ZIXI - Earnings call transcript Q1 2018

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good afternoon. Welcome to Zix First Quarter 2018 Earnings Conference Call. My name is Skyler and I will be your operator this afternoon.

Joining us for today’s presentation are the company’s President and CEO, David Wagner; CFO, David Rockvam; and Vice President of Marketing, Geoff Bibby.

Following their remarks, we will open the call for your questions. of to made that a available the Relations like being call link now Investor and website. recorded for section would remind the everyone is in I company’s the replay via

I Sir, proceed. Bibby. like to please turn call the Now, over would Geoff to

Geoff Bibby

XXXX. and risks the that results could differ We such Factors statements. the in materially to are could available consider on our closed, those future at that results we during of Thanks, to Good also the update future company from It’s These note Risk XX, actual we Investor is uncertainties ended caution of subject regarding our cause that you to obligation press no statements undertakes statements. to forward-looking announcing of cause important actual XX-K our today’s call, release our provides in for and events issued the results which Relations and XXXX the conference first the to www.zixcorp.com. call. March website those for section from risks. joining section thank this Factors The examples performance a filing copy Form press with call. those Risk will the Skyler. this most statements quarter and you After company. of financial that Please contained for forward-looking the make quarter note everyone statements us afternoon, the course recent of to in first differ A forward-looking materially in the market in release forward-looking SEC

or press to certain be a measures encourage We both our company’s Relations Non-GAAP which when performance. considered of our release, section are Investor to included GAAP measures GAAP GAAP can site. today’s intended call, in analyzing of all consider non-GAAP and found superior be the the results. for measures to in is to non-GAAP financial reconciliation A the present from, During in substitute isolation measures. will not we you financial

to his turn to like David would I that, the Wagner over for Dave? remarks. opening with Now call

David Wagner

joining growth e-mail Good acquired new in that’s us of momentum EBITDA delivered. profitable Geoff. Thanks, cloud-based the and protection or More for quarter, continuing XXXX than entered our the services. value and further grew generated We everyone adjusted by are revenue build new success enhancing building what encryption right the growth X%, annual and full of We first We to market delivered number contract today. a by value growth. path. in our with in specifically QX was quarter by and that Whether suite first commitment looking and a add-on our building e-mail we retention, you it’s for security afternoon and orders our we are year by strategy customer evidence in thank a to suite X%. all on this in is in the on by year of services recognized was more full customers what X% ago we of that exactly customers a solid around QX on activity X%,

from we and ZixProtect new after early ZixArchive and winning displacements. becoming e-mail Now, bundles, in impressive customers a XXXX momentum year of security are the formidable our more the introduction continuing success space. a competitive and generating the force meaningful are

positioning. business and gold we comes and absolute the market archiving bundles to have of With to the favorably cross-selling our our planned is and initiatives compliance advanced as responding Erado, recent communications. delivering protecting are our when Our addition standard to it meet

buyers. bolstered solution for cloud-based is existing Our class unified archiving best focused supervision and by capabilities now in are that compliance

customers’ stronger even are position So, needs. to our an meet we now in

and video. strengthened communications, social mobile, including digital to media, web, of beyond instant Our messaging, e-mail leadership forms audio position has all

SEC across vertical the added a these that the to solution, with customer, they able for customers continued e-mail customers solutions platform work compliance and We are also advanced whole, to FINRA continue with threat of status who one, robust e-mail archiving we provide complete one can protection who with also familiar regulations; offerings; result three, our to our and welcoming The is security better financial with they and happy a because for comply complete already value requirements. able a are servicing are solidify solutions base bundled services are we our XX,XXX as two, large must growth solutions. preferred to best-in-class we e-mail choices and and as because of combine and meet customer a security archiving encryption offerings efficiently

addition we the on bolstering front. solutions, made our also strides distribution to In positive

quarter the our provide announced MSP after integrates to additional program, for of our expansion which we ended, partners. shortly Just security best-in-class the offerings

mentioned we more the are our drive can that for previous most and As distributor relationships on call, customers. we our focusing on us value

orders an that had for $XX.X million, our growing also total demonstrating at did annual successful services, and partners our to we flexible program, delivered contract When in valued our another path execution we we of So list. of options productive the businesses our combine on busy growth achieve MSP priority clear of Not we giving year and record first continued expansion channel a orders our investments more in strengthening our their it’s the more start and and very a but value new our XXXX. strengthening and only year-over-year you in are the successfully of strategy. high program products

on but on we convinced increasingly strategically the a business putting and As are result, profitable our recent and towards that growth. results becoming reaccelerating transitions the trajectory front, are us

the Dave turn over will CFO, for the Dave? to quarter. call provide on Rockvam financials to the our more I details Now,

David Rockvam

everyone. first another and quarter XX% bottom Dave which ZixProtect both afternoon of for ZixArchive. by were good our generated and guidance over top Thank solid again, orders we you, Once line growth, new year and of driven and achieved the

and orders our maintained growth total in our adjusted also margin. returned XX% We EBITDA to year-over-year

progress capture build we a to our are and and positioned growth. efforts stage for making of in well larger this we results next towards move of the progress our on operational As we share both From market. e-mail our to believe security the quarter are closer broader financial steady demonstrate, an standpoint,

of continued model, XXX revenues. encryption of our for on was subscription financial in to based $XX.X primarily quarter. offerings ASC in our we $XX.X million protection, same more top driven from quarter the last material hosted achieved the e-mail the line million of to QX quarter revenue With adoption detail, million X% first for solution. our guidance cloud impact rapid Give numbers increased for Turning we The by accounting our and revenue our no bundled our determined success year. $XX.X

our based first also of in Our percent offerings $XX.X in first of of hosted new bundled with the orders first X% strong increased installed and up orders our to was the new this year. year bigger the new driver solution quarter. metric, cloud million year in base year last orders a quarter million to quarter made nearly coming Once add-on the a again same sales base to successful XX% the from $X.X

of the quarter or revenue Our was was adjusted gross XX.X% basis on for first $XX.X which dollar improvement profit revenue of an million $XX.X total in million or total of from a quarter the XXXX. XX.X%

customer QX to communication for our was market in broader higher infrastructure. year-over-year, gross base, over expansion percent let year us past a growth significant business margin the of the level this the our the has because down was adjusted hosted necessary into Our support in

levels our of to higher expect within XX% current XXXX. move for margins We remainder XX% gross adjusted from that to remain the

support, class invest intelligence continue customer provide threat to we in excellence. operational to best As and

XX.X% or XX.X% due Our The quarter was $X.X investment adjusted R&D to to threat total of primarily expenses million and compared in our first quarter the for advance million in $X.X of revenue the XXXX first year-over-year of protection archiving revenue total capabilities. last year. increase were of or

or $X.X revenue year XX.X% spend and for Our the partially total exercise compared $X revenue year. pushed replanting last due were of decrease QX or of total of last quarter up the adjusted QX selling million XXXX. to expenses which in was in million marketing to The XX.X% marketing of

intangible asset to accounting primarily to decrease XXX, solution X years which and new over years approximately However, at have was In contracts, an for This ASC X amortized million. comply $X.X of estimated intangible be for add-ons of change we with our will renewals. sheet the the with our life accordance we on reported the XXX ASC dollars in expected accounting. XX due for balance asset months

QX $XXX,XXX. expense of Our normalized for was $XXX,XXX a commissions amortization XXX versus ASC free approximately

were For general revenue administrative $X.X million XXXX, our and $X revenue QX of expenses per or The or million On year. we of primarily to year. the share total or of $X.X year-over-year over million or increase XX.X% basis, compared in due to quarter year. of $X.XX last was XX.X% reported last diluted to total $X.X income the in last first of G&A with reported QX share acquisitions per million associated $X.XX a compared net GAAP fully adjusted the

of first and quarter over Our share $X.XX $X.XX represents improvement income adjusted diluted consistent or the share million non-GAAP share. an was $X.XX per for And $X.X per quarter fully increase $X.X our compared of $X.X for million, QX totaled with per guidance net was we of year. amount the our an X.X% of XXXX last last reported million in QX reported to year. in we QX finally, EBITDA adjusted

the Cash year primarily balance, term with revenue, same million. a adjusted designed for length. mainly which we first lower the XX%, consistent of QX of which last to was quarter. was shorter deferred higher $X XX% the flow from EBITDA year operations than due total our This was reported from As our revenue for last from XXXX percentage quarter down contract is last was quarter and

at of our million strength and Our $XX.X no financial cash once balance the debt. quarter sheet reflected again with in the end

approved which the XXXX. in of our Turning Board repurchase share to Directors April program

we shares to for are average an we aggregate price to program, million XXXX, X, subject worth an share purchase $X.XX. QX Under amount $X.X million the as certain of April During $X.X conditions. of at an XXX,XXX authorized additional XXXX of current repurchased of shares

In fact, we repurchase shares year. continue April during of this to

to are in mid-market balanced security capital invest customers in a better driven to reiterating commitment we our the compliance-oriented strategy. solutions continue we While to the and serve allocation our segment,

deploying was months, $XXX,XXX, returns highest have Over shareholder as what used we for see demonstrated of we purchasing areas which mindset of consisted the capital our look the the last of million million normal CapEx guides quarter stock and balance in we where continue purchases. this to capital increasing primarily be by business value. $XX.X us acquisitions. $XX for The XX approximately will

and We to continue between to for $X.X million. $X.X be to million for depreciation XXXX and million CapEx approximately $X.X expect be

committed Our year. to Similar the was has prior This as decrease backlog million the associated with which dollar and produced of March offerings. of shorter $XX.X value was date the transaction from commitment customer XX, quarters, down in $XX.X backlog touch our customers. which term last XXXX million contracts of XX.X% and of was due of pricing same represents volume to as number points the desired effect with new bundled increasing the

the As we of to term. reminder, incentives go accomplished this by decreasing financial our for customers a longer most

However, expect we level we length and did note our goals our stabilized with we in further to that see has as declines that term term a last length average aligns year. don’t to

of Looking to we balance expect $XX.X deferred recognize months. over revenue our deferred revenue our as revenue, at XX.X% next XX approximately million the or

ACV of Just our deferred all up part end when the year’s months acquisitions XX from the From an from recognition you XX% from of record term XX% QX XX.X%. with government of excluding At quarters, end or industry breakdown last revenue next XXXX. shift contract year. towards XX.X% the of and quarter, last value our services, compare of the was annual verticals, totaled can from the shorter you like from and see XX% revenue impact perspective, to financial the of X% our million, from other $XX.X three the first over X% healthcare, XXXX contracts a

full year month. acquisition quarter because Now, this our in XXXX guidance and the of updating full Erado are for and guidance, as we for disclosed April, our earlier financial second of the quarter we year

$XX.X net anticipated be approximately million to to of million We expect subscription currently expect an accounting decrease year. to due deferred for revenue the an $X $XX.X contribute year X% but and to we anticipate the of $X.X adjustment second million, and expect to the million X% to EBITDA income revenue operating XXXX, compared cash purchase representing For quarter primarily last range between acquisition QX neutral, to and increase full revenues. flow from of to

per be earnings and We and are between also non-GAAP be fully forecasting GAAP diluted $X.XX diluted fully adjusted share $X.XX. per earnings share to $X.XX to

compared We an expect full revenue and to the which to range $XX be represents million, increase revenue X% for year X% $XX.X of XXXX. in million to between fiscal

previous Erado adjustment $X.X $XX.X only of acquisition. guidance between the revenue for the range million being $XX adding Our for and the revenue million million,

on-premise $X.XX we of are and not share our As progress With XXXX. business in we $X.XX per our well part bundles competitors churn with be our based all to platform. forecasting our along XXXX. have aligned we earnings fiscal our share performing and customers, diluted GAAP the updated our significant have earnings protection fully of appliance in per non-GAAP guidance, and overall data a becoming execute our $X.XX customers also have are exceptionally yet encryption for solution we made between adjusted bigger and while part through displacing In to cleared to additional our be diluted cloud well closing, fully

distribution capabilities now due product program. suite our stronger We have launch MSP to also new our as much expanded Dave channel mentioned and a have and

these attention and completes improving my our on overall of market. articulate in towards steps progress our the our our growth, financial building traction All reaccelerating This summary.

detailed our our more results, Dave? please a analysis reference form of financial X. which by plan file For to May we XX-Q

David Wagner

number the sales and new year more X% to increasing than On main three our you forward. going drivers the Starting sequentially. first one retention. for both to absolute first performance of million, customer over products orders customers as through in before it percentage total churn call cross-selling our total dollar growth year for growth ZixProtect the acquisition up of and now area, was these percentage of financial progress call up orders spend two we flat and respect and remainder last customers first new growth was Erado with were I orders financial our the to three our introduced and and XX% double-clicking first new from each year orders. XX% of ZixArchive noted are earlier will existing what quarter ZixProtect as Similar overview the our new going relatively add-on acquisition, areas Thank last $X.X of Zix of which About and ZixArchive a with the terms year-over-year. three reducing Dave. represented means almost the new and

healthcare made were One first customer our up prior the are new vertical, top year Similar fifth wins of in our customers was quarter New were to displacement the in orders from total PGP XX% the two orders first of government. five of last use. with $XXX,XXX. about quarter quarter the during new Four year the in wins top had five and ZixEncyrpt. for new other no meaningful encryption core

other five bundle. The were top the three new wins for customer

X% was sales demonstrating during and one One partners. efforts, from proposition of is our first customers. VARs XX% sales When MSPs, direct bundling through orders that one competitive year total and of came channel, new displacement a and XX% by our web barracuda look our our you with Microsoft, again X% the distribution our through them quarter from Proofpoint OEM at resonating

areas to we So light specific both are in improve. which OEMs both are steps picking MSPs that relatively we and were

of April Partner protection program administer for At The and The a ability e-mail rapid offering. our all perfect to Our billing, Zix level, MSPs example very MSP will us the console MSPs administration existing program offers high is program addition forward e-mail for encryption solutions. new of major our our provides management deployment for plans centralized of to the in threat sell our and step and to our to flexible e-mail new program with a MSPs archiving is of and distribution. program a improve a help growth. continued new attract partners the launch

we the migrating in program and the X We set customers. to more forward to looking of Zix ability into them are addition broader a adding added give new have encryption solution partners partners their many existing to MSP our offer the to already program for to

progress pleased that partnerships OEM during a both customers. side, end the realigning with the for Cisco On with Symantec quarter and quarter the towards with we had are and QX to value we our maximum in we Google our made good

ability the historical moving end transition timed arrangement transition this the to reseller. into customers the existing arrangement of cloud opportunity Zix the Google gives Zix cross-sell the users collaboratively Zix our to This address are our during needs perfectly full partner customers are to end end On maximize better services. and working customers. resellers with was The with our into the partner OEM and side, launch we of program MSP e-mail our Google and standard of program into Google we customers primarily through intercept current suite new the Google from QX, the Google new game

Cisco side, teams suited ZixEncrypt increasingly go-to-market requirements. Cisco On to the and position not to the well meet is ZCT with EMS also the to into where accounts resolution collaborate Cisco’s continue we customers’ and CRES ZixEncrypt

a a As We do longer no orders and be the be for will of of beginning this to first end earnings other. from as relationship OEM changes these our meaningful new and that we OEM any category resellers and will revenues into orders year bundle year’s QX our impact Zix. not these immaterial transitions new remaining will partner and do positive transitions result think reporting the or sales web we Google channels both on Cisco call, customers, although expect we

and primarily with our They centers. the solutions Nordic a selling IT hosted ZixEncrypt Proact more customers, data in is company progress UK our rules. and front, with partnership Proact the their regions. and publicly European to the standard be traded GDPR will comply new enterprises than the first quarter, ZixEncrypt Distribution on to distribute we UK IT Turning quickly to Progress with our international during announced help in X,XXX

encryption GDPR. their comply as of the providing to services they excited our end-users their We are with customers gold standard opportunity about help

the additional base, area, average is to a add-ons, sales XX% other government healthcare, customer. orders above $X.X and and first quarter. main to X our add-on existing XX% to the approximately new the Three is the ZixArchive. the which in were our our quarter of million Similar of with new both our on in ZixProtect first added year from installed and five second of X was Moving came the top customers, one sales which ZixProtect during our and approximately totaled fifth, encryption of customers, were growth

as base services. our are increasing and pleased add the sales very We see to products installed into we

The third are and that to churn gradually above on we quarter attention. achieved is and pleased and I report increasing quarterly final is and reducing retention growth am area we rate since in that second highest we retention solidly focused the were that XXXX. improving XX% the

front of that’s our get stickier easily most We the enough migrate how a the advantage ACV important stress customers We XX% ACV that from on-premise cloud, appliance complete to quarter. of in Total where can customers it is XX% they they take suite. customers. continued on-premise because can’t to on-premise appliance to from decreased product our and where in of we become

successfully platform is to of cloud during encouraging are hosted multi-tenant the XXX% our Google are ACV customers multi-tenant to It’s our QX, just customers to we who our reached deployed. solution an we the very QX, XX and customers cloud. migrated and see our where our from additional XXX point from cloud XX% to game over moving at During pace which

quarter on retention basis. and in improving a both XX-month as the rolling So, a is result,

quarter, our renewal customers excess success the normal. XXXX excluding we of reference that our customers us rates This migrating to and confident stabilize products, longer the our on-premise work to at well through with will expect ZixArchive we but retention hundreds part Going to last no virtual products new forward, a bundle as to we subside. success has increasingly both a new that this churn ZixProtect our having and are strong for of combined appliance with customers drag prospects. the cloud from allowing us existing new are as expect

the not some time. the expect new high we for means normal the to bundle in retention XXXX return However, record to of that rates saw do we cloud-based

of Lastly, open on in moment which for would was before announced Erado, questions, we spend like our call I acquisition the to April. early a

will healthcare, us addition the very our the XX% acquisition in communications are we and channel We with compliance-oriented family even space. capability the of businesses focusing most about and the XX for with a and communicate review, channel right monitor digital than sectors legacy the revenue excited IT e-mail, opportunity that and for be of cloud expands Erado stronger customers far broker, the our base and are LinkedIn dealer is compliance and a cloud-based prospect all with integrate a fit disruption. The than to e-mail capabilities services we social momentum archiving e-mail. to channels finance and customers the to being is strong indexed in archiving the the the supervisory More on archiving more uniformly perfect unified first, archiving government of adds see for financial in to two Erado organization’s as it the is and other Erado’s very capability Many from on-premise other than officers capabilities financial from installed business the to by in current content. services. transitioning communication as to accelerating are and set one We for LinkedIn makes than large into comes services, moving there of capabilities of Like centralized, content customers. market areas: important compliance channels requirements strong market Zix most other

support immediately the are the presence broker-dealer We in existing our team in Seattle capability to more grow go-to-market investing to and in market segment.

is ZixArchive The the capability data on product integrating ZixCentral core the area channels second and platform. our additional into supervisory focused

is integration installed architecture we best This of year sense of VAR this position set MSD to to end. through majority Zix gives strongly platform packages able well underway expect their architecture a One archiving the you consistent be the to to and with is and and a of expect we and our of we better, existing integrate completed functionality integration the selected can have cloud-based we for the into reasons that Erado partners. that The is before base XXX% our good, work planning welcome why we stated Erado Together the are partner, In build, with acquisition provided XXXX, the team pleased Greenview summary, in evidence expanding our growth to strategy positioning QX Data strategy. is continuation of well buy of employees product It a partner, of our represents entire our Zix. this growth. acquisition previously so than operationally. for our to that was and of customers our through delivering further more just increasing and capability strong us results quarter build, profitable buy strong successful

We areas executing have product and acquire base work has more displace and value perspective entrenched This with us to win deals made significant added larger right to our competitors. installed enhancements a distribution new from to deliver suite to additional are to the to capabilities our in to customers, this the enabled penetrate customers.

seeing our also business and retention improvements in are improving. We core is

anyone not or improvements in growth enough certainly keep seeing the and business with XXX of apparent going we this to higher protected. is Microsoft competitive preferred that while the also Office for customers Zix requirements it especially reputation, environment, laying are the compliance more becomes fully we communications We forward. upon are for groundwork which and profitability taking is advantage as the choice build to look the

ready Skyler? we for are Now, to open your with call the that, questions.

Operator

Our question Malouf comes with first [Operator Instructions] Group. Mike Craig-Hallum from

open. now is line Your

Eric Des Lauriers

for Thanks Eric on Hey, taking questions. Mike. guys. my for is This

David Wagner

Eric. Hi,

Eric Des Lauriers

normal give talked the to a was? we just a of but lot little and about bit could a I you was wondering new more sense have level retention, and you the drill into just know us if level what previous it, in how compares that could I churn

David Wagner

of lack the stickiness or stickiness as anyway, as but Yes, opposed several XXs last be the term given advanced and great. an space of expect our and strong in market And are We we the achieved basis that. What XXX shortening we contracts over talking about to exceptionally were threat will consistent the low the has XXXX to year been year. mid XX% continue is, less we in is above achieve, think normal. is what points XXs new was space to in a

Eric Des Lauriers

about that said a I level? that you Okay, in And we down staffing, sense. be that gross just think because more quarter as XX% margins, more or return should it to they just gradual talk makes little then forward you were you stay expect look highest of bit a was bit then more could this XX% and of a that to to that that

David Wagner

as we ZixProtect related continue on people is increase the to customers grow offerings. the the So

so We down active more great couple side have and to margins review and since our but has the caused it’s can people maybe basis technology threat traffic March. that the intersecting analysts of to that some and we use and give business XXX current XX/X staying those threats all that’s light update also rules that the build time, last go a Dave acquisition to little of points the color? a the

David Rockvam

quarter with a little quarter. last than Yes, so Greenview Data bit of I higher would up catching just full expense a full had add this just we in a in little bit. quarters, Like in quarter past revenue,

part haircut XX% while the little of the revenue be of that’s the that in all will the kind will a we on So to that during expense. we of have have then Erado bit as XX% And we it. situation bring similar years

up So for a picks little it to XX. bit that XX the

forward. XX right should here a and we pickup we March towards the go the So, XX at expect as we from and end we little go bit towards hit year that the of and

Eric Des Lauriers

your complete sense. for makes you year still pretty are the still offering? your enhance guys bundle cloud bundling do lastly, looking offering have you and are to continue and or is to – then some Okay, acquisitions now there that that feel success good throughout you the tuck-in with And cloud of efforts, had sort

David Rockvam

Yes.

complete buyers with the will we that archiving compellingly I compete compliance. encryption So, e-mail offering for our bring say when around believe capability to at we you is and really and look compliance respect

really, stands capability strong. Our really

are. so we with And we pleased where are

strategy, couple on deliver partner, really of a to acquisitions we track nice returns. build, able achieve that are On the buy been have to really strong

for Dave look continue his shareholders well. at our as to position that return continue balances balanced a capital we be in remarks, mentioned our and to in are buyback opportunities looking yes, as as to for be we same So to M&A stock the to prepared for for cash as time allocate high allow

Eric Des Lauriers

Okay, Thanks for great. the help.

David Rockvam

Eric. Thanks

Operator

comes Capital. Kim question Imperial next from with Michael Our

line Your open. now is

Michael Kim

afternoon guys. opportunity Erado good or from where and over ZixProtect the and should sell – we opportunities the balance Hey, ZixEncrypt Can customer about how you you base the talk cross of most rollout up-sell the see year? the into see whether that or

David Wagner

Yes.

the of the cloud-based to base bundled we seeing year, encryption of their reduce was get an provided. that of stages leadership start part the so the of team seeing the services that Erado earlier had be they customer desire to in they to one a late we that’s as really were So, things was able of. but and what consolidate What advantage as vendors, offer offering from what number take with

from dealer small and robust their offers need to deliver So, that to of help offices small And and customers have encryption broker more that’s the that segment, FINRA threat also protect there are family a these requirements e-mail advanced lot financial securely. look you at will SEC, have to organizations a something that add there. then certainly integrate much when encryption we for

nice complete their really The integration be see for full based of year. being many in – adjusted many fit their that as our a won’t late existing I though we of So of cloud customers. the until bundle

the really about it’s year, with market investments on those the existing motion forward I this talked So call. about driving

Michael Kim

penetration your can directly? most MSP base customers or And the do new serving accelerate into something you of that program, customer is or envision you leverage this

David Wagner

as integration their of they the partner set very, completes that that will and and an very for existing opportunity huge year channel is deliver the existing the sides terms were capability again so opportunity full a little we to out using the able year partners building right this customers. the the for both be capability It’s the – to of in of

Michael Kim

Got part natural it. a And of on-premise ACV a should of with considering just that base time see decline do in of your longer expect regards sort to a that period customer of appliance sort or base, over the business? we to

David Wagner

interviews, to continued that we being are are have with also why successful number through this customers intentional finding understand seeing that as an And moving an renewal over. last are to But call talked of So we are on-prem need very, appliance. are at not those very we making every a sure many time on-prem about increasing clients they we move. we of in

that’s I ACV quarter-over-quarter, of we that the perceive X% pace we see. decline saw So will in kind

in are on-prem the going that instances believe a our customers when for are they We longer period to time. of stay

so are to length and customers up-tick customers looking those for starting are we in are an on-prem lock We in X our as and to renewal year offering term we X-year times. those renewals see

Michael Kim

or of you barracuda, displacements some Zix? to And it. for reasons same of with moved notable customers vendors of three context Proofpoint competitive the displacements the and why – or to Microsoft, different highlighted the for regards any those Got did more lastly those then reasons competitive were some

David Wagner

competitive, to much very be the good Zix it’s support are they would our are the a context be of see looking oriented in consolidating us our encryption lag and consolidate binder the right next still operating compliance talked really the and our fit choice vendors. vendors to are the can best in That they are competition. part in finding breed a the to largest bundle to got encryption their superior customers, value We part if staffed mid-market buyers where vis-à-vis to they of more then requirements but

Michael Kim

Got it, very much. great. thanks And

Operator

Dougherty. Zack Our next question Turcotte with comes from

line now is open. Your

Zack Turcotte

Catharine Zack on here. for Trebnick guys. Turcotte Hey,

David Wagner

Zack. Hi

Zack Turcotte

ZixArchive you or expected a to on this think will were ZixProtect shift XX% the in So last said is where contribute of orders, of a is stay level these you new in going the you to future? first percentage still kind guys mix year and at again higher quarter, some general pretty this over similar

David Wagner

from the QX contribute a – XX% probably pretty through stabilization, we percentage that up to our was than in that move XX% still moving kind of and and is but opportunity There attach we expect the lots to as XX% of going expecting be XX% to would That more QX base. into are more in forward. markedly higher to QX We presented in year.

We and next a there added on on X%, X% a that little help with X% lot. are us at attach X% ZixProtect and the just Archive packaging in the year, bundles bit will year over the almost early

to new first So a increase percentage that our year of continuing we as to definitely see orders. expect

drive help us that to just to last talked I want gives Zix program have also Partner that thing will I other call, on that The but the this MSP emphasize and to take sell and existing vendor our could the not pieces opportunity our first, for with partners displace have to threat of the other encryption not ZixProtect they advanced advantage of bundle. about the

in our accelerating bundles. newer for month platform in opportunity an parts April putting out of past that the be this protection will So we market the also think

Zack Turcotte

add sizes on? pretty That sales same kind that you my north then bundling question, much next majority going more of kind seeing the still competitors the X,XXX mailbox toward are of in of mailbox Encrypt of, leading and you seeing different to of with you or bringing it’s trying if those are that thing through So kind size? Okay. sales was into larger just the channel,

David Wagner

no customers, existing we can call and had the new with last X,XXX more are quarters the more feel an new who couple seeing and of being customer and we of the have less it ZixArchive on enterprise are as the wins, we very we said, we are existing as ZixArchive So, decision. are is in several I in ZixProtect success increasing larger that increasingly our customers, we products. longer risk aware larger often what quality encryption to XX,XXX, sold service got But ZixProtect a

continue well. our this increasingly We have of rotation and and year to newer throughout performing see so parts hundreds next we extremely of all have bundled the that and well where into hundreds will performed customers

Zack Turcotte

it. Thanks. Got

David Wagner

Zack. Thanks,

Operator

time, no his Wagner over back for At I call turn this would remarks. closing Mr. further am to I like showing to questions. the

David Wagner

everybody from time to for you Well, great update evening. an of I a night. get evening your Zix thank like taking this little all Good just to and wish would a bit

Operator

your participation in and gentlemen, for does you thank Ladies today’s This program. the conclude conference.

You now may disconnect.

Zix (ZIXI) 2 May 182018 Q1 Earnings call transcript