Zix Corporation Achieves 18th Consecutive Quarterly Record in Revenue for Second Quarter 2013
Zix Corporation Achieves 18thConsecutive Quarterly Record in Revenue for Second Quarter 2013
Company exceeds earnings and revenue guidance
Second Quarter 2013 Financial Highlights
- Second quarter new first year orders of $2.4 million, compared to a near record $2.5 million in the second quarter of 2012
- Second quarter revenue of $11.8 million, an increase of 14.5% year-over-year, the Company's 18th consecutive quarterly record in revenue
- Second quarter GAAP net income of $0.03 per share, a decrease of 30.0% year-over-year (1)
- Second quarter Non-GAAP net income of $0.04 per share, a decrease of 20.2% year-over-year (1)
- The Company generated approximately $2.5 million in cash flow from operations, a decrease of $2.5 million year-over-year
- Cash and cash equivalents totaled $26.3 million, an increase of $2.1 million compared to the Mar. 31, 2013, ending cash balance
- The year-over-year decline in earnings and cash flow was in line with public guidance and the expected result of increased investments in new products and sales and marketing
"We achieved another consecutive quarter of record revenue and bookings and continue to deliver results that meet, if not exceed, our guidance, reflecting the consistency of our business model," said Rick Spurr, ZixCorp's Chairman and Chief Executive Officer. "We continue to see expansion both within our existing customer base and with the addition of new customers. At the same time, we are building on our leadership in email data protection with two new products that more than triple the size of our addressable market and that we believe will lead us to even higher growth rates in 2014. ZixDLP, which addresses an enterprise's number one data leakage problem, was launched in March. Our second new product is ZixOne, our innovative approach to BYOD. ZixOne is in beta with nearly 30 customers and receiving very positive feedback. ZixOne literally takes 30 minutes or less to connect to a company's email Exchange server, and then individual employees can download and implement the app in less than a minute. ZixOne can solve the BYOD security issue surrounding corporate email that is a top concern of nearly every CIO and CTO in the corporate world. We remain on track to meet our September 3 general availability date and look forward to delivering this disruptive product to the marketplace."
Second Quarter 2013 Corporate Financial Summary and Other Operational Metrics
|$ in Millions, except per share and % data|
|% or $|
|GAAP Gross Profit||$||9.9||$||8.5||16.5||%|
|GAAP Net Income||$||1.9||$||2.6||(29.2||)%|
|GAAP Net Income Per Share - Diluted||$||0.03||$||0.04||(30.0||)%|
|Non-GAAP Adjusted Gross Profit(2)||$||10.0||$||8.6||16.6||%|
|Non-GAAP Adjusted Net Income (2)||$||2.5||$||3.1||(19.3||)%|
|Non-GAAP Adjusted Net Income Per Share-Diluted (2)||$||0.04||$||0.05||(20.2||)%|
|Adjusted EBITDA (2) (3)||$||2.9||$||3.5||(16.1||)%|
|Adjusted EBITDA Margin (2) (3)||24.5||%||33.5||%|
|New First Year Orders||$||2.4||$||2.5||(2.7||)%|
|Bookings Backlog (4)||$||63.4||$||55.5||14.1||%|
|(1)||Changes are based on actuals versus numbers shown in the columns which may reflect rounding|
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|
- ZixCorp unveiled ZixOneTM , a unique bring-your-own-device (BYOD) secure mobile email app. ZixOne sets itself apart in the BYOD market by meeting the employees' desire to use their own devices for work and maintain control and privacy while giving IT the ability to secure data and meet compliance needs. Other BYOD solutions, such as mobile device management and containerization, do not meet both employee wants and corporate needs. ZixOne is scheduled for commercial availability on Sept. 3, 2013.
- Lahey Hospital & Medical Center selected ZixCorp®Email Encryption Services to provide secure email to 6,000 internal users, including physicians, nurses and departments such as financial services and information technology. ZixCorp's ease of use combined with its reputation in the healthcare industry made ZixCorp the right choice for Lahey Hospital & Medical Center.
- ZixCorp increased its competitive replacement wins in the first half of 2013 by 80% year-over-year.
- ZixCorp surpassed more than 1,900 U.S. financial services customers. In addition, ZixCorp Email Encryption remains the solution of choice for all U.S. federal financial regulators, divisions of the U.S. Treasury Department, the U.S. Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA).
For the third quarter 2013, the Company forecasts revenue to be between $11.9 million and $12.1 million and fully diluted adjusted earnings per share to be $0.05. For the full year 2013, the Company reaffirms guidance for revenue of $48 million to $50 million and fully diluted Non-GAAP adjusted earnings per share of $0.19 to $0.20.
Conference Call Information:
The Company will discuss its financial results and outlook on a conference call on Tuesday, July 23, 2013, 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 1-866-953-6860 (U.S. toll-free) or 1-617-399-3484 (international) at least 15 minutes before the call and entering access code 79066570. An audio replay of the conference will be available until July 31, 2013, by dialing 1-888-286-8010 (U.S. toll-free) or 1-617-801-6888 (international) and entering the access code 54698370. An archive for the webcast will also be available on the ZixCorp investor relations Web site.
About Zix Corporation
ZixCorp is a leader in email data protection. ZixCorp offers industry-leading email encryption, a unique email DLP solution and an innovative email BYOD solution to meet your company's data protection and compliance needs. ZixCorp is trusted by the nation's most influential institutions in healthcare, finance and government for easy to use secure email solutions. ZixCorp is publicly traded on the Nasdaq Global Market under the symbol ZIXI, and its headquarters are in Dallas, Texas. 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, earnings or new products 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, ZixCorp's ability to obtain and retain customers, grow revenues and deliver new products. 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.
|CONDENSED CONSOLIDATED BALANCE SHEETS|
|Cash and cash equivalents||$||26,308,000||$||22,988,000|
|Prepaid and other current assets||1,364,000||1,697,000|
|Deferred tax assets||1,608,000||1,600,000|
|Total current assets||31,055,000||27,252,000|
|Property and equipment, net||2,587,000||2,384,000|
|Deferred tax assets||50,985,000||51,052,000|
|LIABILITIES AND STOCKHOLDERS' EQUITY|
|Accounts payable and accrued expenses||$||3,186,000||$||3,156,000|
|Total current liabilities||20,503,000||20,626,000|
|Total long-term liabilities||1,038,000||978,000|
|Total stockholders' equity||65,247,000||61,245,000|
|Total liabilities and stockholders' equity||$||86,788,000||$||82,849,000|
|CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS|
|Three Months Ended June 30,||Six Months Ended June 30,|
|Cost of revenue||1,903,000||1,812,000||3,839,000||3,667,000|
|Research and development||2,488,000||1,465,000||5,099,000||2,942,000|
|Selling, general and administrative||5,532,000||4,370,000||12,148,000||8,700,000|
|Total operating expenses||8,020,000||5,835,000||17,247,000||11,642,000|
|Other income, net||64,000||5,000||124,000||10,000|
|Income before income taxes||1,979,000||2,701,000||2,640,000||5,345,000|
|Income tax expense||(108,000||)||(58,000||)||(202,000||)||(276,000||)|
|Basic income per common share:||$||0.03||$||0.04||$||0.04||$||0.08|
|Diluted income per common share:||$||0.03||$||0.04||$||0.04||$||0.08|
|Shares used in per share calculation - basic||61,158,009||61,103,342||61,068,294||62,063,059|
|Shares used in per share calculation - diluted||62,451,546||61,721,859||62,242,401||62,743,297|
|CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS|
|Six Months Ended June 30,|
|Non-cash items in net income||1,617,000||1,177,000|
|Changes in operating assets and liabilities||(504,000||)||1,231,000|
|Net cash provided by operating activities||3,551,000||7,477,000|