LabTech Software CEO Matt Nachtrab Confirms: We're Profitable

LabTech Software CEO Matt Nachtrab Confirms: We're Profitable

LabTech Software, which develops remote monitoring and management (RMM) software for MSPs, is profitable, CEO Matt Nachtrab confirmed in an email to MSPmentor today. That's an important point. Earlier this week LabTech said it had sold 2 million software agents over the past 24 months. But I poked around and tried to get a better feel for what that 2 million node milestone actually means. Here are some insights.

LabTech says more than 2,400 managed services providers (MSPs) now run the company's software. The company claims to be the market share leader ("preferred platform of IT service providers"). I confess: I don't have a feel for "specific" market share numbers but I think it's safe to say there are roughly five to seven RMM platform providers that have large, growing installed bases.

On the one hand it's impressive to hear LabTech has sold 2 million software agents. But on the other hand I wanted to double check:

  • Are the software agents being sold at a profit? (LabTech has been known for aggressive pricing in some circles.)
  • Also, are the LabTech agents all going to ConnectWise partners? (ConnectWise Capital invested in LabTech two years ago.)
Over email, Nachtrab told me that yes, indeed, LabTech is profitable. Then I asked...

Q: Are the 2 million software agents active?

Nachtrab's perspective: "The 2 million is from current active partners. If you mean are they running and checking into LabTech servers, we have about a 60 percent deployment rate on the agents.  Most partners buy the same amount of LabTech agents as they had purchased with their previous tools. Depending on who they came from, the deployment numbers are lower."

MSPs that are jumping from SaaS and subscription-dominant platforms tend to be 100 deployed with the LabTech agents they purchase. MSPs jumping from other competitors tend to be about 33 percent deployed. The overall deployment rate rose from the 50 percent range in 2011 to 60 percent in 2012, he noted.

He continued: "LabTech offers pricing for add-ons at the volume level they are currently at. This means that as they add more their price goes down on future purchases.  This rewards our partners as they grow and is an attempt to get partners to not buy way more than they need to get to a lower price tier."

Q: What percentage of ConnectWise's installed base now runs LabTech?

Nachtrab said:
  • Roughly 32 percent of ConnectWise partners run LabTech (meaning that roughly 68 percent of ConnectWise partners are likely running some other RMM system).
  • Roughly 60 percent of LabTech Partners run ConnectWise (meaning that 40 percent of LabTech partners are likely running some other PSA system).

MSPmentor's Spin

Bottom line: It sounds like LabTech has achieved profitable growth, and it's not all because of the ConnectWise connection. Yes, there is competitive friction in the market as ConnectWise and LabTech work together. But don't forget: ConnectWise still integrates with third-party RMMs. And 40 percent of LabTech's installed base does not run ConnectWise at all, which suggests LabTech has earned quite a bit of success on its own.
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