The last time I visited N-able CEO Gavin Garbutt at the company's headquarters in Ottawa, he was celebrating N-able landing on Deloitte Canada's Technology Fast 50 list. This time around, I expect to see Garbutt in New York the week of August 18, where he'll be meeting with customers and investors. Yes, investors.
Financially speaking, this is an intriguing time for N-able and other managed services platform providers. Here's why.
Although most MSP platform providers are privately held, anecdotal evidence suggests that N-able and many of its rivals continue to grow rapidly. But when are we going to see some initial public offerings, mergers or acquisitions in the MSP platform space? I will quiz Garbutt next week when we meet in New York.
In the meantime, here are some financial insights from my recent conversations with Autotask, ConnectWise, Level Platforms, Kaseya and Nimsoft.
- Autotask CEO Bob Godgart says the first MSP platform IPOs will occur as companies reach roughly $30 million in revenue (rough estimate), but their growth rates will need to show a rapid path to $50 million or so in annual revenue. Godgart didn't disclose Autotask's annual revenue to me. But if I had to guess, I'd estimate most of the platform providers are somewhere between $10 million and $25 million. Again, that's a rough estimate.
- Most executives point to Kaseya as ranking among the largest and fastest-growing MSP platform providers. However, Kaseya CEO Gerald Blackie in June told me the company has no plans to go public and is entirely self-funded -- with no outside debt.
- I haven't spoken directly with ConnectWise CEO Arnie Bellini about their growth rate and long-term financial plans. However, the company plans to host a major user conference in September, and there are indications that it will be the largest dedicated managed services summit ever. Remember: Face to face conferences are expensive to produce, so ConnectWise's efforts here suggest the company is having another strong financial year.
- Level Platforms insiders tell me that they think the opportunity for growth in the MSP space remains strong. One example: Level Platforms estimates that platform providers have penetrated less than 20 percent of the VAR market opportunity. I owe Level Platforms CEO Peter Sandiford a call and will quiz him a bit more on this topic.
- Nimsoft CEO Gary Read provides plenty of financial clues in his personal blog. One recent entry noted that Nimsoft's recurring revenue jumped 130 percent in Q2. And Nimsoft is looking to make highly targeted acquisitions. One recent example involves Nimsoft acquiring Indicative Software.
A lot of this discussion depends on broader economic conditions. If oil prices climb again and the U.S. economy slows, it's safe to expect platform providers to delay potential IPO plans a bit longer.
Another word of caution: I've summarized many of my recent executive meetings and observations in this post. However, I'm sure I'll receive a few emails from PR folks and MSP platform executives saying "What About Us?"
If I didn't mention your company in this blog post, please don't view it as a snub. MSPmentor has posted more than 480 blog entries since January 2008, which means there are plenty of opportunities to have an open dialog with us.
If you have perspectives on the financial health of the MSP space, I'm all ears.