Annual Recurring Revenue Performance
Our Annual Recurring Revenue (ARR) reached $452 million as of the end of the quarter, representing 18% year-over-year growth. This performance was driven primarily by exceptional momentum in our Enterprise segment, which grew 32% year-over-year to $301 million, now constituting 67% of our total ARR. This robust Enterprise growth reflects the successful execution of our upmarket strategy and the increasing adoption of our comprehensive cybersecurity platform by larger organizations with complex security requirements.
While our Enterprise business demonstrated strong performance, our Small and Medium Business (SMB) segment faced headwinds, with ARR declining 4% year-over-year to $151 million. This reflects both increased competitive pressures in the SMB market and our strategic reallocation of resources toward higher-value Enterprise opportunities. Despite these challenges, we maintained healthy customer growth with our total customer count increasing 5% year-over-year to 4,250, while average ARR per customer rose 12% to $106,000, underscoring our ability to deliver increasing value to our customer base.
Net revenue retention, a key indicator of our ability to expand within our existing customer base, remained strong at 112%, though down from 118% in the comparable period last year. While we've experienced a modest increase in churn rates, particularly in the SMB segment, our Enterprise customers continue to expand their deployments, reflecting the mission-critical nature of our solutions and their increasing integration into customers' security infrastructure. The sustained net revenue retention above 110% demonstrates the enduring value our platform provides in addressing evolving cybersecurity threats.
Looking ahead, we remain focused on enhancing our Enterprise momentum while stabilizing our SMB business through targeted product innovations and go-to-market optimizations. Our specialized Enterprise sales team continues to build a robust pipeline that positions us well for future growth in this segment.
Forward-Looking Statements
The following statements regarding our future business performance are forward-looking statements that involve risks and uncertainties. Actual results may differ materially from these forward-looking statements due to various factors, including those discussed in our most recent Form 10-K and Form 10-Q filings with the Securities and Exchange Commission.
Based on current visibility and business momentum, we anticipate:
- Total ARR growth of 17-19% for the full fiscal year, reflecting continued strong Enterprise performance partially offset by SMB challenges
- Enterprise ARR growth of 28-32% for the next quarter, driven by our expanding sales capacity and increasing customer adoption of our advanced security modules
- Modest improvement in SMB ARR trajectory, with potential stabilization by the end of the fiscal year as our new SMB-focused offerings gain traction
- Net revenue retention to remain in the 110-115% range, reflecting our balanced approach to customer expansion and retention initiatives
We remain committed to balancing growth and profitability as we continue to scale our business and capture the significant market opportunity in enterprise cybersecurity.
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