Enhanced Cross-Selling Efforts Drive Another Quarter of 15% Organic Revenue Growth, Expanding Adjusted EBITDA Margins, and 18% Organic Annual Recurring Revenue (ARR) Growth to $200.3 Million
DALLAS–(BUSINESS WIRE)–Zix Corporation (Zix) (NASDAQ: ZIXI), a leading provider of cloud email security solutions, today announced financial results for the third quarter ended September 30, 2019.
Third Quarter 2019 Financial Highlights (results compared to the same year-ago quarter)
- Revenue increased 168% to $47.8 million. Total overall organic revenue growth across Zix and AppRiver was 15%.
- Annual recurring revenue (ARR), representing aggregate contract value attributable to the 12 months ending September 30, 2019, increased 167% to $200.3 million. Total overall organic ARR growth across Zix and AppRiver was 18%.
- GAAP net loss attributable to common stockholders totaled $3.7 million compared to net income of $2.5 million. The company’s net loss attributable to common shareholders includes the effect of a deemed dividend to preferred shareholders of $2.1 million and one-time acquisition-related expenses of $1.9 million.
- GAAP fully diluted earnings (loss) per share attributable to common stockholders totaled ($0.07) compared to $0.05.
- Non-GAAP adjusted net income before deemed dividends and excluding deferred tax (benefit) expense totaled $6.7 million compared to $4.7 million. The company’s Q3 2019 non-GAAP adjusted net income also excludes $1.9 million of one-time acquisition-related expenses.
- Non-GAAP adjusted net income per share before deemed dividends and excluding deferred tax (benefit) expense and one-time acquisition-related expenses increased 43% to $013.
- Adjusted EBITDA increased 116% to $11.5 million, representing an adjusted EBITDA margin of 24%.
Management Commentary
“In the third quarter, we continued to make considerable progress in a number of key areas as we integrate and accelerate our performance as a unified, larger company,” said David Wagner, Zix’s Chief Executive Officer. “With another quarter of 15% organic revenue growth and 24% adjusted EBITDA margins, we’re again knocking on the ‘Rule of 40’ door and doing so while driving increased cross-sell activity. Within the AppRiver channel, we doubled the number of ZixEncrypt and ZixArchive trials compared to last quarter. In the Zix channel, we had 27 Office 365 cross-sell wins in the quarter. Heading into the end of the year, we expect to extend our track record of profitable growth through enhanced cross-selling and increased attach rates, which will help Zix accelerate revenue and ARR improvements into 2020 and beyond.”
Zix’s Chief Financial Officer Dave Rockvam added: “As our results for the quarter clearly demonstrated, we are firing on all cylinders and continuing to recognize material financial benefits as well as operational and sales process efficiencies as a larger organization. We not only exceeded our revenue guidance for Q3 with a record $47.8 million, but we also generated sequentially improved non-GAAP adjusted earnings of $0.13. Put together, our continued outperformance on both the top and bottom line demonstrates our ability to leverage the benefits of scale within two highly complementary businesses. We also generated improving organic ARR growth of 18% year-over-year, which allowed us to cross the $200 million threshold and also provides improved incremental visibility into our long-term accelerated growth expectations. With our first two and a half quarters of solid execution, we are becoming more and more confident that we can maintain this level growth combined with an investment level that would put us right on the ‘rule of 40’ metric, which we believe will help us drive higher shareholder value as well as the achievement of our three- to five-year vision of profitably scaling the business.”
Recent Operational and Product Highlights
- AppRiver direct customers and Managed Service Provider partners (MSPs) started over 300 trials of ZixEncrypt and ZixArchive in Q3 2019
- Zix added 27 O365 customers representing nearly 4,000 mailboxes in Q3 2019, increasing ARR 64% over Q2 2019 with an average product attach of 3.1 services per mailbox
- AppRiver reported findings from its Q3 Cyberthreat Index for Business Survey, revealing SMBs severely underestimate the damaging consequences of successful cyberattacks
|
Third Quarter 2019 Corporate Financial Summary and Other Operational Metrics (1) |
|||
|
$ in Millions, except per share data |
Q3 2019 |
Q3 2018 |
Change (2) |
|
Revenue |
$47.8 |
$17.9 |
167.6% |
|
GAAP Net Income (Loss) Attributable to Common Stockholders |
($3.7) |
$2.5 |
(250.2%) |
|
GAAP Net Income (Loss) Per Share Attributable to Common Stockholders – Diluted |
($0.07) |
$0.05 |
(251.1%) |
|
Non-GAAP Adjusted Net Income Attributable to Common Stockholders (4) |
$4.6 |
$4.7 |
(2.5%) |
|
Non-GAAP Adjusted Net Income Per Share Attributable to Common Stockholders – Diluted (4) |
$0.09 |
$0.09 |
(1.9%) |
|
Non-GAAP Adjusted Net Income Before Deemed Dividends(4) |
$6.8 |
$3.7 |
82.9% |
|
Non-GAAP Adjusted Net Income Per Share Before Deemed Dividends – Diluted(4) |
$0.13 |
$0.07 |
84.1% |
|
Non-GAAP Adjusted Net Income Before Deemed Dividends Excluding Deferred Tax (Benefit) Expense and Acquisition Expense(4) |
$6.7 |
$4.7 |
42.1% |
|
Non-GAAP Adjusted Net Income Per Share Before Deemed Dividends Excluding Deferred Tax (Benefit) Expense and Acquisition Expense(4) |
$0.13 |
$0.09 |
42.9% |
|
EBITDA (3)(4) |
$7.9 |
$4.4 |
81.9% |
|
EBITDA Margin |
16.6% |
24.4% |
(7.8 pts) |
|
Adjusted EBITDA (4) |
$11.5 |
$5.3 |
116.2% |
|
Adjusted EBITDA Margin (4) |
24.0% |
29.8% |
(5.8 pts) |
|
Total Billings |
$46.2 |
$21.3 |
117.1% |
|
Fiscal Nine Months 2019 Corporate Financial Summary and Other Operational Metrics (1) |
|||
|
|
|
|
|
|
$ in Millions, except per share data |
YTD 2019 |
YTD 2018 |
Change (2) |
|
Revenue |
$123.0 |
$52.0 |
136.5% |
|
GAAP Net Income (Loss) Attributable to Common Stockholders |
($19.5) |
$6.2 |
(414.5%) |
|
GAAP Net Income (Loss) Per Share Attributable to Common Stockholders – Diluted |
($0.37) |
$0.12 |
(417.0%) |
|
Non-GAAP Adjusted Net Income Attributable to Common Stockholders (4) |
$8.3 |
$12.9 |
(35.2%) |
|
Non-GAAP Adjusted Net Income Per Share Attributable to Common Stockholders – Diluted (4) |
$0.16 |
$0.24 |
(34.7%) |
|
Non-GAAP Adjusted Net Income Before Deemed Dividends(4) |
$18.4 |
$10.2 |
80.1% |
|
Non-GAAP Adjusted Net Income Per Share Before Deemed Dividends – Diluted (4) |
$0.35 |
$0.19 |
81.5% |
|
Non-GAAP Adjusted Net Income Before Deemed Dividends Excluding Deferred Tax (Benefit) Expense and Acquisition Expense(4) |
$16.2 |
$12.9 |
26.2% |
|
Non-GAAP Adjusted Net Income Per Share Before Deemed Dividends Excluding Deferred Tax (Benefit) Expense and Acquisition Expense – Diluted(4) |
$0.31 |
$0.24 |
27.2% |
|
EBITDA (3)(4) |
$9.8 |
$11.3 |
(12.9%) |
|
EBITDA Margin |
8.0% |
21.7% |
(13.7 pts) |
|
Adjusted EBITDA (4) |
$28.0 |
$14.6 |
92.5% |
|
Adjusted EBITDA Margin (4) |
22.8% |
28.0% |
(5.2 pts) |
|
Total Billings |
$120.9 |
$53.1 |
104% |
|
ARR (at September 30, 2019) |
$200.3 |
$74.9 |
167.4% |
|
(1) |
Metrics include results from AppRiver, unless otherwise specified |
|
|
(2) |
Changes are based on actual numbers versus numbers shown in the columns, which may reflect rounding |
|
|
(3) |
Earnings before interest, taxes, depreciation and amortization |
|
|
(4) |
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
For the fourth quarter of 2019, the company forecasts revenue to range between $49.0 million and $50.0 million. The company forecasts fully diluted GAAP earnings (loss) per share attributable to common stockholders to be in a range of ($0.03) and ($0.02) and fully diluted non-GAAP adjusted earnings per share to be $0.14 for the fourth quarter of 2019. The financial outlook includes a required GAAP adjustment on the deferred revenue acquired from AppRiver.
Zix is increasing the midpoint of its target ARR with an updated range of approximately $205 million to $209 million (previously $204 million to $209 million) at fiscal 2019 year end, representing a growth rate of approximately 14% to 16% (previously 13% to 16%) year-over-year.
For the full fiscal year of 2019, the company is increasing its previously disclosed revenue guidance to a range of between $172.0 million to $173.0 million (previously $170.0 million to $172.0 million), representing an increase of between 144% and 145% (previously 141% and 144%) compared to fiscal year 2018. The company also updates its fully diluted GAAP earnings (loss) per share (attributable to common stockholders) guidance to a range of between ($0.25) and ($0.23) [previously ($0.24) and ($0.21)] and its fully diluted non-GAAP adjusted earnings per share (attributable to common stockholders) guidance to be $0.44 to $0.45 (previously $0.44 to $0.46) for fiscal year 2019. The financial outlook includes approximately 10 months of AppRiver financial results consolidated into Zix and also includes a required GAAP adjustment on the deferred revenue acquired from AppRiver. Zix is forecasting Q4 and full year 2019 to result in a GAAP net loss and expects to be using an approximate basic share count of 53.3 million for Q4 and an average of 53.1 million for the full year.
Conference Call Information
Management will discuss these financial results and outlook on a conference call today (October 31, 2019) at 8:00 a.m. ET (5:00 a.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 5993097. 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 5993097. 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.
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, and how privacy and data security laws may affect demand for Zix data protection solutions. 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.
| ZIX CORPORATION | ||||||
| CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||
| September 30, | ||||||
|
2019 |
December 31, |
|||||
|
(unaudited) |
2018 |
|||||
| ASSETS | ||||||
| Current assets: | ||||||
| Cash and cash equivalents |
$ |
10,066,000 |
$ |
27,109,000 |
||
| Receivables, net |
|
10,106,000 |
|
3,188,000 |
||
| Prepaid and other current assets |
|
4,705,000 |
|
3,176,000 |
||
| Total current assets |
|
24,877,000 |
|
33,473,000 |
||
| Property and equipment, net |
|
9,403,000 |
|
3,924,000 |
||
| Operating lease assets |
|
10,055,000 |
|
– |
||
| Other assets and deferred costs |
|
11,619,000 |
|
9,424,000 |
||
| Intangible Assets, Net |
|
149,280,000 |
|
15,251,000 |
||
| Goodwill |
|
174,357,000 |
|
13,783,000 |
||
| Deferred tax assets |
|
30,935,000 |
|
28,785,000 |
||
| Total assets |
$ |
410,526,000 |
$ |
104,640,000 |
||
| LIABILITIES, PREFERRED STOCK AND STOCKHOLDERS’ EQUITY | ||||||
| Current liabilities: | ||||||
| Accounts payable and accrued expenses |
$ |
23,763,000 |
$ |
10,516,000 |
||
| Deferred revenue |
|
44,564,000 |
|
30,622,000 |
||
| Other current liabilities |
|
5,732,000 |
|
– |
||
| Total current liabilities |
|
74,059,000 |
|
41,138,000 |
||
| Long-term liabilities: | ||||||
| Deferred revenue |
|
1,090,000 |
|
1,539,000 |
||
| Deferred rent |
|
– |
|
1,016,000 |
||
| Operating lease liabilities |
|
9,904,000 |
|
– |
||
| Debt |
|
176,407,000 |
|
– |
||
| Total long-term liabilities |
|
187,401,000 |
|
2,555,000 |
||
| Total liabilities |
|
261,460,000 |
|
43,693,000 |
||
| Total preferred stock |
|
104,436,000 |
|
– |
||
| Total stockholders’ equity |
|
44,630,000 |
|
60,947,000 |
||
| Total liabilities, preferred stock and stockholders’ equity |
$ |
410,526,000 |
$ |
104,640,000 |
||
| ZIX CORPORATION | ||||||||||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||||||||||
| (Unaudited) | ||||||||||||||||
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
|
2019 |
2018 |
2019 |
2018 |
|||||||||||||
| Revenue |
$ |
47,833,000 |
|
$ |
17,876,000 |
|
$ |
123,049,000 |
|
$ |
52,029,000 |
|
||||
| Cost of revenue |
|
21,422,000 |
|
|
3,870,000 |
|
|
52,865,000 |
|
|
11,189,000 |
|
||||
| Gross profit |
|
26,411,000 |
|
|
14,006,000 |
|
|
70,184,000 |
|
|
40,840,000 |
|
||||
| Operating expenses: | ||||||||||||||||
| Research and development |
|
5,590,000 |
|
|
2,764,000 |
|
|
15,048,000 |
|
|
8,720,000 |
|
||||
| Selling, general and administrative |
|
19,592,000 |
|
|
8,025,000 |
|
|
61,729,000 |
|
|
24,139,000 |
|
||||
| Total operating expenses |
|
25,182,000 |
|
|
10,789,000 |
|
|
76,777,000 |
|
|
32,859,000 |
|
||||
| Operating income |
|
1,229,000 |
|
|
3,217,000 |
|
|
(6,593,000 |
) |
|
7,981,000 |
|||||
| Operating margin |
|
3 |
% |
|
18 |
% |
|
-5 |
% |
|
15 |
% |
||||
| Other income (expense) | ||||||||||||||||
| Investment and other income |
|
14,000 |
|
|
183,000 |
|
|
115,000 |
|
|
662,000 |
|
||||
| Interest expense and other expense |
|
(2,973,000 |
) |
|
– |
|
|
(7,398,000 |
) |
|
– |
|
||||
| Total other income (expense) |
|
(2,959,000 |
) |
|
183,000 |
|
|
(7,283,000 |
) |
|
662,000 |
|
||||
| Income before income taxes |
|
(1,730,000 |
) |
|
3,400,000 |
|
|
(13,876,000 |
) |
|
8,643,000 |
|
||||
| Income tax benefit (expense) |
|
133,000 |
|
|
(945,000 |
) |
|
2,308,000 |
|
|
(2,455,000 |
) |
||||
| Net (loss) income |
$ |
(1,597,000 |
) |
$ |
2,455,000 |
|
$ |
(11,568,000 |
) |
$ |
6,188,000 |
|
||||
| Deemed and accrued dividends on preferred stock |
|
(2,090,000 |
) |
|
– |
|
|
(7,894,000 |
) |
|
– |
|
||||
| Net (loss) income attributable to common shareholders |
$ |
(3,687,000 |
) |
$ |
2,455,000 |
|
$ |
(19,462,000 |
) |
$ |
6,188,000 |
|
||||
| Basic (loss) income per share attributable to common shareholders: |
$ |
(0.07 |
) |
$ |
0.05 |
|
$ |
(0.37 |
) |
$ |
0.12 |
|
||||
| Diluted (loss) income per share attributable to common shareholders: |
$ |
(0.07 |
) |
$ |
0.05 |
|
$ |
(0.37 |
) |
$ |
0.12 |
|
||||
| Shares used in per share calculation – basic |
|
53,148,078 |
|
|
52,494,340 |
|
|
52,965,163 |
|
|
52,611,161 |
|
||||
| Shares used in per share calculation – diluted |
|
53,148,078 |
|
|
53,474,849 |
|
|
52,965,163 |
|
|
53,389,622 |
|
||||
| Other Comprehensive income, net of tax: | ||||||||||||||||
| Foreign currency translation adjustments |
|
35,000 |
|
|
– |
|
|
(52,000 |
) |
|
– |
|
||||
| Comprehensive (loss) income |
$ |
(1,562,000 |
) |
$ |
2,455,000 |
|
$ |
(11,620,000 |
) |
$ |
6,188,000 |
|
||||
| ZIX CORPORATION | ||||||||||||||||
| RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES | ||||||||||||||||
| (Unaudited) | ||||||||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
|
2019 |
2018 |
2019 |
2018 |
|||||||||||||
| Revenue: | ||||||||||||||||
| GAAP revenue |
$ |
47,833,000 |
|
$ |
17,876,000 |
|
$ |
123,049,000 |
|
$ |
52,029,000 |
|
||||
| Cost of revenue | ||||||||||||||||
| GAAP cost of revenue |
$ |
21,422,000 |
|
$ |
3,870,000 |
|
$ |
52,865,000 |
|
$ |
11,189,000 |
|
||||
| Stock-based compensation charges (1) | (A) |
|
(154,000 |
) |
|
(91,000 |
) |
|
(422,000 |
) |
|
(239,000 |
) |
|||
| Strategic consulting and litigation costs (2) | (B) |
|
(21,000 |
) |
|
– |
|
|
(293,000 |
) |
|
(1,000 |
) |
|||
| Intangible Amortization (3) | (C) |
|
(1,943,000 |
) |
|
(139,000 |
) |
|
(4,472,000 |
) |
|
(280,000 |
) |
|||
| Corporate separation payment (4) | (D) |
|
– |
|
|
– |
|
|
(52,000 |
) |
|
(28,000 |
) |
|||
| Non-GAAP adjusted cost of revenue |
$ |
19,304,000 |
|
$ |
3,640,000 |
|
$ |
47,626,000 |
|
$ |
10,641,000 |
|
||||
| Gross profit: | ||||||||||||||||
| GAAP gross profit |
$ |
26,411,000 |
|
$ |
14,006,000 |
|
$ |
70,184,000 |
|
$ |
40,840,000 |
|
||||
| Stock-based compensation charges (1) | (A) |
|
154,000 |
|
|
91,000 |
|
|
422,000 |
|
|
239,000 |
|
|||
| Strategic consulting and litigation costs (2) | (B) |
|
21,000 |
|
|
– |
|
|
293,000 |
|
|
1,000 |
|
|||
| Intangible Amortization (3) | (C) |
|
1,943,000 |
|
|
139,000 |
|
|
4,472,000 |
|
|
280,000 |
|
|||
| Corporate separation payment (4) | (D) |
|
– |
|
|
– |
|
|
52,000 |
|
|
28,000 |
|
|||
| Non-GAAP adjusted gross profit |
$ |
28,529,000 |
|
$ |
14,236,000 |
|
$ |
75,423,000 |
|
$ |
41,388,000 |
|
||||
| Research and development expense | ||||||||||||||||
| GAAP research and development expense |
$ |
5,590,000 |
|
$ |
2,764,000 |
|
$ |
15,048,000 |
|
$ |
8,720,000 |
|
||||
| Stock-based compensation charges (1) | (A) |
|
(295,000 |
) |
|
(130,000 |
) |
|
(765,000 |
) |
|
(333,000 |
) |
|||
| Strategic consulting and litigation costs (2) | (B) |
|
(459,000 |
) |
|
– |
|
|
(795,000 |
) |
|
(58,000 |
) |
|||
| Intangible Amortization (3) | (C) |
|
(76,000 |
) |
|
– |
|
|
(227,000 |
) |
|
(76,000 |
) |
|||
| Non-GAAP adjusted research and development expense |
$ |
4,760,000 |
|
$ |
2,634,000 |
|
$ |
13,025,000 |
|
$ |
8,253,000 |
|
||||
| Selling and marketing expense | ||||||||||||||||
| GAAP selling and marketing expense |
$ |
13,312,000 |
|
$ |
5,223,000 |
|
$ |
37,323,000 |
|
$ |
15,054,000 |
|
||||
| Stock-based compensation charges (1) | (A) |
|
(473,000 |
) |
|
(239,000 |
) |
|
(1,590,000 |
) |
|
(652,000 |
) |
|||
| Strategic consulting and litigation costs (2) | (B) |
|
(511,000 |
) |
|
– |
|
|
(1,253,000 |
) |
|
(7,000 |
) |
|||
| Intangible Amortization (3) | (C) |
|
(2,794,000 |
) |
|
(157,000 |
) |
|
(7,045,000 |
) |
|
(380,000 |
) |
|||
| Non-GAAP adjusted selling and marketing expense |
$ |
9,534,000 |
|
$ |
4,827,000 |
|
$ |
26,796,000 |
|
$ |
14,015,000 |
|
||||
| General and administrative expense | ||||||||||||||||
| GAAP general and administrative expense |
$ |
6,280,000 |
|
$ |
2,802,000 |
|
$ |
24,406,000 |
|
$ |
9,085,000 |
|
||||
| Stock-based compensation charges (1) | (A) |
|
(711,000 |
) |
|
(441,000 |
) |
|
(2,049,000 |
) |
|
(1,150,000 |
) |
|||
| Strategic consulting and litigation costs (2) | (B) |
|
(958,000 |
) |
|
(64,000 |
) |
|
(9,427,000 |
) |
|
(857,000 |
) |
|||
| Corporate separation payment (4) | (D) |
|
– |
|
|
– |
|
|
(689,000 |
) |
|
40,000 |
|
|||
| Non-GAAP adjusted general and administrative expense |
$ |
4,611,000 |
|
$ |
2,297,000 |
|
$ |
12,241,000 |
|
$ |
7,118,000 |
|
||||
| Operating income: | ||||||||||||||||
| GAAP operating income |
$ |
1,229,000 |
|
$ |
3,217,000 |
|
$ |
(6,593,000 |
) |
$ |
7,981,000 |
|
||||
| Stock-based compensation charges (1) | (A) |
|
1,633,000 |
|
|
901,000 |
|
|
4,826,000 |
|
|
2,374,000 |
|
|||
| Strategic consulting and litigation costs (2) | (B) |
|
1,949,000 |
|
|
64,000 |
|
|
11,768,000 |
|
|
923,000 |
|
|||
| Intangible Amortization (3) | (C) |
|
4,813,000 |
|
|
296,000 |
|
|
11,744,000 |
|
|
736,000 |
|
|||
| Corporate separation payment (4) | (D) |
|
– |
|
|
– |
|
|
1,616,000 |
|
|
(12,000 |
) |
|||
| Non-GAAP adjusted operating income |
$ |
9,624,000 |
|
$ |
4,478,000 |
|
$ |
23,361,000 |
|
$ |
12,002,000 |
|
||||
| Adjusted Operating Margin |
|
20.1 |
% |
|
25.1 |
% |
|
19.0 |
% |
|
23.1 |
% |
||||
| Net income: | ||||||||||||||||
| GAAP net (loss) income |
$ |
(1,597,000 |
) |
$ |
2,455,000 |
|
$ |
(11,568,000 |
) |
$ |
6,188,000 |
|
||||
| Stock-based compensation charges (1) | (A) |
|
1,633,000 |
|
|
901,000 |
|
|
4,826,000 |
|
|
2,374,000 |
|
|||
| Strategic consulting and litigation costs (2) | (B) |
|
1,949,000 |
|
|
64,000 |
|
|
11,768,000 |
|
|
923,000 |
|
|||
| Intangible Amortization (3) | (C) |
|
4,813,000 |
|
|
296,000 |
|
|
11,744,000 |
|
|
736,000 |
|
|||
| Corporate separation payment (4) | (D) |
|
– |
|
|
– |
|
|
1,616,000 |
|
|
(12,000 |
) |
|||
| Non-GAAP adjusted net income |
$ |
6,798,000 |
|
$ |
3,716,000 |
|
$ |
18,386,000 |
|
$ |
10,209,000 |
|
||||
| Deferred tax (benefit) expense |
|
(142,000 |
) |
|
969,000 |
|
|
(2,151,000 |
) |
|
2,660,000 |
|
||||
| Non-GAAP adjusted net income excluding deferred tax (benefit) expense |
$ |
6,656,000 |
|
$ |
4,685,000 |
|
$ |
16,235,000 |
|
$ |
12,869,000 |
|
||||
| Deemed and accrued dividends on preferred stock |
|
(2,090,000 |
) |
|
– |
|
|
(7,894,000 |
) |
|
– |
|
||||
| Adjusted Net income attributable to common stockholders |
$ |
4,566,000 |
|
$ |
4,685,000 |
|
$ |
8,341,000 |
|
$ |
12,869,000 |
|
||||
| Diluted net income per common share: | ||||||||||||||||
| GAAP net income per share before deemed dividends |
$ |
(0.03 |
) |
$ |
0.05 |
|
$ |
(0.22 |
) |
$ |
0.12 |
|
||||
| Adjustments per share | (A-D) |
$ |
0.16 |
|
$ |
0.02 |
|
$ |
0.57 |
|
$ |
0.08 |
|
|||
| Non-GAAP adjusted net income per share before deemed dividends |
$ |
0.13 |
|
$ |
0.07 |
|
$ |
0.35 |
|
$ |
0.19 |
|
||||
| Deferred tax (benefit) expense impact to Non-GAAP adjusted net income before deemed dividends per share | (E) |
$ |
(0.00 |
) |
$ |
0.02 |
|
$ |
(0.04 |
) |
$ |
0.05 |
|
|||
| Non-GAAP adjusted net income before deemed dividends per share excluding deferred tax (benefit) expense |
$ |
0.13 |
|
$ |
0.09 |
|
$ |
0.31 |
|
$ |
0.24 |
|
||||
| Deemed dividends per share impact to Non-GAAP adjusted net income |
$ |
(0.04 |
) |
$ |
– |
|
$ |
(0.15 |
) |
$ |
– |
|
||||
| Adjusted Net income per share attributable to common stockholders |
$ |
0.09 |
|
$ |
0.09 |
|
$ |
0.16 |
|
$ |
0.24 |
|
||||
| Shares used to compute Non-GAAP adjusted net income per share – diluted |
|
53,148,078 |
|
|
53,474,849 |
|
|
52,965,163 |
|
|
53,389,622 |
|
||||
| Reconciliation of Net income to EBITDA and Adjusted EBITDA: | (F) | |||||||||||||||
| Net income |
$ |
(1,597,000 |
) |
$ |
2,455,000 |
|
$ |
(11,568,000 |
) |
$ |
6,188,000 |
|
||||
| Income tax provision |
|
(133,000 |
) |
|
945,000 |
|
|
(2,308,000 |
) |
|
2,455,000 |
|
||||
| Interest expense |
|
2,973,000 |
|
|
– |
|
|
7,398,000 |
|
|
– |
|
||||
| Depreciation |
|
1,402,000 |
|
|
581,000 |
|
|
3,637,000 |
|
|
1,757,000 |
|
||||
| Amortization |
|
5,274,000 |
|
|
373,000 |
|
|
12,665,000 |
|
|
877,000 |
|
||||
| EBITDA |
|
7,919,000 |
|
|
4,354,000 |
|
|
9,824,000 |
|
|
11,277,000 |
|
||||
| Adjustments: | ||||||||||||||||
| Stock-based compensation charges (1) | (A) |
|
1,633,000 |
|
|
901,000 |
|
|
4,826,000 |
|
|
2,374,000 |
|
|||
| Strategic consulting and litigation costs (2) | (B) |
|
1,949,000 |
|
|
64,000 |
|
|
11,768,000 |
|
|
923,000 |
|
|||
| Corporate separation payment (4) | (D) |
|
– |
|
|
– |
|
|
1,616,000 |
|
|
(12,000 |
) |
|||
| Adjusted EBITDA |
$ |
11,501,000 |
|
$ |
5,319,000 |
|
$ |
28,034,000 |
|
$ |
14,562,000 |
|
||||
| Adjusted EBITDA margin |
|
24.0 |
% |
|
29.8 |
% |
|
22.8 |
% |
|
28.0 |
% |
||||
| (1) Stock-based compensation charges are included as follows: | ||||||||||||||||
| Cost of revenues |
$ |
154,000 |
|
$ |
91,000 |
|
$ |
422,000 |
|
$ |
239,000 |
|
||||
| Research and development |
|
295,000 |
|
|
130,000 |
|
|
765,000 |
|
|
333,000 |
|
||||
| Selling and marketing |
|
473,000 |
|
|
239,000 |
|
|
1,590,000 |
|
|
652,000 |
|
||||
| General and administrative |
|
711,000 |
|
|
441,000 |
|
|
2,049,000 |
|
|
1,150,000 |
|
||||
|
$ |
1,633,000 |
|
$ |
901,000 |
|
$ |
4,826,000 |
|
$ |
2,374,000 |
|
|||||
| (2) Strategic consulting, acquisition, integration and litigation costs are included as follows: | ||||||||||||||||
| Cost of revenues |
|
21,000 |
|
|
– |
|
|
293,000 |
|
|
1,000 |
|
||||
| Research and development |
|
459,000 |
|
|
– |
|
|
795,000 |
|
|
58,000 |
|
||||
| Selling and marketing |
|
511,000 |
|
|
– |
|
|
1,253,000 |
|
|
7,000 |
|
||||
| General and administrative |
|
958,000 |
|
|
64,000 |
|
|
9,427,000 |
|
|
857,000 |
|
||||
|
$ |
1,949,000 |
|
$ |
64,000 |
|
$ |
11,768,000 |
|
$ |
923,000 |
|
|||||
| (3) Intangible Amortization is included as follows: | ||||||||||||||||
| Cost of revenues |
|
1,943,000 |
|
|
139,000 |
|
|
4,472,000 |
|
|
280,000 |
|
||||
| Research and development |
|
76,000 |
|
|
– |
|
|
227,000 |
|
|
76,000 |
|
||||
| Selling and marketing |
|
2,794,000 |
|
|
157,000 |
|
|
7,045,000 |
|
|
380,000 |
|
||||
|
$ |
4,813,000 |
|
$ |
296,000 |
|
$ |
11,744,000 |
|
$ |
736,000 |
|
|||||
| (4) Corporate separation payment is included as follows: | ||||||||||||||||
| Cost of revenues |
|
– |
|
|
– |
|
|
52,000 |
|
|
28,000 |
|
||||
| Research and development |
|
– |
|
|
– |
|
|
236,000 |
|
|
– |
|
||||
| Selling and marketing |
|
– |
|
|
– |
|
|
639,000 |
|
|
– |
|
||||
| General and administrative |
|
– |
|
|
– |
|
|
689,000 |
|
|
(40,000 |
) |
||||
|
$ |
– |
|
$ |
– |
|
$ |
1,616,000 |
|
$ |
(12,000 |
) |
|||||
| (5) Net Income tax components: | ||||||||||||||||
| Current tax (benefit)/expense |
|
9,000 |
|
|
(24,000 |
) |
|
(157,000 |
) |
|
(205,000 |
) |
||||
| Deferred tax (benefit)/expense |
|
(142,000 |
) |
|
969,000 |
|
|
(2,151,000 |
) |
|
2,660,000 |
|
||||
|
$ |
(133,000 |
) |
$ |
945,000 |
|
$ |
(2,308,000 |
) |
$ |
2,455,000 |
|
|||||
Contacts
Zix Company Contact
Geoff Bibby
1-214-370-2241
[email protected]
Zix Investor Contact
Matt Glover and Tom Colton
Gateway Investor Relations
1-949- 574-3860
[email protected]
