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Zix Secure Cloud Global MSP Partner Expansion Gains Traction

David Wagner, CEO, Zix
David Wagner, CEO, Zix

Cloud and email security provider Zix is gaining traction with its global MSP partner expansion, especially in the United Kingdom and Germany, CEO David Wagner told Wall Street analysts during Zix's quarterly earnings call on August 5, 2021.

The Zix product portfolio spans email encryption, threat protection and message privacy; archiving; secure file sharing; and backup and disaster recovery (BDR). Some of the products were built organically, while others involved acquisitions such as AppRiver (2019) and CloudAlly (2020).

Zix revenues rose 18 percent to $62.8 million in Q2 of 2021 compared to Q2 of 2020. Much of the growth involved 5,600 partners -- most of which are managed IT services providers (MSPs) that transact with Zix.

Zix MSP Partner Base: Performance Metrics

For instance, sales to existing customers through MSPs accounted for 51 percent of the MRR (monthly recurring revenue) increase in Q2 2021 -- up from to 44 percent in Q1 of 2021. "We see this largely as the reversal of the COVID trend of reducing users to reflect the increase in SMB hiring we saw in North America, especially in March and April ," Wagner said on the Zix earnings call.

Podcast: Justin Gilbert, senior director, channel marketing, AppRiver, a Zix company

Still, the Zix strategy extends beyond North America. During the quarter, Zix added 39 partners across EMEA (Europe, Middle East and Africa) -- including 16 in Germany. Justin Gilbert, senior director, channel marketing, explained the partner expansion strategy in a June 2021 ChannelE2E Podcast.

Now, CEO Wagner is reinforcing Gilbert's points. "Our global partner expansion continues to gain traction, especially in the UK and Germany," Wagner said during the August 2021 earnings call. "In fact, all five of our top new partner wins were international, with three in the UK and two in Germany. Our UK MSP wins in the quarter included a highly accredited UK-based MSP who initially moved over the Microsoft users and more recently moved over more than 1,000 seats of email security to our advanced Email Threat Protection."

That partner is expected to potentially tuck cloud backup into the end-customer deal, Wagner added.

Zix Competes for MSP Mind Share, Market Share


Admittedly, Zix faces intense competition in a crowded market. Dozens of technology companies now pitch email security and data protection solutions to MSPs.

Still, key Zix business metrics remain in growth mode. For instance, Zix annual recurring revenue (ARR) increased 17 percent to $252.4 million in Q2 of 2021 compared to Q2 of 2020. Also, cloud ARR increased 24 percent to $225.6 million -- or 89 percent of total ARR, the company said.

Zix's overall Q2 revenues for 2021 exceeded Wall Street's expectations by about $1.45 million, but earnings per share slightly missed expectations, SeekingAlpha reports.

Joe Panettieri

Joe Panettieri is co-founder & editorial director of MSSP Alert and ChannelE2E, the two leading news & analysis sites for managed service providers in the cybersecurity market.