Bulletin
Investor Alert

Oct. 24, 2019, 4:13 p.m. EDT

Proofpoint Announces Third Quarter 2019 Financial Results

new
Watchlist Relevance
LEARN MORE

Want to see how this story relates to your watchlist?

Just add items to create a watchlist now:

  • X
    Proofpoint Inc. (PFPT)

or Cancel Already have a watchlist? Log In

SUNNYVALE, Calif., Oct 24, 2019 (GLOBE NEWSWIRE via COMTEX) -- Third Quarter Highlights

-- Total revenue of $227.4 million, up 23% year-over-year

-- Billings of $277.8 million, up 26% year-over-year

-- GAAP EPS of $(0.79) per share, Non-GAAP EPS of $0.49 per share

-- Operating cash flow of $68.6 million and free cash flow of $58.6 million

-- Increasing FY19 revenue and profitability guidance

Proofpoint, Inc. /zigman2/quotes/207816916/composite PFPT +0.66% , a leading next-generation security and compliance company, today announced financial results for the third quarter ended September 30, 2019.

"The third quarter marked another strong quarter for Proofpoint," stated Gary Steele, chief executive officer of Proofpoint. "Our people-centric approach to cybersecurity and compliance, our proven ability to identify and block advanced threats, and a favorable competitive environment all continue to be the main drivers of our success. We are seeing further momentum with our bundling strategy and consistently high customer renewal rates which have us well-positioned to continue to drive attractive growth and increase our market share in the over $13 billion total addressable market that we're pursuing."

Third Quarter 2019 Financial Highlights

-- Revenue: Total revenue for the third quarter of 2019 was $227.4 million, an increase of 23%, compared to $184.2 million for the third quarter of 2018.

-- Billings: Total billings for the third quarter of 2019 were $277.8 million, an increase of 26%, compared to $221.4 million for the third quarter of 2018.

-- Gross Profit: GAAP gross profit for the third quarter of 2019 was $167.5 million compared to $133.2 million for the third quarter of 2018. Non-GAAP gross profit for the third quarter of 2019 was $181.0 million compared to $144.3 million for the third quarter of 2018. GAAP gross margin for the third quarter of 2019 was 74% compared to 72% for the third quarter of 2018. Non-GAAP gross margin for the third quarter of 2019 was 80% compared to 78% for the third quarter of 2018.

-- Operating Income (Loss): GAAP operating loss for the third quarter of 2019 was $(24.4) million compared to a loss of $(26.6) million for the third quarter of 2018. Non-GAAP operating income for the third quarter of 2019 was $33.9 million compared to $22.7 million for the third quarter of 2018.

-- Net Income (Loss): GAAP net loss for the third quarter of 2019 was $(44.3) million, or $(0.79) per share, based on 56.0 million weighted average shares outstanding. This compares to a GAAP net loss of $(36.1) million, or $(0.69) per share, based on 52.2 million weighted average shares outstanding for the third quarter of 2018. Note that this result also included a current and deferred GAAP tax expense of $17.6 million for the transfer of certain intellectual property from Israel to the United States in the third quarter of 2019 associated with the acquisition of Meta Networks. Non-GAAP net income for the third quarter of 2019 was $29.8 million, or $0.49 per share, based on 61.2 million weighted average diluted shares outstanding. This result included a $6.1 million income tax expense, calculated using an effective rate of 17%, by applying the SEC's Non-GAAP Financial Measures Compliance and Disclosure Interpretations (C&DI 102.11) compared to the Company's historical calculation methodology, and as disclosed on April 25, 2019. Non-GAAP earnings per share for the third quarter of 2019 and 2018 included the shares associated with the company's convertible notes, and cash interest expense (net of tax) of $0.2 million and $0.3 million, respectively, was added back to net income as the "If-Converted" threshold during these periods was achieved.

-- Cash and Cash Flow: As of September 30, 2019, Proofpoint had cash, cash equivalents, and short-term investments of $1,051.5 million. The company generated $68.6 million in net cash from operations for the third quarter of 2019 compared to $64.7 million during the third quarter of 2018. The company's free cash flow for the third quarter of 2019 was $58.6 million compared to $58.2 million for the third quarter of 2018. Note that the cash tax payment for the transfer of certain intellectual property from Israel to the United States associated with the acquisition of Meta Networks did not occur in the third quarter and was subsequently paid in October.

"We are pleased with our ability to exceed expectations during the third quarter and once again demonstrate the strong operating leverage inherent within our financial model," stated Paul Auvil, chief financial officer of Proofpoint. "The company remains well-positioned to execute our disciplined growth strategy given the ongoing investments we're making in expanding our product portfolio for our customers and driving strong returns on behalf of our shareholders."

A reconciliation of GAAP to non-GAAP financial measures has been provided in the financial tables included in this press release. An explanation of these measures and how they are calculated are also included below under the heading "Non-GAAP Financial Measures."

Financial Outlook

As of October 24, 2019, Proofpoint is providing its fourth quarter and full year 2019 guidance as follows:

-- Fourth Quarter 2019 Guidance: Total revenue is expected to be in the range of $237.5 million to $239.5 million. Billings are expected to be in the range of $339.0 million to $343.0 million. GAAP gross margin is expected to be 73%. Non-GAAP gross margin is expected to be approximately 79%. GAAP net loss is expected to be in the range of $(32.7) million to $(28.2) million, or $(0.58) to $(0.50) per share, based on approximately 56.4 million weighted average diluted shares outstanding. Non-GAAP net income is expected to be in the range of $30.0 million to $32.0 million, or $0.47 to $0.50 per share, using 64.9 million weighted average diluted shares outstanding, and based on our reporting under C&DI 102.11. Free cash flow during the quarter is expected to be in the range of $58.2 million to $60.2 million, which includes an $8.4 million cash tax payment associated with the transfer of certain intellectual property from Israel to the United States as a result of the acquisition of Meta Networks. Excluding this tax payment, free cash flow guidance would have been $66.6 million to $68.6 million. Capital expenditures are expected to be approximately $14.2 million.

-- Full Year 2019 Guidance: Total revenue is expected to be in the range of $882.3 million to $884.3 million. Billings are expected to be in the range of $1,064.0 million to $1,068.0 million. GAAP gross margin is expected to be 73%. Non-GAAP gross margin is expected to be 79%. GAAP net loss is expected to be in the range of $(134.2) million to $(129.7) million, or $(2.40) to $(2.32) per share, based on approximately 55.9 million weighted average diluted shares outstanding. This estimate for GAAP net loss includes a GAAP tax expense of approximately $17.6 million for the transfer of certain intellectual property from Israel to the United States that occurred in the third quarter of 2019 associated with the acquisition of Meta Networks. Non-GAAP net income is expected to be in the range of $103.5 million to $105.5 million, or $1.72 to $1.75 per share, using 60.6 million weighted average diluted shares outstanding, and based on our reporting under C&DI 102.11. Free cash flow is expected to be in the range of $200.5 million to $202.5 million, which includes an $8.4 million cash tax payment associated with the transfer of certain intellectual property from Israel to the United States as a result of the acquisition of Meta Networks. Excluding this tax payment, free cash flow guidance would have been $208.9 to $210.9 million. Capital expenditures are expected to be approximately $38.0 million.

Quarterly Conference Call

Proofpoint will host a conference call today at 1:30 p.m. Pacific Time (4:30 p.m. Eastern Time) to review the company's financial results for the third quarter ended September 30, 2019. To access this call, dial (800) 239-9838 for the U.S. or Canada, or (929) 477-0448 for international callers, with conference ID #1877243. A live webcast, and an archived recording of the conference call will be accessible from the Investors section of Proofpoint's website at investors.proofpoint.com. An audio replay of this conference call will also be available through November 7, 2019, by dialing (844) 512-2921 for the U.S. or Canada or (412) 317-6671 for international callers, and entering passcode #1877243.

About Proofpoint, Inc.

Proofpoint, Inc. /zigman2/quotes/207816916/composite PFPT +0.66% is a leading cybersecurity company that protects organizations' greatest assets and biggest risks: their people. With an integrated suite of cloud-based solutions, Proofpoint helps companies around the world stop targeted threats, safeguard their data, and make their users more resilient against cyber attacks. Leading organizations of all sizes, including more than half of the Fortune 1000, rely on Proofpoint for people-centric security and compliance solutions that mitigate their most critical risks across email, the cloud, social media, and the web. More information is available at www.proofpoint.com .

Proofpoint is a trademark or registered trademark of Proofpoint, Inc. in the U.S. and other countries. All other trademarks contained herein are the property of their respective owners.

Forward-Looking Statements

This press release contains forward-looking statements that involve risks and uncertainties. These forward-looking statements include statements regarding momentum in the company's business, market position, win rates and renewal rates, future growth, and future financial results. It is possible that future circumstances might differ from the assumptions on which such statements are based. Important factors that could cause results to differ materially from the statements herein include: failure to maintain or increase renewals and increased business from existing customers and failure to generate increased business through existing or new channel partner relationships; uncertainties related to continued success in sales growth and market share gains; failure to convert sales opportunities into definitive customer agreements; risks associated with successful implementation of multiple integrated software products and other product functionality; competition, particularly from larger companies with more resources than Proofpoint; risks related to new target markets, new product introductions and innovation and market acceptance thereof; the ability to attract and retain key personnel; potential changes in strategy; risks associated with management of growth; lengthy sales and implementation cycles, particularly in larger organizations; the time it takes new sales personnel to become fully productive; unforeseen delays in developing new technologies and the uncertain market acceptance of new products or features; technological changes that make Proofpoint's products and services less competitive; security breaches, which could affect our brand; the costs of litigation; the impact of changes in foreign currency exchange rates; the effect of general economic conditions, including as a result of specific economic risks in different geographies and among different industries; risks related to integrating the employees, customers and technologies of acquired businesses; assumption of unknown liabilities from acquisitions; ability to retain customers of acquired entities; and the other risk factors set forth from time to time in our filings with the SEC, including our Quarterly Report on Form 10-Q for the three months ended June 30, 2019, and the other reports we file with the SEC, copies of which are available free of charge at the SEC's website at www.sec.gov or upon request from our investor relations department. All forward-looking statements herein reflect our opinions only as of the date of this release, and Proofpoint undertakes no obligation, and expressly disclaims any obligation, to update forward-looking statements herein in light of new information or future events.

/zigman2/quotes/207816916/composite
US : U.S.: Nasdaq
$ 113.60
+0.74 +0.66%
Volume: 586,017
Dec. 13, 2019 4:00p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
$6.41 billion
Rev. per Employee
$274,395
loading...
/zigman2/quotes/207816916/composite
US : U.S.: Nasdaq
$ 113.60
+0.74 +0.66%
Volume: 586,017
Dec. 13, 2019 4:00p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
$6.41 billion
Rev. per Employee
$274,395
loading...
1 2
This Story has 0 Comments
Be the first to comment

Story Conversation

Commenting FAQs »
Link to MarketWatch's Slice.