ZixCorp (ZIXI) Reports In-Line Q4 EPS, Revenues Beat; Offers 1Q & FY21 EPS/Revenue Guidance
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ZixCorp (NASDAQ: ZIXI) reported Q4 EPS of $0.16, in-line with the analyst estimate of $0.16. Revenue for the quarter came in at $57.9 million versus the consensus estimate of $56.91 million.
Fourth Quarter 2020 Financial Highlights (results compared to the same year-ago quarter)
- Revenue increased 15% to $57.9 million.
- Annual recurring revenue (ARR) increased 14% to $237.7 million. Cloud ARR increased 21% to $206.6 million or 87% of total ARR.
- GAAP net loss totaled ($2.9) million compared to a year ago net loss of ($3.1) million.
- GAAP net loss attributable to common stockholders totaled ($5.3) million compared to a year ago net loss attributable to common stockholders of ($5.2) million. The company’s Q4 2020 net loss attributable to common shareholders includes the effect of a deemed dividend to preferred shareholders of $2.3 million and acquisition-related expenses of $1.0 million.
- GAAP fully diluted earnings (loss) per share attributable to common stockholders totaled ($0.10) compared to ($0.10).
- Non-GAAP adjusted net income before deemed dividends and excluding deferred tax (benefit) expense totaled $8.6 million compared to $6.7 million.
- Non-GAAP adjusted net income per share before deemed dividends and excluding deferred tax (benefit) expense increased 25.2% to $0.16.
- Adjusted EBITDA increased 17% or $1.9 million to $13.4 million, representing an adjusted EBITDA margin of 23%.
- The company ended the quarter with $21.4 million in cash. Cash flow from operations for 2020 was $31.3 million, an increase of 124% or $17.3 million compared to 2019.
“The fourth quarter marked a strong finish to a successful and transformative year,” said David Wagner, Zix’s Chief Executive Officer. “We delivered profitable growth for the full year 2020 highlighted by 14% ARR growth, 26% revenue growth, and 29% adjusted EBITDA growth. Achieving these results in the face of a pandemic year is a testament to our team, our partners, our customers, and the resilience of our operating model. Our strategic prioritization in 2020 of investments in our indirect channels and in our Secure Cloud platform was already well timed, and the rapid shift to remote work caused by the pandemic provided further support for this emphasis. The recent, high-profile breaches remind us that Email remains the number one threat vector. Zix Secure Cloud provides security tools and a second layer of threat protection capability that are increasingly critical for small and medium sized enterprises. In Q4 we added cloud backup and recovery to provide robust data resiliency and protection against ransomware attacks that are another bane for our partners and customers. With our Secure Cloud platform and growing array of security compliance and productivity applications, we are positioned to benefit from strong secular growth drivers, including the increasingly dynamic threat landscape and move to the cloud.”
Zix’s Chief Financial Officer Dave Rockvam commented: “We again delivered on our commitment to drive profitable revenue growth, increased adjusted EBITDA, and we generated more than $31 million of operating cash flow for the year. Our continued success with productivity solutions has proven to be an effective beachhead for attaching Zix’s organic, higher-margin products. With more than 5,000 partners and 90,000 end customers today, we have a meaningful, built-in base. Secure Cloud is enabling our partners to accelerate new customer acquisition and is empowering our end customers to add more services, leading to our industry-leading LTV (Lifetime Value) to CAC (Customer Acquisition Cost) ratio. In Q4, 99% of customers on-boarded onto Secure Cloud, and in 2021 we will be migrating thousands of legacy Zix customers to Secure Cloud. As we enter 2021, we have a solid financial foundation and considerable cash flow generation, providing us with the resources and predictability to meet our debt obligations while at the same time executing our growth strategy.”
ZixCorp sees Q1 2021 EPS of $0.15-$0.16, versus the consensus of $0.14. ZixCorp sees Q1 2021 revenue of $58.7-59.8 million, versus the consensus of $58.07 million.
ZixCorp sees FY2021 EPS of $0.58-$0.60, versus the consensus of $0.66. ZixCorp sees FY2021 revenue of $244-248.5 million, versus the consensus of $243.11 million.
Zix provides guidance based on current market conditions and expectations. The company emphasizes that its guidance is subject to various important cautionary factors referenced in the section entitled "Forward-Looking Statements" below, including risks and uncertainties associated with the COVID-19 pandemic.
For the first quarter of 2021, the company forecasts revenue to range between $58.7 million and $59.8 million. Zix’s revenue forecast for the first quarter of 2021 implies a 12% to 14% growth rate compared to the same year ago quarter. The company forecasts fully diluted GAAP earnings (loss) per share (attributable to common stockholders) to be in the range of ($0.07) and ($0.06), and fully diluted non-GAAP adjusted earnings per share (attributable to common stockholders) before deemed dividends and excluding deferred tax (benefit) expense to be in the range of $0.15 and $0.16 for the first quarter of 2021. The company forecasts adjusted EBITDA to be between 22% and 23% of forecast revenue for Q1 2021. The per share guidance figures are based on an approximate basic share count of 55.1 million for Q1 2021.
Based on management’s current visibility, the company forecasts revenue for fiscal 2021 to range between $244.0 million and $248.5 million, representing an increase of between 12% and 14% compared to fiscal year 2020. The company also expects fully diluted GAAP earnings (loss) per share (attributable to common stockholders) to range between ($0.27) and ($0.25) and fully diluted non-GAAP adjusted earnings per share (attributable to common stockholders) before deemed dividends and excluding deferred tax (benefit) expense to range between $0.58 to $0.60 for fiscal year 2021. The company forecasts adjusted EBITDA to be $56.0 million (or approximately 23% of forecast revenue) for 2021, representing a year-over-year increase of approximately 10% compared to fiscal year 2020. The per share figures are based on an approximate basic average share count of 55.5 million for 2021. Fiscal 2021 guidance adds back approximately $3.0 million of expenses related to travel, compensation, and marketing, which were reduced in 2020 due to COVID-19.
For earnings history and earnings-related data on ZixCorp (ZIXI) click here.
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