Milestone’s Tim Palmquist on Growth, COVID-19, and Future Goals
Today, Milestone Systems announced that it experienced a record year in 2019, increasing its net revenue to DKK 1.03 billion.
In the past five years, the Danish company has maintained an annual growth rate of 14 percent, and nearly doubled its number of employees to more than 900 people.
To learn more about the growth Milestone has gone through, along with the company’s future goals, and how they have been impacted by the COVID-19 pandemic, SDM spoke with Tim Palmquist, vice president of Americas at Milestone.
SDM: In 2019, Milestone reached its goal of achieving an annual net revenue of one billion Danish Kroner. What do you credit for this growth?
Tim Palmquist: We have a rich history going back to 1998, so we have this footprint of a customer base which is appealing to add onto. Expanding existing installations with device licenses, we have recurring annual care which supports the upgrades, and we add new customers to that every month and every year. As we expand our portfolio and capabilities, we have a long reputation of working in this space, and that works out well for having a consistent business year over year.
SDM: With the disruption the coronavirus pandemic has caused, do you still project continued growth for the video surveillance market for 2020?
TP: I think all of us would agree COVID-19 is going to impact so many elements of the economy. Interestingly, this year is one of the few years where I think the security industry will be dramatically impacted. Normally, in economic decline, the industry does pretty well, but we have the rare situation here where businesses are physically closed.
I think there’s opportunity still for growth this year — I actually believe in that and have seen examples for that in our own business. That being said, it would be foolish to say our businesses will not be impacted; they absolutely will, and our anticipation is that Q2 will be the most difficult for everybody. We don’t know exactly what Q3 will look like yet. At Milestone, we have done a worst case forecast for the full year based on our anticipated impact, and even in that worst case, we see some profitability, and at a minimum I think we can tread water at last year’s numbers. But any time you do a prediction like that, you reevaluate it every 30 days, maybe sooner.
SDM: What changes has Milestone already made to its business since the pandemic started?
TP: Of course we sent our people to work from home and are keeping people out of the office, which has worked pretty well. There are activities we think we can engage in that will be impactful during this time. One is that we just launched a campaign for Care, our annual software maintenance, which we think will help the channel still be able to sell to users, because it isn’t a physical installation, it’s a software update. Included with all those care renewals is 90 days of Care premium for free that will give the end user access to the manufacturer. We think this is meaningful at a time when the channel cannnot make normal sales calls.
We’ve also made our instructor-led certification classes free. We have at least 800 seats available for the three-day course for systems integrators, and we’re looking to fill those seats and train systems integrators now when they have more time on their hands.
We’re also promoting professional services to the channel so we can help with set-up as needed and coordinate with our systems integrators, and we’re evaluating some other initiatives that we think might be helpful to the channel and end-users. It’s just about being nimble in this time.
SDM: Has the company considered any lay-offs or salary adjustments for employees because of COVID-19?
TP: We’re very conscious of managing our costs. We’ve taken the action not to lay anyone off or reduce anybody’s comp so far, and we’re working hard to keep our revenue above our worst case projections so we don’t have to take further cost cutting actions.
SDM: What are Milestone’s future goals?
TP: When we talk about our future goals, we also look at the trends in the industry, and there are some obvious trends right now. One is the move from client/server to cloud and balancing on-premise versus off-premise. The other is AI and automation — using technology to automate otherwise human processes. Then there’s the IoT trend; it’s not just cameras but other connected devices we need to be thinking about. And the fourth trend is making open easy, which is always a challenge in an industry that’s not laden with standards, so the innovations we see with the Open Security & Safety Alliance (OSSA) and Security and Safety Things (SAST) are promising. At Milestone we will be working with our partners and also developing in our own teams around these themes, and steering our projects and partnerships in those directions.
SDM: In March, Milestone’s longtime CEO Lars Thinggaard announced he was leaving the company. How has all that has happened in the past month impacted the search for a new CEO?
TP: Certainly that’s consequential for Milestone during this time. I think that we will be fine in terms of leadership in the interim; Lars Larsen is a very capable interim CEO, and we have a very strong executive management team. The search process might take longer than we anticipated with the disruption of the economy, so it could take six months or longer to find a candidate. We’re really excited about the prospect of bringing in someone from the outside with a new perspective, and what that could look like for our organization and our future. We’re a business that cares about its organization and its people, which is why we’re doing everything we can to have a consistent experience during the crisis.
SDM: What is your 2020 outlook for the security industry?
TP: We could anticipate the impact of COVID-19 and the shut downs of businesses could result in a flat year – I think that’s a really realistic possibility. Everyone would like to think Q4 will just be an opening of the flood gates, but there’s no way to predict that at this point.
The other interesting consequence we’re looking at for 2020 is that manufacturers who don’t have cash reserves will be really challenged, and it’s already happening — there are lots of M&A conversations. So the landscape could become really different against the backdrop of a time where the security industry is at the peak of its lifestyle curve as we contemplate the things that would speed up our growth rates. When you’re in that peak stage and have an economic downturn like this that is so impactful, it has an economic consequence to the landscape of manufactures and systems integrators.
I think this is the first week since we went into the shelter-in-place order that I don’t think the world has significantly tilted further. We’re getting into an understanding of where we’re at now, and we just have no idea how this is going to conclude. It’s just a matter of weathering the storm. At Milestone we have the advantage of a strong cash reserve, but not everybody does, so for that reason I think it will be a consequential year.