According to IDC, the global cyber security market grew 9% to $103.1 billion in 2019 and is expected to grow at 9% CAGR to reach $133.8 billion by 2022. Recently, San Francisco-based Proofpoint (Nasdaq: PFPT) announced its fourth quarter results that surpassed market expectations.
Proofpoint’s revenues grew 23% over the year to $243.3 million, ahead of the market’s forecast of $239.1 million. Billings grew 29% to $347.2 million, ahead of the Street’s expected $341.7 million. EPS of $0.52 was also significantly better than the market’s forecast earnings of $0.48 per share.
By segment, Subscription revenues grew 23% to $240.4 million. Hardware and services revenues declined 10% over the year to $3 million as the company continues to push forward on the subscription model.
Within its product portfolio, emerging products accounted for more than 33% of its total new and add-on businesses closed, driven by demand for Email Fraud Defense, Proofpoint Security Awareness Training (PSAT), and Threat Response.
For the full year 2019, revenues grew 24% to $888.2 million. Billings improved 22% to $1.07 billion. Net loss was $(130.3) million compared to a net loss of $(103.7) million last year. On an adjusted basis, it ended the year with an EPS of $1.77 compared with $1.47 in 2018.
For the first quarter, Proofpoint forecast revenues of $246-$248 million with an EPS of $0.25-$0.29. The market was looking for revenues of $244.3 million with an EPS of $0.36. Proofpoint expects to end 2020 with revenues of $1.06-$1.067 billion with an EPS of $1.42-$1.48.
Last quarter, Proofpoint announced the $255 million acquisition of a leading insider threat management platform ObserveIT. Boston-based ObserveIT was founded in 2006 by Avi Amos, Avi Weiss, and Gabriel Friedlander. ObserveIT is known for its security platform that identifies and eliminates insider threats within the organization. According to a McKinsey research, more than half of all data breaches within an organization involve an insider. The ObserveIT platform correlates activity and data movement to empower security teams to identify user risk, detect insider-led data breaches, and accelerate security incident response.
Proofpoint believes that as companies transition to the cloud, the traditional methods of data and intellectual property protection may not be enough. It plans to leverage ObserveIT’s acquisition to extend its email and cloud access security broker (CASB) DLP capabilities with endpoint. By integrating email and data-at-rest solutions, it will be able to deliver a pioneering enterprise DLP offering. The acquisition will allow security teams to understand and respond to data that is being mishandled either on a corporate device, or on a cloud app or over email.
Prior to the acquisition, ObserveIT was privately held and had raised $53 million from investors including Bain Capital Ventures, Spring Lake Equity Partners, NightDragon Security, and MDI Ventures. Unlike Proofpoint’s subscription-based model, ObserveIT was operating under a perpetual licensing model. Proofpoint will be transitioning it over to a subscription model.
Its stock is trading at $128.25 with a market capitalization of $7.3 billion. It touched a high of $133.58 in July last year. The stock had fallen to a year low of $102.25 in June last year.
This segment is a part in the series : Cloud Stocks