Proofpoint, Inc. EBITDA jumped on 2,009% and Revenue jumped on 18.2%
02/04/2021 • About Proofpoint, Inc. (
$PFPT) • By InTwits
Proofpoint, Inc. reported 2020 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Proofpoint, Inc. is a fast growth stock: 2020 revenue growth was 18.2%, 5 year revenue CAGR was 31.7% at 2020 ROIC -6.4%
- Proofpoint, Inc. spends a lot for Stock Based Compensation (SBC): average SBC/Revenue for 2016-2020 is 9.0%. Average EBITDA Margin for the same period was -1.7%
- Proofpoint, Inc. has medium CAPEX intensity: 5 year average CAPEX/Revenue was 6.6%. At the same time it's a lot of higher than industry average of 3.2%.
- CAPEX is quite volatile: $72m in 2020, $35m in 2019, $30m in 2018, $47m in 2017, $34m in 2016
- The company has unprofitable business model: ROIC is -6.4%
- It operates with medium-size leverage: Net Debt/EBITDA is 2.5x while industry average is -1.0x
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
Proofpoint, Inc.'s Revenue surged on 18.2%. Revenue growth showed slowdown in 20Q4 - it was 13.0% YoY. Revenue decline was accelerating on average at -6.1 pp per annum in the last 5 years. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased slightly on 1.3 pp from 7.6% to 9.0% in 2020. EBITDA Margin followed a growing trend at 3.8 pp per annum in 2016-2020.
Gross Margin showed almost no change in 2020. Gross Margin stuck to a growing trend at 0.64 pp per annum in the last 5 years. SG&A as a % of Revenue decreased on 3.5 pp from 59.3% to 55.8% in 2020.
Net Income margin decreased slightly on 0.93 pp from -14.7% to -15.6% in 2020. During the last 5 years Net Income margin topped in 2017 at -13.4% and was declining since that time.
Investments (CAPEX, working capital and M&A)
Proofpoint, Inc.'s CAPEX/Revenue was 6.9% in 2020. CAPEX/Revenue decreased on 2.1 pp from 9.0% in 2017 to 6.9% in 2020. For the last three years the average CAPEX/Revenue was 5.0%. The company has spent a lot to CAPEX (227% of EBITDA) to fuel its growth. During 2016-2020 CAPEX as a % of Revenue bottomed in 2019 at 4.0%.
Return on investment
The company operates at negative ROIC (-6.4%) and ROE (-31.7%). ROIC increased on 4.2 pp from -10.7% to -6.4% in 2020. ROE decreased on 8.1 pp from -23.6% to -31.7% in 2020. During 2016-2020 ROE topped in 2019 at -23.6%.
Leverage (Debt)
Company's Net Debt / EBITDA is 2.5x and Debt / EBITDA is 31.0x. Net Debt / EBITDA surged on 29.9x from -27.4x to 2.5x in 2020. Debt jumped on 22.9% while cash increased on 7.4%.
Proofpoint, Inc. has no short term refinancing risk: cash is higher than short term debt (3,187.3%).
Management team
Gary Steele is a Proofpoint, Inc.'s CEO. Gary Steele has spent 19 years with the company. Paul R Auvil III is a Proofpoint, Inc.'s CFO. Paul R Auvil III has spent 14 years at the company.
Financial and operational results
FY ended 12/31/2020
Proofpoint, Inc. ($PFPT) key annual financial indicators| mln. $ | 2016 | 2017 | 2018 | 2019 | 2020 | 2020/2019 |
|---|
P&L
|
|---|
| Revenue | 375 | 520 | 717 | 888 | 1,050 | 18.2% |
| Gross Profit | 267 | 376 | 515 | 652 | 775 | 18.8% |
| SG&A | 254 | 301 | 432 | 526 | 586 | 11.3% |
| EBITDA | -54 | -13 | -28 | 2 | 32 | 2,008.8% |
| EBIT | -86 | -55 | -102 | | | |
| Interest expence | 24 | 26 | 14 | | | |
| Tax | 1 | -10 | -13 | | | |
| Net Income | -111 | -70 | -104 | -130 | -164 | |
| Stock Based Compensation | 79 | 97 | 143 | | | |
Balance Sheet
|
|---|
| Cash | 345 | 286 | 185 | 848 | 910 | 7.4% |
| Accounts Receivable | 73 | 108 | 199 | | | |
| Inventory | 1 | 1 | 0 | | | |
| Accounts Payable | 15 | 12 | 20 | | | |
| Short Term Debt | 0 | 0 | 0 | 20 | 29 | 41.4% |
| Long Term Debt | 367 | 198 | 0 | 786 | 962 | 22.4% |
Cash flow
|
|---|
| Capex | 34 | 47 | 30 | 35 | 72 | 105.8% |
| Acquisitions | 54 | 155 | 224 | | | |
Ratios
|
|---|
| Revenue growth | 41.5% | 38.4% | 38.0% | 23.9% | 18.2% | |
| EBITDA growth | 1.5% | -76.3% | 119.5% | -105.4% | 2,008.8% | |
|
|---|
| Gross Margin | 71.1% | 72.4% | 71.9% | 73.4% | 73.8% | 0.4% |
| EBITDA Margin | -14.4% | -2.5% | -3.9% | 0.2% | 3.0% | 2.9% |
| EBIT Margin | -22.8% | -10.6% | -14.2% | | |
| SG&A, % of revenue | 67.6% | 58.0% | 60.2% | 59.3% | 55.8% | -3.5% |
| SBC, % of revenue | 21.0% | 18.8% | 19.9% | | |
| Net Income Margin | -29.6% | -13.4% | -14.5% | -14.7% | -15.6% | -0.9% |
| CAPEX, % of revenue | 9.2% | 9.0% | 4.1% | 4.0% | 6.9% | 2.9% |
|
|---|
| ROIC | -20.4% | -12.1% | -20.1% | -10.7% | -6.4% | 4.2% |
| ROE | -173.6% | -40.6% | -25.6% | -23.6% | -31.7% | -8.1% |
| Net Debt/EBITDA | | | | -27.4x | 2.5x | 29.9x |
| Interest expence / Average debt | 6.4% | 12.9% | | | | |
People
|
|---|
| Insider ownership | 2.1% | 2.1% | 2.1% | | | |
| Employees | 1,573 | 2,047 | 2,613 | | | |
| Revenue/Employee, th. $ | 239 | 254 | 274 | | | |
Proofpoint, Inc. ($PFPT) key quoterly financial indicators
| mln. $ | 20Q1 | 20Q2 | 20Q3 | 20Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 250 | 258 | 267 | 275 | | 23.1% | 20.5% | 17.3% | 13.0% |
| EBITDA | -11 | 19 | 11 | 13 | | - | - | 360.3% | 121.2% |
| Net Income | -74 | -23 | -32 | -35 | | - | - | - | - |
Balance Sheet
|
|---|
| Cash | 922 | 961 | 1,020 | 910 | | 325.6% | 542.2% | -0.1% | 7.4% |
| Short Term Debt | 18 | 24 | 23 | 29 | | -23.8% | 5.5% | 13.8% | 41.4% |
| Long Term Debt | 797 | 813 | 820 | 962 | | 2,176.1% | 2,258.3% | 5.4% | 22.4% |
Ratios
|
|---|
| Gross Margin | 72.4% | 73.9% | 74.2% | 74.5% | | -0.4% | 0.8% | 0.5% | 0.5% |
| EBITDA Margin | -4.5% | 7.5% | 4.0% | 4.7% | | -2.8% | 9.0% | 3.0% | 2.3% |
| Net Income Margin | -29.7% | -8.7% | -12.0% | -12.8% | | -15.8% | 4.7% | 7.5% | -1.0% |
Peers in Systems Software
Below we provide Proofpoint, Inc. benchmarking against other companies in Systems Software industry for the last 5 years. We show data for the top-5 companies by key financial metric together with the median value for all the companies in the industry.
Top companies by Revenue growth, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Zscaler, Inc. ($ZS) | - | 56.5% | 51.3% | 59.2% | 42.4% |
| ServiceNow, Inc. ($NOW) | - | 38.0% | 36.0% | 32.6% | 30.6% |
| SailPoint Technologies Holdings, Inc. ($SAIL) | - | 40.5% | 33.8% | 15.9% | 26.6% |
| Rapid7, Inc. ($RPD) | - | 27.6% | 21.5% | 33.9% | 25.9% |
| Tenable Holdings, Inc. ($TENB) | - | 50.9% | 42.4% | 32.6% | 24.2% |
| |
|---|
| Median (23 companies) | 12.9% | 14.0% | 19.0% | 15.9% | 12.9% |
|---|
| Proofpoint, Inc. ($PFPT) | - | 38.4% | 38.0% | 23.9% | 18.2% |
Top companies by Gross margin, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Check Point Software Technologies Ltd. ($CHKP) | 88.5% | 88.6% | 89.6% | 89.5% | 89.4% |
| Progress Software Corporation ($PRGS) | 83.8% | 82.6% | 83.1% | 81.8% | 86.0% |
| Varonis Systems, Inc. ($VRNS) | 90.5% | 90.4% | 89.8% | 86.2% | 84.9% |
| Vmware, Inc. ($VMW) | 85.2% | - | 85.5% | 83.9% | 83.4% |
| Tenable Holdings, Inc. ($TENB) | 88.6% | 86.4% | 83.9% | 82.8% | 82.4% |
| |
|---|
| Median (23 companies) | 73.6% | 74.1% | 75.0% | 76.6% | 77.8% |
|---|
| Proofpoint, Inc. ($PFPT) | 71.1% | 72.4% | 71.9% | 73.4% | 73.8% |
Top companies by EBITDA margin, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Check Point Software Technologies Ltd. ($CHKP) | 49.8% | 50.7% | 48.8% | 46.0% | 45.1% |
| Qualys, Inc. ($QLYS) | 23.8% | 25.1% | 28.4% | 36.5% | 40.3% |
| SolarWinds Corporation ($SWI) | -8.0% | 44.0% | 44.8% | 44.7% | 39.8% |
| Progress Software Corporation ($PRGS) | 2.4% | 28.6% | 32.9% | 23.4% | 34.4% |
| Fortinet, Inc. ($FTNT) | 7.2% | 11.1% | 15.9% | 19.8% | 23.9% |
| |
|---|
| Median (23 companies) | -8.0% | -5.4% | -4.7% | -1.4% | -1.1% |
|---|
| Proofpoint, Inc. ($PFPT) | -14.4% | -2.5% | -3.9% | 0.2% | 3.0% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Zscaler, Inc. ($ZS) | 7.8% | 6.5% | 8.0% | 9.5% | 12.0% |
| ServiceNow, Inc. ($NOW) | 7.6% | 7.8% | 8.6% | 7.7% | 9.3% |
| Qualys, Inc. ($QLYS) | 11.7% | 16.4% | 8.2% | 8.6% | 8.3% |
| Zuora, Inc. ($ZUO) | 3.4% | 3.3% | 2.8% | 5.7% | 7.8% |
| Allot Communications Ltd. ($ALLT) | 1.8% | 3.5% | 3.6% | 3.4% | 5.6% |
| |
|---|
| Median (23 companies) | 2.0% | 2.2% | 2.5% | 3.4% | 2.8% |
|---|
| Proofpoint, Inc. ($PFPT) | 9.2% | 9.0% | 4.1% | 4.0% | 6.9% |
Top companies by ROIC, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Fortinet, Inc. ($FTNT) | 5.3% | 15.0% | 28.0% | 29.0% | 46.3% |
| Check Point Software Technologies Ltd. ($CHKP) | 24.7% | 26.8% | 25.5% | 24.2% | 25.6% |
| Qualys, Inc. ($QLYS) | 13.7% | 12.3% | 14.3% | 18.7% | 22.0% |
| Vmware, Inc. ($VMW) | 15.9% | - | - | 18.1% | 19.6% |
| Progress Software Corporation ($PRGS) | -4.9% | 13.5% | 18.5% | 7.6% | 16.0% |
| |
|---|
| Median (23 companies) | 0.0% | -2.7% | -0.9% | -6.3% | -6.4% |
|---|
| Proofpoint, Inc. ($PFPT) | -20.4% | -12.1% | -20.1% | -10.7% | -6.4% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| SolarWinds Corporation ($SWI) | - | 6.2x | 4.1x | 4.4x | 4.1x |
| Progress Software Corporation ($PRGS) | -7.5x | -0.1x | 0.1x | 1.5x | 2.1x |
| Vmware, Inc. ($VMW) | -0.7x | - | -0.8x | 0.3x | 1.5x |
| CyberArk Software Ltd. ($CYBR) | -4.1x | -5.7x | -4.5x | -3.6x | 0.9x |
| ServiceNow, Inc. ($NOW) | - | 9.0x | 0.9x | 1.0x | 0.9x |
| |
|---|
| Median (11 companies) | -1.2x | -0.6x | -0.4x | -0.3x | -0.1x |
|---|
| Proofpoint, Inc. ($PFPT) | - | - | - | -27.4x | 2.5x |
