According to a report published last year, the global cloud-based email security market is estimated to grow at 8% CAGR to reach $1.1 billion by 2023. Emails are expected to be targets for nearly 90% of hacking attempts globally. The growing adoption of cloud-based services in enterprises, coupled with the rising instances of cyber-attacks involving the use of malware, spam, and phishing attempts will continue to drive the adoption of cloud-based email security services. London-based Mimecast (NASDAQ: MIME) is among the leading players in this market that does more than just email security.

Mimecast’s Offerings

Mimecast was set up in 2003 by Neil Murray and Peter Bauer. A few years ago, I had met with Peter who spoke about the story behind Mimecast. Both the founders had set up companies earlier that were sold off for good returns. They decided to move out of South Africa to London where they met each other. Neil brought business development skills to the table and Peter brought his systems engineering skills. Together, they came up with the idea for Mimecast by recognizing the value of information and email and the complexity involved in moving parts around it.

Historically, companies have focused on providing a solution that either addresses security or archiving. Instead of focusing on one of the two solutions, Mimecast decided to focus on building an infrastructure that does all of those things for thousands of companies. Today its proprietary cloud architecture offers comprehensive email security, service continuity, and archiving in a single subscription service. It has differentiated its offerings from those of the rivals by providing a solution that is integrated and are multi-tenanted.

Mimecast boasts of offering a multi-product and a multi-cloud architecture. Its purpose-built, cloud-native platform –Mime|OS – provides an extensible architecture that lets organizations quickly and easily integrate Mimecast with their existing investments. It offers pre-built integrations along with sample code and documentation that help developers to easily create their own solutions. Organizations have access to build a sustainable cyber resilience strategy that can leverage the power of other technologies available in the industry. Its API partners include names like Splunk, Salesforce, and LogRhythm. It does not disclose usage statistics on these third party APIs.

Mimecast’s Financials

Mimecast raised its first round of funding in 2008. Prior to going public in 2015, it had raised $90 million from investors including ATL Partners, Dawn Capital, Insight Partners, and Index Ventures. It went public in 2015 when it raised $77.5 million at a valuation of $540 million.

Mimecast recently reported its third-quarter results. Revenues for the quarter grew 26% over the year to $110.16 million, ahead of the market’s forecast of $108.28 million. Adjusted EPS was $0.14, which was also better than the market’s forecast of $0.13 and grew from $0.09 a year ago.

Among key operating metrics, the company added 800 net new customers in the quarter to end with over 36,900 organizations globally. It reported a revenue retention rate of 109% in the quarter.

Mimecast expects to end the current quarter with revenues of $112.9-$114 million. It forecast revenues of $425.6-$426.7 million for the year. The market was looking for revenues of $112.98 million for the quarter with an EPS of $0.15 and revenues of $423.73 million for the year with an EPS of $0.48 per share.

Mimecast’s Acquisitions

Mimecast continued to expand its market reach through acquisitions. In the last quarter, it announced the acquisition of DMARC Analyzer to provide customers an integrated solution for strong visibility, governance, and brand protection across all email channels. Netherlands-based DMARC was a SaaS-based solution provider that offered user-friendly Domain-based Message Authentication, Reporting and Conformance (DMARC) setup, management, and analysis. Its simple and effective offerings help reduce the time, effort and cost of stopping domain spoofing attacks.

Mimecast plans to integrate its offerings with DMARC Analyzer’s reporting and email validation solution to strengthen the cyber resilience for customers by providing them with improved visibility into attacks aimed at committing frauds. Terms of the acquisition were not disclosed.

Earlier this year, Mimecast also acquired Israel-based SegaSec, a cybersecurity player focused on protecting organizations from phishing, pharming, business email compromise, and ransomware. Mimecast plans to leverage SegaSec’s digital threat protection capabilities to provide its customers with a solution that can better defend against attacks that leverage fake websites and domains for credential harvesting of customers, employees, partners, and third-party vendors within supply chains. The integrated offering will help Mimecast block and put down suspicious sites and active scams. Terms of the acquisition were not disclosed.

Mimecast’s stock is currently trading at $32.25 with a market cap of $1.9 billion. It was trading at a 52-week high of $53.93 in April last year and a 52-week low of $25.14 last month.