First-quarter billings higher than expected
Proofpoint (PFPT) managed to increase its sales 25% YoY (year-over-year) in the first quarter of 2019. The company’s billings also rose 15% YoY to $215 million, higher than its guidance range of $211.5 million–$213.5 million.
Revenue in Proofpoint’s Advanced Threat segment rose 22% and accounted for 75% of its total sales. The company’s Compliance sales rose 33% and accounted for 25% of its revenue in the first quarter.
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Proofpoint is optimistic about its long-term sustainable growth. Market research company Gartner expects the computer-based security market to be valued at $2 billion by 2022. Proofpoint expects its total available market to reach $13 billion by 2022.
Improving profit margins
Proofpoint has managed to improve its profit margins at a consistent rate over the years. Its operating margin has expanded from -7.4% in 2013 to 11.7% in 2018, and it’s expected to expand to 13.4% in 2020 and 15.9% in 2021.
The company isn’t yet GAAP (generally accepted accounting principles) profitable. It posted a non-GAAP gross margin of 78.5% in the first quarter. Its operating expenses rose 26% YoY to $136.3 million and accounted for 67% of its total sales.
Proofpoint’s non-GAAP operating income was $22.9 million in the quarter, indicating an operating margin of 11%. This outperformance was a result of its lower-than-expected spending on sales, research, and marketing.
Proofpoint’s net income came in at $23.1 million or $0.40 per share, higher than its estimate of $18 million–$20 million. Proofpoint reported non-GAAP net income for the 12th consecutive quarter.