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Proofpoint Expands Through Tie-ups and Acquisitions

Posted on Friday, Sep 28th 2018

Gartner estimates the worldwide enterprise security spending to grow 8% this year to $96.3 billion. As the US gets ready for midterm elections this year, there is growing concern regarding election interference as well. Government agencies and organizations are all gearing towards managing the growing threat of cyber attacks. Sunnyvale, California-based Proofpoint provides cloud-based email security solutions that help organizations secure their data.

Proofpoint’s Financials

Proofpoint (Nasdaq:PFPT) recently announced its second quarter financials that saw revenues grow 41% over the year to $171.9 million. The Street was expecting revenues of $169.8 million. Its non-GAAP earnings rose an impressive 53% to $0.26 per share, ahead of the Street’s forecast of $0.17 per share. Earlier coverage is available here and here.

During the quarter, billings grew 35% to $197.9 million. Renewal rates continued to be more than 90% during the quarter. By segment, subscription revenues grew 1.6% to $238.8 million. Hardware and services revenues fell 1.4% over the year to $2.9 million.

On the basis of offerings, revenues from Advanced Threat solutions that include the Targeted Attack Protection offering grew 45.7% to $129.2 million. Compliance revenues rose 26.4% to $42.7 million.

For the current fiscal, Proofpoint increased its revenue and non-GAAP earnings expectations. It now expects revenues of $705-$709 million, compared with $702-$704 million predicted earlier. Non-GAAP earnings per share are now expected to be between $1.12-$1.19, up from the previous guidance of $1.00-$1.09. For the current quarter, Proofpoint anticipates revenues of $180-182 million with non-GAAP earnings in the range of $0.25-$0.29 per share. The Street has forecast EPS of $0.28 and revenues of $181.35 million for the quarter. For the year, the Street expects the company to earn revenues of $707.95 million with an EPS of $1.17.

Proofpoint’s Expanding Offerings

Proofpoint continued to expand its product offerings through tie-ups and product upgrades. Earlier this month, it announced its partnership with Okta, the leading enterprise identity management provider. Through the tie-up, Proofpoint’s Threat Response Auto-Pull will be integrated with the Okta Identity Cloud so that security teams can automatically layer additional authentication security. The service will ensure that users who clicked on a phishing URL do not have their accounts compromised. Proofpoint’s solution will detect that a user has clicked on a malicious URL and has been permitted access to the phishing webpage. It is then that Okta will step in and allow administrators to automatically deploy stepped-up authentication using Okta’s Multi-Factor Authentication.

In February this year, Proofpoint had announced the $225 million acquisition of Wombat Security Technologies. Founded in 2008, Wombat was born out of research into phishing attacks. It is recognized by Gartner in the Leaders Quadrant of the Magic Quadrant for Security Awareness Computer-Based Training. Wombat had raised $10.8 million in funding from investors including Level Equity, BlueTree Allied Angels, Innovation Works, and Piitsburgh Equity Partners. Details of its financials were not disclosed.

Using Wombat’s technology, Proofpoint recently announced the availability of its Closed-Loop Email Analysis and Response (CLEAR) solution. This offering will be a complete closed-loop approach to instant end user email reporting, analysis, and remediation. It will help stop malicious emails getting through perimeter defenses, thus reducing an organization’s exposure to cyber attacks.

Proofpoint has been consistently delivering a strong product. It has been recognized as a leader in Gartner’s Magic Quadrant for Enterprise Information Archiving. Its competitors include Veritas Technologies, Microsoft, and Barracuda Networks to name a few. As users, I would like to know from you, what do you look for in a security service offering? What do you think makes Proofpoint different, and a leader, in the quadrant?

Its stock is trading at $105.67 with a market capitalization of $5.6 billion. It had touched a 52-week high of $130.27 in July this year. It has recovered from the 52-week low of $82.60 that it had fallen to in December last year.


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