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Proofpoint Inc. delivered fourth-quarter 2018 non-GAAP earnings of 51 cents, which outpaced the Zacks Consensus Estimate of 35 cents and was also ahead of the year-ago quarterly figure of 37 cents.
Proofpoint reported total revenues of $198.5 million, up 35% year over year and also surpassed the Zacks Consensus Estimate of $193 million.
This strong top-line growth can be attributed to the sturdy international uptick and a solid progress in the emerging products. Moreover, Proofpoint drew $3 million of revenues (under ASC 606) from private cloud deployments in the fourth quarter, which was expected to be recognized in fiscal 2019. The company has, however, provided an outlook for fiscal 2019 that matched with the prior guidance.
Top-Line Details
Total billings during the quarter under review jumped 43% year over year to $269.9 million. Also, renewal rates again soared above 90% during the reported quarter. Management noted that with no improvement in Microsoft’s (MSFT - Free Report) overall efficacy in security during the fourth quarter, Proofpoint’s win rate is consistently high.
Subscription revenues (98.3% of total revenues) during the quarter under consideration came in at $195.1 million, up 35.1% from the year-ago period. Hardware and services revenues (1.7%) increased 17.2% year over year to $3.4 million.
On the basis of solutions, revenues from Advanced Threat (74.3%), which includes Targeted Attack Protection or TAP offering, rose 34.2% from the year-earlier quarter to $147.4 million, and Compliance revenues (25.7%) of $51.1 million surged 37.7% year over year.
Management mentioned that the new offerings have expanded the total addressable market by more than $5 billion and are proving to be a key growth catalyst. Emerging products, which contributed to more than 30% of total new and add-on businesses closed during the quarter under discussion, steadily surpass the company’s remaining product portfolio. This upside was led by robust demand for Email Fraud Defense, Threat Response and Wombat.
Proofpoint continues to expand abroad by dint of its international business performance, which grew 45% year over year and accounted for 19% of its total revenues.
Operating Details
Non-GAAP gross profit advanced 36.9% from the year-ago quarter to $156.6 million. Non-GAAP gross margin improved 100 basis points (bps) year over year to 78.9%, driven by a strong revenue performance.
Proofpoint’s non-GAAP operating income for the reported quarter augmented 39.5% to $29.3 million. Non-GAAP operating margin expanded 50 bps to 14.8%.
Proofpoint, Inc. Price, Consensus and EPS Surprise
Proofpoint exited the quarter with cash and cash equivalents and short-term investments of approximately $231.7 million compared with the previous quarterly balance of $190.4 million.
During the reported period, the company generated operating cash flow of $55.1 million. Free cash flow for the same period summed $48.6 million.
Full-Year Highlights
Proofpoint reported fiscal 2018 non-GAAP earnings of $1.47 per share, up from $1.10 in the prior-year quarter. Revenues ascended 38% year over year to $717 million.
Subscription revenues (98.2% of total revenues) increased 39% year over year to $704.4 million.
Hardware and services revenues (1.8% of total revenues) declined 5.5% year over to $12.6 million.
Non-GAAP gross profit rose 38.5% from fiscal 2017 to $558.5 million. Non-GAAP gross margin of 78% is flat with the prior-year number.
Internationally, Proofpoint ended fiscal 2018 with 24% of global 2000 customers, which grew 18% year over year. The strength customers with three or more products has increased 45% year over year to 2,900.
The company ended the year with nearly 6,100 enterprise customers including nearly 550 of those gained through the acquisition of Wombat.
Guidance
For the first quarter of 2019, Proofpoint anticipates revenues of $198-$200 million and billings of $211.5-$213.5 million.
Non-GAAP gross profit is expected to be around $154.4-$156 million. Non-GAAP gross margin is estimated to be 78%. Non-GAAP earnings per share are anticipated in the band of 31-35 cents. Free cash flow is forecast in the range of $38-$40 million.
For fiscal 2019, the company expects revenues of $870-$874 million and billings in the range of $1.058-$1.062 billion. Non-GAAP gross profit is predicted to be around $678.6-$681.7 million. Non-GAAP gross margin is projected to be 78%.
Non-GAAP earnings per share are now anticipated in the band of $1.60-$1.67. Free cash flow is envisioned in the range of $196-$200 million.
Management states that contribution from buyouts across the company’s 2018 financial results and the wind down of Cloudmark OEM business create a challenging year-over-year comparison for 2019.
Long-term earnings growth rate for both Synopsys and Verint is projected to be 10%.
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Proofpoint (PFPT) Q4 Earnings Surpass Estimates, Surge Y/Y
Proofpoint Inc. delivered fourth-quarter 2018 non-GAAP earnings of 51 cents, which outpaced the Zacks Consensus Estimate of 35 cents and was also ahead of the year-ago quarterly figure of 37 cents.
Proofpoint reported total revenues of $198.5 million, up 35% year over year and also surpassed the Zacks Consensus Estimate of $193 million.
This strong top-line growth can be attributed to the sturdy international uptick and a solid progress in the emerging products. Moreover, Proofpoint drew $3 million of revenues (under ASC 606) from private cloud deployments in the fourth quarter, which was expected to be recognized in fiscal 2019. The company has, however, provided an outlook for fiscal 2019 that matched with the prior guidance.
Top-Line Details
Total billings during the quarter under review jumped 43% year over year to $269.9 million. Also, renewal rates again soared above 90% during the reported quarter. Management noted that with no improvement in Microsoft’s (MSFT - Free Report) overall efficacy in security during the fourth quarter, Proofpoint’s win rate is consistently high.
Subscription revenues (98.3% of total revenues) during the quarter under consideration came in at $195.1 million, up 35.1% from the year-ago period. Hardware and services revenues (1.7%) increased 17.2% year over year to $3.4 million.
On the basis of solutions, revenues from Advanced Threat (74.3%), which includes Targeted Attack Protection or TAP offering, rose 34.2% from the year-earlier quarter to $147.4 million, and Compliance revenues (25.7%) of $51.1 million surged 37.7% year over year.
Management mentioned that the new offerings have expanded the total addressable market by more than $5 billion and are proving to be a key growth catalyst. Emerging products, which contributed to more than 30% of total new and add-on businesses closed during the quarter under discussion, steadily surpass the company’s remaining product portfolio. This upside was led by robust demand for Email Fraud Defense, Threat Response and Wombat.
Proofpoint continues to expand abroad by dint of its international business performance, which grew 45% year over year and accounted for 19% of its total revenues.
Operating Details
Non-GAAP gross profit advanced 36.9% from the year-ago quarter to $156.6 million. Non-GAAP gross margin improved 100 basis points (bps) year over year to 78.9%, driven by a strong revenue performance.
Proofpoint’s non-GAAP operating income for the reported quarter augmented 39.5% to $29.3 million. Non-GAAP operating margin expanded 50 bps to 14.8%.
Proofpoint, Inc. Price, Consensus and EPS Surprise
Proofpoint, Inc. Price, Consensus and EPS Surprise | Proofpoint, Inc. Quote
Balance Sheet & Cash Flow
Proofpoint exited the quarter with cash and cash equivalents and short-term investments of approximately $231.7 million compared with the previous quarterly balance of $190.4 million.
During the reported period, the company generated operating cash flow of $55.1 million. Free cash flow for the same period summed $48.6 million.
Full-Year Highlights
Proofpoint reported fiscal 2018 non-GAAP earnings of $1.47 per share, up from $1.10 in the prior-year quarter. Revenues ascended 38% year over year to $717 million.
Subscription revenues (98.2% of total revenues) increased 39% year over year to $704.4 million.
Hardware and services revenues (1.8% of total revenues) declined 5.5% year over to $12.6 million.
Non-GAAP gross profit rose 38.5% from fiscal 2017 to $558.5 million. Non-GAAP gross margin of 78% is flat with the prior-year number.
Internationally, Proofpoint ended fiscal 2018 with 24% of global 2000 customers, which grew 18% year over year. The strength customers with three or more products has increased 45% year over year to 2,900.
The company ended the year with nearly 6,100 enterprise customers including nearly 550 of those gained through the acquisition of Wombat.
Guidance
For the first quarter of 2019, Proofpoint anticipates revenues of $198-$200 million and billings of $211.5-$213.5 million.
Non-GAAP gross profit is expected to be around $154.4-$156 million. Non-GAAP gross margin is estimated to be 78%. Non-GAAP earnings per share are anticipated in the band of 31-35 cents. Free cash flow is forecast in the range of $38-$40 million.
For fiscal 2019, the company expects revenues of $870-$874 million and billings in the range of $1.058-$1.062 billion. Non-GAAP gross profit is predicted to be around $678.6-$681.7 million. Non-GAAP gross margin is projected to be 78%.
Non-GAAP earnings per share are now anticipated in the band of $1.60-$1.67. Free cash flow is envisioned in the range of $196-$200 million.
Management states that contribution from buyouts across the company’s 2018 financial results and the wind down of Cloudmark OEM business create a challenging year-over-year comparison for 2019.
Zacks Rank and Stocks to Consider
Proofpoint currently has a Zacks Rank #3 (Hold). Two better-ranked stocks in the broader Computer and Technology sector are Synopsys, Inc. (SNPS - Free Report) and Verint Systems Inc. (VRNT - Free Report) , both sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Long-term earnings growth rate for both Synopsys and Verint is projected to be 10%.
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This outperformance has not just been a recent phenomenon. From 2000 – 2018, while the S&P averaged +4.8% per year, our top strategies averaged up to +56.2% per year.
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