Kaseya Generates 70% Growth In 2016, Pursues Acquisitions
Kaseya has grown its business about 70 percent in 2016, and expects to deliver about 50 percent growth in 2017, CEO Fred Voccola told ChannelE2E on Friday. The figures involve bookings growth (total contract values) rather than revenue growth.
Bookings can be a strong indicator of future revenue growth and performance — if Kaseya retains the customers. There again, Voccola points to progress. Customer retention rates are about 94 percent and vastly improved over the past year. “As a business we’re very profitable. We were expecting to grow 25 percent this year. We’ve got $100 million in our balance sheet and we’re in the market to make acquisitions.”
The acquisitions, he says, will involve purpose-built products that help MSPs to generate more revenues. Kaseya plans to loop in its advisory council to to ensure the acquisitions align with its product and partner strategy, he says.
The upbeat statements arrive roughly 16 months after Voccola arrived as CEO. In July 2015, he stepped into a software company that was at a crossroads. At the time, Kaseya was striving to sell to both MSPs and mid-market end customers. The company’s sale to a private equity firm coupled with multiple acquisitions and management changes had left the business adrift.
In the past year or so, Kaseya essentially hired a new executive team, leveraged existing middle management and doubled-down on its MSP base. “It’s been really good,” says Voccola, reflecting on the journey so far. “It’s going well. It’s going really well. We had a solid strategic plan, and we knew what we wanted to do at a high level. But there’s risk when you take a business over.”
The risk, he says, involved the management team below the executive team. What if they weren’t up to the task? Fortunately, those existing managers were talented — which accelerated the company’s turnaround by about six months, Voccola estimates.
How Kaseya MSPs Are Growing
Kaseya’s MSPs, meanwhile, also are growing. The typical Kaseya MSP grew about 26.5 percent during the first three quarters of 2016. And that figure should rise to about 32 percent growth by year-end, Voccola estimates. MSP satisfaction rates with Kaseya also have doubled, he adds.
Much of the MSP growth involves cross-selling and up-selling. In addition to Kaseya VSA — the company’s flagship product — the company has been investing in 365 Command for Office 365 management; AuthAnvil for identity and access as a service; and Traverse for network and cloud management.
The results sound promising. AuthAnvil’s business is up 400 percent year over year. MSPs are charging $4 to $10 per user per month for that capability, though Kaseya charges MSPs under $1 for that capabilities, he says. “It’s an easy sell,” Voccola asserts.
Meanwhile, Kaseya recently upgraded Traverse to version 9.4 for hybrid cloud and network infrastructure monitoring. Nearly 300 MSPs are now running that platform, which offers a single pane of glass across public, private and hybrid clouds, he asserts. MSPs can also report on a country-by-country basis — an important point amid Brexit, the EU-US Privacy Shield and other compliance regulations across Europe.
“Our product management org has done an awesome job at putting aside their egos, listening to the customer and doing what’s pragmatic,” says Voccola. “The cool part of this industry is we’re dealing with the business owners. And we can help them in a direct way.”
Some of the momentum, he concedes, involves “pure luck — we’re hitting the market at the right time.” Two decades ago, technology became strategic to enterprises. Fast forward to present day and technology has now become strategic to SMBs. “They don’t have a CIO. But they have an MSP.”
Voccola says Kaseya has also migrated hundreds of MSPs onto the company’s PSA offering, known as Kaseya Business Management Solution (BMS). The company has launched a free PSA Migrator tool to ease migrations from Autotask, ConnectWise and other entrenched rivals, Voccola says.
Kasaeya Rivalries Remain Intense
Overall, it sounds like Kaseya has had a successful year that was ahead of plan. Still, it’s difficult to track a privately held business’s overall performance. There’s no way for me to pinpoint actual revenues, net income, EBITDA margins and the associated trends. Putting growth rates into proper perspective also can be difficult without the actual dollar figures on hand.
Kaseya has roughly 464 employees as of mid-November, with a dozen or so positions open. Generally speaking most head-on rivals (Autotask, ConnectWise, Continuum and SolarWinds MSP, just to name a few) have significantly more employees. And all four of those companies essentially declared victory — in terms of growth and momentum — during various conferences in recent months — including Autotask Community Live, ConnectWise IT Nation, Continuum Navigate and a SolarWinds MSP gathering in Europe. Niche rivals, particularly PassPortal‘s alternative to AuthAnvil, also are growing rapidly.
As for Kaseya, Voccola concedes there’s plenty of room for further improvement and continued refinement on partner support, cross-sell education and more. Plus, he’s busy evaluating potential acquisitions. It sounds like at least three M&A deals are potentially on his radar.