Zix
Corporation (ZixCorp), (Nasdaq: ZIXI), a leader in email data
protection, today announced financial results for the third quarter
ended Sept. 30, 2014.
Third Quarter 2014 Financial Highlights
-
Ending backlog of $68.8 million, an increase of 7.2% year-over-year
and the Company’s 10th consecutive quarterly record in backlog
-
Third quarter new first year orders of $1.6 million, a decrease of
25.2% year-over-year
-
Third quarter revenue of $12.7 million, an increase of 3.9%
year-over-year
-
Third quarter Non-GAAP net income of $0.04 per share, a decrease of
26.4% year-over-year (1) (3); the decrease reflects planned
investments in sales and marketing and non-cash federal income tax
-
Third quarter GAAP net income of $0.02 per share, a decrease of 60.5%
year-over-year (1)
-
The Company generated approximately $4.7 million in cash flow from
operations, a decrease of $1.5 million year-over-year
-
Cash and cash equivalents totaled $20.3 million, a decrease of $12.6
million compared to the Sept. 30, 2013, ending cash balance; the
decrease resulted from the completion of a $15 million share
repurchase program in Nov. 2013 and the completion of a $10 million
share repurchase program in Sept. 2014
“Although we did not deliver the third quarter new sales results we
expected, we believe the level of activity for email encryption will
rebound in the fourth quarter. We’ll continue to build on our strong
base in the healthcare and financial services industries while we
increase our presence in new market segments with ZixOne. We like the
growth opportunities we see for our base business and ZixOne in the
coming quarters,” said Rick
Spurr, ZixCorp’s Chairman and Chief Executive Officer.
|
|
|
Third Quarter 2014 Corporate Financial Summary and Other
Operational Metrics
|
|
|
|
$ in Millions, except per share and % data
|
|
|
Q3
2014
|
|
|
Q3
2013
|
|
|
% or $
Change (1)
|
|
Revenue
|
|
|
$
|
12.7
|
|
|
|
$
|
12.2
|
|
|
|
3.9
|
%
|
|
GAAP Gross Profit
|
|
|
$
|
10.6
|
|
|
|
$
|
10.3
|
|
|
|
3.1
|
%
|
|
GAAP Net Income
|
|
|
$
|
1.2
|
|
|
|
$
|
3.2
|
|
|
|
(63.4
|
)%
|
|
GAAP Net Income Per Share – Diluted
|
|
|
$
|
0.02
|
|
|
|
$
|
0.05
|
|
|
|
(60.5
|
)%
|
|
Non-GAAP Adjusted Gross Profit(2)
|
|
|
$
|
10.7
|
|
|
|
$
|
10.4
|
|
|
|
3.1
|
%
|
|
Non-GAAP Adjusted Net Income (2)
|
|
|
$
|
2.5
|
|
|
|
$
|
3.7
|
|
|
|
(31.8
|
)%
|
|
Non-GAAP Adjusted Net Income Per Share-Diluted (2)
|
|
|
$
|
0.04
|
|
|
|
$
|
0.06
|
|
|
|
(26.4
|
)%
|
|
Adjusted EBITDA (2) (3)
|
|
|
$
|
3.1
|
|
|
|
$
|
4.2
|
|
|
|
(26.2
|
)%
|
|
Adjusted EBITDA Margin (2) (3)
|
|
|
|
24.3
|
%
|
|
|
|
34.2
|
%
|
|
|
(9.9
|
)pt
|
|
New First Year Orders
|
|
|
$
|
1.6
|
|
|
|
$
|
2.2
|
|
|
|
(25.2
|
)%
|
|
Total Orders
|
|
|
$
|
13.4
|
|
|
|
$
|
13.0
|
|
|
|
2.9
|
%
|
|
Bookings Backlog (4)
|
|
|
$
|
68.8
|
|
|
|
$
|
64.2
|
|
|
|
7.2
|
%
|
(1) Changes are based on actuals versus numbers shown in the
columns which may reflect rounding
(2) A reconciliation of GAAP to Non-GAAP adjusted results is
attached to this press release and is available on our investor
relations Web site at http://investor.zixcorp.com
(3) Adjusted earnings before interest, taxes, depreciation
and amortization
(4) Service contract commitments that represent future
revenue to be recognized as the services are provided
Business Highlights
-
ZixCorp announced and completed an approved share
repurchase program. Funded from cash from operations, the
company purchased $10 million of its shares of common stock, during
the third quarter.
Outlook
For the fourth quarter 2014, the Company forecasts revenue to be between
$12.8 million and $13.1 million and Non-GAAP fully diluted adjusted
earnings per share to be between $0.03 and $0.04. For the full year, the
company forecasts revenue to be between $50 million and $51 million and
fully diluted Non-GAAP adjusted earnings per share to be between $0.15
and $0.16.
Conference Call Information
The Company will discuss its financial results and outlook on a
conference call on Tuesday, Oct. 21, 2014, at 5:00 p.m. ET. A live
webcast of the conference call will be available on our investor
relations Web site at http://investor.zixcorp.com.
Alternatively, participants can access the conference call by dialing
1-800-688-0836 (U.S. toll-free) or 1-617-614-4072 (international) at
least 15 minutes before the call and entering access code 92019150. An
audio replay of the conference will be available until Oct. 29, 2014, by
dialing 1-888-286-8010 (U.S. toll-free) or 1-617-801-6888
(international) and entering the access code 38508583. An archive for
the webcast will also be available on the ZixCorp investor relations Web
site.
About Zix Corporation
ZixCorp is a leader in email data protection. ZixCorp offers
industry-leading email encryption, a unique email DLP solution and an
innovative email BYOD solution to meet your company’s data protection
and compliance needs. ZixCorp is trusted by the nation’s most
influential institutions in healthcare, finance and government for easy
to use secure email solutions. ZixCorp is publicly traded on the Nasdaq
Global Market under the symbol ZIXI, and its headquarters are in Dallas,
Texas. For more information, visit www.zixcorp.com.
Statements in this release that are not purely historical facts or that
necessarily depend upon future events, including statements about
forecasts of sales, revenue or earnings, or other statements about
anticipations, beliefs, expectations, hopes, intentions or strategies
for the future, may be forward-looking statements within the meaning of
Section 21E of the Securities Exchange Act of 1934, as amended. Readers
are cautioned not to place undue reliance on forward-looking statements.
All forward-looking statements are based upon information available to
ZixCorp on the date this release was issued. ZixCorp undertakes no
obligation to publicly update or revise any forward-looking statements,
whether as a result of new information, future events or otherwise. Any
forward-looking statements involve risks and uncertainties that could
cause actual events or results to differ materially from the events or
results described in the forward-looking statements, including risks or
uncertainties related to market acceptance of new ZixCorp solutions and
how privacy and data security laws may affect demand for ZixCorp email
data protection solutions. ZixCorp may not succeed in addressing these
and other risks. Further information regarding factors that could affect
ZixCorp financial and other results can be found in the risk factors
section of ZixCorp’s most recent filing on Form 10-K with the Securities
and Exchange Commission.
|
|
|
|
|
ZIX CORPORATION
|
|
CONDENSED CONSOLIDATED BALANCE SHEETS
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30,
|
|
|
|
|
|
|
|
2014
|
|
|
December 31,
|
|
|
|
|
(unaudited)
|
|
|
2013
|
|
ASSETS
|
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
$
|
20,262,000
|
|
|
$
|
27,518,000
|
|
Receivables, net
|
|
|
|
2,313,000
|
|
|
|
2,324,000
|
|
Prepaid and other current assets
|
|
|
|
1,748,000
|
|
|
|
2,038,000
|
|
Deferred tax assets
|
|
|
|
1,361,000
|
|
|
|
1,814,000
|
|
Total current assets
|
|
|
|
25,684,000
|
|
|
|
33,694,000
|
|
Property and equipment, net
|
|
|
|
3,823,000
|
|
|
|
2,608,000
|
|
Goodwill
|
|
|
|
2,161,000
|
|
|
|
2,161,000
|
|
Deferred tax assets
|
|
|
|
51,023,000
|
|
|
|
52,239,000
|
|
Total assets
|
|
|
$
|
82,691,000
|
|
|
$
|
90,702,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
Accounts payable and accrued expenses
|
|
|
$
|
3,710,000
|
|
|
$
|
2,487,000
|
|
Deferred revenue
|
|
|
|
21,733,000
|
|
|
|
19,080,000
|
|
Total current liabilities
|
|
|
|
25,443,000
|
|
|
|
21,567,000
|
|
Long-term liabilities:
|
|
|
|
|
|
|
|
Deferred revenue
|
|
|
|
959,000
|
|
|
|
1,278,000
|
|
Deferred rent
|
|
|
|
1,561,000
|
|
|
|
1,623,000
|
|
Total long-term liabilities
|
|
|
|
2,520,000
|
|
|
|
2,901,000
|
|
Total liabilities
|
|
|
|
27,963,000
|
|
|
|
24,468,000
|
|
Total stockholders’ equity
|
|
|
|
54,728,000
|
|
|
|
66,234,000
|
|
Total liabilities and stockholders’ equity
|
|
|
$
|
82,691,000
|
|
|
$
|
90,702,000
|
|
|
|
|
|
ZIX CORPORATION
|
|
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30,
|
|
|
Nine Months Ended September 30,
|
|
|
|
|
|
2014
|
|
|
|
|
2013
|
|
|
|
|
2014
|
|
|
|
|
2013
|
|
|
Revenue
|
|
|
$
|
12,705,000
|
|
|
|
$
|
12,225,000
|
|
|
|
$
|
37,482,000
|
|
|
|
$
|
35,827,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of revenue
|
|
|
|
2,062,000
|
|
|
|
|
1,904,000
|
|
|
|
|
6,119,000
|
|
|
|
|
5,743,000
|
|
|
Gross profit
|
|
|
|
10,643,000
|
|
|
|
|
10,321,000
|
|
|
|
|
31,363,000
|
|
|
|
|
30,084,000
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development
|
|
|
|
2,234,000
|
|
|
|
|
2,345,000
|
|
|
|
|
6,653,000
|
|
|
|
|
7,444,000
|
|
|
Selling, general and administrative
|
|
|
|
6,544,000
|
|
|
|
|
4,659,000
|
|
|
|
|
19,611,000
|
|
|
|
|
16,807,000
|
|
|
Total operating expenses
|
|
|
|
8,778,000
|
|
|
|
|
7,004,000
|
|
|
|
|
26,264,000
|
|
|
|
|
24,251,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
|
|
|
|
1,865,000
|
|
|
|
|
3,317,000
|
|
|
|
|
5,099,000
|
|
|
|
|
5,833,000
|
|
|
Operating margin
|
|
|
|
15
|
%
|
|
|
|
27
|
%
|
|
|
|
14
|
%
|
|
|
|
16
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income, net
|
|
|
|
66,000
|
|
|
|
|
17,000
|
|
|
|
|
140,000
|
|
|
|
|
141,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income taxes
|
|
|
|
1,931,000
|
|
|
|
|
3,334,000
|
|
|
|
|
5,239,000
|
|
|
|
|
5,974,000
|
|
|
Income tax benefit (expense)
|
|
|
|
(768,000
|
)
|
|
|
|
(159,000
|
)
|
|
|
|
(2,040,000
|
)
|
|
|
|
(361,000
|
)
|
|
Net income
|
|
|
$
|
1,163,000
|
|
|
|
$
|
3,175,000
|
|
|
|
$
|
3,199,000
|
|
|
|
$
|
5,613,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic income per common share:
|
|
|
$
|
0.02
|
|
|
|
$
|
0.05
|
|
|
|
$
|
0.05
|
|
|
|
$
|
0.09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted income per common share:
|
|
|
$
|
0.02
|
|
|
|
$
|
0.05
|
|
|
|
$
|
0.05
|
|
|
|
$
|
0.09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares used in per share calculation - basic
|
|
|
|
57,610,386
|
|
|
|
|
61,378,131
|
|
|
|
|
58,510,426
|
|
|
|
|
61,172,708
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares used in per share calculation - diluted
|
|
|
|
58,501,937
|
|
|
|
|
63,065,762
|
|
|
|
|
59,613,658
|
|
|
|
|
62,517,989
|
|
|
|
|
|
|
ZIX CORPORATION
|
|
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30,
|
|
|
|
|
|
2014
|
|
|
|
|
2013
|
|
|
Operating activities:
|
|
|
|
|
|
|
|
Net income
|
|
|
$
|
3,199,000
|
|
|
|
$
|
5,613,000
|
|
|
Non-cash items in net income
|
|
|
|
4,213,000
|
|
|
|
|
2,465,000
|
|
|
Changes in operating assets and liabilities
|
|
|
|
3,168,000
|
|
|
|
|
1,698,000
|
|
|
Net cash provided by operating activities
|
|
|
|
10,580,000
|
|
|
|
|
9,776,000
|
|
|
|
|
|
|
|
|
|
|
Investing activities:
|
|
|
|
|
|
|
|
Purchases of property and equipment
|
|
|
|
(1,797,000
|
)
|
|
|
|
(1,262,000
|
)
|
|
Net cash used in investing activities
|
|
|
|
(1,797,000
|
)
|
|
|
|
(1,262,000
|
)
|
|
|
|
|
|
|
|
|
|
Financing activities:
|
|
|
|
|
|
|
|
Proceeds from exercise of stock options
|
|
|
|
457,000
|
|
|
|
|
1,494,000
|
|
|
Purchase of Treasury Stock
|
|
|
|
(16,496,000
|
)
|
|
|
|
(120,000
|
)
|
|
Net cash used in financing activities
|
|
|
|
(16,039,000
|
)
|
|
|
|
1,374,000
|
|
|
|
|
|
|
|
|
|
|
Increase (Decrease) in cash and cash equivalents
|
|
|
|
(7,256,000
|
)
|
|
|
|
9,888,000
|
|
|
Cash and cash equivalents, beginning of period
|
|
|
|
27,518,000
|
|
|
|
|
22,988,000
|
|
|
Cash and cash equivalents, end of period
|
|
|
$
|
20,262,000
|
|
|
|
$
|
32,876,000
|
|
|
|
|
|
|
ZIX CORPORATION
|
|
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
Nine Months Ended
|
|
|
|
|
|
September 30,
|
|
|
September 30,
|
|
|
|
|
|
|
2014
|
|
|
|
|
2013
|
|
|
|
|
2014
|
|
|
|
|
2013
|
|
|
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP revenue
|
|
|
|
$
|
12,705,000
|
|
|
|
$
|
12,225,000
|
|
|
|
$
|
37,482,000
|
|
|
|
$
|
35,827,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP cost of revenue
|
|
|
|
$
|
2,062,000
|
|
|
|
$
|
1,904,000
|
|
|
|
$
|
6,119,000
|
|
|
|
$
|
5,743,000
|
|
|
Stock-based compensation charges (1)
|
|
(A)
|
|
|
(45,000
|
)
|
|
|
|
(46,000
|
)
|
|
|
|
(146,000
|
)
|
|
|
|
(133,000
|
)
|
|
Non-GAAP adjusted cost of revenue
|
|
|
|
$
|
2,017,000
|
|
|
|
$
|
1,858,000
|
|
|
|
$
|
5,973,000
|
|
|
|
$
|
5,610,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP gross profit
|
|
|
|
$
|
10,643,000
|
|
|
|
$
|
10,321,000
|
|
|
|
$
|
31,363,000
|
|
|
|
$
|
30,084,000
|
|
|
Stock-based compensation charges (1)
|
|
(A)
|
|
|
45,000
|
|
|
|
|
46,000
|
|
|
|
|
146,000
|
|
|
|
|
133,000
|
|
|
Non-GAAP adjusted gross profit
|
|
|
|
$
|
10,688,000
|
|
|
|
$
|
10,367,000
|
|
|
|
$
|
31,509,000
|
|
|
|
$
|
30,217,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development expense
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP research and development expense
|
|
|
|
$
|
2,234,000
|
|
|
|
$
|
2,345,000
|
|
|
|
$
|
6,653,000
|
|
|
|
$
|
7,444,000
|
|
|
Stock-based compensation charges (1)
|
|
(A)
|
|
|
(61,000
|
)
|
|
|
|
(56,000
|
)
|
|
|
|
(185,000
|
)
|
|
|
|
(162,000
|
)
|
|
Non-GAAP adjusted research and development expense
|
|
|
|
$
|
2,173,000
|
|
|
|
$
|
2,289,000
|
|
|
|
$
|
6,468,000
|
|
|
|
$
|
7,282,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling and marketing expense
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP selling and marketing expense
|
|
|
|
$
|
4,543,000
|
|
|
|
$
|
3,088,000
|
|
|
|
$
|
13,473,000
|
|
|
|
$
|
10,338,000
|
|
|
Stock-based compensation charges (1)
|
|
(A)
|
|
|
(131,000
|
)
|
|
|
|
(134,000
|
)
|
|
|
|
(425,000
|
)
|
|
|
|
(386,000
|
)
|
|
Non-GAAP adjusted selling and marketing expense
|
|
|
|
$
|
4,412,000
|
|
|
|
$
|
2,954,000
|
|
|
|
$
|
13,048,000
|
|
|
|
$
|
9,952,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General and administrative expense
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP general and administrative expense
|
|
|
|
$
|
2,001,000
|
|
|
|
$
|
1,571,000
|
|
|
|
$
|
6,138,000
|
|
|
|
$
|
6,469,000
|
|
|
Stock-based compensation charges (1)
|
|
(A)
|
|
|
(181,000
|
)
|
|
|
|
(216,000
|
)
|
|
|
|
(579,000
|
)
|
|
|
|
(618,000
|
)
|
|
Non-recurring consulting and legal costs (2)
|
|
(B)
|
|
|
(327,000
|
)
|
|
|
|
(33,000
|
)
|
|
|
|
(596,000
|
)
|
|
|
|
(1,286,000
|
)
|
|
Non-GAAP adjusted general and administrative expense
|
|
|
|
$
|
1,493,000
|
|
|
|
$
|
1,322,000
|
|
|
|
$
|
4,963,000
|
|
|
|
$
|
4,565,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP operating income
|
|
|
|
$
|
1,865,000
|
|
|
|
$
|
3,317,000
|
|
|
|
$
|
5,099,000
|
|
|
|
$
|
5,833,000
|
|
|
Stock-based compensation charges (1)
|
|
(A)
|
|
|
418,000
|
|
|
|
|
452,000
|
|
|
|
|
1,335,000
|
|
|
|
|
1,299,000
|
|
|
Non-recurring consulting and legal costs (2)
|
|
(B)
|
|
|
327,000
|
|
|
|
|
33,000
|
|
|
|
|
596,000
|
|
|
|
|
1,286,000
|
|
|
Non-GAAP adjusted operating income
|
|
|
|
$
|
2,610,000
|
|
|
|
$
|
3,802,000
|
|
|
|
$
|
7,030,000
|
|
|
|
$
|
8,418,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
-
|
|
|
Adjusted Operating Margin
|
|
|
|
|
20.5
|
%
|
|
|
|
31.1
|
%
|
|
|
|
18.8
|
%
|
|
|
|
23.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP net income
|
|
|
|
$
|
1,163,000
|
|
|
|
$
|
3,175,000
|
|
|
|
$
|
3,199,000
|
|
|
|
$
|
5,613,000
|
|
|
Stock-based compensation charges (1)
|
|
(A)
|
|
|
418,000
|
|
|
|
|
452,000
|
|
|
|
|
1,335,000
|
|
|
|
|
1,299,000
|
|
|
Non-recurring consulting and legal costs (2)
|
|
(B)
|
|
|
327,000
|
|
|
|
|
33,000
|
|
|
|
|
596,000
|
|
|
|
|
1,286,000
|
|
|
Income tax impact
|
|
(C)
|
|
|
609,000
|
|
|
|
|
29,000
|
|
|
|
|
1,670,000
|
|
|
|
|
88,000
|
|
|
Non-GAAP adjusted net income
|
|
|
|
$
|
2,517,000
|
|
|
|
$
|
3,689,000
|
|
|
|
$
|
6,800,000
|
|
|
|
$
|
8,286,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted net income per common share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP net income
|
|
|
|
$
|
0.02
|
|
|
|
$
|
0.05
|
|
|
|
$
|
0.05
|
|
|
|
$
|
0.09
|
|
|
Adjustments per share
|
|
(A-C)
|
|
$
|
0.02
|
|
|
|
$
|
0.01
|
|
|
|
$
|
0.06
|
|
|
|
$
|
0.04
|
|
|
Non-GAAP adjusted net income
|
|
|
|
$
|
0.04
|
|
|
|
$
|
0.06
|
|
|
|
$
|
0.11
|
|
|
|
$
|
0.13
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares used to compute Non-GAAP adjusted net income per share -
diluted
|
|
|
|
|
58,501,937
|
|
|
|
|
63,065,762
|
|
|
|
|
59,613,658
|
|
|
|
|
62,517,989
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Net income to EBITDA and Adjusted EBITDA:
|
|
(D)
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
|
$
|
1,163,000
|
|
|
|
$
|
3,175,000
|
|
|
|
$
|
3,199,000
|
|
|
|
$
|
5,613,000
|
|
|
Income tax provision
|
|
|
|
|
768,000
|
|
|
|
|
159,000
|
|
|
|
|
2,040,000
|
|
|
|
|
361,000
|
|
|
Interest expense
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
Depreciation expense
|
|
|
|
|
415,000
|
|
|
|
|
367,000
|
|
|
|
|
1,209,000
|
|
|
|
|
1,078,000
|
|
|
EBITDA
|
|
|
|
|
2,346,000
|
|
|
|
|
3,701,000
|
|
|
|
|
6,448,000
|
|
|
|
|
7,052,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share-based compensation expense
|
|
(A)
|
|
|
418,000
|
|
|
|
|
452,000
|
|
|
|
|
1,335,000
|
|
|
|
|
1,299,000
|
|
|
Non-recurring consulting and legal costs (2)
|
|
(B)
|
|
|
327,000
|
|
|
|
|
33,000
|
|
|
|
|
596,000
|
|
|
|
|
1,286,000
|
|
|
Adjusted EBITDA
|
|
|
|
$
|
3,091,000
|
|
|
|
$
|
4,186,000
|
|
|
|
$
|
8,379,000
|
|
|
|
$
|
9,637,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA margin
|
|
|
|
|
24.3
|
%
|
|
|
|
34.2
|
%
|
|
|
|
22.4
|
%
|
|
|
|
26.9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Stock-based compensation charges are included as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of revenues
|
|
|
|
$
|
45,000
|
|
|
|
$
|
46,000
|
|
|
|
$
|
146,000
|
|
|
|
$
|
133,000
|
|
|
Research and development
|
|
|
|
|
61,000
|
|
|
|
|
56,000
|
|
|
|
|
185,000
|
|
|
|
|
162,000
|
|
|
Selling and marketing
|
|
|
|
|
131,000
|
|
|
|
|
134,000
|
|
|
|
|
425,000
|
|
|
|
|
386,000
|
|
|
General and administrative
|
|
|
|
|
181,000
|
|
|
|
|
216,000
|
|
|
|
|
579,000
|
|
|
|
|
618,000
|
|
|
|
|
|
|
$
|
418,000
|
|
|
|
$
|
452,000
|
|
|
|
$
|
1,335,000
|
|
|
|
$
|
1,299,000
|
|
|
(2) Non-recurring consulting and legal costs are included as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General and administrative
|
|
|
|
|
327,000
|
|
|
|
|
33,000
|
|
|
|
|
596,000
|
|
|
|
|
1,286,000
|
|
|
|
|
|
|
$
|
327,000
|
|
|
|
$
|
33,000
|
|
|
|
$
|
596,000
|
|
|
|
$
|
1,286,000
|
|
This presentation includes Non-GAAP measures. Our Non-GAAP measures are
not meant to be considered in isolation or as a substitute for
comparable GAAP measures and should be read only in conjunction with our
consolidated financial statements prepared in accordance with GAAP. For
a detailed explanation of the adjustments made to comparable GAAP
measures, the reasons why management uses these measures, the usefulness
of these measures and the material limitations of these measures, see
items (A) through (D) on the next page.
|
|
|
ZIX CORPORATION
|
|
NOTES TO RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
|
USE OF NON-GAAP FINANCIAL INFORMATION
The Company occasionally utilizes financial measures and terms not
calculated in accordance with generally accepted accounting principles
in the United States (“GAAP”) in order to provide investors with an
alternative method for assessing our operating results in a manner that
enables investors to more thoroughly evaluate our current performance as
compared to past performance. We also believe these Non-GAAP measures
provide investors with a more informed baseline for modeling the
Company’s future financial performance. Management uses these Non-GAAP
financial measures to make operational and investment decisions, to
evaluate the Company's performance, to forecast and to determine
compensation. Further, management utilizes these performance measures
for purposes of comparison with its business plan and individual
operating budgets and allocation of resources. We believe that our
investors should have access to, and that we are obligated to provide,
the same set of tools that we use in analyzing our results. These
Non-GAAP measures should be considered in addition to results prepared
in accordance with GAAP, but should not be considered a substitute for
or superior to GAAP results. We have provided definitions below for
certain Non-GAAP financial measures, together with an explanation of why
management uses these measures and why management believes that these
Non-GAAP financial measures are useful to investors. In addition, in our
earnings release we have provided tables to reconcile the Non-GAAP
financial measures utilized to GAAP financial measures.
ADJUSTED NON-GAAP MEASURES
Our Non-GAAP measures adjust GAAP Cost of revenue, Gross profit,
Research and development expense, Selling and marketing expense, General
and administrative expense, Operating income, Net income, Net income per
share - diluted, and EBITDA for non-cash stock-based compensation
expense, and non-recurring consulting and legal expense to derive
Non-GAAP adjusted Cost of revenue, adjusted Gross profit, adjusted
Research and development expense, adjusted Selling and marketing
expense, adjusted General and administrative expense, adjusted Operating
income, adjusted Net income, adjusted Net income per share - diluted and
adjusted EBITDA. We provide a reconciliation of these adjusted Non-GAAP
measures to GAAP Gross profit, Operating income, Net income, Net income
per share - diluted and EBITDA.
We do not provide a reconciliation of forward-looking adjusted Non-GAAP
earnings per share to GAAP earnings per share. Our forward-looking
adjusted Non-GAAP earnings per share information consistently excludes
non-cash stock-based compensation expense. Additionally, the adjusted
Non-GAAP earnings per share will consistently exclude non-recurring
items that impact our ongoing business. See items (A) through (C) below
for further information on the current quarter's reconciling items.
Items (A) through (D) on the "Reconciliation of GAAP to Non-GAAP
Financial Measures" table are listed to the right of certain categories
under "Gross profit," "Operating income," "Net income," "Net income per
share - diluted" and "EBITDA" and correspond to the categories explained
in further detail below under (A) through (D).
(A) Non-cash stock-based compensation charges relating to stock option
grants, restricted stock, restricted stock units, and performance units
awarded to and accounted for in accordance with Share-Based Payment
accounting guidance. See (1) on previous page for breakdown of
stock-based compensation. Because of varying valuation methodologies,
subjective assumptions and varying award types, the Company believes
that the exclusion of stock-based compensation charges provides for more
accurate comparisons to our peer companies and for a more accurate
comparison of our financial results to previous periods. Additionally,
the Company believes it is useful to investors to understand the
specific impact of non-cash stock-based compensation charges on our
operating results.
(B) Non-recurring consulting and legal costs. See item (2) on previous
page for breakdown of non-recurring consulting and legal costs. The
Company’s management excludes these costs when evaluating the ongoing
performance and/or predicting its earnings trends and therefore excludes
these charges on our adjusted operating results.
(C) The Non-GAAP adjustment to the tax provision represents the non-cash
tax expense included in the GAAP tax provision, including the current
period utilization of deferred tax assets created in previous periods.
The remaining provision for income taxes represents expected cash taxes
to be paid.
(D) EBITDA represents earnings before interest, taxes, depreciation and
amortization. Adjusted EBITDA adds back stock-based compensation and
non-recurring litigation expenses.
Copyright Business Wire 2014