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Proofpoint (PFPT) Down 0.8% Since Last Earnings Report: Can It Rebound?

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A month has gone by since the last earnings report for Proofpoint (PFPT - Free Report) . Shares have lost about 0.8% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Proofpoint due for a breakout? 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 drivers.

Proofpoint Reports Stellar Q1 Results

Proofpoint delivered first-quarter 2021 non-GAAP earnings of 49 cents per share, handily outpacing the Zacks Consensus Estimate of 39 cents. Moreover, the figure is approximately 29% higher than the year-ago quarter’s earnings of 38 cents per share.

Top Line Details

Revenues came in at $287.8 million in the first quarter, which beat the consensus mark of $282.3 and increased 15% year over year as well.

This upside in the top-line number can be attributed to the exponential demand for the firm’s next-generation cloud security and compliance platform, ongoing migration to the cloud, solid international growth, and high renewal rates.

Total billings during the reported quarter grew 16% year on year to $276.7 million.

Subscription revenues came in at $283.6 million, up 16.2% from the year-ago quarter. However, hardware and service revenues dipped 26% year over year to $4.2 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.

Operating Details

Non-GAAP gross profit climbed 17.3% from the year-ago quarter to $232 million. Non-GAAP gross margin expanded 200 basis points (bps) to 81% on an impressive revenue performance.

Proofpoint’s non-GAAP operating income jumped 50% to $38.2 million.

Balance Sheet & Cash Flow

As of Mar 31, 2021, the company’s cash, cash equivalents and short-term investments were $882.6 million compared with $910.3 million as of Dec 31, 2020.

The company generated operating cash flow of $95.1 million compared with the $92.2 million reported in the year-ago quarter. Free cash flow was $88.5 million compared with the year-ago quarter’s $79.8 million.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in estimates revision. The consensus estimate has shifted -9.14% due to these changes.

VGM Scores

Currently, Proofpoint has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with a C. Following the exact same course, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions has been net zero. It's no surprise Proofpoint has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.


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