric that we monitor to assess how the company is performing. With this morning's results, we are raising our revenue guidance for the full year to reflect the performance year to date and the high conviction we have in our ability to deliver on the opportunities in front of us. This conviction is a result of a few factors, the digital investigation market we address are growing. Multiple tailwinds in the public sector and private enterprise markets support continued investment in digital investigation technologies.

The digitization of society means digital evidence is everywhere. It's growing exponentially. The case backlogs with police agencies globally are growing as more cases involving digital evidence require investigation and review. Beyond crimes with digital evidence, pure cybercrimes continue to grow in volume. Ransomware, business email compromise, and criminal use of cryptocurrency incidents are increasing. The cost to a corporation of dealing with data breach or a ransomware attack is becoming more and more expensive, attracting the specialized personnel that conduct digital investigations is challenging. Regulations to comply with standard cybersecurity preventative practices and disclosure after breaches occur are increasing for both public and private organizations. The risk to private enterprises is front of mind at the executive and Board levels.

These problems are persisting and getting harder to deal with for organizations. We believe there is going to be strong demand for digital forensics and incident response technologies. The macro outlook across all sectors of the economy is uncertain. This creates challenges for executives in determining capital allocation and expenditure priorities. We believe the digital investigation markets we address are more resilient to recessionary pressures than other sectors. Private enterprises recognize the threat of cybercrime and the business-critical nature of cybersecurity investments and incident response. The public sector, which represents approximately 65% of our ARR, is dedicating more resources to confront cybercrime and crimes associated with digital evidence, both within society and within their own organization.

Our technologies address the scarcity of specialized personnel by leveraging workflow automation, analytics, and distributing the workload to nontechnical personnel in a secure and simplified manner. Our solutions improve efficiency, gets to the key evidence quickly to solve the crime or understand what happened, and how to remediate it. Should we be facing a prolonged recession, it would have broad-reaching impact that is undeniable, but we believe the strength of Magnet solutions, our team, and prudent approach of managing the business, coupled with the tailwinds underpinning our markets, puts us in a strong position for continued, sustainable growth.

We have a proven track record of managing for the top line growth and delivering bottom line performance from bootstrapping our business all the way through to the public listing. We intend to continue to invest in the business to capture market share, grow our wallet share among our customers, and penetrate new markets. We do so while being cognizant of the macroenvironment and the headwinds in the economy. We are prioritizing investments to ensure that we deliver against our plan. We are mindful of increasing costs, specifically wage inflation pressures, which are a significant factor in today's market and the ability to attract talent. We filled a number of key openings in Q1 and a few more in Q2.

As we look out to the second half of the year, we intend to deliver progressively improved adjusted EBITDA and bottom line performance as demonstrated by our guidance. We'll continue to hire, but we are being disciplined with our planning and execution to ensure that the new positions we fill are fundamentally required and not just a function of the budget planning process that we established in Q4 of last year when the market conditions were quite different. We believe there is an opportunity to attract top talent and retain them in the current environment, which is quite different than the hire-freeze-reduce strategy that a number of other tech companies dealt with recently. We are doing this with a clear focus on our ability to continue to deliver positive and growing adjusted EBITDA through the back half of 2022 and into 2023. We believe significant operating leverage exists in our business to improve margins and continue to grow the top line beyond 2023.

The unit economics of our platform make possible, in fact warrant, continued investment in the team because we know that the incremental value of a new account today, combined with our proven ability to expand with that account over their lifetime, is a healthy multiple of the dollar invested to acquire that new account. The salespeople that we brought on in the back end of last year are now nearing the stage where they are making a meaningful contribution to our growth, and we believe that is a repeatable process with new hires today making significant positive contributions in the back half of 2023. We're seeing a marked change in our pipeline. Our new opportunities today are stronger than they have ever been.

We are seeing opportunities across both the public sector and especially the private enterprise. On the public front, those opportunities consist of expansion within existing accounts and outright new wins. And on the private enterprise side, we are seeing growing momentum in new customers. This progress is primarily driven due to a few factors: the investments we've made in R&D and product development with the launch of new products like MDIS, that's the Magnet Digital Investigation Suite, Magnet AUTOMATE ENTERPRISE, and Magnet IGNITE; the investments we've made in our sales and marketing team who can now get back in front of customers in person for these solution sales which is paying off for us; plus we are holding in-person workshops again with customers speaking to prospects and other accounts about their success with these solutions which is creating additional momentum.

In terms of customer wins, we won new public sector accounts at federal cybersecurity agencies in North America, Europe, and Asia; defense departments in North America and Europe; and a National intelligence agency in Europe. With new law enforcement accounts, including a major state level corrections department, new police and county sheriffs in North America, federal as well as state level police agencies in Europe, and forensic science labs in multiple Asia Pacific organizations. On the private enterprise side, we won accounts across a number of financial service organizations, including multiple banks in North America; tech companies, including a brand name electric vehicle manufacturer and retailer in North America; and a number of service providers in both Asia and Europe, in addition to the forensic service providers and consulting companies in North America, Asia, and Europe. This is just a select sample of the success we're having on the new customer front.

We are often asked how our solutions addressed the private enterprise vertical, how we fit into the market relative to the recognized endpoint detection and response, EDR, providers such as CrowdStrike and SentinelOne, and our ability to grow in the private enterprise market, how large a vector it could become. This morning, we wanted to provide an illustrative use case. There are a number of players involved in cybersecurity on the detection end of the spectrum, including EDR, XDR, and MDR providers. During a cyber intrusion, detection is step one. We do not compete head-to-head with those providers at that part of the workflow. Where we enter is at the post-detection investigation stage, which requires deep analysis.

A detection concludes an intrusion has happened, but it doesn't identify the scope of the intrusion, and that is an important stage that needs to proceed very quickly. At this stage of the investigation, the organization is trying to narrow down that intrusion to a range of devices. Depending on the intrusion, it could number in the tens, hundreds or even thousands of devices, and millions of data points that could potentially be infected. You want to do this as quickly as possible to quarantine the infected devices. We think of this as the triage state stage, narrowing down to the exact number of endpoints impacted, be they computers or even servers.

This is the purpose of our new Magnet IGNITE offering. It's a cloud-based triage solution enabling businesses to perform rapid remote scans of targeted endpoints for malicious and insider activity. This triage approach to the market is a greenfield opportunity that expands our addressable market. The conventional approach is a full digital forensic analysis after an incident has happened. The issue with that standard approach is it can take hundreds of hours to complete on multiple endpoints. Security teams cannot afford to waste time and resources on multiple endpoints that haven't been impacted by an attack and pose little to no threat. Magnet IGNITE offers internal incident response teams and external service providers an early case assessment that will guide the next steps of their investigations. By quickly gathering intelligence and assessing a potential ransomware attack, for example, Magnet IGNITE helps enterprises understand where and when they need to deploy a deep-dive forensic analysis.

To triage the network for those devices impacted, the next stage along the workflow of an intrusion is a deep dive forensic analysis to understand what malware is involved and what vectors really happened. This is our traditional strength with offerings like AXIOM CYBER and our new solution AUTOMATE ENTERPRISE, which delivers significant value to the private enterprise and forensic service providers, we are recognized as leaders in this market. With the broad range and the depth of our artifact support, we enable deep dive investigations of those endpoints. Through our investments in product development, we have enhanced our offering over the years, specifically for the private enterprise. As an example, AXIOM CYBER has been tailored to support investigations by enabling collections of both targeted portions or full images of those impacted endpoint.

In this sense, think of the process as a funnel. Thousands of endpoints at the detection stage, thousand or hundreds at the triage stage, and tens or singles at the deep dive stage. This not only reduces risk for enterprise customers, it also does so in a fiscally responsible manner. We're expanding upon the workflow from the comprehensive deep dive analysis to the triage stage, while at the same time facilitating the workflow within the corporation's digital forensic lab or at the forensic service provider, just like where we have been successful in law enforcement. The forensics experts at the private enterprise have the playbook of what to do.

We are the platform that integrates the different applications into a single pane of glass to look through. EDRs are good at the front end as they cover millions of endpoints, which is a significant challenge. However, it is at a very narrow [ depth ] in terms of coverage. When you cross over the threshold into that targeted deep dive, that is where we are strong. We are now adding more expertise at the triage area, getting better results faster.

One of the ways we deliver these results is through improved automation. Our new Magnet AUTOMATE ENTERPRISE addresses incident response workflows. It's designed to work with AXIOM Cyber to collect and process more evidence in a methodical approach, which can be done for ad hoc collection, queued up collections, or multiple collections in parallel to increase the scale of the investigation and move faster. These processes can continue 24/7 by 365 without human intervention, maximizing the efficiency of incident responders. The forensic service providers and in-house digital forensic experts and incident responders use our deep-dive analysis to know what to look for on the devices, what devices to quarantine, the steps required to remediate it, and just as important, to understand what has happened, so they're able to harden their cybersecurity against future attacks.

We address a market that is rapidly evolving with increased threat levels and higher scrutiny from Boards, executives, and security managers in the private enterprise. We believe there's tremendous opportunity to grow within the space from our core strength that the deep dive forensic investigation up to workflow into the [ triage ] stage to move quickly and get to the key information faster. Our ability to grow our wallet share within the private enterprise is significant. The revenue multiple of a corporate user is up to 4.4x higher than a conventional forensic user. A forensic lab leveraging our automation and orchestration platform is up to an additional 12x increase in revenue. You can see why we believe the private enterprise is an attractive opportunity.

We're seeing early success in generating higher ARR within the account base. During Q2, we delivered increased ARR of 750% at a European interinstitutional service provider, 400% at a technology and service provider, and 300% at a European bank. We bring a compelling value proposition to a large and growing market. We continue to attract new customers, expand with existing customers, and introduce new innovations into the market with that.

I'll turn over to Peter to outline the financial impact that's having on our business.

[Peter Vreeswyk, executive]

Thank you, Adam, and good morning, everyone. Total revenue was $23.1 million in Q2, an increase of $6.7 million, or 41%, compared to the same period in 2021. Our continued strong performance was a result of our new customer acquisitions and our land and expand strategy, where we continue to win new accounts and expand within our customer base.

We delivered strong growth across all of our major revenue streams. Software license revenue was $7.3 million, an increase of $2.4 million, or 48%, and software maintenance and support revenue was $13.6 million, an increase of $4 million, or 42%. And professional services revenue was $2.2 million, an increase of $300,000 or 14%, each compared to the same period in 2021.

Total recurring revenue was $20 million in the quarter, representing 86% of total revenue. This is an increase from 81% in the same quarter in 2021. The growth in recurring revenue is in line with our expectations as we see more customers adopt term licenses of our product. On a quarterly basis, the percentage of recurring revenue can fluctuate depending on the mix of term versus perpetual licensing that is sold. Adjusted EBITDA was $3.5 million in Q2, a decrease of $1 million compared to the same period in 2021. The change is primarily due to increased investments that we made in sales and marketing and research and development in the back half of last year and in Q1 of 2022. Our adjusted EBITDA margin profile was 15% in Q2 compared to 27% in the same period in 2021. The 2021 margin was bolstered by reduced expenses due to limited travel and marketing programs as a result of COVID-19 restrictions, which have now generally lifted, and we're seeing our teams back out in the market again.

Moving on to cash flow. We have demonstrated a track record of positive cash flows on an annual basis, which has been a key factor in our growth. Cash flow does vary quarter-to-quarter based on timing of payments, receipt of accounts receivable, as well as the impact of certain large transactions. For Q2, we had cash flows used in operations of $200,000 compared to cash provided by operations of $63 million in the same period in 2021, primarily driven by lower net income as well as timing of payments and receipt of cash. Year-to-date, we have generated $1.3 million in cash flow from operations compared to $2.3 million in the same period last year.

On an annual basis, we expect to continue to generate positive cash flows from operations. This demonstrates our ability to both invest ahead for future growth and still demonstrate meaningful profitability. As of June 30, 2022, cash and cash equivalents stood at $116 million compared to $118.1 million at the end of fiscal 2021. We are closely monitoring the macroeconomic environment with rising interest rates and inflationary pressures. And as Adam mentioned, are prioritizing our investments to ensure that we can deliver against our plan.

With that in mind, we are updating our outlook for fiscal 2022 with this morning's announcement. We have increased our expected revenue outlook for fiscal 2022 to a range of $92.5 million to $94.5 million, moving the range up $1 million at both the top and the bottom end, which represents growth of approximately 32% to 34% in fiscal 2022 compared to fiscal 2021. We have also increased our margin guidance for fiscal 2022 and expect adjusted EBITDA to be in the range of $13.75 million to $15.75 million, which represents a margin of 15% to 17% for the year.

As Adam mentioned earlier, we believe we can continue to deliver top-line growth, and at the same time, generate scale within the business to deliver improved EBITDA margin performance in 2023 and beyond. In the current macroeconomic environment, we intend to be disciplined, striking an appropriate balance between revenue growth and further investment in the business with a continued focus on unit economics to ensure we are growing in a sustainable fashion.

Thank you again for everyone for participating in today's call. And with that, I'll pass it back to Adam.

[Adam Belsher, executive]

Thanks, Peter. Cyber investigations are mission-critical to the public sector customers we support and business critical to our private enterprise customers. We are committed to continuing to build a business of scale in these fast-growing and evolving markets. While the recent economic headwinds are on settling, we continue to see strong demand driven by tangible tailwind across both private enterprise and the public sector end markets.

We are passionate about assisting public safety agencies in the pursuit of justice and the support of victims. Our work supporting private enterprises to safeguard their corporate assets and reduce organizational risk is equally important for them. We appreciate the trust that shareholders have shown in us, and I look forward to updating you further on our progress during our Q3 call in November.

With that, I'll turn it back to the operator to open up the call for questions. Thank you.

[Operator]

[Operator Instructions] Your first question comes from the line of Thanos Moschopoulos with BMO Capital Markets.

[Thanos Moschopoulos, analyst]

Adam, maybe just to expand on the macro. So on the one hand, you alluded to the fact you're being mindful of the macro backdrop. On the other hand, it sounds like you're actually seeing an acceleration in the pipeline. So just help us reconcile that. I mean, is this a situation where you're reading the same headwinds we are and you're being mindful or are you actually seeing any changes in customer behavior and sales cycles at this point?

[Adam Belsher, executive]

Yes. What I would say, Thanos, is both in private and the public sector, like we are seeing increased investments, whether that's in the public sector where more money is flowing from the Federal government around cybercrime, around violent crime that's flowing to state and local in the U.S. as an example. So there's increased investment and funding for those agencies.

So despite the economic, the kind of macro stuff we're in. And similar on the private sector where a lot of companies may have deployed or have deployed some kind of endpoint security, but they're realizing that there's no such thing as being 100% breach -- breach prevention is never 100%. So they're looking at how do they make their organizations more resilient, how do they become more resilient in digital forensics and incident responses as part of that. So yes, there definitely has been a marked shift in terms of how both executives and even boards think about their security posture and DFIR, the business that we're in is a big part of that.

[Thanos Moschopoulos, analyst]

So the bottom line, I mean, at this point, no real change in customer behavior, no change in sales cycles in a negative sense, right?

[Adam Belsher, executive]

No, no, we haven't seen anything.

[Thanos Moschopoulos, analyst]

I know you don't disclose customer count, but from your commentary, it sounds like the growth in new customers is accelerating. So I guess, firstly, can you confirm that's the case? And then secondly, is that a result of maybe new sales hires? Is it partly a result of being able to resume travel and getting people in front of new prospects? If you could clarify on that?

[Adam Belsher, executive]

Yes. So we've -- over the last couple of years -- at the back end of last year, we spent a lot of time thinking about how we can refine the sale, the go-to-market model. And we hired some inside salespeople and built up a team there, really focused on that new logo acquisition, qualifying customers, outreach to customers. So that is -- we're starting to see the fruits of those investments that we made in the back half of last year. So that's definitely a determinant of it. We've certainly cranked up -- we've increased our marketing, especially around digital. We're doing more conferences. We're doing more targeted digital enterprise customers, which is creating more demand at the top of the funnel. So those are the 2 big ones.

And then I guess the third one would be, we have people that -- we've increased the size of our outside sales team. So we have more people in market. And as you get to these bigger solutions that obviously have higher dollar values being in front of those customers to sell the solution and really work with them on their workflows and integrating with their security stack is an important part of kind of the formula. So I'd say it's a combination of all 3 of those things.

[Thanos Moschopoulos, analyst]

Maybe just last one for me. Nice uptick in new ARR signed in the quarter. So just to confirm, were there any 7 figure deals that might have skewed that or just a lot more broad-based than that?

[Adam Belsher, executive]

Yes, no 7 figure deals that would have skewed that.

[Operator]

Your next question comes from the line of Paul Treiber with RBC Capital Markets.

[Paul Treiber, analyst]

Just wanted to focus on the relative growth in public sector versus private sector. You mentioned in the prepared remarks that public is 60% of ARR, so private will be 40%. Could you double-click on that and just qualify how the growth rates of both segments has been tracking in terms of either ARR or SaaS growth?

[Adam Belsher, executive]

Yes. We don't actually break that out from a disclosure perspective, Paul. But what I can say is, I think we've talked about this maybe in the past, we -- our go-to-market for public and private are slightly different. And our sales motion is quite different where in a public sector most of our growth comes from selling more solutions or adding more licenses to existing customers. And then on the private sector side, which is really made up of enterprise and service providers is, there's a lot of greenfield of new logos out there. So on a relative basis, on a percentage basis, that enterprise growth is higher. But you got to remember, it's on a smaller revenue base as well. But we're definitely seeing from a new account growth, the majority would be coming from the private sector.

[Paul Treiber, analyst]

And just focusing a bit more on the private sector. I mean, do you have a sense of how the adoption of the -- or usage has changed over time? And maybe it was more -- several years ago more used in HR and investigations. Is it now tipping over where the majority is now related to cybersecurity deployments as you illustrated it?

[Adam Belsher, executive]

Yes, you're right. The traditional use case for us has been what we would call HR investigations, whether that's fraud or intellectual property theft or harassment type of cases, that was typically the bull's eye, let's say, 3 plus years for us, 3 years out. In the past, that was the typical use case as what we've seen with all the cyberattacks, cybercrime, the phishing emails, business email component, all these things that are happening in the organizations, the use case for our product in those types of cases, the pure cybercrime, I would call it, has definitely grown.

And then you've got -- the other backdrop you have in a lot of countries, U.S., Canada, Australia and others are following is you have more actually regulation now for certain types of companies that are running critical infrastructure and even financial services where they actually have to report these breaches within a certain amount of time. So there's a compliance angle to this. There's a risk management angle. And then there's the overall increase in cybercrime that's really driving people to use our products.

And then the other thing that's a realization for a lot of companies is as good as the leaders are that are doing endpoint security, like the best-in-class is about an 85% prevention rate. So forensics is an important part of that cybersecurity posture, that resiliency that organizations are focused on because they have so much of their assets now that are digital, and organizational risk and risk management is such an important part of how they operate their business. So it's become a bigger use case than it was 3 years ago and it continues to grow.

[Paul Treiber, analyst]

That's helpful. Just lastly, just in terms of your investments in the cost base, it sounds like you're being a little bit more conservative on bringing on new talent. How do you think about the balance there between conservatism, but then also the need to continue to make new investments to drive growth across all the markets that you're in?

[Adam Belsher, executive]

Yes. I mean, I think you nailed it. It's a balance, right? We have to -- we were a bootstrap company prior to going public. So we really understand the discipline of driving the top-line, but also making sure that you're profitable and thinking about things like unit economics and making sure those are in check. So we kind of run through the key KPIs, if you will, at least a rule of 40 positive unit economics with certain ratios. So we look at that, but we also have to balance that we are a growth company, but we want to make sure we do that -- we grow profitably and make the investments where we need to. So it is a balancing act and I think we have a track record of doing that. So we'll continue to kind of execute on that plan.

[Operator]

[Operator Instructions] Your next question comes from the line of Javeria Gaya with CIBC Capital Markets.

[Javeria Gaya, analyst]

This is Javeria dialing in on behalf of Stephanie Price. I just have a couple of questions here. Obviously, you're seeing a strong demand environment right now, but under recurring revenue growth, maybe if you can expand a bit on the mix between new customer acquisitions versus upselling to existing customers?

[Peter Vreeswyk, executive]

Yes, I can take that question. So we're seeing good growth across both an increase in recurring revenue from new logos and from cross-sell and upsell. I would say the majority of the increase in recurring revenue, especially this year, does come from our ability to expand within those accounts. So the new logos that we landed in 2021 and early 2022, we expand those accounts quite significantly and that is really the big driver from a contribution of ARR growth comes from those.

The smaller portion does come from new logos in an immediate period when those new logos are added. But again, those new logos in a future period start to add more notably and more significantly to ARR as we expand those accounts. So I would say majority of ARR growth in the period does come from cross-sell upsell and the remainder from new logos.

[Javeria Gaya, analyst]

And then maybe if you can comment on the M&A environment. How active do you intend to be for the remainder of 2022? And in general, how should we be thinking about capital allocation for the full year?

[Adam Belsher, executive]

I mean, we -- since we've been public, we definitely -- we have a team now that's focused on -- that's quite active in identifying targets and talking to different targets. So we're in quite a few different discussions. I'd say our sweet spot is around kind of technology tuck-ins in the kind of $5 million to $20 million range acquisition, but we're also looking at bigger opportunities. But yes, the -- what we're seeing in the private market is the multiples are starting to come down. There's a bit of delay from the public markets, but -- so that's nice to see. And we think there's opportunities for some consolidation in our market.

[Operator]

Your next question comes from the line of John Shao with National Bank.

[Meng Shao, analyst]

I just want to ask about your partnership channels for the quarter. Any updates on that front? And how should we think about the opportunities for 2022 and potentially beyond?

[Adam Belsher, executive]

So I guess, the first one on the partnership. Yes, I mean, we've announced, obviously, it's been a few months now a partnership with NICE Public Safety, which are one of the big public safety vendors and kind of we're working through some of the integration there. Our plan is, especially with products like Magnet REVIEW and our AUTOMATE product is making our APIs more robust because there is an opportunity as we talk to customers whether it's in the enterprise or within public safety is making sure that the products are well integrated and are efficient in terms of the workflow with other products.

So we have APIs in AUTOMATE as an example, which is opening up some good partnership opportunities. And then in REVIEW, it's something that we're working through. But we suspect once that happens, we do have a line-up of partners that either proactively reached out to us or that we're going to target that makes a lot of sense. So we have some work to do on the technology side just from an enablement, and I think that really unlocks some new channels for us.

[Meng Shao, analyst]

And the other question for me is for the new product, Magnet IGNITE, could you just give us some color on the pricing mechanisms? And what kind of revenue opportunity do you think this product would generate for the company?

[Adam Belsher, executive]

Yes, it's -- we launched it, I want to say, like in -- I think it was March or April. So it's still quite new in markets. We saw over the last couple of years just working with enterprise customers, we saw a real need that nobody was filling around you have the endpoint security guys and the vendors that are dealing with, in a lot of cases, millions of endpoints or hundreds of thousands of endpoints on the prevention side.

We have our other products like AXIOM CYBER that are for deep dive analysis, but there was this middle ground, which is how do you quickly triage a bunch of endpoints on your network that may have been compromised or not and then determine which ones you want to do a deep dive. So that triage is quite an important part of the workflow and it helps us move up kind of that workflow stack, if you will.

So it's early days. I would say, it's quite popular, especially with the service providers because it's a really easy way for them to work with their end customers in doing incident response or forensic work. So yes, I mean, I think it's an opportunity for us. It's a real need in the market and we're the first mover there. And we have focused on getting traction and maturing the product. But initial response from customers that have used, that are using it has been really positive, because at the end of the day, if we can help them, especially on the service provider front, generate more revenue from their customers, then that's a big win for them. So a lot of focus for us on that Magnet IGNITE product.

[Operator]

This concludes the question and answer session. I will turn the call back to Adam for any closing remarks.

[Adam Belsher, executive]

Thanks for joining us today. Have a great day everyone.

[Operator]

This concludes today's conference call. You may now disconnect your lines.