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Zix Corporation's CEO Discusses Q2 2012 Results - Earnings Call Transcript

Rick and Mike will refer to various non-GAAP financial measures, such as adjusted gross profit, adjusted operating expenses, adjusted earnings and adjusted EBITDA. You can find in our earnings press release and on our investor website detailed explanations of our non-GAAP financial measures along with reconciliations of our adjusting items to the most directly comparable GAAP financial measures.

Now I am very pleased to turn the call over to Rick.

Rick Spurr

Thanks Geoff. Good afternoon everyone and thank you for joining us today. I am pleased to announce that during the second quarter, we delivered the best financial results in our company's history. These results included strong new first year orders, which reached a record $2.5 million, up 46% sequentially from 1.7 million in the preceding quarter and up 22% from 2 million in the second quarter of last year. While our second quarter tends to be our strongest, we believe this significant increase in orders goes beyond seasonal trends and reflects the broad based increase in demand for email encryption. We are seeing more inbound enquiries, up 66% over last year. More activity from prospects buying email encryption for the first time and more opportunities to replace outdated or weak competitive solutions.

The strong new order results in Q2 also reflects our increased number of mid-market channel partners which we grew by 80% over the last 18 months. We now have 191 combined managed security service providers and value added resellers compared to 106 at the end of 2010. This increased command also highlights what we talked about over the past few quarters that buyers have become better educated and are now more discriminating when it comes to selecting an email encryption solution. They now understand the robust capabilities and ease of use design features that are required for success and are demanding a more sophisticated solution like Zix Corp. prospective customers are starting to make buying decisions based on the feature set, quality and effectiveness of the solution they intend to implement including automatic policy based encryption, ease of use through transparency, strong analytics and reporting capabilities and best in class mobility support. This trend has and will continue to benefit Zix because of the quality and maturity of our solutions.

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