Mimecast Gains Momentum Post-IPO, As E-mail Security Threats Surge
Mimecast went public a year ago in a tough IPO environment for tech companies. But the move seems to have worked out well for the e-mail management and security firm.
Mimecast’s stock (NASDAQ: MIME) didn’t achieve the desired “pop” in price on its first day of trading, but over the past year it has more than doubled to over $20 per share. It closed at $22.37 per share on Friday, two days after the company reported a 29 percent increase in quarterly revenue (versus the same period last year), to $44.4 million. Mimecast is predicting about $178 million in annual sales this year, and its market cap is currently more than $1 billion.
“It was the right time for the company” to go public, Mimecast CEO and co-founder Peter Bauer says in a phone interview. “I think looking back, it was actually the right time in the market for us as well, because by not going public at the height of a frothy market,” it gave Mimecast room to build up its stock price, he says.
Going public has also helped U.K.-based Mimecast grow its business. The 800-person company—which has 274 employees in Watertown, MA—says it now serves more than 21,800 customers globally. That’s a 43 percent increase from the 15,200 customers it had a little over a year ago.
“The increased visibility is definitely a factor,” Bauer says. “The confidence that organizations have—particularly larger organizations—being [a customer of] a public company, I hadn’t fully appreciated being a private company. Now I can see how that is a factor.”
Bauer and Neil Murray, both natives of South Africa, founded Mimecast in 2003 in the U.K. The company’s Web-based software helps businesses manage, archive, and secure their e-mail communications and systems. Mimecast grew its business without raising much outside capital for the first several years, but it ended up raising more than $95 million from private investors—including a $62 million round in 2012.
Bauer moved to the Boston area in 2011 to lead the company’s push in North America. Murray remains in London, but most of Mimecast’s executive team is based at the Watertown office. Other notable team members include chief scientist Nathaniel Borenstein, an original designer of the Internet e-mail standard protocol MIME (Multipurpose Internet Mail Extensions).
Bauer says three things have driven sales for Mimecast in recent months: a competing e-mail security product from McAfee was discontinued; more businesses are shifting their e-mail to cloud-based systems such as Microsoft Office 365; and businesses are facing more e-mail-based security threats.
“E-mail has been a neglected area of security investment for quite some time for companies,” Bauer argues. “They’ve really been caught off guard by spear phishing, by ransomware, and by impersonation attacks.”
One trend that has surprised Mimecast’s leaders: e-mail hackers are now targeting not only large companies, but also small firms, Bauer says. It’s pretty easy these days for hackers to do a quick LinkedIn search of a company’s staff to figure out, say, who runs the IT department and who might have the authority to make wire transfers. Then they might send an e-mail to the person in finance, pretending to be the IT head, and “lure that person into a dialogue” that escalates to a request for an urgent payment to a supplier.
The hackers might only make off with $5,000 to $10,000 a pop, Bauer says, but the “downside is fairly low,” he says.
“It’s easier to pull off and proven to work, and you’re anonymous,” Bauer says.
To combat those types of threats, earlier this year Mimecast began offering a new software tool that searches for signs of impersonation risks. For example, it checks to make sure the domain name in the e-mail address is trusted.
Mimecast has direct experience with such threats. Bauer says the company was targeted by scammers using an e-mail address that substituted “r” and “n” for the second “m” in Mimecast, so at a glance the name looked the same. “It’s difficult for people to detect, but obviously machines can,” Bauer says.
The company thwarted that scam before it did any damage, but the experience “helped us develop the techniques in our new product,” he says.