M&A Announcement

Sep 29, 2021

Press Release

Good day, and thank you for standing by. Welcome to the Akamai Technologies Investor Call. At this time, all participants are in listen only mode. After the presentation, there will be a question and answer Please be advised that today's conference may be recorded. I'd now like to hand the conference over to Tom Bart, Head of Investor Relations. Good morning, and thank you for joining us to discuss Akamai's execution of a definitive agreement to acquire Guardicore Limited. Participating on the call today will be Doctor. Tom Layton, Akamai's Chief Executive Officer and Ed McGowan, Akamai's Chief Financial Officer. A press release with information on today's announcement can be found under the Press Releases portion of the Investor Relations section of akamai.com. The agenda for today's call is straightforward. We will begin with prepared remarks regarding Gardacor, its technology, the opportunity And potential synergies in front of us and additional color on expected longer term financial impact. And then we'll open up the call for a question and answer session. Given that we are still within the fiscal Q3 and the acquisition is not yet closed, we do not intend to discuss any Q3 financial results for near term financial impact of GARDICORE today. We do expect to provide the customary quarterly color as well as any potential GARDICORE impact To our Q4 outlook on our next quarterly earnings call scheduled for November 2. A replay of this call will be available via webcast on the Akamai Investor Relations website. But before we get started, please note that certain comments made today may be characterized as forward looking statements, including comments about the expected financial impact of the acquisition. Actual results may differ materially from those indicated by these forward looking statements due to various important factors. These include, but are not limited to, Such things as substantial delay in the expected closing of the proposed transaction, inability to satisfy all conditions necessary To complete the acquisition, any failure to realize the expected benefits of the acquisition and difficulty integrating Guardicore into Akamai And other factors that are discussed in our annual report on Form 10 ks, our quarterly reports on Form 10 Q and other documents periodically filed with the SEC. Any forward looking statements discussed in this call represent the company's view on today's date. Akamai disclaims any obligation to update these statements to reflect future events or circumstances. During the call, we will be referring to some non GAAP financial measures that we believe are helpful to understand our financial expectations with respect to the proposed acquisition. These non GAAP measures are not prepared in accordance with generally accepted accounting principles. A detailed reconciliation of GAAP Non GAAP metrics can be found under the News and Events portion of the Investor Relations section of our website. Now I'd like to turn the call over to Tom. Thank you all for joining us. Today is an exciting day for Akamai. This morning, we announced that we've signed a definitive agreement to acquire Gardacore, A privately held company that offers security services to protect enterprises from ransomware and malware. Enterprises today are confronting a rapidly evolving threat landscape with sophisticated attackers who are trying to steal their data, Disrupt their operations and extort them for large sums of money. The recent growth of ransomware and other malware based attacks has been explosive. One firm estimates that the number of devices infected with ransomware grew 35 fold last year. This has caused significant damage for companies, Governments and end users all over the world. Recently, we've seen such attacks impact critical infrastructure at a major energy pipeline And it's the world's largest meat packer. One target, Colonial Pipeline, said it paid $5,000,000 to attackers to make the problem go away. IBS reportedly paid $11,000,000 Globally, the costs associated with ransomware are expected to reach $20,000,000,000 this year. These growing impacts illustrate why stronger enterprise defenses are urgently needed. One weakness is that traditional firewalls are no longer sufficient to prevent malware from entering and spreading undetected within a corporate network. There are just Too many ways for malware to sneak inside an enterprise today. It can be imported as a result of compromised supply chains, Phishing schemes, infected third party content, stolen credentials or employees connecting infected devices to corporate networks and applications. And the problem has gotten even worse with so many employees working remotely. Once malware gets inside the enterprise, it's Critical to stop it from spreading. For that, we need micro segmentation, also known as 0 Trust segmentation. Gardacore's best in class micro segmentation solution works by limiting access to only those applications that are authorized to communicate with each other. By denying communication as the default, the threat surface and risk exposure are drastically reduced. This limits the spread of malware and protects the flow of enterprise data across the network. And this protection extends beyond the data center to the cloud, Including bare metal, virtual machines and containers. We believe that Gardacor solution is the perfect addition to Akamai's 0 Trust portfolio, Enabling Akamai to offer customers a comprehensive solution to stop the spread of ransomware and malware. Akamai's existing solutions help prevent attackers from gaining access to enterprise infrastructure and applications. But to be secure in today's world, you also need a second layer of defense to block the spread of malware when it gains a foothold in the enterprise, And that's where Gardacor comes in. Their solution helps detect that a breach has occurred through unparalleled visibility into the core of the enterprise And immediately limits the damage that it can cause. In addition and importantly, Gardacor solution is relatively simple to implement. It features easy to use policy based controls and interfaces well with the legacy application environments present in most enterprises today. GardaCore protects hundreds of enterprises today, including global financial institutions, top retail brands, leading tech companies, Carriers, manufacturers, utilities, law firms and other major companies that can't afford to take risk with their operations or data. Gardicore is based in Tel Aviv, close to our existing office that is home to about 200 Akamai engineers, most of whom work on our security products. We believe Gardacore's highly talented team and strong culture will be an excellent fit for Akamai, And we're very excited about what the combination will mean for our customers and our growth strategy as we fulfill our mission to power and protect life online. As we previously reported, our security business generated $325,000,000 of revenue in Q2, Growing 25% over Q2 in the prior year, Akamai already leads the security market in DDoS prevention, Web App Firewalls and Bot Management. In fact, Gartner has recognized Akamai as a leader in web application and API protection For 5 years in a row, and Forrester named Akamai as a leader for web app firewalls, bot management and 0 Trust for enterprise security. We're confident in our ability to build upon this very successful track record as we combine with Gardacore to stop ransomware and other threats. Given the rapidly increasing demand for micro segmentation solutions as a result of ransomware attacks and regulatory requirements, We believe that this acquisition will help drive substantial continued growth for Akamai Security Services going forward. In fact, with the addition of Gardicore, we expect that the revenue generated by our access control security solutions To more than double from over $100,000,000 this year to well over $200,000,000 in 2023. Together, Akamai and Gardicorn have a great base of products, customers and channel partners as well as a great team of security experts. And together, we have an exciting opportunity to do even more to make life better for billions of people, billions of times per day. I'll now turn the call over to Ed, who will cover the financial aspects of the acquisition. Ed? Thank you, Tom. As Tom mentioned, today we announced the acquisition of Gardacore, a company that offers security services to protect enterprises from ransomware and malware. We're very excited to add Gardacore to our impressive and growing list of 0 trust access control capabilities. Under the terms of the agreement, Akamai will acquire all of the outstanding stock of Gardicore in exchange for approximately $600,000,000 of cash. The transaction, which is subject to customary closing conditions, is expected to close in the Q4. Therefore, the acquisition We'll not have any impact on our Q3 results. We plan to update our annual guidance as well as provide Q4 guidance, both of which will include the impact of the acquisition when we report Q3 results in early November. Looking ahead to 2022, we expect the acquisition will add roughly $30,000,000 to $35,000,000 To our security revenue in 2022, it will lower Akamai's non GAAP operating margin. We currently expect our 2022 non GAAP operating margin to be in the range of 29% to 30% As we work through the integration of Gardacore, we do, however, expect to get back to at least 30% Non GAAP operating margin for 2023. We will provide more detailed revenue and EPS guidance for 2022, Which will include the impact of Gardicore on our Q4 earnings conference call, which will be held in early February 2022. Acquisitions remain a key component of our innovation and growth strategy. We believe we have demonstrated a disciplined approach For evaluating and prioritizing opportunities with a specific focus on creating shareholder value. As Tom mentioned, Gardacore is a great addition to our security business. Along with its best in class technology, Gardacore also brings an experienced leadership team A very talented team of security experts. Importantly, the acquisition expands our existing employee footprint in Israel, which is already a key technology hub for our security business. Upon the close of the acquisition, DataCore's roughly 300 employees We'll be integrated into our Security Technology Group. While we expect Gardacor to be dilutive to earnings in the near term as we integrate the companies, We are confident that we can grow and scale the business to drive significant revenue and profit growth over the longer term. With that, I'd like to ask the operator to open up the call for Q and A. Operator? Hi, guys. It's Matt Wilson on for Keith Weiss. Can you talk about the competitive landscape, who is Gardacore competing against and how does Akamai kind of fit in Sorry, to this market? Yes, good question. I would say Gardicore's primary competitor is Illumio. Olumio is a private company that offers micro segmentation services. Hard to know exactly their revenue. They might be a little bit larger In revenues in Gardicore, and both the companies are competing against sort of the old way of doing things, which is Putting a device in segment in the network using hardware, and those would be companies that offer firewalls, for example, Palo Alto, Fortinet, Checkpoint. But in terms of the much more effective way of doing micro segmentation, the 0 Trust of the future, I'd say it's Gardacore and Illumio are the only players really out there today. There's a lot of startups, pre revenue companies, Some of them bought recently by larger companies, but I would say most of the competition will be with Alumio and of course, really most of it is Greenfield. Awesome. And maybe a second question. Just in terms of the talent you acquired, 300 employees. Could you give a breakdown on how many are Focus on R and D and then how many are salespeople? Yes, sure, Matt. This is Ed. So if you think about the 300 people there, it's roughly, call it, about 130 or so that are in the R and D area. On the 6th, it's north of 100. We also have some resident engineers, technical folks that can work on-site as well. So the majority of the company is broken up between sales and R and D. Awesome. Thank you. Our next question comes from Sterling Auty with JPMorgan. Yes, thanks. Hey, guys. So two technical questions. 1, can you talk about architecture of Guardicore In terms of how are they delivering the solution today? So are they in do they have kind of a small network of pops that you're going to be able Expand out across the Akamai network or what is the deployment model? Sure. We'll start with that one. The architecture is pretty unique and it gives them strong competitive advantages. They place an agent on pretty much every app Within the enterprise, within the data center or in the cloud, wherever it exists, and then that application Talks to a controller asynchronously. Now the controller can be on the premises of the enterprise, so totally disconnected from Any central platform or it can be in the cloud and connected. And so you could the enterprise can do it either way that they want to set it up. And the agents restrict the communication so that apps one app can only talk to other apps that it's supposed to be talking to, And it monitors it and gives visibility to the manager of the core network and security. Now one of the big advantages of Gardicorp's approach over Illumio and others is that not only is it easier to implement, Micro segmentation has a reputation for being very hard and expensive to do. That's not the case with Alumio sorry, not the case with Gardicore, It also gives great visibility. And so a lot of their customers go out of their way to say how helpful it is. They can finally see and understand what's going on in their network. And of course, if there is a breach, it immediately is reported. And because by default, the communication is blocked where it's not supposed to go, You stop the spread automatically of the malware. And so the platform stands alone or can be integrated into the cloud And ultimately, of course, to the Akamai platform. And the follow-up question, you kind of touched upon it there at the end. When you talk about being able to stop the malware once it's in, it sounds a lot like endpoint detection and response or EDR Companies like CrowdStrike. So how would you say that this solution either complements or competes against some of those endpoint technologies? It's complementary. So we won't be competing with CrowdStrike, which has software, monitors what's on the device. We're in the process of Monitoring the communications and so that you don't let one app talk to another app, if it's not And of course, most apps shouldn't be talking to most other apps. And so you block that. And that has advantages because often the Lloyd, and the malware that's being passed hasn't been diagnosed before and may not be caught at all by your endpoint protection. And the whole key is to stop it from spreading. And that's exactly what Gardicore does. So if you want to stop ransomware, you need Gardicore. Makes sense. Thank you, Tom. Our next question comes from James Fish with Piper Sandler. Hey, thanks for the questions. I actually just want to work off of Sterling's share. First, when will the cloud management be put on top of the Akamai network, And second, could you use this agent based real estate to really expand into really other security markets and use cases organically? Obviously, we talked about firewalls being replaced here with the technology, but could you even go down the identity access routes given the ability to tie Paul, see to the identity of the end user? Yes, great question. To run Guard A Core today, you don't need to be on the Akamai platform. That said, in the future, there could be very strong advantages to doing that. And in particular, the first place you'll see the integration Is with our EAA solution, which will operate off the Akamai platform, and let me say a few words about that. Micro segmentation is often referred to As blocking what's called East West Communications, communications from one app to another. Now the next thing you need Adjacent to that is what's called north south communication. And that's communication between an employee device and an enterprise application. And of course, that's a solution that Akamai offers today with enterprise application access. The goal of NorthSouth is to keep an infected employee's device From sending that infection or malware from the employee device into the enterprise application. East to West Keeps it from moving from that enterprise application to all the other enterprise applications. Now today, those two products are usually bought separately, But increasingly, we're seeing our customers want to have them be part of the same solution, the same policy controls, The same pane of glass to monitor it. And that puts Akamai in a great position. And that's why we're so excited about the fit with Gardicore. Not only is it stop ransomware, but it fits their East West solution fits very nicely with our North South solution. And that's where we think the future of 0 trust is going, is the combination. Now of course, EAA interfaces vary heavily with the Akamai platform Because there, the performance matters because if you want to be if you're in between the employee device and the Enterprise network applications performance really matters and that's also a perfect opportunity to insert our market leading web app firewall. So not only are we blocking communication where it shouldn't be taking place, But where it is allowed, we want to be filtering the communication to get rid of any malware to the attack as malware trying to be spread. And long term, you can think about that within the enterprise as well. And to your point, I think you had to make a very good point. Once you have this footprint of being Having an agent on every application, that's tremendously powerful. And I think one of the things that Gardacore has done really well, probably market leading, As they have figured out how to interoperate with all the legacy environments inside the enterprise, and that makes a big difference. You think about just deploying the agent, that's not a simple thing because there's all these different environments that it has to work with. And they've also partnered with all the leading players in the market to make sure that their software major Cooperates and works well with all the other kinds of software and security solutions that an enterprise will have. And those are big advantages for Gardicore And why when our IT department was looking at a micro segmentation solution and tried all the products that were available, they like Gardacore by far. Understood. And then if I could follow-up on the over 100 sales and marketing employees you're bringing in, I guess, will they be entitled to sell the entire Akamai Security Suites over time? Or do you intend to keep them as Guardicore Specialist. And then Ed, if you could talk about the growth rate of Guardicore and any purchase accounting adjustments we should think about. Yes, sure. Thanks for the question, James. So initially, they're obviously going to be focused on Gardevo. I think over time, we've shown that Our sales force can sell any other product. It would be natural, as Saum was just talking about, for the Gardacore team to start selling our EAA and DP Solutions, and then over time, the Web App firewall and that sort of thing. But it's going to integrate into The PJ sales team, we're going to keep the entire team together, integrated with our overlay team as well. So we do expect to see a lot of synergy there instead of introducing Tarasor into our channel partners. As far as growth goes, they were roughly doubling Year over year. Just one thing to keep in mind, just to spend a minute on revenue here. Guardicore Sales both term and SaaS, about 40% of their legacy business was term licenses. Our plan is to be 100% SaaS, maybe there's a few exceptions from time to time. The when you The other thing they did is they haven't integrated ASC 606. So we have to sort of restate that, if you will. And obviously, with purchase accounting, there's going to be a little bit of a haircut. So if you look around and you see any numbers that are out there, it It might be a little confusing for anything that's out there in the press. But the numbers that I've provided for next year, we've already taken all that stuff into account, but just something to think Our next question comes from Colby Synesael with Cowen. Great. Thank you. Maybe just a follow-up on that. Does the guidance for 2022 assume doubling continues or were you more conservative? And then secondly, how do you plan to finance The acquisition, are you intending to potentially raise equity, put that on or just reduce the cash balance since you obviously have the cash available? And then lastly, are there any earn outs or should we think of the $600,000,000 as the full price? Thank you. Yes, great question Colby. So financing right off the balance sheet, no need to raise capital. We'll produce more than $600,000,000 in free cash flow next year. So no issues there. No earn outs. There's obviously investments you do with balance sheet as you go from signing to closing and that sort of thing. So 600 is about the right number to use and maybe a little bit more, a little bit less, but no one else. And then your other question, sorry, it's doubling. The point I was just making on The first year you do an acquisition, when you have term licenses, you have to under ASC 606 take most of that upfront and then spread the remaining obligation Over the remaining terms, let's say, call it, the maintenance period. So you have to adjust for that and you lose a lot of that in purchase accounting. So it won't be a doubling necessarily because of the fact that you're kind of comparing apples and oranges. But as far as the productivity goes, we would expect it To continue to grow very, very rapidly, and if I were to do apples to apples, it's probably more than a double going into next year because we're going to be accelerating their growth rate. But there's just nothing that we have to work out through in the 1st year of purchase accounting, which gets kind of a little messy in terms of I'm trying to compare to historical numbers, especially since they weren't they hadn't adopted ASC 606. Great. Thank you. Our next question comes from Frank Louthan with Raymond James. All right, great. And just to follow-up on that a little bit more on the growth side. So can you give us an apples to apples on the $30,000,000 to 35,000,000 On the apples to apples, what would that growth represent or maybe going into 'twenty three on that new accounting? Can you give us an idea there? And then What are you doing? Are there any sort of key employees or founders there that you and how have you incentivized them to stay with the company To keep that knowledge base with the business. Thanks. Yes, sure. It's really hard to say since they weren't using that method. But if I sort of look at kind of the comparing the old way of doing things with the continuing it, if we would have Follow that going forward, it's roughly doubling. So I think that's a good way to think about it. Don't want to give guidance for 'twenty three. We think this could be Significant part of our business going forward. We hope to be able to deliver those type of results or even better, but it's early days. I don't want to give Any guidance beyond what I've already provided. In terms of the FOMs, yes, they're going to be staying with us. Obviously, our incentives are tied to Stock and whatnot, so they're going to be have to have a heavy incentive to stick with us. Their father will be reporting directly to Rick. Very excited to get that leadership team, some folks that have a lot of experience in this area. So very excited to have the team. I think we have Adequate incentive structure to keep them around for a while. All right, great. Just one quick follow-up. On the R and D investment, do you expect that level Spend to stay the same? Are you looking at this opportunity to ramp up the R and D in this area? How should we think about that going forward? Yes. I mean, this is certainly an area of investment for us across the company. Enterprise Security in general has been a pretty big area of investment. There will obviously be So natural synergy, not in terms of cost cutting, but just in terms of just sharing of technology and mind share As we put the 2 engineering teams together, but we're going to continue to invest in this business going forward. All right, great. Thank you. Our next question comes from James Breen with William Blair. Thanks for taking the question. Can you just talk about their existing customer base and any overlap as the existing customers in terms of opportunities The customer base has good synergy with us. I would say they're strong in the major financials, Retail, big tech companies, obviously, there's a lot more regulations now being put in place requiring micro segmentation. That's very helpful. And so I think there is very strong cross sell opportunities. So our field, as Ed talked about, is looking forward to bringing Their solution into our base, where there should be a strong positive reception. Great. Thanks. Our next question comes from Will Power with Baird. Hey, thanks for taking the question. This is actually Charlie Ehrlich on for Will. Most of mine have actually been asked already, but I guess I'll just ask quick one on the COVID impacts to Gardicloud's business. Is there any color you can provide on how COVID impacted revenue trends From 2019 to 2020 into 2021? I don't think COVID is a primary driver. Of course, that said, with a lot of more people working remotely, which I think will continue past COVID, That does increase the exposure. And we have certainly seen a huge increase in ransomware attacks since the start of COVID. Now Did COVID cause that or not? Hard to say. But the increase in ransomware makes a big difference obviously for Gardevoir's business Our next question comes from Alex Henderson with Needham. Great, thanks. So you talked about the EAA section of your business going from $100,000,000 currently to $200,000,000 in 23. That would imply some pretty good growth, but nowhere near a doubling. Can you talk about what the baseline is and what's In the EAA segment, how much of that is the Zscaler like type products? How much of that is Other stuff, what else is in the EIA that's in that baseline that's being added before this is Yes. Good question, Alex. So if you remember from our Analyst Day, this is the access control segment of our business. So that includes Our EAA, E2P and MFA solutions as well as our secure business, and that's also where Azaovy sits. So this will be added into that product suite. And if I could, just a follow on. One of the biggest challenges with This type of technology is the unintended consequence of putting a Blockage on applications or network components that need to communicate with each other that causes disruption to the existing business. So can you talk about how long it takes to deploy the technology In the context of ensuring that you're not knocking down important communications as you're doing it And whether this is something that is land and expand or whether this is generally tried to be rolled out across the entire enterprise, it Sounds like it's a land to land type of business model. Can you just pick on that a little bit? Thanks. Yes, great question. And this is an area where Gardacore excels. As you point out, micro segmentation can be really hard to implement And cause problems. And Gardacor has figured out how to do this much more simply. I think land and expand is a good way to think about it. As you add agents to applications, they're added into the framework, you get your visibility. And you don't initially, as you're deploying it, block everything. You first turn it on and you see what's going on in your network. Some reasonably small number of months would be a typical time to get an enterprise fully up to speed. A very large enterprise might take longer. A large global financial institution, that might take longer to do. And there may be people, that's what their job is to do. In fact, this is an area we look forward to working with our major Partners today, because this is an area where they could add a lot of value in terms of the major enterprises in getting their networks fully locked down. But the nice thing about the Guardicore solution is you don't have this issue where you're breaking things trying to get the security report. Thank you very much. Our next question comes from Amit Baryanani with Evercore. Yes. Thanks for taking my question. I just I have one, a lot of them have been asked, but the one I have to use, I think in the analyst days, we talked about Akamai spent around $1,300,000,000 $1,400,000,000 in deals over the last 7 years, and you did, I think, 14 deals in that time frame. Maybe just talk to me about deal sizes because this deal alone is $670,000,000 So I'm just wondering, does that sort of signal an appetite and a desire to scale up Besides the deals we do and what is what could then make the capital allocation of the portfolio? Well, we look at each deal separately. I would compare this Gardacord deal to what we did with Prolexic 7 or 8 years ago. I think it's pretty transformational for us, just the way the Prolexic was. Prolexic established us it's really established us in DDoS, where we're still the market leader by far today. And I think Gardacore establishes us with enterprise security and stopping ransomware, very synergistic with our existing business, just as Alexic was. And so you will see us, I think, rarely do these larger acquisitions. Most of our acquisitions tend to be smaller, tech tuck ins, product adjacencies. And of course, our capital allocation strategy hasn't changed. We are using the capital primarily for M and A. We also buy back our stock to offset equity dilution programs And occasionally buy back more stock opportunistically. So no change, I think, to our overall strategy, We're very excited about this acquisition, and I think it we do compare it in a way that we have a specific acquisition 7 or 8 years ago. Perfect. And then if I can just follow-up and add on the revenue growth you're seeing for the under for Gyrocor, maybe just talk about Yes. I guess what was the growth rate last couple of years, maybe down by the SaaS and the rest of the business? And then how do you see that Going forward with the scale and synergies that Akamai brings to the table for them? Yes, good question, Amit. So They were seeing significant growth doubling over the last couple of years, and so getting to a meaningful scale. Now, of course, you have to Think about how that translates into a world where we're moving to a full SaaS. Obviously, we're going to accelerate the go to market them, it's a pretty significant increase for them in terms of their reach and their access to partners. This we're pretty early on in this Space, and what's exciting to me is that we have a chance to be the leader here in the market in this particular category, which I think will Great for us for dragging along our other enterprise solutions. So as I said, we're very optimistic about the growth rate. They've been they were doing a great job on their own, I think we can really help accelerate them. Obviously, in the 1st year, anytime you do an acquisition where there's a lot of deferred revenue and you get So this haircut that you have to take as you work through purchase accounting, but really, I think the big question will be what does it look like going into 'twenty three. I think Our goal here is to get this launched into our sales force, get them trained up as fast as possible, get everybody out selling And hopefully exit on a path to do to double or even do better than that hopefully coming out of next year. Perfect. That's really helpful. Thank you. Our next question comes from Brandon Miskell with KeyBanc. Great. Two questions, if I could. Can you talk about the process here? Was this company that was openly listening for bids, we're concluding with somebody else. Secondly, on I think the last question, it is the largest acquisition think you guys have ever done comp in the past. You've talked about valuations that have been stretched. What got you comfortable here? And I guess, is this The new baseline for what you guys would call small tuck in acquisitions? Thanks. Yes. The process was that We have been looking for this solution for some time and discovered Gardacor, And we actually looked at all the companies out there and also for, as I mentioned, for our own solution in our own IT department. And we like Gardicore, but thought they were the best by far. They were not for sale, but we approached them. And after A long process of talking and working together, they became open to an acquisition. I don't think they were looking to sell, but there's a really good fit between the companies and not just on the product that we talked about. They have the leading East West solution. We've got a great North South solution. We both feel the future is the merge of those 2, But also a great cultural fit. And that obviously is important to them as they merge into a bigger company, and that's always very important for Akamai. So it's not a situation where they were looking to sell the company, actually quite the reverse. And it's not our largest But it's certainly the largest one for, well, probably close to 20 years. And it's probably most comparable, as I mentioned, to the Prolexic acquisition. I think we spent about $400,000,000 for that and the revenue was back then maybe they had a little more but pretty close to the same revenue. And I think the impact on our business will be at least as large with GardaCore because I think there's an enormous future potential For 0 thrust in the enterprise, there's huge potential today to just stop ransomware. And they have got a great solution to do that. Now I would not call this a tech tuck in, and it's not a new baseline for a tech tuck This is the kind of a deal that we do once in a long while when we see an incredible opportunity and A fair price for that opportunity. Now there's no cheap security deals today for companies that have really good solutions, as you know, But this was within the zone of reasonableness and we think a very valuable investment for our shareholders. I would not treat this as a new baseline. In tech tuck ins, when I say that, I mean companies that are much, much smaller than this. Thank you. Our next question comes from Jeff Van Rhee with Craig Hallum. Great. Just a couple of loose ends here for me. How many customers are they bringing? What would a typical ARR be on the SaaS side for a customer? And just to get a sense of sort of full penetration of a large customer, who is their large or what would be the size of their largest customer? And then lastly along that line, any customer concentration? Yes. Thanks for the question, Jeff. So roughly 300, little less than 300 customers coming over. The size of the deals really depends. You could have, Tom mentioned, a few different verticals, say, like a large financial institution that's Tens of thousands of machines and very complex environment could be 1,000,000 or more in a year. And then you've got the smaller ones, say like a regional law firm or regional bank that might be a little less complex where it's would be smaller, maybe in the 100,000, 150,000, 200,000 something like that per year. So it really depends on the size and the complexity. And then As we talked about land and expand, are they just rolling this out to a portion of their environment or the entire environment? So really, there's a lot of variables that go into it. The pricing is based on agent base. We also have some of the larger, more complex engagements. Occasionally, it will be a resident Jameer, that's hired. We're on the professional services side. Long term contracts, which is great. And as I talked about in the past, they were doing more Term licenses, which for a start up, makes a ton of sense. You get the cash upfront. We're going to be moving more towards all SaaS if we can. We're going to need a few exceptions from time to time. But good sized ARPUs, especially as you get into those larger environments. Got it. Great. Thanks. Okay. Well, I think that's it for the questions, operator. Is that correct? Correct. Okay. Great. Well, thank you all for joining us today, particularly on short notice. This concludes the call for today, and we look forward to speaking with you all On our scheduled earnings call on November 2. Have a great day. This concludes today's conference call. Thank you for participating. You may now disconnect.