Proofpoint Inc. ( PFPT Quick Quote PFPT - Free Report) reported fourth-quarter 2020 non-GAAP earnings of 51 cents per share, outpacing the Zacks Consensus Estimate of 42 cents. However, the figure is a penny lower than the year-ago quarter’s earnings of 52 cents per share.
Revenues came in at $275.1 million in the fourth quarter, which beat the consensus mark of $269.1 and increased 13% year over year as well.
This upside in top-line results can be attributed to strong demand for the firm’s next-generation cloud security and compliance platform, ongoing migration to the cloud, solid international growth, and high renewal rates.
Top Line Details
Total billings during the reported quarter grew 8% year on year to $374.9 million.
Subscription revenues came in at $271.4 million, up 12.9% from the year-ago quarter. In addition, hardware and service revenues climbed 21.4% year over year to $3.7 million.
The company has stopped reporting results for its advanced threat and compliance-oriented products as it believes the data is not informative in terms of measuring business performance.
Proofpoint continues to expand globally. Its international business grew 20% year over year, accounting for 21% of the total revenues during the December-end quarter.
Non-GAAP gross profit climbed 14.2% from the year-ago quarter to $221.6 million. Non-GAAP gross margin expanded 100 basis points (bps) to 81% on impressive revenue performance.
Proofpoint’s non-GAAP operating income jumped 17% to $43.3 million.
Balance Sheet & Cash Flow
As of Dec 31, 2020, the company’s cash, cash equivalents and short-term investments were $910.3 million compared with $1.02 billion as of Sep 30, 2020.
The company generated operating cash flow of $55.7 million compared with the $76.4 million reported in the year-ago quarter. Free cash flow was $28.9 million compared with the year-ago quarter’s $65.1 million.
During full-year 2020, Proofpoint generated operating and free cash flows of $264.5 million and $192.1 million, respectively.
Proofpoint issued its outlook for first-quarter and full-year 2021. For the March-end quarter, Proofpoint anticipates revenues of $280-$282 million.
Non-GAAP gross margin is estimated to be 80%. Non-GAAP earnings per share are predicted in the band of 39-40 cents.
Free cash flow is estimated in the range of $80 million to $85 million. Capital expenditures are expected to be $8-$9 million for the ongoing quarter.
For 2021, the company projects revenues at $1.19-$1.2 billion.
Non-GAAP gross margin is expected to be 80%. Non-GAAP earnings per share are anticipated in the band of $1.91-$1.99.
Free cash flow is estimated in the range of $200-$210 million. Capital expenditure is predicted to be approximately $45 million.
Zacks Rank and Key Picks
Proofpoint currently carries a Zacks Rank #3 (Hold).
Better-ranked stocks in the broader technology sector include
Shopify ( SHOP Quick Quote SHOP - Free Report) , Zoom Video Communications ( ZM Quick Quote ZM - Free Report) and Apple ( AAPL Quick Quote AAPL - Free Report) , all flaunting a Zacks Rank #1 (Strong Buy) at present. You can see . the complete list of today’s Zacks #1 Rank stocks here
The long-term earnings growth rate for Shopify, Zoom and Apple is currently pegged at 32.5%, 25% and 11.5%, respectively.
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