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Zix Completes AppRiver Acquisition: Cloud Security Provider’s Next Moves

Zix has completed its recently announced AppRiver acquisition. The combined company focuses on email security and cloud-based cybersecurity solutions. Zix, which has a fledgling MSP partner base, is expected to leverage AppRiver’s strong ecosystem of MSPs and Microsoft Office 365 partners.

Zix CEO David Wagner

More clues about the company’s business strategy will likely surface in two places:

  • The next Zix quarterly earnings call, which is scheduled for February 28.
  • The RSA Security Conference, set for March 4-8 in San Francisco, which Zix executives are scheduled to attend.

Zix: Embracing the Cloud Security Opportunity

Zix CEO David Wagner believes SMB customer migrations to the cloud are still in the early innings — providing ample time for the security software company to help partners and customers safeguard workloads as they shift to off-premises systems. He also sees ample opportunity for channel partners in those migrations.

In a prepared statement about the deal close, Wagner said:

“We will focus on integrating the two businesses, accelerating our growth through channel partners and cross-selling, and increasing our profitability through cost synergies and improved attach rates.”

Zix Business Size, Focus, Competition

The combined company expects to have $200 million to $207 million in annual recurring revenue for 2019, which represents an organic growth rate of approximately 11% to 15% year-over-year.

Still, Zix has not disclosed which AppRiver team members will remain with the company. Moreover, Zix has indicated that it will rework AppRiver’s cost model a bit to improve that business’s profitability. Read between the lines and that likely means two things: Less emphasis on helping MSPs to resell Office 365, and some potential AppRiver staff consolidation, ChannelE2E believes. (Note: Those are just our best guesses.)

Meanwhile, competition in the MSP-centric security market continues to intensify. Companies such as Cisco Systems, Barracuda Networks, Sophos, VIPRE Security and Webroot (now owned by Carbonite) specifically target MSPs with security-centric software tools. Plus, private equity firms are buying up MSP-centric technology firms — with a particular emphasis on the security sector.

As for Zix, we’ll be tracking the company’s February 28 earnings call and RSA conference moves for more updates.

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