Reflexion: Hosted Email Security Provider Grows 47%

Reflexion: Hosted Email Security Provider Grows 47%

Reflexion Networks, which develops cloud-based email security services, has turned cash-flow positive and generated record revenues in each quarter so far in 2011. In fact, Reflexion's revenues will likely rise about 47 percent in 2011 vs. 2010, according to CEO David G. Hughes. All of that growth is directly tied to managed services providers that leverage Reflexion's services. So where is Reflexion heading next?

First up, the company continues to expand its strategic partner base. The latest Reflexion partnerships include ChannelCloud, PointClickWork and VAR Dynamics. Reflexion also has relationships with CharTec, TeamLogic IT, Naverisk and Synnex, just to name a few. And naturally, Reflexion integrates with most of the major PSA (professional services automation) and RMM (remote monitoring and management) software platforms.

Gaining Critical Mass

Through those relationships and a growing network of partners, Reflexion has lined up roughly 8,000 customers in 45 countries. And Reflexion's entire business flows through the channel, asserts Hughes. The typical end-user environment has roughly 50 to 250 seats, though Reflexion's MSPs have lined up several accounts with 1,000 or more seats.

Moreover, Reflexion has successfully diversified beyond basic anti-spam services. The company now offers email archiving, email encryption and email hosting services. The services all fit under a single umbrella -- the Reflexion Compliance Suite -- to help MSPs focus on end-customer corporate compliance and privacy issues like HIPAA and the Freedom of Information Act.

Looking ahead to 2012, Reflexion will increasingly focus on a Zero Vulnerability, Zero Latency strategy -- which involves a constant build-out and expansion of the company's hosted security services. Plus, sources say Reflexion will likely raise some money in the next few months to help further accelerate that growth. In the meantime, those sources say, Reflexion is cash flow positive with a sustainable business.

Competitive Challenges

Despite its momentum, Reflexion also faces real-world challenges. Rivals like Spam Soap and Exchange Defender, among others, also have strong followings in the MSP community. Reflexion VP of Sales Scott Barlow is a constant presence at MSP events, but so too are channel leaders from Spam Soap and Exchange Defender. Plus, emerging rivals like Maildistiller seem to be gaining momentum with MSPs.

Also of potential concern for Reflexion and its MSPs: Some email security services could become commodity services. As Microsoft Office 365 and Google Apps gain momentum with some customers, it's a safe bet many of those customer will simply leverage email security services that are built into those big cloud platforms.

Still, Reflexion remains in growth mode (and hiring mode, from what we hear) -- though we need to qualify our statements with the usual caveats: As a privately held company, Reflexion doesn't disclose quarterly net income, earnings per share, debt and other financial metrics that allow outsiders to gain a deeper view of the company's performance.
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