ZixCorp (ZIXI) Tops Q4 EPS by 13c, Revenues Beat; Q1 & FY19 EPS Guidance Below Consensus, Q1 & FY19 Revenue Guidance Above Consensus

ZixCorp (NASDAQ: ZIXI) reported Q4 EPS of $0.22, $0.13 better than the analyst estimate of $0.09. Revenue for the quarter came in at $18.4 million versus the consensus estimate of $18.19 million.

• Revenue increased 10% to a record $18.4 million.
• Annual recurring revenue (ARR) increased 13% to a record $75.8 million.
• New First Year Orders (NFYO) increased 23% to $3.1 million.
• Total orders increased 21% to $17.6 million.
• GAAP net income increased from ($12.9) million to $9.2 million.*
• GAAP fully diluted earnings per share increased from ($0.24) to $0.17.*
• Non-GAAP fully diluted earnings per share increased from ($0.20) to $0.22.
• Non-GAAP fully diluted earnings per share excluding deferred tax (benefit) expense increased 1% to $0.09.
• Cash flow from operations increased 16% to $4.9 million.
• Adjusted EBITDA increased 14% to a record $5.6 million, representing an adjusted EBITDA margin of 30.2%.
• The company ended the quarter with $27.1 million in cash.
  

Management Commentary

“With revenue up 10% to a record $18.4 million and adjusted EBITDA up 14% to a record level of $5.6 million, representing an adjusted EBITDA margin of 30.2%, the fourth quarter of 2018 topped off another strong year for the company,” said David Wagner, Zix’s Chief Executive Officer. “Our commitment to profitable growth continues to inform our growth strategy and is shaping our journey to become one of the leading cloud-based email security providers. Building off of the success we have been experiencing with ZixProtect and ZixArchive, earlier this year we announced major enhancements to ZixArchive, significantly expanding our archiving capabilities. Our work in 2018 also focused on strengthening our distribution capabilities. We expanded our managed service provider (MSP) program, added dozens of G-Suite resellers and reduced our reliance on OEM partnerships in favor of partners more aligned with our cloud-based offerings. Earlier this quarter we launched ZixSuite, a cloud-based business communications security and compliance solution that combines advanced threat protection, business email continuity, email encryption, email DLP and unified archiving, all managed from a centralized interface. We believe the end result has been the successful alignment of our business to the cloud—and a really strong foundation from which to further build with the acquisition of AppRiver that closed earlier this month. Today, we are a much stronger business that is even better positioned to help our customers. We’re also a business with much greater scale, and with significant cost synergies, cross-selling opportunities, and market tailwinds working in our favor.”

Zix’s Chief Financial Officer Dave Rockvam added: “Q4 was a success in many ways, with record revenue, record ACV, a return to double-digit topline growth, and New First Year Orders growth of more than 20% for the third consecutive quarter. This strong performance was once again driven by the success of our sales teams in attracting new customers and selling additional solutions into our growing installed base. Our progress in driving stronger topline growth coupled with our continued success in managing our costs enabled us to achieve a 30.2% adjusted EBITDA margin during the quarter—the highest level achieved since Dave and I joined Zix in 2016. Overall, our results for the quarter and full year demonstrate that the strategy we laid out three years ago to drive strong returns for our shareholders is really starting to bear fruit. With our recent transformational acquisition of AppRiver, we look to extend this success in a much more impactful way by leveraging our newfound scale, cost synergies, expanded customer base, and complementary solutions.”

GUIDANCE:

ZixCorp sees Q1 2019 EPS of $0.03-$0.04, versus the consensus of $0.09. ZixCorp sees Q1 2019 revenue of $26.5-27.5 million, versus the consensus of $18.25 million.

ZixCorp sees FY2019 EPS of $0.30-$0.33, versus the consensus of $0.36. ZixCorp sees FY2019 revenue of $164-167 million, versus the consensus of $74.95 million.

For earnings history and earnings-related data on ZixCorp (ZIXI) click here.

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