Four things we learned from Exclusive Networks' 2023 Q1 results
Cybersecurity VAD reports gross sales growth by 28 per cent in 2023 Q1
Exclusive Networks has today announced its results for the first quarter of 2023, highlighting double-digit growth in gross sales as "an excellent start to the year".
In Q1 2023, the company reported a 28 per cent growth in gross sales to reach €1.18bn.
The latest financials for the value added distributor follows a strong calendar 2022 performance when its EMEA business turned over its first €1bn a quarter.
Commenting on the company's Q1 2023, CEO Jesper Trolle said: "I am pleased to announce Exclusive Networks continued its strong momentum from 2022 in the first quarter of 2023."
"We grew faster than the cybersecurity market once again, with growth in all regions. This is an impressive result in a challenging macro environment which has impacted global IT budgets.
"Our strong performance reflects demand for our differentiated offering."
He added: "Exclusive Networks helps hundreds of thousands of organisations around the world access the most innovative security technology through our global platform, commercial expertise and technical know-how.
"Exclusive Networks' scale and ability to grow our addressable market - driven by a portfolio of best-in-class vendors - supports our confidence in meeting our 2023 financial guidance."
Trolle reported that in Q1 2023, Exclusive was able to sign geographical expansions with four existing vendors (Fortinet, Imperva, Thales and SentinelOne) and added two new vendors to their portfolio, BitSight and LaunchDarkly.
The cloud business remained a key accelerator for growth at Exclusive. Cloud-based sales grew by 23 per cent compared to Q1 2022.
Key takeaways
- Majority of growth comes from regions with existing vendor relationships
While gross sales grew by more than a quarter year over year, the majority of this growth (24 per cent) was driven by existing vendor relationships in geographies where Exclusive already operate.
The balance of growth came from vendor expansion, partly through the expansion of existing vendors into new geographies (two per cent) and partly from new vendors relationships (2 per cent).
- Distribution is not dead
In the earnings call, Trolle touched on the importance of distribution in the channel. He said that in Exclusive has been working on several expansion contracts, one of which was with SentinelOne which moved from a one-tier to a two-tier distribution model.
He said: "The move from a one-tier to a two-tier distribution model is of significant importance as it demonstrates our value and importance even in a mature market. It also highlights the critical role that the two-tier model plays in an increasingly complex and fragmented cybersecurity eco-system."
- Vendor and Customer retention rates continued to improve year on year
Driven by continued demand for cybersecurity solutions, net vendor retention rate were up 126 per cent (+119 per cent in Q1 2022) and net customer retention rate were up 123 per cent (+116 per cent in Q1 2022).
- EMEA represented 78 per cent of Q1 2023 gross sales
Gross Sales were €925m, up 27 per cent. EMEA benefited from the strong performance and continued momentum in 2022, and a healthy backlog.