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Proofpoint Announces Strong Third Quarter 2015 Financial Results

The following excerpt is from the company's SEC filing.

Total revenue of $69.1 million, up 37% year-over-year

Billings of $85.0 million, up 37% year-over-year

Generated positive adjusted EBITDA of $2.4 million

GAAP EPS loss of $0.71; Non-GAAP EPS loss of $0.06

Generated record free cash flow of $16.

2 million or 23% of total revenue

Increasing FY15 revenue and billings guidance

SUNNYVALE, Calif., October 21, 2015

Proofpoint, Inc. (NASDAQ: PFPT), a leading next-generation security and compliance company, today announced financial results for the third quarter ended September 30, 2015.

Our strong third quarter results reflect Proofpoints ongoing high competitive win rates, traction with new products along with robust add-on and renewal activity, stated Gary Steele, chief executive officer of Proofpoint. Our ability to exceed expectations in billings, revenue and profitability during the quarter highlights the ongoing demand for our advanced threat solutions as enterprises continue to struggle with the broader threat landscape. Given our proven capability in handling current advanced security threats, Proofpoint remains well positioned to maintain momentum for the remainder of the year and into 2016.

Third Quarter 2015 Financial Highlights

Revenue

: Total revenue for the third quarter of 2015 was $69.1 million, an increase of 37% compared to $50.3 million in the prior-year period.

: Total billings were $85.0 million for the third quarter of 2015, an increase of 37% compared to $62.1 million in the third quarter of 2014. The company defines billings, a non-GAAP financial measure, as revenue recognized during the period plus the change in deferred revenue from the beginning to the end of the period.

Gross Profit:

GAAP gross profit for the third quarter of 2015 was $48.1 million compared to $33.0 million for the third quarter of 2014. Non-GAAP gross profit for the quarter was $51.7 million compared to $35.0 million in the year ago period. GAAP gross margin for the third quarter of 2015 was 70% compared to 66% for the third quarter of 2014. Non-GAAP gross margin was 75% for the third quarter of 2015, compared to 70% for the same period last year.

Operating Loss

: GAAP operating loss for the third quarter of 2015 was $21.9 million compared to a loss of $13.2 million during the third quarter last year. Non-GAAP operating loss for the third quarter of 2015 was $0.9 million compared to a loss of $2.2 million for the same period last year.

Net Loss:

GAAP net loss for the third quarter of 2015 was $28.4 million or $0.71 per share based on 40.1 million weighted average shares outstanding. This compares to a GAAP net loss of $17.3 million or $0.46 per share based on 37.6 million weighted average shares outstanding in the prior-year period.

Non-GAAP net loss for the third quarter of 2015 was $2.5 million or $0.06 per share based on 40.1 million weighted average shares outstanding. This compares to a non-GAAP net loss of $4.2 million or $0.11 per share based on 37.6 million weighted average shares outstanding during the same period last year.

Adjusted EBITDA

: Adjusted EBITDA for the third quarter of 2015 was a $2.4 million compared to $0.3 million for the third quarter of 2014.

Cash and Cash Flow

: As of September 30, 2015, Proofpoint had cash, cash equivalents and short term investments of $416.4 million, an increase of $5.7 million from the end of the prior quarter primarily due to the generation of free cash flow which was partially offset by cash used for an acquisition during the quarter.

The company generated $23.9 million in net cash from operations for the third quarter of 2015 compared to $8.6 million during the third quarter of 2014. The company generated $16.2 million in free cash flow for the quarter compared to $4.3 million during the same period last year.

Our strong third quarter results were highlighted by our ability to exceed expectations from a billings, revenue, and profitability perspective, stated Paul Auvil, chief financial officer of Proofpoint. During the quarter, we were particularly pleased with our ability to generate record free cash flow while at the same time driving top line growth.

A reconciliation of GAAP to non-GAAP financial measures has been provided in the financial tables included in this press release. An explanation of these measures and how they are calculated are also included below under the heading Non-GAAP Financial Measures.

Third Quarter and Recent Business Highlights:

Unveiled Targeted Attack Protection Mobile Defense which provides security teams with the ability to stop malicious Android and iOS mobile apps before they compromise sensitive data.

Announced Targeted Attack Protection Social Discover which provides IT administrators with immediate visibility into the social media accounts linked to their organizations and the ability to persistently monitor for spam, phishing, malware, bad actors and fraud.

Announced the latest version of Proofpoint Essentials which adds social media protection, email attachment defense and automated email encryption.

Financial Outlook

As of October 21, 2015 Proofpoint is providing guidance for its fourth quarter and increasing full year 2015 guidance as follows:

Fourth Quarter 2015 Guidance

: Total revenue is expected to be in the range of $72.5 million to $73.5 million. Billings are expected to be in the range of $90.0 million to $92.0 million. Adjusted EBITDA is expected to be in the range of $0.3 million to $0.5 million. Non-GAAP EPS loss is expected to be in the range of $0.12 to $0.11 based on approximately 40.6 million weighted average shares outstanding.

Full Year 2015 Guidance

: Total revenue is expected to be in the range of $263.0 million to $264.0 million. Billings are expected to be in the range of $316.8 million to $318.8 million. Adjusted EBITDA is expected to be in the range of $4.3 million to $4.5 million. Non-GAAP EPS loss is expected to be in the range of $0.36 to $0.35 based on approximately 39.8 million weighted average shares outstanding. Free cash flow, defined as operating cash flow less capital expenditures, is expected to be approximately $19.0 million, which assumes capital expenditures of $25.0 million to $26.0 million for the full year.

Quarterly Conference Call

Proofpoint will host a conference call today at 1:30 p.m. Pacific Time (4:30 p.m. Eastern Time) to review the companys financial results for the third quarter ended September 30, 2015. To access this call, dial (800) 967-7134 for the U.S. or Canada and (719) 457-2634 for international callers with conference ID #801077. A live webcast of the conference call will be accessible from the Investors section of Proofpoints website at investors.proofpoint.com, and a recording will be archived and accessible at investors.proofpoint.com. An audio replay of this conference call will also be available through November 4, 2015, by dialing (877) 870-5176 for the U.S. or Canada or (858) 384-5517 for international callers, and entering passcode #801077.

About Proofpoint, Inc.

Proofpoint, Inc. (NASDAQ:PFPT) is a leading next-generation security and compliance company that provides cloud-based solutions for comprehensive threat protection, incident response, secure communications, social media security, compliance, archiving and governance. Organizations around the world depend on Proofpoints expertise, patented technologies and on-demand delivery system. Proofpoint protects against phishing, malware and spam, while safeguarding privacy, encrypting sensitive information, and archiving and governing messages and critical enterprise information. More information is available at www.proofpoint.com.

Proofpoint is a trademark or registered trademark of Proofpoint, Inc. in the U.S. and other...


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