Ladies and gentlemen, thank you for standing by. Welcome to the KnowBe4 First Quarter 2021 Result Conference Call. Please be advised that today's conference is being recorded. All lines has been placed on mute to prevent any background noise, after the speakers remarks there will be a question-and-answer session. If you like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you like to withdraw your question, press the pound key, thank you. Now it is my pleasure to turn the call over to Ken Talanian, KnowBe4 Vice President of Investor Reporting. As a reminder, our commentary today will include non-GAAP financial measures. Information regarding our non-GAAP financial results, the limitations and reconciliations of our GAAP and non-GAAP results can be found in our earnings release, which was furnished with our Form 8-K today with the SEC, and may also be found on our investor relations website at investors.knowbe4.com. Some of our comments today, including those relating to our guidance, may contain forward-looking statements that are subject to risks, uncertainties, and assumptions. Should any of these materialize or should our assumptions prove to be incorrect, actual company results could differ materially from those projected or implied during this call. These risks are described in the final prospectus from our recent IPO and our Form 10-Q that will be filed following this call. These documents can be found on the SEC's website, sec.gov, and on our investor relations website. During today’s call, you will hear prepared remarks from our CEO, Stu Sjouwerman, and CFO and Co-President, Krish Venkataraman. Lars Letonoff, our Chief Revenue Officer and Co-President, will join our question-and-answer session. With that, I will turn the call over to Stu. Thank you, Ken, and thank you all for joining us today. We're pleased to share our results with you this afternoon. We had a record quarter with 40%+ annual recurring revenue growth, improving gross margins, and strong cash flow. As many of you know, I started KnowBe4 to help organizations manage the ongoing problem of social engineering. We define social engineering as manipulating an employee in an organization to do something against the benefit of that organization. That could be phishing or replying to a CEO fraud attack or sending an attachment with W-2 information to cybercriminals. We're the only public company dedicated to securing the human layer. The emphasis in cybersecurity has traditionally been on legacy controls. However, the exponential growth in cyberattacks and their relative success proves that we cannot solely rely on security infrastructure. Ignoring the human element of this equation leaves organizations of all sizes vulnerable, which is why we are dedicated to helping organizations transform their employees into a successful last line of defense against cyberattacks. Recent events, such as the coronavirus pandemic and the mass migration to a work-from-home environment, has only made the problem worse, further evidenced by recent high-profile breaches. The ransomware attack on Colonial Pipeline is the most recent example of an attack that made it into mainstream media. Although the root of the attack is still under investigation, most ransomware attacks begin with social engineering. This is a problem that is not going away. Just last week, Verizon released their 2021 Data Breach Investigations Report. It is no surprise that social engineering remains a top threat for the last five years running. The human layer needs to be strengthened every day. This is why we are focused on building a strong human endpoint. I will start by summarizing my key observations. We continue to see strong momentum in our new business and continued strong retention within our existing customer base. Customers in both the SMB and enterprise see our platform as a critical element of their security stack. Prospects have strong focus on enhancing their security and the ability to manage the ongoing problem of social engineering. We have established a market-leading position in the human-centric cybersecurity space, which is further enhanced by our focus on continuing to innovate to meet the needs of our customers against an increasingly dangerous threat landscape. Our new customer growth has been robust as we capitalize on our mostly greenfield opportunity. In addition, our current customers are investing in our KMSAT platform and adopting our additional PhishER and KCM products at record levels. First quarter results exceeded our expectations across the board with continued growth and strong free cash flow generation. Our inside sales motion continues to win both new SMB and enterprise customers across all industry verticals, resulting in $222 million in ARR, ahead of our expectations and up almost 41% year-over-year. Our international revenue growth reached 88% year-over-year, which is our highest international quarter ever. Domestically, we also continue to see strong momentum with over 30% growth. Penetrating international markets remains one of the key pillars of our growth strategy. As you may recall, we made three tuck-in acquisitions during 2019 that have really started to contribute meaningfully to our international expansion. These acquisitions have been a key foundation to our expansion in EMEA. You can expect us to continue this strategy as we move into other geographies, such as APAC. We also continue to be opportunistic in our domestic M&A strategy. This quarter, we announced the acquisition of MediaPRO Holdings for approximately $38 million. A portion was paid in cash, and the remaining was paid in shares of our common stock. MediaPRO will bring some important technology to the KnowBe4 platform to accelerate our expansion in the compliance market. We are particularly excited about their advanced courseware editor. This technology will serve as the foundation for an enhanced courseware editor that we intend to incorporate into the KnowBe4 platform. MediaPRO comes with an exciting library of compliance content that we intend to incorporate into our launch of Compliance Plus, which I will cover in more detail shortly. That said, we do not anticipate that this acquisition will be material to our 2021 financial results. Krish will provide more details on the financials. Organizations across all verticals and sizes continue to see value in our free tools and thought leadership webinars, which we utilize to generate leads for our inside sales team to sell KMSAT, PhishER, and KCM GRC. Customer growth was strong across both SMB and enterprise. As in previous quarters, we saw new customers buy both KMSAT and PhishER together to leverage the immediate risk reduction that PhishER brings to their organization. We do not report the growth for PhishER and KCM GRC separately, the combined logo growth and revenue growth was triple digits for the quarter. The positive trends with our customer wins continue in Q1. Total number of customers grew to almost 39,000, including really strong momentum internationally. We saw a number of both greenfield wins as well as competitive displacements. Greenfield wins continue to show that the value of security awareness is resonating with customers, and our platform stands out from the competition. Our competitive wins are further proof that our platform and customer support ranks well above our competition. Customers are drawn to the wide scope and breadth our platform has to offer. Our platform's ability to record email replies to CEO fraud, spoof domains, randomized phishing, and leverage real-life logos and data entry landing pages are all big selling points. Our reporting capabilities provide customers with the ability to produce weekly reports and select the best templates to keep up with the actual threats to their database. The combination of our Phish Alert Button and the PhishER product is typically a huge upgrade to a customer's ability to respond to threats. We continue to see success in our enterprise segment, which had several big wins. We displaced a competitor at one of the world's largest defense contractors with 200,000 seats that wanted to efficiently build out a global security awareness program. We had a 68,000-seat competitive win at an automotive manufacturing company. They recognized the strength of our platform, as well being ahead of the competition. We had an 18,000-seat competitive displacement at a large Japanese conglomerate that favored our global capabilities. In the government segment, we had a greenfield sale with 30,000 seats to a large U.S. city transportation organization. We also have seen good traction in the education sector with a 38,000-seat win at a large U.S. public school district. Social engineering remains the top vulnerability that organizations face because hacking humans remains the easiest way to access critical information. These threats are far-reaching and impact everything from our global healthcare system to our schools. Regular training sessions coupled with frequent simulated social engineering attacks remains the most effective protection. Over the last decade, we have helped our customers across every vertical in the U.S. These problems are not specific to the U.S., and we're focused on selling our innovative products across the world. We have a vision for the security awareness market that we continue to use to define KnowBe4's product roadmap. This includes both exciting new features and new products. A recent new feature we released is AI-driven phishing, which allows our Diamond KMSAT customers to automatically choose the best phishing templates for their users. AI-driven phishing is part of our larger strategy to drive our platform with artificial intelligence. This helps users learn to defend themselves against attacks that are increasingly going beyond the email threat vector. We're also in the process of releasing a new PhishER feature called PhishFlip. PhishFlip will allow admins to flip actual live phishing attacks into defanged lookalike phishing tests. As for new products, we intend to release a new SKU called Compliance Plus in a couple of weeks. Compliance Plus leverages the intellectual property from MediaPRO as well as new in-house new school training modules to expand our reach into the important compliance segment. This is a whole new TAM for KnowBe4, which shows the power of our platform to reach additional adjacencies. Given that we are one of the only security companies focused on managing the ongoing problem of social engineering, we see significant third-party recognition of our leadership. I would like to point out recent reports from Okta and Microsoft. Okta released its seventh Businesses at Work report, where KnowBe4 was recognized as one of the 15 most popular apps ranked by a number of customers. In that same report, we were recognized as a clear leader in people-centric security tools. Similarly, Microsoft also released their list of top 15 apps by number of organizations within its Azure AD ecosystem. KnowBe4 made considerable progress moving from number 12 in 2018 to number five in 2020. We're also very proud that we ranked number three among the top five most popular security apps, just below Palo Alto Networks and Zscaler. We believe this third-party recognition provides ample proof of our scale and importance to our customers. Before I turn the call over to Krish, I would like to thank our employees and partners for the dedication, commitment, and customer focus that has brought KnowBe4 to its market-leading position today. Our mission is to enable employees to make smarter security decisions. We had a strong close to the first quarter and are excited about the rest of the year. I would like Krish to discuss our financial trends. Thanks, Stu. Good afternoon to everyone. As a quick reminder, unless otherwise noted, all numbers, except revenue, mentioned during my remarks are non-GAAP. Before I discuss the quarter's results, I want to remind everyone of the principles that we use to run the business. Our first pillar of focus is driving long-term growth. We continue to focus our investments on international expansion, enhancing capabilities in our core products, driving channel initiatives both domestically and internationally, and finally, investing in our people and their skills development. I will touch on a few of these initiatives. On the international expansion, we continue to focus our investments on hiring key talent in marketing, sales, content, and customer support. We have made several key hires in the U.K., Germany, Australia, and Japan, and laying the foundation of talent to scale across the globe. On the product side, we have a deep pipeline of new products. At the same time, enhancing existing products with key feature releases. We work under a modern, agile development framework to help drive speed of execution. This is evidenced by the release of our AI-driven phishing feature and planned releases of PhishFlip and Compliance Plus that Stu covered a few moments ago. The other big focus for us is onboarding new channel partners to accelerate international expansion. We have invested in hiring a number of key resources in our channel team and building both marketing and distribution capabilities for our channel partners. On the people side, we continue to hire new employees in all departments and invest in training our existing employees to outperform. This includes key critical new hires in our management tier. Where other firms under the COVID crisis reduced headcount investments, we have expanded these efforts significantly to keep up with the ongoing demand for our products domestically and internationally. The second pillar for us is capital efficiency. We are laser-focused on maintaining our capital efficiency. We have used little of our investors' capital during our small primary rounds prior to the IPO and remain just as focused on cash generation and capital efficiency as a public company. The third pillar we follow is how to drive long-term development. We believe in balancing our organic development with select acquisitions that help expand our capabilities in both existing and new areas focused on strengthening the human endpoint. This expansion will help us drive into adjacencies, which in turn helps us expand our TAM. We believe that M&A must be done diligently with a high acceptable ROI. In fact, at KnowBe4, we track every acquisition's ROI and don't stop tracking this until we're 100% sure that initial acquisition case has been validated and exceeded. As you heard from Stu, our development teams continue to turn our compelling new products and features to fulfill our long-term roadmap, which is dedicated to the human endpoint. With that, let me actually provide some color on the quarter. Both new and existing customers have witnessed the ongoing problem of social engineering worsen over the last year. We continue to support our customers with our platform reach, which includes integrated capabilities around security events, security orchestration automation, and compliance. In addition to our internal efforts, we continue to engage new partners with a healthy level of joint sales engagement. Though we are still early in the channel development process, we have made considerable progress in signing on both domestic and international partners. We will continue to make strong investments in the channel business to drive future growth, especially in international markets where we are 100% channel-enabled. Throughout the quarter, we saw the strength across most verticals. We did see some lightness in some specific industries, like hospitality and airlines, that are coming out of COVID pandemic. In the first quarter, total annual recurring revenue, or ARR, reached $222 million, up 41% year-over-year. Our ARR growth, which is driven by another strong quarter of new logo additions and continued expansion of cross-sell to existing logos. Our total customer count for the quarter grew to almost 39,000, up from close to 32,000 in Q1 2020. Logo churn and gross dollar retention for the quarter were both comparable with historical levels. I also want to give you some color on MediaPRO as it relates to our ARR and operating results. As Stu mentioned, the acquisitions thesis was driven by MediaPRO's technology and the ability to expand our TAM into the compliance marketplace. The impact on full year 2021 revenue from MediaPRO acquisition is expected to be immaterial. We expect the ARR impact to be approximately $5 million by Q4 2021, based on the historical churn rate of the legacy MediaPRO client base. In Q1, total GAAP revenue grew almost 37% year-over-year, reaching $53.5 million, which was well ahead of expectations. We continue to execute at a high level and remain focused on our pillars of growth. A hallmark of our diversified sales approach has resulted in no concentration of clients or ARR in any industry or vertical. This helps us weather macroeconomic shocks like the world faced over the last year. No single customer accounted for more than 5% of revenue during the quarter. Geographically, the vast majority of our revenue is derived from North America. At the same time, we believe there's a sizable addressable market for KnowBe4 internationally, and we continue to invest both in EMEA and APAC in both KnowBe4 relationships. Approximately 14% of our revenue now is derived from international markets, representing an 88% increase in international revenues year-over-year. We are still early in our international expansion, which represents a very large and executable TAM. Clearly, our strategy of investment in these markets is sound. To date, these investments have focused on further expansion of our product capabilities, diversified content, and globalizing our sales and marketing teams. Since Q1 2020, we have added approximately 44 new heads to the KnowBe4 International team. Over the past two years, we have opened offices in Australia, Japan, Norway, Dubai, and an initial office in the U.K. through our acquisition of the Twist and Shout Group. We have completed building our shared service center in the Netherlands to help us drive long-term support for our clients and our sales teams. We've also accelerated our hiring plans to ensure we have the right resources in place to execute on our international expansion. On the product side. We launched PhishER in late December 2018. The results have continued to exceed expectations. PhishER is another example of our team's ability to launch new products, cross-sell, and increase the overall ARR associated with the initial sale. As a reminder, our go-to-market motion is based on landing large with the customer's full seat count, which maximizes the initial deal size. We have seen a number of customers purchasing both KMSAT and PhishER together for the initial subscription. As a reminder, we don't bundle our products. We prefer to cross-sell the products as it results in premium pricing for additional products versus discounting. As a result, PhishER represents approximately a 45% increase in ARR for SMB and 35% on enterprise clients versus a standalone KMSAT sale. Our multi-product strategy is seeing considerable traction with a combination of both PhishER and KCM GRC. Year-over-year, PhishER and KCM GRC combined have a triple-digit revenue and a triple-digit logo growth. At the same time, we still have a massive opportunity to cross-sell our products to our existing large customer base. As part of our philosophy of running the business, we remain focused on sustaining a high growth rate with strong margins. First quarter non-GAAP gross margins improved to 86.6% from 84.8% a year ago as we gain efficiency with scale. As a reminder, we continue to scale our international businesses. We expect non-GAAP gross margins in the low to mid-80% long term. Total non-GAAP operating expense for the quarter was approximately $40 million versus $34 million for the same quarter last year. This growth was mostly driven by additional G&A costs related to becoming a public company, as well as increases in sales and marketing expenses. Sales and marketing costs were up due to increased headcount in channel, direct sales, and customer service teams to help manage new logos acquired both domestically and internationally. Sales and marketing as a percentage of revenue was lower year-over-year as we scale the business. G&A costs increase reflect our continued effort to build out our support functions, including legal, finance, internal audit, and HR, as we prepare to become a public company over the last year. As you can see, we have made considerable investment in our technology platform. We are able to launch a number of new product features such as PhishRIP and PhishFlip, while continuing to significant investment in products and content translations. Our investments are also aimed at continuing to expand our AI and ML functionality throughout the platform. I intend to provide updates on our new areas of growth realized from these investments during future earnings calls. To note, our unit cost of tech and dev is significantly lower than other tech firms in high-cost regions. Our location helps us attract, retain, and develop our tech and dev teams. Hence, it's important to understand that we have and will continue to invest in our product, R&D, and content teams. Non-GAAP operating income in the first quarter was approximately $5.9 million, and non-GAAP operating margin was approximately 11%, and non-GAAP net income was $1.6 million. Our non-GAAP net income excludes stock compensation expense, amortization of acquired intangibles, and acquisition and integration related costs. Turning to cash flow and balance sheet items. We finished March with cash and cash equivalents of approximately $95 million, up about $36 million from Q1 2020, which represents our continued focus on maintaining a high level of capital efficiency and use of cash. First quarter free cash flow was approximately $21 million compared to $10 million a year ago, primarily driven by strong cash collection as well as strong sales performance and efficient go-to-market model. To note, these metrics do not include the impact of IPO transaction, which closed in mid-April. From our results, you can see that we have a highly resilient and cash generating SaaS model and strong balance sheet supporting a balance of top-line growth and expanding profitability. We are continuing to expand our resource pool and maintaining sustainable growth as we lead this new category in cybersecurity. Now on to guidance. We enter the second quarter with strong customer and business momentum. This momentum is seen across all our segments and international markets. For the second quarter of 2021, we expect the total revenue in the range of $55.5 million- $56.5 million, or approximately 34%-36% year-over-year growth. For the full year 2021, we expect total revenue in the range of $229 million - $231 million, or approximately 31%-32% year-over-year growth. We expect free cash flow margin in the range of 12%-15%. As a reminder, there's seasonality in our free cash flow, which can cause results to vary quarter-to-quarter. For modeling purposes, you can assume a fully diluted weighted average share count of approximately 183 million for Q2. As we look forward to the rest of the year, we are seeing continued growth and momentum in the business. We are laser focused on maintaining our market leadership in the most important layer in security dedicated to the human endpoint. With that, we would like to open the call to Q&A. In the interest of time, please limit yourself to one question and one follow-up question. Thank you. Your first question comes from the line of Brian Essex with Goldman Sachs. Great. Thank you. Good afternoon, and thank you for taking the question and congratulations on emerging as a public company. Stu, if I could start, or maybe Krish, if you want to take this one. As you focus on leveraging your platform strategy to penetrate your markets, it was nice to see the acceleration, not only in logo adds, but ARR per logo. How much of that was? Better penetration into larger enterprise versus better attach rate with the percentage of accounts that have multiple products. That's one for Krish. All right. Okay. Hey, Brian. Thanks for the question, and thanks for your comment on getting baby eyes above the company. I think the answer is both. What we have seen, and this trend is not just Q1, we are seeing this across multiple quarters, is we are seeing further expansion into, I would say, all the levels within the enterprise market and also in the megas. One thing to note that the mega expansion is not just a Q1 phenomenon. It's been happening month after month over the last almost year and a half. The second point, the cross-product penetration has been extremely strong this quarter and last quarter. In fact, I talk about the triple crown, where we are seeing both PhishER and KCM GRC seeing considerable progress in terms of expansion. As mentioned in my note also, we almost saw a triple-digit growth in logo as well as revenue. If you look at the overall penetration of cross-sell, both of PhishER and KCM combined, we almost doubled from Q1 of last year. Remember, that's on a very large and substantially larger base of clients, because last year we had Q1, we had about 32,000 customers, and now we have 39. This is a win across both those key areas, i.e., lots more expansion into enterprise and significant traction in terms of cross-sell of our two key cross-sell products, which are GRC, KCM, as well as PhishER. Right. That's helpful. Maybe just to follow up with the housekeeping, but historically, we have some data, percentage of accounts with multiple products. Are you open to disclosing what that might be this quarter? No, what I can definitely state, Brian, it, as I said, almost doubled from Q1 of last year. For the number of accounts? The percentage, as you requested. Oh, got it. Okay, perfect. Very helpful. Thanks again. Appreciate it. Thank you. Absolutely. Your next question comes from the line of Shaul Eyal with Cowen and Co. Hi, Shaul. Hey, guys. Good afternoon. Congrats on a very strong set of results right out the gate. Stu or Krish, maybe trying to focus on Brian's question, maybe from a little bit of different direction. When we take those 2,000 new logos you've just discussed, can you maybe qualitatively kind of break it down for us between the SMBs and the nice traction that you're seeing within the enterprise arena? I have a follow-up. Yeah, I can sort of comment on that in a general sense that I created the KnowBe4 platform knowing full well that I was gonna go large enterprise, but I decided to take the SMB market first. We own that. There's very little competition there. Over the last five years, we have successfully executed into the enterprise and large enterprise space. At the moment, if you look at the pie chart, it's about 50/50. That gives you a bit of an indication where we're at today. Understood. Maybe from a bird's eye perspective, clearly with Proofpoint being taken out of the public domain, really from a near-term perspective, Stu, what do you guys have in mind in terms of maybe displacing some of their accounts, maybe a good opportunity to go and revisit some of those, given some potential integration disruption that Proofpoint could potentially be seeing? Yeah. We all know the private equity playbook. The cost-cutting, and to some degree, not really investing a lot in existing features is an opportunity for us. We're continuing to invest heavily in both new features in the existing platform and new products that are coming down the pike. For us, that was only good news, really. Got it. Good job. Good luck. Well done. Thank you very much, Shaul. Your next question comes from the line of DJ Hynes with Canaccord. Hey, thanks, guys, and congrats on the great start here. Stu, one of the questions I've been asked by investors, so I figure I'll ask you in this forum, is whether the secure email gateway vendors, just by virtue of all the inbound email traffic that they handle, if they're better equipped in terms of staying on top of the latest phishing threats, which I guess in theory would enable them to put out more relevant training content. Any comments or thoughts there? Sure. You have to look at the bigger picture in the sense of there's billions of emails that are being sent every day, tens of billions. Bad guys send about 3 billion malicious emails every day. The additional advantage that they have is they can test those secure email gateways and make sure that their attack actually gets through before they send them. The attacker always has the advantage in these types of situations. For a while, Proofpoint and Mimecast reported on each other's failure rates. They stopped that, but that was single-digit percentages, 5%, 7%. There's press releases that you can dig into. There's a massive amount of emails that make it through all the security layers, and that is one of the reasons why I decided it was truly required to have this eighth layer, the human layer, if you will, and make sure that you create that strong last line of defense. Does that answer your question, DJ? Yeah, no, it does. That's helpful color. Then if I think about the number of new SKUs that you have today and what you're planning in the future, how are you thinking about separating the cross-sell motion from the renewal cycle? Is that important? What's the need to that end? Any thoughts there would be helpful. I don't know if that's better for Stu or Lars. Actually, Lars would be the best man to answer that one. Yeah, Vijay. The minute we make a sale, that sale gets passed over to our customer success team, and their job is to onboard the customer, make sure they know how to use all the different features, keep them apprised of the new features that we come out with, and also get the renewals at the end of the subscription, and then just ensure that they have the best possible customer experience they can. Built into that, all of that work is they're constantly looking at the customer wallet and determining where there's opportunity for an up-sell or a cross-sell, and we'll, in some cases, even partner with our direct team to get those cross-sells done. Does that answer your question? It does. Yep. Thank you, guys. Again, we're off to a good start. Your next question comes to the line of Rob Owens with Piper Sandler. Great, thanks for taking my question. I guess first around MediaPRO, was there anything inorganic relative to either ARR contribution or to customer count in the quarter? Actually, Krish has a few insights that he's willing to share with us about MediaPRO. The thing that I want to start with is this was an opportunity that we could not pass by. Their library with compliance modules, is the best way to put it, was something that helped us significantly to get faster to market with our Compliance Plus SKU. That was the main driving force to quickly get that transaction done. There are some financial details that Krish will share. Absolutely. Thanks, Stu. Great. Hey, Rob. How you doing? Thanks. Rob, let me actually start off from the ARR story to actually provide some more color around MediaPRO. If you look at Q1 of last year versus this year, our ARR grew almost in excess of 40%, and the vast majority of this growth was organic in nature. We did see some upliftment in terms of MediaPRO's acquisition, as I discussed in my prepared remarks, I expect the existing ARR to actually have some level of deterioration to, we believe, about $5 million by end of the year. As Stu mentioned, the primary reason for this deal was not only the technology, also the resource quality, who have really strong experience around our compliance capability. More importantly, as Stu mentioned in his remarks, is it really helped us accelerate the launch of a Compliance Plus product that we were working behind the scenes on for the last year or so. This was really the biggest driver for the MediaPRO acquisition versus a customer acquisition story or an ARR story. Great. I guess secondarily for Lars, how are you thinking about capacity additions this year relative to sales force, especially given the Compliance Plus module and then just the success you're seeing overall? Will you lean into it a little bit more in terms of hiring plans? Yeah, we have our headcount models just modeled out into the future. We don't really talk about that. I think with launching the PhishER product, we've kind of already done that. As we add the Compliance Plus, we'll have a pretty much exact sales motion going forward, and I don't think it'll require much more addition to the headcount. Great. Thanks, guys. Yeah. Thanks, Rob. Thanks, Rob. Your next question comes from the line of Fatima Boolani with UBS. Good afternoon. Thank you for taking my questions. Stu or Lars, for either one of you, I wanted to start high level with respect to the threat environment backdrop. Stu, in your prepared remarks, you did allude to the ransomware environment, and certainly it seems to be at some of the worst levels that it has been in recent memory. Because the vast majority of ransomware is propagated via email, you're very close to that dynamic. I'm wondering if that has had any quantifiable impact and maybe specifically Colonial, if that has had any quantifiable impact on your business in terms of sales cycles, in terms of pipeline, in terms of conversion rates, any sort of quantifiable detail there would be very helpful. Then I have a follow-up for Krish, please. Fair enough. It's early days. These types of compromises take months. There's a whole bunch of research that needs to be done to find what the true cause was. No, there is no immediate uptick in a whole bunch of people are suddenly buying awareness training because of the pipeline. However, having said that, ransomware has been a massive contributor to the realization over time, larger and larger customers, that training those end users is an absolute must, and that they really cannot afford not to do it. Now, the Biden administration recently came out with increased security requirements for federal organizations. That is going to filter down. A very visible pipeline critical infrastructure incident, it works well for us, and the media are essentially our PR agency, Fatima. Fair enough. I appreciate that perspective. Krish, for you, as we anniversary the pandemic's onset and think about the investments you have in place to continue to chip away at the new logo acquisition velocity and activity we've seen, and taking into consideration this quarter's performance as well, what are some of the things that we should keep in mind vis-a-vis the new customer growth cadence as we progress through the year and we reflect on some of the compares from the prior year, again, as we anniversary the pandemic? That's it from me. Thank you. Okay. Thanks, Fatima. I think it's fair to talk about last year versus this year, right? As I said, in Q2 now, we actually tend to actually sell to a layer in the organization, which is in the direct front lines of not only security awareness, but more importantly, those are the same people who are bringing and taking all of us to work from home. Now, post that, in Q3 and Q4 last year, we were pretty much back to normal in terms of customer acquisition and logo addition. These are the same trends I would say in the Q4 of last year and the Q1 of this year. We're seeing a similar trend in terms of pipeline into Q2. Going back to your point in terms of how we think about customer logo, I think we are pretty much in business as usual for the last almost a year or so. Fair enough. Thank you. Your next question comes from the line of Mike Cikos with Needham & Company. Hi, team. You have Mike Cikos on the line from Needham in place of Alex Henderson. How are you doing? We're doing great, thanks. Terrific. I did have two questions for you. The first, your gross margins actually came in well ahead of our expectations, and I was hoping you could talk to the drivers for both the year-on-year as well as the quarter-on-quarter expansion, as well as the sustainability of gross margins in this 85% range as we look to the rest of calendar 2021. Krish, maybe for you, how should we expect MediaPRO to impact your gross margin outlook? Thank you. Yep. Thanks a lot, Mike. Let me actually talk to you a little bit about overall gross margins. As we scale the business now, we did see an improvement in terms of our gross margins from the mid-80s. To really understand gross margins, you want to actually break down the gross margins into really the components that drive that. The CSM teams, which are customer support teams, are a big driver of the overall cost associated with our gross margins. They are in two different phases of evolution. In the U.S., we have been driving significant logo additions, as you know, and the CSM teams tend to be at a high utilization and capacity levels. Internationally, we're just building out our international expansion, given we've seen the problem of social engineering really increase substantially around the world. We are adding CSM teams around the world to help support new and existing customers, as well as future customers. Hence, it takes some time before those CSM teams are fully utilized. That is why for 2021, we expect gross margins to be in the mid-80s, as previously discussed. The second part of your question, hopefully that answered the gross margin question. The second part of your question is around how MediaPRO is going to affect gross margins. Right now, as I said before, MediaPRO was not a massive client acquisition, right? It was largely the acquisition thesis was around us actually expanding into a brand new category, which is Compliance Plus. We don't expect MediaPRO to create any compression in our gross margins. Terrific. Thanks for that. Just two other small items, if I could. The first, I guess building on MediaPRO while we're on it, I know that you guys discussed the ARR by the end of calendar 2021. We touched on gross margins, is there any associated impact to OpEx based on MediaPRO? Secondly, I know we were talking about Proofpoint or Mimecast or some of these other email secure gateways, maybe you could talk to the technology there. My understanding is that your AI engine for the KMSAT platform is almost at a privileged position, again, because you are learning on all these emails that have already gotten through the email secure gateways, which really puts you in an advantaged position as far as showing efficacy and proving out your ROI. Can you validate that latter point on the technology as well as come back to the OpEx impact for MediaPRO? Thank you, guys. I appreciate it. Yeah, there's two questions there. One is more a Krish question. I'll be happy to go into the AI part and it's basically the PhishER product. Krish? Yeah, I'll be quick there. We expect the OpEx impact of MediaPRO to be anywhere between $5 million and $7 million for the full year. Very good. You were right, Mike, we have a unique data stream because those literally billions of malicious emails, they do get caught by employees who click on the Phish Alert Button. We get in a stream of email that is either clean, spam, or it's malicious. We are able to train PhishER with that data stream and create machine learning models that allow a very higher than 90% reliability score of these malicious emails. What we're able to do with that, like I said, unique data stream, is train our models to high levels and save the security operations center people enormous amounts of time because they can almost fully automate the process of handling emails that are reported by their users. The last thing that I would like to highlight for a second is the PhishFlip feature, because you can now fully automate it, train the model to a point where it recognizes it's malicious, and then fully automatic change the malicious attachment and change any malicious links in the email to make it into a defanged training template, which is a feature that has been extremely well-received by our customer base. Thank you for the color, guys. Keep up the good work. That's all. Thank you very much, Mike. Your next question comes from the line of Hamza Fodderwala with Morgan Stanley. Hi, guys. Thank you for taking my question. Just two quick ones. First one for Stu and Lars. Just around the go-to-market, it seems like you're seeing stronger attach rates between PhishER and KCM, and now sort of going after the compliance market in a more fully fledged way. I'm curious, are these buyers different relative to who you sell into for core KMSAT? What type of go-to-market investments, either both from a direct sales perspective or a channel perspective, do you have to make to reach those different types of buyers? I'm going to grab that one myself, Hamza. A good question. The buyer indeed is different in the case of Compliance Plus. The buyer for our security awareness platform is definitely the IT/director/CSO, the InfoSec team, because they get confronted with the pain of infected workstations and downtime and data breaches and ransomware. They are the same people that can help us refer to the correct people in the organization, which are senior executives, compliance and risk officers, who are the actual first deciders on this compliance type training. HR is following that essentially decision-making unit. We are, to begin with, going after our existing 39,000 + accounts and sell Compliance Plus in there. Certainly, we will grab our channel and help them get this sold as well. Maybe Lars can tell us a little about the channel side of things and how we're going to approach that. Yeah, we'll approach the channel just like any of our other products. Here in the U.S., we have a hybrid model where we sell both direct and through the channel. I think as we get into the larger and larger deals, more and more percentage here locally go through the channel. Internationally, we're actually 100% channel, but we have the exact same sales motion. We have full-on direct sales teams, and our marketing team generates the same leads, but the direct teams handle the entire sales process, but they never quote and they never accept a deal. For the second part of your question with the go-to-market investment, I think there's a little more investment when we're talking international markets, and that's because of just specific localization and things we have to do and localized marketing to go after those different markets. Makes sense. Just a quick follow-up for Krish, if I may. Krish, I think, not to belabor this point, but just so I have some clarity, the MediaPRO ARR run rate, you mentioned $5 million by the end of the year. You're assuming some deterioration in that even. Safe to say that it's above $5 million today. Any color you can give us as to what the ARR run rate is today? Yeah. I am not going to be providing exact color in terms of what the ARR is today, but you are right, it is above $5 million, but it is not a meaningful impact in terms of when you look at Q1 last year's versus Q1 this year's 40% growth in ARR. Majority of the 40%, Hamza, was driven by the organic efforts of the KnowBe4 platform. Okay. It's at least $5 million ARR today, just to make sure. I'm sorry, Hamza, you broke up there. No, I was going to say it's at least $5 million ARR today as well, right, or a little bit higher? That's true. Okay. That's true. Okay. Thank you. Thanks, Hamza. Your next question comes from the line of Tyler Radke with Citi. Hey, good evening, guys. Thanks for taking my question. I wanted to ask you about the domestic performance. I think you talked about 30% revenue growth there. I wasn't sure if that was a revenue or ARR number. I think that might have come down a little bit from where that business grew in 2020. Maybe if you could just walk us through kind of the puts and takes there. Just a follow-up that's somewhat related. As you look out across your SMB base, where are we to a return to pre-COVID demand and renewal rates? Thank you. Yeah, I can take that on. If you look at, I think the phenomenal part of this business, and I use the word phenomenally rarely, but I will use it in this case, is how stable our gross dollar retention as well as our logo retention has been. Of course, many of you guys have seen that over the last two or three years, and we're seeing the same trend continue even in the worst periods of the pandemic and even to now. You're right, we don't talk about net dollar retention, but it's fair to assume that with further expansion of our cross-sell efforts, there would be some positive momentum associated with that. Hopefully that gives a little bit color on that first point. The second point in the U.S., I think Stu mentioned this also. Historically, KnowBe4 grew in the U.S. markets, in the North American markets. We have built a substantial share in the U.S. market. We are starting from a very large base in terms of clients as well as revenue. If you look at the overall TAM associated with our products, the TAM is substantially large globally, and that is very much greenfield right now, both on the SMB side as well as an enterprise side. There is ample opportunity for us to grow both domestically and internationally into the future. Your last question comes from the line of Joshua Tilton with Berenberg. Yeah. Hi, guys. Thanks for taking my question. Just the first one from me, I just wanted to touch on the net new ARR, which actually grew this quarter, which is kind of a solid turnaround from 2020. Can you just comment on this relative to the improving macro environment and also maybe what bakes into the full year guidance in regard to the net new ARR growth? That is definitely a numbers question for Krish. Thanks for your question. From a guidance perspective, there are two areas we actually provide guidance, which is, of course, in our earnings recording. One is revenue and the second one is FCF margin. We do not provide any guidance on overall ARR for the rest of the year. Your first point was, you're right. We did see strong growth in ARR year-over-year, and that's really driven by, I would say, three key factors. One is continued expansion into new logos. We have seen that trend over the last year and a half. The second key, which I just mentioned, is the continued focus on the sales and the marketing teams to drive further cross-sell of our products, both into new customers, where the attachment rates are much higher, and now further into cross-sell our existing 39,000 customers. The third thing that we're actually seeing further driving our ARR is the threat matrix, right? As Stu mentioned, the threat matrix continues to be very challenging, especially in international. We're seeing further traction into international markets as you saw that our international revenue grew almost 88% year-over-year. All three key pillars of our growth are really driving that ARR story. That was helpful. If I could just follow up with one more. It seems as if some newer vendors are offering managed services or they're differentiating with additional value-added features outside of just more content. Maybe, can you guys just comment a little bit on where are you focusing your investments to ensure that you can maintain your competitive moat and market-leading position? I can take that one. There are a bunch of the traditional stories. There were 40,000 VARs, value-added resellers, mainly U.S. All these people are trying to literally add more value and become managed service providers or even managed security service providers. Those are the organizations that are adding this additional security awareness platform because it helps them both in OpEx and in their revenues. The KnowBe4 platform is very well designed, especially for those kinds of MSPs, and we have many hundreds of those that are actually using our platform. We have a special pricing model and a go-to-market for those types of partners as well. We feel we're in a good position to benefit from that particular trend in the market. Thanks. That was very helpful. Very good. Thanks, Josh. You have no further questions at this time. Thank you very much. Ladies and gentlemen, this concludes today's conference call. Thank you for participating, and you may now disconnect.