Barracuda CEO BJ Jenkins says the security and data protection company is gaining momentum in the MSP channel, especially as SMB customers seek to protect workloads across Microsoft Office 365 and public clouds.
"In the MSP channel, we continued to add new partners and products and we are pleased with the growth we are generating through this route to market," says Jenkins. "In the first quarter, we added 160 new partners to our Intronis platform and we now have nearly 2,700 MSP partners."
Barracuda acquired Intronis in September 2015, adding cloud-based business continuity services to the company's portfolio of security solutions. More recently, Barracuda introduced subscription-based firewall services to the Intronis MSP base. As part of that effort, Barracuda veteran Brian Babineau made a seamless transition into the GM position at Intronis. Intronis Channel Chief Neal Bradbury has also provided steady, consistent guidance through the M&A process.
Jenkins and Barracuda CFO David Faugno summarized the overall strategy and partner momentum during a July 7 earnings call. During Q1 2017, Barracuda revenues climbed 11 percent to $86.7 million, while recurring subscription revenue grew to $65.3 million, up 20% from $54.3 million in the first quarter of fiscal 2016. The financial results impressed Wall Street, pushing Barracuda shares up 20 percent on July 8.
Barracuda Bets on Cloud Security
As SMB customers move workloads from on-premises servers to Office 365 and Microsoft Azure, some skeptics wondered if Barracuda's overall security business would shrink. But Jenkins views the cloud inflection point as a business opportunity rather than a downside challenge.
"I know a lot of people have been talking about the public cloud is a headwind for us," Jenkins says. "We view public cloud as an opportunity area for us going forward. When you think about the areas we are investing in in sales and marketing, we are putting more sales people on our MSP and our on our public cloud team. If you see our advertising and branding, it's very centric around public cloud firewall, public cloud security, secure connectivity. Bringing your applications into the public cloud. And we view this as a real, big opportunity for us going forward."
Adds CFO Faugno: "As we see some real strong momentum in some of our core growth areas, particularly around things like public cloud, Office 365 and MSP, we have some opportunities to kind of start to invest behind some of the momentum there, really sort of catalyze growth a few quarters out."
Barracuda's MSP Engagements
Intronis MSP Solutions is a linchpin to that effort. The Intronis partner base has largely mastered the art of monthly recurring revenues, providing a prebuilt channel upon which to offer more and more cloud services.
"In our view, we are completely dedicated to the channel and the channel is changing rapidly," says Jenkins. "Faster than I had seen before. I know a lot of people talk to the traditional channel partners. We just had our Americas partner conference last week and we had our Europe one in May. And almost all of those partners are looking at more of an MSP or service oriented offering going forward. All of these partners are trying to figure out how to play in public cloud. There are now new partners who are born in public cloud that we are working with. So there is a real evolution in the channel and how transactions are happening with our SMB customer base. I feel we have really got our offers aligned to now and there is a lot of excitement in our partner summits about how they can bring these to market."
The other big effort, according to CFO Faugno, involves European expansion. "Intronis has now expanded overseas so we do have our MSP offering available in the U.K. and have intention over time of building that out in Europe which I think gives us access to an incremental market," he says. "We have always been strong in network security and security overall in Europe and I think we have a very good core competency in our sales force towards security in Europe and we continue to execute well in those security offerings in Europe. Our goal is really to improve our data protection business in Europe in the coming year and I think we have that opportunity."
Take a closer look, and you might even say that Barracuda and some of its rivals (example: Datto) are erasing the line between the security and storage sectors in the U.S. and abroad.
