Zix Corporation (NASDAQ:ZIXI) Q3 2018 Earnings Conference Call Transcript

Oct 23, 2018 • 05:00 pm ET


Zix Corporation (NASDAQ:ZIXI) Q3 2018 Earnings Conference Call Transcript


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Good afternoon. Welcome to Zix's Third Quarter 2018 Earnings Conference Call. My name is Carmen 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 VP of Marketing, Geoff Bibby. Following their remarks, we will open the call for your questions. I would like to remind everyone that this call will be recorded and made available for replay via link in the IR section of the Company's website.

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

Geoff Bibby

Thank you, Carmen. Good afternoon, everyone and thank you for joining our third quarter 2018 call. With me today are our CEO, Dave Wagner; and CFO, Dave Rockvam. After the market closed, we issued a press release announcing our results for the third quarter ended September 30th, 2018, a copy of which is available in the IR section of our website at www.zixcorp.com.

(Forward-Looking Cautionary Statements)

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

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

David Wagner

Thanks, Geoff. Good afternoon and thank you, everyone for joining us today. Q3 represented another major step forward for Zix. We achieved 24% New First Year Order growth which combined with our 27% New First Year Order growth last quarter, brings us to over 20% growth for the year-to-date.

These are meaningful milestones demonstrating successful execution of the bundling strategy we put in place just a year and a half ago. We made progress on each of our key initiatives of securing new customers, growing our tax rates and increasing retention as we continue to strengthen our position in the broader email security market.

What is particularly driving our business in 2018 is the great success we are having -- selling ZixProtect into our installed base and increasing ZixEncrypt deployments further into existing accounts. Our customers are demonstrating a preference for bundling encryption and threat protection in a highly effective, easy to use package with outstanding customer service.

Once again, our strong orders performance was driven by both our channel and direct sales team across all customer sizes, helping us increase revenue by 8%, ACV or annual contract value by 13%, New First Year Orders by 24% and total orders by 33%. We also continue to see solid improvements in our GAAP earnings, up 29% and adjusted EBITDA, which increased 16% year-over-year.

Over the last year and a half, we've progressively extended the solid momentum generated by our advanced threat protection and unified archiving products,