Continued Adoption of Secure Cloud Platform Drives Record 2020 Revenue of $218.5 Million and 21% Cloud ARR Growth Along with Strong Cash Flow from Operations of $31.3 Million
DALLAS–(BUSINESS WIRE)–Zix Corporation (Zix) (NASDAQ: ZIXI), a leading provider of cloud email security, productivity, and compliance solutions, today announced financial results for the fourth quarter and full year ended December 31, 2020.
Fourth Quarter 2020 Financial Highlights (results compared to the same year-ago quarter)
- Revenue increased 15% to $57.9 million.
- Annual recurring revenue (ARR) increased 14% to $237.7 million. Cloud ARR increased 21% to $206.6 million or 87% of total ARR.
- GAAP net loss totaled ($2.9) million compared to a year ago net loss of ($3.1) million.
- GAAP net loss attributable to common stockholders totaled ($5.3) million compared to a year ago net loss attributable to common stockholders of ($5.2) million. The company’s Q4 2020 net loss attributable to common shareholders includes the effect of a deemed dividend to preferred shareholders of $2.3 million and acquisition-related expenses of $1.0 million.
- GAAP fully diluted earnings (loss) per share attributable to common stockholders totaled ($0.10) compared to ($0.10).
- Non-GAAP adjusted net income before deemed dividends and excluding deferred tax (benefit) expense totaled $8.6 million compared to $6.7 million.
- Non-GAAP adjusted net income per share before deemed dividends and excluding deferred tax (benefit) expense increased 25.2% to $0.16.
- Adjusted EBITDA increased 17% or $1.9 million to $13.4 million, representing an adjusted EBITDA margin of 23%.
- The company ended the quarter with $21.4 million in cash. Cash flow from operations for 2020 was $31.3 million, an increase of 124% or $17.3 million compared to 2019.
Recent Operational Highlights
- Acquired CloudAlly, an industry leader in cloud-based data backup and recovery, expanding Zix’s product suite into Microsoft Office 365 backup and addressing growing demand from AppRiver’s Managed Service Provider (MSP) channel and Zix’s value-added reseller and direct channels.
- 99% of all new customers in Q4 2020 were brought onto the new Zix Secure Cloud platform, the company’s cloud-based security and threat protection platform designed for easy provisioning of multiple solutions.
- Zix added 54,800 cloud mailboxes in Q4 2020, bringing the total number of productivity mailboxes to nearly 1.2 million.
- Direct customers and MSP partners started 3,259 trials of SecureTide, ZixEncrypt and ZixArchive in Q4 2020.
Management Commentary
“The fourth quarter marked a strong finish to a successful and transformative year,” said David Wagner, Zix’s Chief Executive Officer. “We delivered profitable growth for the full year 2020 highlighted by 14% ARR growth, 26% revenue growth, and 29% adjusted EBITDA growth. Achieving these results in the face of a pandemic year is a testament to our team, our partners, our customers, and the resilience of our operating model. Our strategic prioritization in 2020 of investments in our indirect channels and in our Secure Cloud platform was already well timed, and the rapid shift to remote work caused by the pandemic provided further support for this emphasis. The recent, high-profile breaches remind us that Email remains the number one threat vector. Zix Secure Cloud provides security tools and a second layer of threat protection capability that are increasingly critical for small and medium sized enterprises. In Q4 we added cloud backup and recovery to provide robust data resiliency and protection against ransomware attacks that are another bane for our partners and customers. With our Secure Cloud platform and growing array of security compliance and productivity applications, we are positioned to benefit from strong secular growth drivers, including the increasingly dynamic threat landscape and move to the cloud.”
Zix’s Chief Financial Officer Dave Rockvam commented: “We again delivered on our commitment to drive profitable revenue growth, increased adjusted EBITDA, and we generated more than $31 million of operating cash flow for the year. Our continued success with productivity solutions has proven to be an effective beachhead for attaching Zix’s organic, higher-margin products. With more than 5,000 partners and 90,000 end customers today, we have a meaningful, built-in base. Secure Cloud is enabling our partners to accelerate new customer acquisition and is empowering our end customers to add more services, leading to our industry-leading LTV (Lifetime Value) to CAC (Customer Acquisition Cost) ratio. In Q4, 99% of customers on-boarded onto Secure Cloud, and in 2021 we will be migrating thousands of legacy Zix customers to Secure Cloud. As we enter 2021, we have a solid financial foundation and considerable cash flow generation, providing us with the resources and predictability to meet our debt obligations while at the same time executing our growth strategy.”
| Fourth Quarter 2020 Corporate Financial Summary and Other Operational Metrics | |||
|
$ in Millions, except per share data |
Q4 2020 |
Q4 2019 |
Change (1) |
|
Revenue |
$57.9 |
$50.4 |
14.9% |
|
GAAP Net Income (Loss) |
($2.9) |
($3.1) |
4.4% |
|
GAAP Net Income (Loss) Attributable to Common Stockholders |
($5.3) |
($5.2) |
(1.7%) |
|
GAAP Net Income (Loss) Per Share Attributable to Common Stockholders – Diluted |
($0.10) |
($0.10) |
0.4% |
|
Non-GAAP Adjusted Net Income Attributable to Common Stockholders (3) |
$6.3 |
$4.6 |
35.5% |
|
Non-GAAP Adjusted Net Income Per Share Attributable to Common Stockholders – Diluted (3) |
$0.12 |
$0.09 |
29.84% |
|
Non-GAAP Adjusted Net Income Before Deemed Dividends(3) |
$6.6 |
$9.0 |
(26.3%) |
|
Non-GAAP Adjusted Net Income Per Share Before Deemed Dividends – Diluted(3) |
$0.12 |
$0.17 |
(27.8%) |
|
Non-GAAP Adjusted Net Income Before Deemed Dividends and Excluding Deferred Tax (Benefit) Expense(3) |
$8.6 |
$6.7 |
27.8% |
|
Non-GAAP Adjusted Net Income Per Share Before Deemed Dividends and Excluding Deferred Tax (Benefit) Expense(3) |
$0.16 |
$0.13 |
25.2% |
|
EBITDA (2)(3) |
$9.9 |
$5.6 |
77.2% |
|
EBITDA Margin |
17.1% |
11.1% |
6.0 pts |
|
Adjusted EBITDA (3) |
$13.4 |
$11.5 |
16.5% |
|
Adjusted EBITDA Margin (3) |
23.1% |
22.8% |
0.3 pts |
|
Total Billings |
$56.6 |
$49.3 |
14.7% |
| Full Year 2020 Corporate Financial Summary and Other Operational Metrics | |||
|
$ in Millions, except per share data |
FY 2020 |
FY 2019 |
Change (1) |
|
Revenue |
$218.5 |
$173.4 |
26.0% |
|
GAAP Net Income (Loss) |
($6.4) |
($14.6) |
56.1% |
|
GAAP Net Income (Loss) Attributable to Common Stockholders |
($15.5) |
($24.6) |
37.3% |
|
GAAP Net Income (Loss) Per Share Attributable to Common Stockholders – Diluted |
($0.29) |
($0.46) |
38.4% |
|
Non-GAAP Adjusted Net Income Attributable to Common Stockholders (3) |
$23.4 |
$13.0 |
80.5% |
|
Non-GAAP Adjusted Net Income Per Share Attributable to Common Stockholders – Diluted (3) |
$0.43 |
$0.24 |
77.2% |
|
Non-GAAP Adjusted Net Income Before Deemed Dividends(3) |
$30.6 |
$27.4 |
11.9% |
|
Non-GAAP Adjusted Net Income Per Share Before Deemed Dividends – Diluted (3) |
$0.57 |
$0.52 |
9.8% |
|
Non-GAAP Adjusted Net Income Before Deemed Dividends and Excluding Deferred Tax (Benefit) Expense(3) |
$32.5 |
$23.0 |
41.3% |
|
Non-GAAP Adjusted Net Income Per Share Before Deemed Dividends and Excluding Deferred Tax (Benefit) Expense – Diluted(3) |
$0.60 |
$0.43 |
38.7% |
|
EBITDA (2)(3) |
$37.0 |
$15.4 |
139.9% |
|
EBITDA Margin |
16.9% |
8.9% |
8.0 pts |
|
Adjusted EBITDA (3) |
$50.9 |
$39.5 |
28.9% |
|
Adjusted EBITDA Margin (3) |
23.3% |
22.8% |
0.5 pts |
|
Total Billings |
219.1 |
170.2 |
28.7% |
|
(1) |
Changes are based on actual numbers versus numbers shown in the columns, which may reflect rounding |
|
|
(2) |
Earnings before interest, taxes, depreciation, and amortization |
|
|
(3) |
A reconciliation of GAAP to non-GAAP results is included in this press release and available on the Zix investor relations website at http://investor.zixcorp.com |
Financial Outlook
Zix provides guidance based on current market conditions and expectations. The company emphasizes that its guidance is subject to various important cautionary factors referenced in the section entitled “Forward-Looking Statements” below, including risks and uncertainties associated with the COVID-19 pandemic.
For the first quarter of 2021, the company forecasts revenue to range between $58.7 million and $59.8 million. Zix’s revenue forecast for the first quarter of 2021 implies a 12% to 14% growth rate compared to the same year ago quarter. The company forecasts fully diluted GAAP earnings (loss) per share (attributable to common stockholders) to be in the range of ($0.07) and ($0.06), and fully diluted non-GAAP adjusted earnings per share (attributable to common stockholders) before deemed dividends and excluding deferred tax (benefit) expense to be in the range of $0.15 and $0.16 for the first quarter of 2021. The company forecasts adjusted EBITDA to be between 22% and 23% of forecast revenue for Q1 2021. The per share guidance figures are based on an approximate basic share count of 55.1 million for Q1 2021.
Based on management’s current visibility, the company forecasts revenue for fiscal 2021 to range between $244.0 million and $248.5 million, representing an increase of between 12% and 14% compared to fiscal year 2020. The company also expects fully diluted GAAP earnings (loss) per share (attributable to common stockholders) to range between ($0.27) and ($0.25) and fully diluted non-GAAP adjusted earnings per share (attributable to common stockholders) before deemed dividends and excluding deferred tax (benefit) expense to range between $0.58 to $0.60 for fiscal year 2021. The company forecasts adjusted EBITDA to be $56.0 million (or approximately 23% of forecast revenue) for 2021, representing a year-over-year increase of approximately 10% compared to fiscal year 2020. The per share figures are based on an approximate basic average share count of 55.5 million for 2021. Fiscal 2021 guidance adds back approximately $3.0 million of expenses related to travel, compensation, and marketing, which were reduced in 2020 due to COVID-19.
Conference Call Information
Management will discuss these financial results and outlook on a conference call today (February 25, 2021) at 5:00 p.m. ET (2:00 p.m. PT).
A live webcast of the conference call will be available in the investor relations section of Zix’s website here. Alternatively, participants can access the conference call by dialing 1-855-853-6940 (U.S. toll-free) or 1-720-634-2906 (international) at least 15 minutes before the call and entering access code 8193249. If you have any difficulty connecting with the conference call, please contact Gateway Investor Relations at 1-949-574-3860.
An audio replay of the conference will be available for seven days by dialing 1-855-859-2056 (U.S. toll-free) or 1-404-537-3406 (international) and entering the access code 8193249. An archive of the webcast will also be available on the Zix investor relations website.
About Zix Corporation
Zix Corporation (Zix) is a leader in email security. Trusted by the nation’s most influential institutions in healthcare, finance, and government, Zix delivers a superior experience and easy-to-use solutions for email encryption and data loss prevention, advanced threat protection, unified information archiving and bring your own device (BYOD) mobile security. Focusing on the protection of business communication, Zix enables its customers to better secure data and meet compliance needs. Zix is publicly traded on the Nasdaq Global Market under the symbol ZIXI. For more information, visit www.zixcorp.com.
Forward-Looking Statements
As more fully described in Zix’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2020, which was filed with the SEC on November 9, 2020, the company has been actively monitoring the COVID-19 situation and its impact on both the company and the world in which we operate. The impact of COVID-19 and unprecedented measures to prevent its spread are affecting our business in various ways such as causing volatility in demand for our products, changes in customer behavior, including their spending and payment patterns, disruptions in the operations of our third-party suppliers and business partners, and limitations on our employees’ and partners ability to work and travel. We expect the ultimate significance of the impact of the foregoing on our financial and operational results will be dictated by the length of time that these circumstances continue, which will depend on the currently unknowable extent and duration of the COVID-19 pandemic and governmental and public actions taken in response. These factors also make it more challenging for management to estimate the future performance of our business, particularly over the near term.
Statements in this release that are not purely historical facts or that necessarily depend upon future events, including statements about forecasts of sales, revenue, annual recurring revenue, EBITDA, EBITDA margin, earnings or earnings per share, potential benefits of acquisitions and strategic relationships, or other statements about anticipations, beliefs, expectations, hopes, intentions or strategies for the future, may be forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. Readers are cautioned not to place undue reliance on forward-looking statements. All forward-looking statements are based upon information available to Zix on the date this release was issued. Zix undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Any forward-looking statements involve risks and uncertainties that could cause actual events or results to differ materially from the events or results described in the forward-looking statements, including but not limited to, risks or uncertainties related to the completion and integration of acquisitions, the effects of our debt and equity financing transactions, year-end adjustments to previously reported preliminary unaudited financial information, market acceptance of both existing and new Zix solutions, changing market dynamics resulting from technological change, innovation and continuing customer migration to the cloud, changes in the competitive ecosystem, how privacy and data security laws may affect demand for Zix data protection solutions, and business disruptions, uncertainty and market instability stemming from the COVID-19 pandemic and governmental actions related thereto. Zix may not succeed in addressing these and other risks. Further information regarding factors that could affect Zix’s business and its financial and other results can be found in the risk factors section of Zix’s most recent annual report on Form 10-K and quarterly report on Form 10-Q, each as filed with the Securities and Exchange Commission, as those risk factors may be supplemented in subsequent filings.
We monitor ARR as an operating metric, which we define as the aggregate annualized contract value attributable to recurring revenue contracts as of the end of the applicable reporting period. We calculate ARR by determining the annual or monthly revenue of subscription agreements that are active as of the end of the applicable period and multiplying by 1 or 12. We monitor this metric to aid in determining to what extent individual customer relationships, considered in the aggregate, are growing or declining in financial magnitude. ARR is an operating metric derived as of the date of determination, and should be viewed independently of revenue, unearned revenue and any other GAAP financial measure over any period.
|
ZIX CORPORATION |
|||||
|
CONDENSED CONSOLIDATED BALANCE SHEETS |
|||||
|
December 31, |
|
|
|||
|
|
|
2020 |
|
December 31, |
|
|
|
(unaudited) |
|
|
2019 |
|
|
ASSETS |
|||||
|
Current assets: |
|||||
|
Cash and cash equivalents |
$ |
21,362,000 |
$ |
13,349,000 |
|
|
Receivables, net |
|
16,831,000 |
|
10,081,000 |
|
|
Prepaid and other current assets |
|
5,430,000 |
|
4,984,000 |
|
|
Total current assets |
|
43,623,000 |
|
28,414,000 |
|
|
Property and equipment, net |
|
7,345,000 |
|
8,591,000 |
|
|
Operating lease assets |
|
14,259,000 |
|
10,128,000 |
|
|
Other assets and deferred costs |
|
12,767,000 |
|
11,968,000 |
|
|
Intangible Assets, Net |
|
144,163,000 |
|
145,876,000 |
|
|
Goodwill |
|
195,013,000 |
|
171,209,000 |
|
|
Deferred tax assets |
|
32,554,000 |
|
36,535,000 |
|
|
Total assets |
$ |
449,724,000 |
$ |
412,721,000 |
|
|
LIABILITIES, PREFERRED STOCK AND STOCKHOLDERS’ EQUITY |
|||||
|
Current liabilities: |
|||||
|
Accounts payable and accrued expenses |
$ |
30,382,000 |
$ |
28,132,000 |
|
|
Deferred revenue |
|
40,447,000 |
|
40,757,000 |
|
|
Other current liabilities |
|
7,963,000 |
|
6,135,000 |
|
|
Total current liabilities |
|
78,792,000 |
|
75,024,000 |
|
|
Long-term liabilities: |
|||||
|
Deferred revenue |
|
1,079,000 |
|
2,524,000 |
|
|
Operating and finance lease liabilities |
|
10,208,000 |
|
9,105,000 |
|
|
Debt |
|
209,658,000 |
|
178,250,000 |
|
|
Total long-term liabilities |
|
220,945,000 |
|
189,879,000 |
|
|
Total liabilities |
|
299,737,000 |
|
264,903,000 |
|
|
Total preferred stock |
|
115,552,000 |
|
106,527,000 |
|
|
Total stockholders’ equity |
|
34,435,000 |
|
41,291,000 |
|
|
Total liabilities, preferred stock and stockholders’ equity |
$ |
449,724,000 |
$ |
412,721,000 |
|
|
ZIX CORPORATION |
|||||||||||||||||
|
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS |
|||||||||||||||||
|
(Unaudited) |
|||||||||||||||||
|
` |
|||||||||||||||||
|
|
Three Months Ended December 31, |
|
Twelve Months Ended December 31, |
||||||||||||||
|
|
|
|
2020 |
|
|
|
|
2019 |
|
|
|
2020 |
|
|
|
2019 |
|
|
Revenue |
$ |
57,867,000 |
|
$ |
50,380,000 |
|
$ |
218,478,000 |
|
$ |
173,428,000 |
|
|||||
|
Cost of revenue |
|
|
30,498,000 |
|
|
|
24,043,000 |
|
|
112,763,000 |
|
|
76,908,000 |
|
|||
|
Gross profit |
|
|
27,369,000 |
|
|
|
26,337,000 |
|
|
105,715,000 |
|
|
96,520,000 |
|
|||
|
Operating expenses: |
|||||||||||||||||
|
Research and development |
|
|
5,887,000 |
|
|
|
5,383,000 |
|
|
22,813,000 |
|
|
20,431,000 |
|
|||
|
Selling, general and administrative |
|
|
20,287,000 |
|
|
|
23,502,000 |
|
|
78,345,000 |
|
|
85,230,000 |
|
|||
|
Total operating expenses |
|
|
26,174,000 |
|
|
|
28,885,000 |
|
|
101,158,000 |
|
|
105,661,000 |
|
|||
|
Operating income |
|
|
1,195,000 |
|
|
|
(2,548,000 |
) |
|
4,557,000 |
|
|
(9,141,000 |
) |
|||
|
Operating margin |
|
|
2 |
% |
|
|
-5 |
% |
|
2 |
% |
|
-5 |
% |
|||
|
Other income (expense) |
|||||||||||||||||
|
Investment and other income (expense) |
|
|
(21,000 |
) |
|
|
6,000 |
|
|
83,000 |
|
|
121,000 |
|
|||
|
Interest expense |
|
|
(2,134,000 |
) |
|
|
(2,707,000 |
) |
|
(9,325,000 |
) |
|
(10,105,000 |
) |
|||
|
Total other income (expense) |
|
|
(2,155,000 |
) |
|
|
(2,701,000 |
) |
|
(9,242,000 |
) |
|
(9,984,000 |
) |
|||
|
Income before income taxes |
|
|
(960,000 |
) |
|
|
(5,249,000 |
) |
|
(4,685,000 |
) |
|
(19,125,000 |
) |
|||
|
Income tax benefit (expense) |
|
|
(1,985,000 |
) |
|
|
2,170,000 |
|
|
(1,740,000 |
) |
|
4,478,000 |
|
|||
|
Net (loss) income |
$ |
|
(2,945,000 |
) |
$ |
|
(3,079,000 |
) |
$ |
(6,425,000 |
) |
$ |
(14,647,000 |
) |
|||
|
Deemed and accrued dividends on preferred stock |
|
|
(2,311,000 |
) |
|
|
(2,090,000 |
) |
|
(9,025,000 |
) |
|
(9,984,000 |
) |
|||
|
Net (loss) income attributable to common shareholders |
$ |
|
(5,256,000 |
) |
$ |
|
(5,169,000 |
) |
$ |
(15,450,000 |
) |
$ |
(24,631,000 |
) |
|||
|
Basic (loss) income per share attributable to common shareholders: |
$ |
|
(0.10 |
) |
$ |
|
(0.10 |
) |
$ |
(0.29 |
) |
$ |
(0.46 |
) |
|||
|
Diluted (loss) income per share attributable to common shareholders: |
$ |
|
(0.10 |
) |
$ |
|
(0.10 |
) |
$ |
(0.29 |
) |
$ |
(0.46 |
) |
|||
|
Shares used in per share calculation – basic |
|
|
54,291,830 |
|
|
|
53,199,409 |
|
|
54,024,162 |
|
|
53,025,152 |
|
|||
|
Shares used in per share calculation – diluted |
|
|
54,291,830 |
|
|
|
53,199,409 |
|
|
54,024,162 |
|
|
53,025,152 |
|
|||
|
Other Comprehensive income, net of tax: |
|||||||||||||||||
|
Foreign currency translation adjustments |
|
|
1,505,000 |
|
|
|
267,000 |
|
|
1,387,000 |
|
|
215,000 |
|
|||
|
Comprehensive (loss) income |
$ |
|
(1,440,000 |
) |
$ |
|
(2,812,000 |
) |
$ |
(5,038,000 |
) |
$ |
(14,432,000 |
) |
|||
|
ZIX CORPORATION |
|||||||
|
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS |
|||||||
|
(Unaudited) |
|||||||
|
Twelve Months Ended December 31, |
|||||||
|
|
|
2020 |
|
|
|
2019 |
|
|
Operating activities: |
|||||||
|
Net (loss) income |
$ |
(6,425,000 |
) |
$ |
(14,647,000 |
) |
|
|
Non-cash items in net income |
|
49,008,000 |
|
|
30,179,000 |
|
|
|
Changes in operating assets and liabilities |
|
(11,303,000 |
) |
|
(1,581,000 |
) |
|
|
Net cash provided by operating activities |
|
31,280,000 |
|
|
13,951,000 |
|
|
|
Investing activities: |
|||||||
|
Purchases of property and equipment and capitalized software |
|
(18,010,000 |
) |
|
(11,653,000 |
) |
|
|
Acquisition of business, net of cash acquired |
|
(30,046,000 |
) |
|
(284,590,000 |
) |
|
|
Net cash used in investing activities |
|
(48,056,000 |
) |
|
(296,243,000 |
) |
|
|
Financing activities: |
|||||||
|
Proceeds from issuance of series A preferred stock, net of offering costs |
|
– |
|
|
96,588,000 |
|
|
|
Proceeds from exercise of stock options |
|
334,000 |
|
|
415,000 |
|
|
|
Proceeds from long term debt |
|
41,000,000 |
|
|
187,000,000 |
|
|
|
Debt issuance costs |
|
(653,000 |
) |
|
(6,444,000 |
) |
|
|
Repayment of long term debt |
|
(9,939,000 |
) |
|
(1,363,000 |
) |
|
|
Repayment of finance lease obligations |
|
(1,339,000 |
) |
|
(1,707,000 |
) |
|
|
Payment of acquisition-related contingent consideration |
|
(1,125,000 |
) |
|
(3,843,000 |
) |
|
|
Purchase of treasury stock |
|
(2,733,000 |
) |
|
(1,906,000 |
) |
|
|
Net cash provided used in financing activities |
|
25,545,000 |
|
|
268,740,000 |
|
|
|
Effect of exchange rate changes on cash |
|
(756,000 |
) |
|
(208,000 |
) |
|
|
(Decrease) Increase in cash and cash equivalents |
|
8,013,000 |
|
|
(13,760,000 |
) |
|
|
Cash and cash equivalents, beginning of period |
|
13,349,000 |
|
|
27,109,000 |
|
|
|
Cash and cash equivalents, end of period |
$ |
21,362,000 |
|
$ |
13,349,000 |
|
|
|
ZIX CORPORATION |
|||||||||||||||||||
|
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES |
|||||||||||||||||||
|
(Unaudited) |
|||||||||||||||||||
|
Three Months Ended |
|
Twelve Months Ended |
|||||||||||||||||
|
December 31, |
|
December 31, |
|||||||||||||||||
|
|
2020 |
|
|
|
2019 |
|
|
|
2020 |
|
|
|
2019 |
|
|||||
|
Revenue: |
|||||||||||||||||||
|
GAAP revenue |
$ |
57,867,000 |
|
$ |
50,380,000 |
|
$ |
218,478,000 |
|
$ |
173,428,000 |
|
|||||||
|
Cost of revenue |
|||||||||||||||||||
|
GAAP cost of revenue |
$ |
30,498,000 |
|
$ |
24,043,000 |
|
$ |
112,763,000 |
|
$ |
76,908,000 |
|
|||||||
|
Stock-based compensation charges (1) |
(A) |
|
(97,000 |
) |
|
(147,000 |
) |
|
(1,201,000 |
) |
|
(569,000 |
) |
||||||
|
Strategic consulting and litigation costs (2) |
(B) |
|
(1,000 |
) |
|
(93,000 |
) |
|
(116,000 |
) |
|
(386,000 |
) |
||||||
|
Intangible Amortization (3) |
(C) |
|
(2,740,000 |
) |
|
(2,660,000 |
) |
|
(10,172,000 |
) |
|
(7,132,000 |
) |
||||||
|
Corporate separation payment (4) |
(D) |
|
– |
|
|
– |
|
|
(867,000 |
) |
|
(52,000 |
) |
||||||
|
Non-GAAP adjusted cost of revenue |
$ |
27,660,000 |
|
$ |
21,143,000 |
|
$ |
100,407,000 |
|
$ |
68,769,000 |
|
|||||||
|
Gross profit: |
|||||||||||||||||||
|
GAAP gross profit |
$ |
27,369,000 |
|
$ |
26,337,000 |
|
$ |
105,715,000 |
|
$ |
96,520,000 |
|
|||||||
|
Stock-based compensation charges (1) |
(A) |
|
97,000 |
|
|
147,000 |
|
|
1,201,000 |
|
|
569,000 |
|
||||||
|
Strategic consulting and litigation costs (2) |
(B) |
|
1,000 |
|
|
93,000 |
|
|
116,000 |
|
|
386,000 |
|
||||||
|
Intangible Amortization (3) |
(C) |
|
2,740,000 |
|
|
2,660,000 |
|
|
10,172,000 |
|
|
7,132,000 |
|
||||||
|
Corporate separation payment (4) |
(D) |
|
– |
|
|
– |
|
|
867,000 |
|
|
52,000 |
|
||||||
|
Non-GAAP adjusted gross profit |
$ |
30,207,000 |
|
$ |
29,237,000 |
|
$ |
118,071,000 |
|
$ |
104,659,000 |
|
|||||||
|
Research and development expense |
|||||||||||||||||||
|
GAAP research and development expense |
$ |
5,887,000 |
|
$ |
5,383,000 |
|
$ |
22,813,000 |
|
$ |
20,431,000 |
|
|||||||
|
Stock-based compensation charges (1) |
(A) |
|
(456,000 |
) |
|
(292,000 |
) |
|
(1,641,000 |
) |
|
(1,056,000 |
) |
||||||
|
Strategic consulting and litigation costs (2) |
(B) |
|
(5,000 |
) |
|
(686,000 |
) |
|
(137,000 |
) |
|
(1,481,000 |
) |
||||||
|
Intangible Amortization (3) |
(C) |
|
(76,000 |
) |
|
(76,000 |
) |
|
(303,000 |
) |
|
(303,000 |
) |
||||||
|
Corporate separation payment (4) |
(D) |
|
– |
|
|
– |
|
|
(128,000 |
) |
|
(235,000 |
) |
||||||
|
Non-GAAP adjusted research and development expense |
$ |
5,350,000 |
|
$ |
4,329,000 |
|
$ |
20,604,000 |
|
$ |
17,356,000 |
|
|||||||
|
Selling and marketing expense |
|||||||||||||||||||
|
GAAP selling and marketing expense |
$ |
14,191,000 |
|
$ |
17,580,000 |
|
$ |
56,479,000 |
|
$ |
54,903,000 |
|
|||||||
|
Stock-based compensation charges (1) |
(A) |
|
(648,000 |
) |
|
(350,000 |
) |
|
(2,524,000 |
) |
|
(1,941,000 |
) |
||||||
|
Strategic consulting and litigation costs (2) |
(B) |
|
(7,000 |
) |
|
(2,175,000 |
) |
|
(219,000 |
) |
|
(3,427,000 |
) |
||||||
|
Intangible Amortization (3) |
(C) |
|
(3,279,000 |
) |
|
(3,433,000 |
) |
|
(12,612,000 |
) |
|
(10,478,000 |
) |
||||||
|
Corporate separation payment (4) |
(D) |
|
(114,000 |
) |
|
(171,000 |
) |
|
(553,000 |
) |
|
(811,000 |
) |
||||||
|
Non-GAAP adjusted selling and marketing expense |
$ |
10,143,000 |
|
$ |
11,451,000 |
|
$ |
40,571,000 |
|
$ |
38,246,000 |
|
|||||||
|
General and administrative expense |
|||||||||||||||||||
|
GAAP general and administrative expense |
$ |
6,096,000 |
|
$ |
5,922,000 |
|
$ |
21,866,000 |
|
$ |
30,327,000 |
|
|||||||
|
Stock-based compensation charges (1) |
(A) |
|
(1,160,000 |
) |
|
(636,000 |
) |
|
(4,344,000 |
) |
|
(2,685,000 |
) |
||||||
|
Strategic consulting and litigation costs (2) |
(B) |
|
(973,000 |
) |
|
(1,328,000 |
) |
|
(2,098,000 |
) |
|
(10,755,000 |
) |
||||||
|
Corporate separation payment (4) |
(D) |
|
– |
|
|
– |
|
|
(109,000 |
) |
|
(689,000 |
) |
||||||
|
Non-GAAP adjusted general and administrative expense |
$ |
3,963,000 |
|
$ |
3,958,000 |
|
$ |
15,315,000 |
|
$ |
16,198,000 |
|
|||||||
|
Operating income: |
|||||||||||||||||||
|
GAAP operating income |
$ |
1,195,000 |
|
$ |
(2,548,000 |
) |
$ |
4,557,000 |
|
$ |
(9,141,000 |
) |
|||||||
|
Stock-based compensation charges (1) |
(A) |
|
2,361,000 |
|
|
1,425,000 |
|
|
9,710,000 |
|
|
6,251,000 |
|
||||||
|
Strategic consulting and litigation costs (2) |
(B) |
|
986,000 |
|
|
4,282,000 |
|
|
2,570,000 |
|
|
16,049,000 |
|
||||||
|
Intangible Amortization (3) |
(C) |
|
6,095,000 |
|
|
6,169,000 |
|
|
23,087,000 |
|
|
17,913,000 |
|
||||||
|
Corporate separation payment (4) |
(D) |
|
114,000 |
|
|
171,000 |
|
|
1,657,000 |
|
|
1,787,000 |
|
||||||
|
Non-GAAP adjusted operating income |
$ |
10,751,000 |
|
$ |
9,499,000 |
|
$ |
41,581,000 |
|
$ |
32,859,000 |
|
|||||||
|
$ |
– |
|
|||||||||||||||||
|
Adjusted Operating Margin |
|
18.6 |
% |
|
18.9 |
% |
|
19.0 |
% |
|
18.9 |
% |
|||||||
|
Net income: |
|||||||||||||||||||
|
GAAP net (loss) income |
$ |
(2,945,000 |
) |
$ |
(3,079,000 |
) |
$ |
(6,425,000 |
) |
$ |
(14,647,000 |
) |
|||||||
|
Stock-based compensation charges (1) |
(A) |
|
2,361,000 |
|
|
1,425,000 |
|
|
9,710,000 |
|
|
6,251,000 |
|
||||||
|
Strategic consulting and litigation costs (2) |
(B) |
|
986,000 |
|
|
4,282,000 |
|
|
2,570,000 |
|
|
16,049,000 |
|
||||||
|
Intangible Amortization (3) |
(C) |
|
6,095,000 |
|
|
6,169,000 |
|
|
23,087,000 |
|
|
17,913,000 |
|
||||||
|
Corporate separation payment (4) |
(D) |
|
114,000 |
|
|
171,000 |
|
|
1,657,000 |
|
|
1,787,000 |
|
||||||
|
Non-GAAP adjusted net income |
$ |
6,611,000 |
|
$ |
8,968,000 |
|
$ |
30,599,000 |
|
$ |
27,353,000 |
|
|||||||
|
Deferred tax (benefit) expense |
|
1,990,000 |
|
|
(2,236,000 |
) |
|
1,861,000 |
|
|
(4,387,000 |
) |
|||||||
|
Non-GAAP adjusted net income excluding deferred tax (benefit) expense |
$ |
8,601,000 |
|
$ |
6,732,000 |
|
$ |
32,460,000 |
|
$ |
22,966,000 |
|
|||||||
|
Deemed and accrued dividends on preferred stock |
|
(2,311,000 |
) |
|
(2,090,000 |
) |
|
(9,025,000 |
) |
|
(9,984,000 |
) |
|||||||
|
Adjusted Net income attributable to common stockholders |
$ |
6,290,000 |
|
$ |
4,642,000 |
|
$ |
23,435,000 |
|
$ |
12,982,000 |
|
|||||||
|
Diluted net income per common share: |
|||||||||||||||||||
|
GAAP net income per share before deemed dividends |
$ |
(0.05 |
) |
$ |
(0.06 |
) |
$ |
(0.12 |
) |
$ |
(0.28 |
) |
|||||||
|
Adjustments per share |
(A-D) |
$ |
0.18 |
|
$ |
0.23 |
|
$ |
0.69 |
|
$ |
0.80 |
|
||||||
|
Non-GAAP adjusted net income per share before deemed dividends |
$ |
0.12 |
|
$ |
0.17 |
|
$ |
0.57 |
|
$ |
0.52 |
|
|||||||
|
Deferred tax (benefit) expense impact to Non-GAAP adjusted net income before deemed dividends per share |
(E) |
$ |
0.04 |
|
$ |
(0.04 |
) |
$ |
0.03 |
|
$ |
(0.09 |
) |
||||||
|
Non-GAAP adjusted net income before deemed dividends per share excluding deferred tax (benefit) expense |
$ |
0.16 |
|
$ |
0.13 |
|
$ |
0.60 |
|
$ |
0.43 |
|
|||||||
|
Deemed dividends per share impact to Non-GAAP adjusted net income |
$ |
(0.04 |
) |
$ |
(0.04 |
) |
$ |
(0.17 |
) |
$ |
(0.19 |
) |
|||||||
|
Adjusted Net income per share attributable to common stockholders |
$ |
0.12 |
|
$ |
0.09 |
|
$ |
0.43 |
|
$ |
0.24 |
|
|||||||
|
Shares used to compute Non-GAAP adjusted net income per share – diluted |
|
54,291,830 |
|
|
53,199,409 |
|
|
54,024,162 |
|
|
53,025,152 |
|
|||||||
|
Reconciliation of Net income to EBITDA and Adjusted EBITDA: |
(F) |
||||||||||||||||||
|
Net income |
$ |
(2,945,000 |
) |
$ |
(3,079,000 |
) |
$ |
(6,425,000 |
) |
$ |
(14,647,000 |
) |
|||||||
|
Income tax provision |
|
1,985,000 |
|
|
(2,170,000 |
) |
|
1,740,000 |
|
|
(4,478,000 |
) |
|||||||
|
Interest expense |
|
2,134,000 |
|
|
2,707,000 |
|
|
9,325,000 |
|
|
10,105,000 |
|
|||||||
|
Depreciation |
|
1,215,000 |
|
|
1,355,000 |
|
|
5,016,000 |
|
|
4,992,000 |
|
|||||||
|
Amortization |
|
7,509,000 |
|
|
6,772,000 |
|
|
27,313,000 |
|
|
19,437,000 |
|
|||||||
|
EBITDA |
|
9,898,000 |
|
|
5,585,000 |
|
|
36,969,000 |
|
|
15,409,000 |
|
|||||||
|
Adjustments: |
|||||||||||||||||||
|
Stock-based compensation charges (1) |
(A) |
|
2,361,000 |
|
|
1,425,000 |
|
|
9,710,000 |
|
|
6,251,000 |
|
||||||
|
Strategic consulting and litigation costs (2) |
(B) |
|
986,000 |
|
|
4,282,000 |
|
|
2,570,000 |
|
|
16,049,000 |
|
||||||
|
Corporate separation payment (4) |
(D) |
|
114,000 |
|
|
171,000 |
|
|
1,657,000 |
|
|
1,787,000 |
|
||||||
|
Adjusted EBITDA |
$ |
13,359,000 |
|
$ |
11,463,000 |
|
$ |
50,906,000 |
|
$ |
39,496,000 |
|
|||||||
|
Adjusted EBITDA margin |
|
23.1 |
% |
|
22.8 |
% |
|
23.3 |
% |
|
22.8 |
% |
|||||||
|
(1) Stock-based compensation charges are included as follows: |
|||||||||||||||||||
|
Cost of revenues |
$ |
97,000 |
|
$ |
147,000 |
|
$ |
1,201,000 |
|
$ |
569,000 |
|
|||||||
|
Research and development |
|
456,000 |
|
|
292,000 |
|
|
1,641,000 |
|
|
1,056,000 |
|
|||||||
|
Selling and marketing |
|
648,000 |
|
|
350,000 |
|
|
2,524,000 |
|
|
1,941,000 |
|
|||||||
|
General and administrative |
|
1,160,000 |
|
|
636,000 |
|
|
4,344,000 |
|
|
2,685,000 |
|
|||||||
|
$ |
2,361,000 |
|
$ |
1,425,000 |
|
$ |
9,710,000 |
|
$ |
6,251,000 |
|
||||||||
|
(2) Strategic consulting, acquisition, integration and litigation costs are included as follows: |
|||||||||||||||||||
|
Cost of revenues |
|
1,000 |
|
|
93,000 |
|
|
116,000 |
|
|
386,000 |
|
|||||||
|
Research and development |
|
5,000 |
|
|
686,000 |
|
|
137,000 |
|
|
1,481,000 |
|
|||||||
|
Selling and marketing |
|
7,000 |
|
|
2,175,000 |
|
|
219,000 |
|
|
3,427,000 |
|
|||||||
|
General and administrative |
|
973,000 |
|
|
1,328,000 |
|
|
2,098,000 |
|
|
10,755,000 |
|
|||||||
|
$ |
986,000 |
|
$ |
4,282,000 |
|
$ |
2,570,000 |
|
$ |
16,049,000 |
|
||||||||
|
(3) Intangible Amortization is included as follows: |
|||||||||||||||||||
|
Cost of revenues |
|
2,740,000 |
|
|
2,660,000 |
|
|
10,172,000 |
|
|
7,132,000 |
|
|||||||
|
Research and development |
|
76,000 |
|
|
76,000 |
|
|
303,000 |
|
|
303,000 |
|
|||||||
|
Selling and marketing |
|
3,279,000 |
|
|
3,433,000 |
|
|
12,612,000 |
|
|
10,478,000 |
|
|||||||
|
$ |
6,095,000 |
|
$ |
6,169,000 |
|
$ |
23,087,000 |
|
$ |
17,913,000 |
|
||||||||
|
(4) Corporate separation payment is included as follows: |
|||||||||||||||||||
|
Cost of revenues |
|
– |
|
|
– |
|
|
867,000 |
|
|
52,000 |
|
|||||||
|
Research and development |
|
– |
|
|
– |
|
|
128,000 |
|
|
235,000 |
|
|||||||
|
Selling and marketing |
|
114,000 |
|
|
171,000 |
|
|
553,000 |
|
|
811,000 |
|
|||||||
|
General and administrative |
|
– |
|
|
– |
|
|
109,000 |
|
|
689,000 |
|
|||||||
|
$ |
114,000 |
|
$ |
171,000 |
|
$ |
1,657,000 |
|
$ |
1,787,000 |
|
||||||||
|
(5) Net Income tax components: |
|||||||||||||||||||
|
Current tax (benefit)/expense |
|
(5,000 |
) |
|
66,000 |
|
|
(121,000 |
) |
|
(91,000 |
) |
|||||||
|
Deferred tax (benefit)/expense |
|
1,990,000 |
|
|
(2,236,000 |
) |
|
1,861,000 |
|
|
(4,387,000 |
) |
|||||||
|
$ |
1,985,000 |
|
$ |
(2,170,000 |
) |
$ |
1,740,000 |
|
$ |
(4,478,000 |
) |
||||||||
Contacts
Zix Company Contact
Geoff Bibby
1-214-370-2241
gbibby@zixcorp.com
Zix Investor Contact
Matt Glover and Tom Colton
Gateway Investor Relations
1-949-574-3860
ZIXI@gatewayir.com
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