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Zix Corporation Achieves 18th Consecutive Quarterly Record In Revenue For Second Quarter 2013

Zix Corporation (ZixCorp), (Nasdaq: ZIXI), a leader in email data protection, today announced financial results for the second quarter ended June 30, 2013.

Second Quarter 2013 Financial Highlights

  • Second quarter new first year orders of $2.4 million, compared to a near record $2.5 million in the second quarter of 2012
  • Second quarter revenue of $11.8 million, an increase of 14.5% year-over-year, the Company’s 18th consecutive quarterly record in revenue
  • Second quarter GAAP net income of $0.03 per share, a decrease of 30.0% year-over-year (1)
  • Second quarter Non-GAAP net income of $0.04 per share, a decrease of 20.2% year-over-year (1)
  • The Company generated approximately $2.5 million in cash flow from operations, a decrease of $2.5 million year-over-year
  • Cash and cash equivalents totaled $26.3 million, an increase of $2.1 million compared to the Mar. 31, 2013, ending cash balance
  • The year-over-year decline in earnings and cash flow was in line with public guidance and the expected result of increased investments in new products and sales and marketing

“We achieved another consecutive quarter of record revenue and bookings and continue to deliver results that meet, if not exceed, our guidance, reflecting the consistency of our business model,” said Rick Spurr, ZixCorp’s Chairman and Chief Executive Officer. “We continue to see expansion both within our existing customer base and with the addition of new customers. At the same time, we are building on our leadership in email data protection with two new products that more than triple the size of our addressable market and that we believe will lead us to even higher growth rates in 2014. ZixDLP, which addresses an enterprise’s number one data leakage problem, was launched in March. Our second new product is ZixOne, our innovative approach to BYOD. ZixOne is in beta with nearly 30 customers and receiving very positive feedback. ZixOne literally takes 30 minutes or less to connect to a company’s email Exchange server, and then individual employees can download and implement the app in less than a minute. ZixOne can solve the BYOD security issue surrounding corporate email that is a top concern of nearly every CIO and CTO in the corporate world. We remain on track to meet our September 3 general availability date and look forward to delivering this disruptive product to the marketplace.”

Second Quarter 2013 Corporate Financial Summary and Other Operational Metrics

$ in Millions, except per share and % data    

Q2 2013

   

Q2 2012

    % or $

Change (1)

Revenue     $ 11.8       $ 10.3       14.5 %
GAAP Gross Profit     $ 9.9       $ 8.5       16.5 %
GAAP Net Income     $ 1.9       $ 2.6       (29.2 )%
GAAP Net Income Per Share – Diluted     $ 0.03       $ 0.04       (30.0 )%
Non-GAAP Adjusted Gross Profit (2)     $ 10.0       $ 8.6       16.6 %
Non-GAAP Adjusted Net Income (2)     $ 2.5       $ 3.1       (19.3 )%
Non-GAAP Adjusted Net Income Per Share-Diluted (2)     $ 0.04       $ 0.05       (20.2 )%
Adjusted EBITDA (2) (3)     $ 2.9       $ 3.5       (16.1 )%
Adjusted EBITDA Margin (2) (3)       24.5 %       33.5 %    

9.0

pt

New First Year Orders     $ 2.4       $ 2.5       (2.7 )%
Total Orders     $ 15.6       $ 13.6       14.8 %
Bookings Backlog (4)     $ 63.4       $ 55.5       14.1 %
           
(1)     Changes are based on actuals versus numbers shown in the columns which may reflect rounding
(2)

A reconciliation of GAAP to Non-GAAP adjusted results is attached to this press release and is available on our investor relations Web site at http://investor.zixcorp.com

(3) Adjusted earnings before interest, taxes, depreciation and amortization
(4) Service contract commitments that represent future revenue to be recognized as the services are provided
 

Business Highlights

  • ZixCorp unveiled ZixOneTM, a unique bring-your-own-device (BYOD) secure mobile email app. ZixOne sets itself apart in the BYOD market by meeting the employees’ desire to use their own devices for work and maintain control and privacy while giving IT the ability to secure data and meet compliance needs. Other BYOD solutions, such as mobile device management and containerization, do not meet both employee wants and corporate needs. ZixOne is scheduled for commercial availability on Sept. 3, 2013.
  • Lahey Hospital & Medical Center selected ZixCorp® Email Encryption Services to provide secure email to 6,000 internal users, including physicians, nurses and departments such as financial services and information technology. ZixCorp's ease of use combined with its reputation in the healthcare industry made ZixCorp the right choice for Lahey Hospital & Medical Center.
  • ZixCorp increased its competitive replacement wins in the first half of 2013 by 80% year-over-year.
  • ZixCorp surpassed more than 1,900 U.S. financial services customers. In addition, ZixCorp Email Encryption remains the solution of choice for all U.S. federal financial regulators, divisions of the U.S. Treasury Department, the U.S. Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA).

Outlook

For the third quarter 2013, the Company forecasts revenue to be between $11.9 million and $12.1 million and fully diluted adjusted earnings per share to be $0.05. For the full year 2013, the Company reaffirms guidance for revenue of $48 million to $50 million and fully diluted Non-GAAP adjusted earnings per share of $0.19 to $0.20.

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