According to Gartner, cloud-based security software solutions will account for 15.6% of the $26.2 billion market for security software by the year 2016. For 2012, Gartner expects the security software market to be worth $19.1 billion, with cloud-based security solutions accounting for 5% of the market’s share. Gartner believes that demand for cloud-based security solutions will grow at a compounded rate of 23.7% from 2012 to 2016.
Recently listed Proofpoint (Nasdaq:PFPT) expects to benefit from this growing market. Q2 revenues grew 30% over the year to $25.9 million. Subscription revenues grew 40% over the year to $24.7 million. Hardware and services revenues brought in $1.2 million for the quarter. Non-GAAP net loss for the quarter of $0.08 per share was better than the loss of $0.09 per share reported a year ago. The company’s products are used by more than 2,400 customers worldwide. Its customer list includes 28 of the Fortune 100 organizations.
The company continues to invest heavily in marketing and R&D efforts to ensure it achieves its objective of expanding internationally and delivering strong product solutions. Last quarter, Proofpoint spent 54% of revenues on sales and marketing and 24% of revenues on R&D expenses. With those high percentages, the company does not expect to turn profitable this year.
For the current quarter, Proofpoint projects revenues of $26.1 million-$26.5 million, with non-GAAP EPS loss of $0.09-$0.11 per share. It expects to end the current year with revenues of $103.5 million-$104.5 million, with non-GAAP EPS loss of $0.38-$0.39 per share.
Proofpoint’s Expanding Product Portfolio
As part of its product expansion focus, Proofpoint recently launched Proofpoint Targeted Attack Protection, a cloud-based security solution that is targeted at protecting systems from spear phishing and other malicious target attacks. The offering uses technologies such as big data analysis techniques, URL interception, and malware analysis to deliver the level of protection. The product has received strong reviews and was selected as a finalist for the Microsoft Best of TechEd Awards.
Last month, Google announced plans to shut down Postini, the e-mail security and archiving product, as it gets its users to shift to Google Apps. To attract Google Postini customers and help them evaluate new email security and compliance solutions, Proofpoint announced a dedicated migration process to its own products. Google Postini customers can access Proofpoint’s migration process to ensure that consumer settings and preferences are retained. The service is being offered free of cost for a limited time and comes with professional services staff that helps in deployment, testing and training for the customer.
Proofpoint’s stock is trading at $13.82 after reaching a high of $17.75 soon after listing. The market cap is $439.94 million. In a market where many recently listed stocks have taken a beating, Proofpoint has managed to remain above its $13 listing price.