Zix Corporation New Sales up 31 Percent Year to Date
Zix Corporation New Sales up 31 Percent Year to Date
Company expects full-year revenue and EPS to be at high end of guidance range
Backlog at an all-time high of $57 million
DALLAS--(BUSINESS WIRE)-- Zix Corporation (NAS: ZIXI) , the leader in email encryption services, today announced financial results for the third quarter ended Sept. 30, 2012.
Third Quarter 2012 Financial Highlights
Third quarter new first year orders of $2.6 million, including a one-time catch up of approximately $300,000
New first year orders for the nine months ended Sept. 30, 2012, were $6.8 million compared to $5.2 million for the same period last year, representing 31.0% year-over-year growth
Third quarter revenue of $11.0 million, an increase of 15.3%, year-over-year, the Company's 15th consecutive quarterly record in revenue
Third quarter GAAP net income of $0.03 per share, a decrease of 18.9%, year-over-year (1)
Third quarter Non-GAAP net income of $0.04 per share, an increase of 3.6%, year-over-year (1)
The Company generated approximately $4.6 million in cash flow from operations, a decrease of $0.1 million, year-over-year
Cash and cash equivalents totaled $23.0 million, an increase of $4.2 million compared to the June 30, 2012, ending cash balance
"We are pleased with our new first year order performance over the last two quarters reflecting our product leadership, channel expansion and increasing demand in the marketplace. The positive results to date have us well-positioned to achieve our full-year goals," said Rick Spurr, ZixCorp's Chairman and Chief Executive Officer.
Third Quarter 2012 Corporate Financial Summary and Other Operational Metrics
$ in Millions, except per share and % data | Q3 | Q3 | % or $ Change(1) | ||||||||
Revenue | $11.0 | $9.6 | 15.3% | ||||||||
GAAP Gross Profit | $9.1 | $7.8 | 17.6% | ||||||||
GAAP Net Income | $1.9 | $2.6 | (24.4)% | ||||||||
GAAP Net Income Per Share - Diluted | $0.03 | $0.04 | (18.9)% | ||||||||
Non-GAAP Adjusted Gross Profit(2) | $9.2 | $7.8 | 17.8% | ||||||||
Non-GAAP Adjusted Net Income (2) | $2.7 | $2.8 | (3.4)% | ||||||||
Non-GAAP Adjusted Net Income Per Share-Diluted (2) | $0.04 | $0.04 | 3.6% | ||||||||
Adjusted EBITDA (2) (3) | $3.1 | $3.2 | (3.6)% | ||||||||
Adjusted EBITDA Margin (2) (3) | 28.2% | 33.7% | (5.5)pt | ||||||||
New First Year Orders | $2.6 | $1.6 | 57.6% | ||||||||
Total Orders | $12.7 | $9.7 | 30.7% | ||||||||
Bookings Backlog (4) | $57.0 | $52.6 | 8.4% |
(1) Changes are based on actuals versus numbers shown in the columns which may reflect rounding
(2) A reconciliation of GAAP to Non-GAAP adjusted results is attached to this press release and is available on our investor relations Web site at http://investor.zixcorp.com
(3) Adjusted earnings before interest, taxes, depreciation and amortization
(4) Service contract commitments that represent future revenue to be recognized as the services are provided
Business Highlights
ZixCorp enhanced its partner program with upgraded marketing and sales support and improved program infrastructure. Program changes were implemented to maximize channel growth and continue to recruit qualified value added resellers while assisting partners in lead generation and accelerating the sales cycle.
Growing at approximately 100,000 members per week, ZixDirectory®increased its membership to 33 million. ZixDirectory continues to be the largest email encryption community in the world and demonstrates the growing strength of ZixCorp's unique email encryption approach.
Outlook
For the fourth quarter 2012, the Company forecasts revenue to be between $11.2 million and $11.5 million and fully diluted adjusted earnings per share to be $0.03. Based on that fourth quarter guidance, the Company expects to be at or near the high end of the Company's previous revenue guidance of $42 million to $43 million for the full year 2012. The Company now expects Non-GAAP adjusted earnings per share of $0.17 for the full year, tightening its guidance toward the high end of its most recent forecast.
Conference Call Information
The Company will discuss its financial results and outlook on a conference call on Tuesday, Oct. 23, 2012, at 5 p.m. ET. A live webcast of the conference call will be available on our investor relations Web site at http://investor.zixcorp.com. Alternatively, participants can access the conference call by dialing 1-800-688-0836 (U.S. toll-free) or 1-617-614-4072 (international) at least 15 minutes before the call and entering access code 41074246. An audio replay of the conference will be available until Oct. 31, 2012, by dialing 1-888-286-8010 (U.S. toll-free) or 1-617-801-6888 (international) and entering the access code 70887357. An archive for the webcast will also be available on the ZixCorp investor relations Web site.
About Zix Corporation
Zix Corporation (ZixCorp) provides the only email encryption services designed with your most important relationships in mind. Many of the most influential companies and government organizations use the proven ZixCorp® Email Encryption Services, including WellPoint, the SEC, and more than 1,500 hospitals and 1,800 financial institutions. ZixCorp Email Encryption Services are powered by ZixDirectory®, the largest email encryption community in the world. The tens of millions of ZixDirectory members can feel secure knowing their most important relationships are protected. For more information, visit www.zixcorp.com.
Statements in this release that are not purely historical facts or that necessarily depend upon future events, including statements about forecasts of revenue or earnings 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 ZixCorp on the date this release was issued. ZixCorp 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 risks or uncertainties related to how privacy and data security law mandates may affect demand for email encryption and ZixCorp's ability to obtain and retain customers and grow revenues. ZixCorp may not succeed in addressing these and other risks. Further information regarding factors that could affect ZixCorp financial and other results can be found in the risk factors section of ZixCorp's most recent filing on Form 10-K with the Securities and Exchange Commission.
ZIX CORPORATION | |||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS | |||||||||
September 30, | |||||||||
2012 | December 31, | ||||||||
(unaudited) | 2011 | ||||||||
ASSETS | |||||||||
Current assets: | |||||||||
Cash and cash equivalents | $ | 23,031,000 | $ | 20,680,000 | |||||
Receivables, net | 1,156,000 | 704,000 | |||||||
Prepaid and other current assets | 1,233,000 | 1,422,000 | |||||||
Deferred tax assets | 1,490,000 | 1,551,000 | |||||||
Total current assets | 26,910,000 | 24,357,000 | |||||||
Property and equipment, net | 2,275,000 | 2,228,000 | |||||||
Goodwill | 2,161,000 | 2,161,000 | |||||||
Deferred tax assets | 48,785,000 | 48,806,000 | |||||||
Other assets | - | - | |||||||
Total assets | $ | 80,131,000 | $ | 77,552,000 | |||||
LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||||
Current liabilities: | |||||||||
Accounts payable and accrued expenses | $ | 3,273,000 | $ | 2,292,000 | |||||
Deferred revenue | 19,193,000 | 16,568,000 | |||||||
Total current liabilities | 22,466,000 | 18,860,000 | |||||||
Long-term liabilities: | - | - | |||||||
Deferred revenue | 690,000 | 795,000 | |||||||
Deferred rent | 93,000 | 140,000 | |||||||
Total long-term liabilities | 783,000 | 935,000 | |||||||
Total liabilities | 23,249,000 | 19,795,000 | |||||||
Total stockholders' equity | 56,882,000 | 57,757,000 | |||||||
Total liabilities and stockholders' equity | $ | 80,131,000 | $ | 77,552,000 | |||||
ZIX CORPORATION | |||||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||||||||
(Unaudited) | |||||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||||
Revenues | $ | 11,023,000 | $ | 9,558,000 | $ | 31,667,000 | $ | 28,260,000 | |||||||||
Cost of revenues | 1,887,000 | 1,789,000 | 5,554,000 | 5,362,000 | |||||||||||||
Gross profit | 9,136,000 | 7,769,000 | 26,113,000 | 22,898,000 | |||||||||||||
Operating expenses: | |||||||||||||||||
Research and development | 2,046,000 | 1,343,000 | 4,988,000 | 3,948,000 | |||||||||||||
Selling, general and administrative | 5,020,000 | 3,754,000 | 13,720,000 | 11,310,000 | |||||||||||||
Total operating expenses | 7,066,000 | 5,097,000 | 18,708,000 | 15,258,000 | |||||||||||||
Operating income | 2,070,000 | 2,672,000 | 7,405,000 | 7,640,000 | |||||||||||||
Operating margin | 19 | % | 28 | % | 23 | % | 27 | % | |||||||||
Other income, net | 6,000 | 18,000 | 16,000 | 79,000 | |||||||||||||
Income before income taxes | 2,076,000 | 2,690,000 | 7,421,000 | 7,719,000 | |||||||||||||
Income tax (expense) benefit | (133,000 | ) | (119,000 | ) | (409,000 | ) | (132,000 | ) | |||||||||
Net income | $ | 1,943,000 | $ | 2,571,000 | $ | 7,012,000 | $ | 7,587,000 | |||||||||
Basic income per common share: | $ | 0.03 | $ | 0.04 | $ | 0.11 | $ | 0.12 | |||||||||
Diluted income per common share: | $ | 0.03 | $ | 0.04 | $ | 0.11 | $ | 0.11 | |||||||||
Shares used in per share calculation - basic | 60,896,042 | 64,140,926 | 61,671,214 | 65,499,763 | |||||||||||||
Shares used in per share calculation - diluted | 61,472,352 | 65,927,794 | 62,316,809 | 67,727,404 | |||||||||||||
Note: EPS totals off due to rounding | |||||||||||||||||
ZIX CORPORATION | ||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||||
(Unaudited) | ||||||||||
Nine Months Ended September 30, | ||||||||||
2012 | 2011 | |||||||||
Operating activities: | ||||||||||
Net income | $ | 7,012,000 | $ | 7,587,000 | ||||||
Non-cash items in net income | 1,874,000 | 1,436,000 | ||||||||
Changes in operating assets and liabilities | 3,206,000 | 1,638,000 | ||||||||
Net cash provided by operating activities | 12,092,000 | 10,661,000 | ||||||||
Investing activities: | ||||||||||
Purchases of property and equipment | (1,049,000 | ) | (1,103,000 | ) | ||||||
(Purchase) sale of commercial paper | - | (2,290,000 | ) | |||||||
Net cash used in investing activities | (1,049,000 | ) | (3,393,000 | ) | ||||||
Financing activities: | ||||||||||
Proceeds from exercise of stock options | 308,000 | 1,778,000 | ||||||||
Proceeds from exercise of warrants | - | 1,259,000 | ||||||||
Payment of license subscription note payable | - | |||||||||
