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Proofpoint, Inc. (PFPT)
Q1 2013 Earnings Call
April 25, 2013 4:30 pm ET
Paul Auvil – Chief Financial Officer
Gary Steele – Chief Executive Officer
Rob Owens – Pacific Crest
Phil Winslow – Credit Suisse
Robert Breza – RBC Capital Markets
Jonathan Ruykhaver – Stephens, Inc.
Craig Nankervis – First Analysis Securities Corp.
Tim Klasell – Northland Securities
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Thank you. Good afternoon and welcome to Proofpoint’s first quarter 2013 earnings call. Today, we will be discussing the results announced in our press release that was issued after the after close today. I’m Paul Auvil, Chief Financial Officer of Proofpoint, and with me on the call today is Gary Steele, Proofpoint’s Chief Executive Officer.
During the course of this call, we will make forward-looking statements regarding future events and the future financial performance of the company. These forward-looking statements are subject to material risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. We caution you to consider the important risk factors that could cause actual results to differ materially from those in the forward-looking statements, contained in the press release and this conference call. These risk factors are described in our press release and are more fully detailed under the caption Risk Factors in Proofpoint’s most recent Form 10-K filed with the SEC and the company’s other filings with the SEC.
During this call, we will present both GAAP and non-GAAP financial measures. These non-GAAP measures may exclude both stock-based compensation expenses as well as the amortization of intangibles related to acquisitions or other components of GAAP metrics. These non-GAAP measures are not intended to be considered in isolation form, a substitute for or superior to our GAAP results and we encourage you to consider all measures when analyzing Proofpoint’s performance.
A reconciliation of GAAP to non-GAAP measures is included in today’s press release regarding our first quarter 2013 results, which can be found in the Investors Relations section of our website. In addition, please note the date of this conference call is April 25, 2013, and any forward-looking statements that we make today are based on assumptions that we believe to be reasonable as of this date, and we undertake no obligation to update these statements as a result of new information or future events.
With that, I’ll turn the call over to Gary.
Thanks, Paul. I’d like to thank everyone for joining us on the call today. We are very pleased with the company’s continued strong execution during the first quarter that resulted in meeting or exceeding the high-end of our guidance across all metrics. Our performance is driven by the ongoing demand for differentiated next generation cloud-based platform.
Proofpoint has steadily shown the capability to defend, protect, archive and govern the most sensitive data for many of the world’s largest enterprises. And we believe we are well positioned to maintain our traction and further – and gain further market share. Our strong first quarter results and our momentum in the business continue to benefit from the increased in the number and types of advanced security threats including advanced persistent threats as well as the continued need for our cloud based solution in both regulated and non-regulated industries to meet enterprise compliance requirements.
In addition, enterprises continue to replace their on premise legacy security solutions with our integrated cloud based solution to more fully protect their data and drive lower total cost of ownership.
If you look at the financial results for the first quarter, total revenue increased 25% to $30.8 million compared to the year ago period representing our 39th consecutive quarter of sequential revenue growth. We also recorded billings of $35.1 million, up 47% on a year-over-year basis.
Both revenues and billings exceeded our first quarter guidance ranges. In addition, we generated $1.2 million of operating cash flow in Q1 compared to $0.2 million in the same period last year. Our continued growth was due to renewal rates that once again exceeded 90%, sustained strong competitive run rates, new and add on business momentum and further traction with our strategic partners and resellers.
Now I’d like to highlight some of our key accomplishments during the first quarter. To start, we continue to benefit from Google’s end-of-life decision for their standalone Postini infrastructure and we expect to continue to drive replacements for the remainder of 2013 and into 2014. Some examples of significant competitive wins during the first quarter in which Proofpoint enterprise protection and privacy replace Postini include one of the nation’s leading luxury retail brands with 5500 users, one of the nation’s largest transportation services companies with over 8500 users and a large European based industrial materials manufacturer with 28,000 users worldwide.
In addition, in the wake of the Postini exit, we recently introduced a new channel focused cloud-based solution to extend our customer reach to the mid and small enterprise. The acquisition of European-based MailDistiller Limited provided a foundation for a launch of Proofpoint Essentials, a new suite of SaaS security and compliance solution specifically designed for distribution across managed service providers and dedicated security resellers.