Dallas-based Zix buys the AppRiver email security provider and, in doing so, takes a giant step in the channel, multiplying by 10 the number of its partners with a pencil stroke.

The agreement is expected to create an e-mail heavyweight in the SME market with an annual recurring revenue of $ 180 million and a "revolutionary application delivery for MSPs," said CRN's David Wagner, CEO of Zix.

"We are the first to bring together a cloud-based e-mail platform that goes beyond Microsoft to offer a broader suite of security and compliance solutions," said Wagner. "The ability to acquire AppRiver, more than doubling the size of the company and positioning ourselves really strong with the MSP partners, who are really the facilitators of cloud technology for small and medium businesses, and this acquisition puts us in a really great place to help them deliver value to their customers. "

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With this $ 275 million deal, Zix's number of partners will grow from 400 to 4,000, taking over AppRiver, winner of many channel awards, including CRN Security 100 – the coolest provider of Web and Web security solutions. Applications and Inc.

Wagner said the acquisition offers great benefits to MSPs and solution providers who become partners.

"Value-added partners and resellers want to make a good comeback," said Wagner. "The first thing I would like to talk to them about is the value of a recurring revenue stream of 100%. Thus, when they attract customers on the AppRiver platform, it will always be a subscription model. Ninety percent of the time it will be a monthly billing, which is a very big advantage that a lot of our work reveals to the chain. They do not want to take the risk of paying all these Microsoft licenses in advance and then letting their end customers go bankrupt. So for this monthly billing, the fact that their margins are maintained month after month throughout the life of the account is basically my starting point. "

AppRiver made two acquisitions in 2018. In October, the company purchased Total Defense, a cloud-based security and productivity services provider. In March, AppRiver purchased Roaring Penguin, which allowed it to improve spam and virus filtering technology, as well as to enter Canadian markets to sell Office 365.

"AppRiver will remain the leading brand of MSP market," said Wagner. "Very quickly, I would say that in 100 days, we will integrate the suite of Zix email compliance and security services into this platform, which will provide more value and allow existing partners to sell more."

Zix is ​​the manufacturer of email security and archiving products, including ZixMail Secure Email, which automates key management to provide end-to-end email encryption that protects messages and attachments. . The publicly traded company has a market capitalization of $ 332 million.

The company acquired Seattle-based Erado in April 2018, a financial sector company specializing in e-mail archiving, compliance, monitoring, and analysis.

During the last quarter, Zix's revenue increased by 7% over the previous year to $ 17.9 million. During this call, Mr. Wagner said that Zix realized 58% of its activities live, of which 41% via the channel, 1% from sales on the Web. Wagner said the market conditions are pushing Zix to do more of its business via the channel.

"This migration to the cloud, in general, and more specifically to security, allows customers, particularly end-customers, to benefit from the services of a person of their knowledge, within their community, who brings value to their business, "he said. "We want to allow this company to do its job as best as possible. It is about adapting our business model to the new cloud computing model and helping our MSP partners adapt their business to the cloud computing business model, while retaining the value they offer, directly to the customer. "

To fund the deal to purchase AppRiver, a subsidiary of Gulf Breeze, Florida, Zix received a $ 100 million investment from True Wind Capital, as well as a $ 175 million five-year loan (with a $ 25 million revolving credit) from SunTrust Bank and KeyBanc Capital. Markets.

True Wind's two partners will also be on the Zix board once the agreement is signed: Jamie H. Greene Jr., founding partner, and Brandon Van Buren, a principal.