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Proofpoint (PFPT) Beats Q4 Earnings & Revenue Estimates

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Proofpoint Inc. (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.

Proofpoint, Inc. Price, Consensus and EPS Surprise Proofpoint, Inc. Price, Consensus and EPS Surprise

Proofpoint, Inc. price-consensus-eps-surprise-chart | Proofpoint, Inc. Quote

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.

Operating Details

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.

Guidance

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 - Free Report) , Zoom Video Communications (ZM - Free Report) and Apple (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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