According to a Fortune Business Insights report, the global cyber security market is estimated to grow at 13% CAGR to reach $281.74 billion by 2027 from $112 billion last year. The verdict is still out as to how will the recent global crisis impact the industry. San Francisco-based Proofpoint (Nasdaq: PFPT) recently announced its first quarter results that surpassed market expectations for the quarter.
Proofpoint’s Q1 revenues grew 23% over the year to $249.8 million, ahead of the market’s forecast of $245.5 million. EPS of $0.38 was also significantly better than the market’s forecast of $0.27 per share.
By segment, Subscription revenues grew 22% to $244.1 million. Hardware and services revenues grew 68% to $5.7 million. Billings grew 23% to $238 million.
For the second quarter, Proofpoint forecast revenues of $251-$255 million. It expects to end the year with revenues of $1.005-$1.03 billion, reducing its earlier forecast of $1.06-$1.067 billion. It even lowered its earlier EPS guidance of $1.42-$1.48 to $1.41-$1.46 for the year.
Proofpoint’s Grim Outlook
As a result of the Covid19 crisis, Proofpoint anticipates that the need to conserve cash by customers will impact both billings and cash flow. With customers, especially in the retail and hospitality industry, conducting layoffs and furloughs, Proofpoint’s per seat pricing model will translate to its ARR retention rates when these customers renew. It also believes that as discretionary spending across organizations is reviewed, it will experience project deferrals in its existing pipeline. To address these concerns, Proofpoint is also conserving cash and managing expenses. It has changed the pace of its hiring activity, is rationalizing its marketing spend, is reducing travel and entertainment expense, and is shifting to virtual events instead. As of now, it expects no layoffs or furloughs for its existing headcount.
Proofpoint realizes that the current work at home conditions will also make enterprise networks more susceptible to threat attacks. Its threat researchers have tracked a significant rise in attacks and campaigns over the past few months with hundreds of thousands of COVID-19 associated scams attempting to deliver emails, malicious attachments, and URLs. It believes that these threats will help keep some of its billing risks at bay.
To keep emails more secure, Proofpoint recently released the industry’s first integrated, end-to-end solution. It addresses Business Email Compromise (BEC) and Email Account Compromise (EAC) attacks by integrating its secure email gateway, advanced threat protection, threat response, email authentication, security awareness training, and cloud account protection. It also announced several Proofpoint Cloud App Security Broker (CASB) innovations that are aimed at keeping safe cloud applications that employees access every day.
The latest CASB innovations include the ability to automatically detect and remediate malicious third-party applications in Microsoft Office 365 and Google G Suite. It allows for suspicious file activity detection for Microsoft Office 365 by integrating it with Proofpoint threat intelligence. The solution also offers multi-factor authentication and an enhanced real-time data loss prevention (DLP) for approved apps through an integration with Proofpoint Browser Isolation.
The current crisis has not slowed down Proofpoint’s hunger for acquisition. Earlier this month, it announced the acquisition of The Defence Works, a security awareness start-up based in Manchester, UK. Set up in 2017, The Defence Works focuses on providing security awareness training and simulated phishing to help employees become more aware of the cyber security threats surrounding the organization. Proofpoint plans to leverage its innovative content for its interactive content engine that will help it deliver highly engaging training to its customers. The Defence Works was privately held and did not disclose its financials prior to the acquisition. Proofpoint acquired the entity at less than $5 million.
Its stock is trading at $116.64 with a market capitalization of $6.9 billion. It touched a 52-week high of $133.58 in July last year. The stock had fallen to a 52-week low of $83.81 in March when most stocks tumbled.
This segment is a part in the series : Cloud Stocks