Sometimes you need to look beyond the headlines to figure out how a managed services software business truly is performing. A case in point: If you dig into SEC filings, you’ll discover that Quest Software’s 2009 buyout of PacketTrap appears to be exceeding original expectations. And some industry pundits now predict Quest may remain on the managed services software acquisition trail. Here’s why.
First, the big picture. It’s been a busy week at Quest Software. The company has unveiled its latest PacketTrap MSP release — an upgraded remote monitoring platform for MSPs. Another Quest division has unveiled tools and services to help channel partners and customers migrate to Office 365. Elsewhere in Quest, the company continues to develop tools for application, database, virtualization and Windows management. It’s as if Quest wants to be the Baskin-Robbins of managed services, offering 31 software flavors to hungry MSPs.
So far, the results are promising. Quest’s annual revenues topped $767 million in 2010, up a healthy 10 percent from 2009. Although Quest isn’t a flashy company I’m starting to wonder: Can Quest emerge as a one-stop shop for MSP-centric software?
Here’s why I ask: During separate conversations last week, two MSPs predicted Quest would make more acquisitions in the MSP software market over the next 18 months, perhaps even buying a PSA (professional services automation) or CRM company to help VARs and MSPs run their businesses better. Complete speculation, of course, but Quest has a long track record of acquisitions.
PacketTrap MSP: In Growth Mode
Even if Quest doesn’t make a PSA move, the company has a foothold in the managed services market — thanks to Quest’s 2009 buyout of PacketTrap, the remote monitoring software provider. An SEC filing, covering fiscal year 2010, seems to indicate that Quest paid roughly $15 million for PacketTrap. That same SEC filing seems to indicate that PacketTrap’s business is accelerating faster than Quest had originally expected. The SEC filing states:
“‘The estimated fair value [for PacketTrap] increased due to actual earn-out achievement for 2010, improved expectations for the PacketTrap business in 2011 forward, adjustments to the earn-out agreement providing PacketTrap with greater opportunity to earn a higher payout for the 2011 earn-out period and the passage of time.”
The latest PacketTrap MSP release debuted this month. It features integrated antivirus (AV) detection software, customizable reports and a Global Policy Management tool that maps to Service Level Agreements (SLAs) and streamlines daily network monitoring and management, Quest claims.
Admittedly, PacketTrap faces numerous entrenched rivals. Overall, I suspect PacketTrap MSP’s annual revenues are roughly one-fifth to one-tenth the size of some rivals. But I’ll be curious to see if Quest connects the dots between PacketTrap and other Quest tools — particularly Foglight, an application performance monitoring platform that allows IT managers to maintain physical and virtual applications. Just a guess, but I suspect MSPs would welcome a single, integrated dashboard for maintaining PCs, network centric hardware and applications…
Stay tuned.
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Posted In: Acquisitions | Mergers & Acquisions | Partner Program | Remote Monitoring & Management Software
Tags: Managed Services Software | MSP Software | PacketTrap MSP | Quest Software | Quest Software FogLight
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I am a Quest Toad user and have been a Bakbone user (another Quest acquisition), but I also do IT consulting. I’ve tested the PacketTrap product, but haven’t made a decision yet on purchasing. What I do know is that Quest seems to be one of those companies that just keeps coming. They have an uncanny ability to identify where to invest, and then perform well. I currently run n-able. But because I use so many other Quest products, I am considering the move to PacketTrap. I also use ScriptLogic Desktop Authority (another Quest product). I agree, if Quest can put these products together, no one else will be able to compete with them in the market. I just wish they’d change their name. They sound like that phone company.
Toad: Thanks for weighing in. I hear quite a bit about ScriptLogic as well. I don’t think Quest will become so dominant that “no one else will be able to compete with them.” But I do think Quest has economies of scale to potentially leverage. Most of the MSP-centric software providers are $10M to $100M companies. At $700M-plus, Quest has some potential leverage against foes…
-jp
I am a small MSP. We use Kaseya. I just looked up Quest. What’s impressive, if they decide to go heavy in this market, is that they have $500 million on their balance sheet. Revenue is immaterial, balance sheet cash they can use to invest is what matters. And they have a lot of it.
MSP: Balance sheet cash = great point. There are a lot of big tech companies with billions (B) of cash on their balance sheets. Lots of M&A coming. But Quest is that rare tool-centric software company focused on systems, application and network management/monitoring. So, I think they will open their wallet again in the managed services market. But that’s just speculation on my part. I don’t know of any firm deals brewing.
-jp
Yep, Quest is big alright. We are an Orange County California MSP. What I know is that Quest is really really big. They’ve got this really big corporate campus down here (and like 5000 people) Our vendor, Kaseya comes across as small. Very small. But perhaps small also means responsive. Kaseya is pretty good to us. Treat us well. Anyone have knowledge about how Quest is to work with?
Kevin: Your perspectives are particularly interesting because Kaseya is one of the larger MSP software providers in the market. My best guess: Kaseya’s annual revenues are like 5X to 10X the size of most Kaseya rivals. However, I realize a lot of Kaseya’s revenues involve corporate IT deployments rather than MSP deployments.
-jp
I could not be happier for Packet Trap. Great team and fantastic offering. We are proud to be their partner and believe they will make a big splash in 2011! I personally recommend looking into the Packet Trap offerings if you are evaluating RMM platforms.
Hi Kevin,
While Quest is a very large corporation, we at PacketTrap Networks still operate as a closely knit 40-employee organization. We have the financial backing of Quest but operate as a small organization for our PacketTrap MSP product.
Best,
-Natan Ovadia
-Partner Development Specialist
-PacketTrap Networks (Quest Software)