A month has gone by since the last earnings report for Proofpoint, Inc. . Shares have added about 15.8% in that time frame, outperforming the market.
Will the recent positive trend continue leading up to the stock's next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Proofpoint Q1 Loss Narrows, 2017 Guidance Revised Up
Proofpoint reported mixed results for first-quarter 2017 wherein its top line fared better than the Zacks Consensus Estimate but bottom didn’t. However, on a year over year basis, the company witnessed improvement on both the counts.
Quarter in Detail
Proofpoint reported total revenue of $113.3 million, up 43.3% year over year, mainly driven by customer additions, improved add-on-sales and strong renewal rate. The company’s revenues also surpassed the Zacks Consensus Estimate of $110 million and also came ahead of its own guidance range of $109–$111 million.
Total billings during the quarter also jumped 40% year over year to $137.4 million. Renewal rates also remain well over 90% during the first quarter.
Adjusted gross profit (excluding all one-time items but including stock-based compensation) increased 49.3% from the year-ago quarter to $84.1 million. Moreover, adjusted gross margin expanded 290 basis points (bps) to 74.2%, primarily driven by higher sales.
Furthermore, the company efficiently managed its operating expenses this quarter. As a percentage of revenues, adjusted operating expenses declined to 87.7% from 97.8% in the year-ago quarter. In dollar terms, however, the figure increased 28.5% to $99.3 million.
Owing to higher revenues and efficient cost management, Proofpoint’s operating loss for the quarter narrowed year over year to $15.3 million from $21 million in first-quarter 2016.
The company’s adjusted loss per share also narrowed year over year to $0.38 from $0.54 posted in the year-ago quarter. The year-over-year improvement was primarily stemmed by strong top-line growth and efficient cost management, which were partially offset by higher share counts. However, Proofpoint’s adjusted loss was higher than the Zacks Consensus Estimate of a loss of $0.35.
Balance Sheet & Cash Flow
Proofpoint exited the quarter with cash and cash equivalents, and short-term investments of approximately $412.9 million, slightly up from the previous quarter balance of $396.8 million. Accounts receivable were $62.4 million compared with $73 million at the end of fourth-quarter 2016.
During the quarter, the company generated cash flow of $40.5 million. Free cash flow for the quarter came in at $28.2 million.
Outlook
Buoyed by the better-than-expected top-line result, Proofpoint provided encouraging outlook for the second quarter and raised guidance for the full year. For 2017, the company now anticipates revenues in the range of $496–$500 million, up from the earlier guidance range of $488–$492 million. Billings’ guidance for the year has also been revised upward and is now anticipated to come between $619.0 million and $623.0 million. Earlier it was projected to remain in the range of $611–$615 million.
Similarly, non-GAAP earnings per share are now expected to come between $0.56 and $0.59, up from the previous guidance range of $0.49–$0.52. Free cash flow for the year is now projected to be in the range of $98–$106 million, up from the earlier projection of $95–$105 million. The company intends to incur capital expenditure in the range of $40–$42 million in 2017.
Coming to the second-quarter outlook, the company anticipates reporting revenues in the range of $118–120 million, and billings between $141 million and $143 million.
Further, Proofpoint anticipates reporting loss in the range of $0.61–$0.69 per share on a GAAP basis, while earnings are estimated between $0.11 and $0.13 on non-GAAP basis. Free cash flow is projected to be in the range of $11–$12 million.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed an upward trend in fresh estimates. There have been three revisions higher for the current quarter. In the past month, the consensus estimate has shifted by 17.1% due to these changes.
VGM Scores
At this time, Proofpoint's stock has a great Growth Score of 'A', while it is lagging a bit on the momentum front with 'C'. However, the stock was allocated a grade of 'F' on the value side, putting it in the fifth quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'C'. If you aren't focused on one strategy, this score is the one you should be interested in.
Zacks' style scores indicate that the company's stock is suitable solely for growth investors.
Outlook
Estimates have been trending upward for the stock. The magnitude of these revisions also looks promising. The stock has a Zacks Rank #3 (Hold). We are expecting an inline return from the stock in the next few months.
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Proofpoint (PFPT) Up 15.8% Since Earnings Report: Can It Continue?
A month has gone by since the last earnings report for Proofpoint, Inc. . Shares have added about 15.8% in that time frame, outperforming the market.
Will the recent positive trend continue leading up to the stock's next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Proofpoint Q1 Loss Narrows, 2017 Guidance Revised Up
Proofpoint reported mixed results for first-quarter 2017 wherein its top line fared better than the Zacks Consensus Estimate but bottom didn’t. However, on a year over year basis, the company witnessed improvement on both the counts.
Quarter in Detail
Proofpoint reported total revenue of $113.3 million, up 43.3% year over year, mainly driven by customer additions, improved add-on-sales and strong renewal rate. The company’s revenues also surpassed the Zacks Consensus Estimate of $110 million and also came ahead of its own guidance range of $109–$111 million.
Total billings during the quarter also jumped 40% year over year to $137.4 million. Renewal rates also remain well over 90% during the first quarter.
Adjusted gross profit (excluding all one-time items but including stock-based compensation) increased 49.3% from the year-ago quarter to $84.1 million. Moreover, adjusted gross margin expanded 290 basis points (bps) to 74.2%, primarily driven by higher sales.
Furthermore, the company efficiently managed its operating expenses this quarter. As a percentage of revenues, adjusted operating expenses declined to 87.7% from 97.8% in the year-ago quarter. In dollar terms, however, the figure increased 28.5% to $99.3 million.
Owing to higher revenues and efficient cost management, Proofpoint’s operating loss for the quarter narrowed year over year to $15.3 million from $21 million in first-quarter 2016.
The company’s adjusted loss per share also narrowed year over year to $0.38 from $0.54 posted in the year-ago quarter. The year-over-year improvement was primarily stemmed by strong top-line growth and efficient cost management, which were partially offset by higher share counts. However, Proofpoint’s adjusted loss was higher than the Zacks Consensus Estimate of a loss of $0.35.
Balance Sheet & Cash Flow
Proofpoint exited the quarter with cash and cash equivalents, and short-term investments of approximately $412.9 million, slightly up from the previous quarter balance of $396.8 million. Accounts receivable were $62.4 million compared with $73 million at the end of fourth-quarter 2016.
During the quarter, the company generated cash flow of $40.5 million. Free cash flow for the quarter came in at $28.2 million.
Outlook
Buoyed by the better-than-expected top-line result, Proofpoint provided encouraging outlook for the second quarter and raised guidance for the full year. For 2017, the company now anticipates revenues in the range of $496–$500 million, up from the earlier guidance range of $488–$492 million. Billings’ guidance for the year has also been revised upward and is now anticipated to come between $619.0 million and $623.0 million. Earlier it was projected to remain in the range of $611–$615 million.
Similarly, non-GAAP earnings per share are now expected to come between $0.56 and $0.59, up from the previous guidance range of $0.49–$0.52. Free cash flow for the year is now projected to be in the range of $98–$106 million, up from the earlier projection of $95–$105 million. The company intends to incur capital expenditure in the range of $40–$42 million in 2017.
Coming to the second-quarter outlook, the company anticipates reporting revenues in the range of $118–120 million, and billings between $141 million and $143 million.
Further, Proofpoint anticipates reporting loss in the range of $0.61–$0.69 per share on a GAAP basis, while earnings are estimated between $0.11 and $0.13 on non-GAAP basis. Free cash flow is projected to be in the range of $11–$12 million.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed an upward trend in fresh estimates. There have been three revisions higher for the current quarter. In the past month, the consensus estimate has shifted by 17.1% due to these changes.
Proofpoint, Inc. Price and Consensus
Proofpoint, Inc. Price and Consensus | Proofpoint, Inc. Quote
VGM Scores
At this time, Proofpoint's stock has a great Growth Score of 'A', while it is lagging a bit on the momentum front with 'C'. However, the stock was allocated a grade of 'F' on the value side, putting it in the fifth quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'C'. If you aren't focused on one strategy, this score is the one you should be interested in.
Zacks' style scores indicate that the company's stock is suitable solely for growth investors.
Outlook
Estimates have been trending upward for the stock. The magnitude of these revisions also looks promising. The stock has a Zacks Rank #3 (Hold). We are expecting an inline return from the stock in the next few months.