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Proofpoint Announces Fourth Quarter and Full Year 2015 Financial Results

Jan 28, 2016

Fourth Quarter Highlights

  • Total revenue of $74.9 million, up 33% year-over-year
  • Billings of $97.5 million, up 30% year-over-year
  • Generated positive adjusted EBITDA of $0.6 million
  • Generated free cash flow of $0.4 million
  • Increasing FY16 revenue and billings guidance


SUNNYVALE, Calif., Jan. 28, 2016 (GLOBE NEWSWIRE) -- Proofpoint, Inc. (NASDAQ:PFPT), a leading next-generation security and compliance company, today announced financial results for the fourth quarter and full year ended December 31, 2015 .

"We were very pleased with the company's execution during the fourth quarter, which resulted in a strong finish to a record year," stated Gary Steele, chief executive officer of Proofpoint.  "The ongoing demand for our advanced threat solutions, high competitive win rates, traction with new products along with robust add-on and renewal activity drove the better-than-expected results during the quarter. Looking forward, Proofpoint is well positioned to maintain the momentum and grow market share due to our best-of-breed cloud-based platform, superior go-to-market strategy and commitment to innovation."

Fourth Quarter 2015 Financial Highlights

  • Revenue: Total revenue for the fourth quarter of 2015 was $74.9 million, an increase of 33% compared to $56.2 million in the prior-year period.

  • Billings: Total billings were $97.5 million for the fourth quarter of 2015, an increase of 30% compared to $74.9 million in the fourth quarter of 2014.

  • Gross Profit: GAAP gross profit for the fourth quarter of 2015 was $51.0 million compared to $36.8 million for the fourth quarter of 2014.  Non-GAAP gross profit for the quarter was $54.9 million compared to $38.9 million in the year ago period.  GAAP gross margin for the fourth quarter of 2015 was 68% compared to 65% for the fourth quarter of 2014. Non-GAAP gross margin was 73% for the fourth quarter of 2015, compared to 69% for the same period last year.

  • Operating Loss: GAAP operating loss for the fourth quarter of 2015 was $25.0 million compared to a loss of $14.4 million during the fourth quarter last year.  Non-GAAP operating loss for the fourth quarter of 2015 was $3.0 million compared to a loss of $2.0 million for the same period last year.

  • Net Loss: GAAP net loss for the fourth quarter of 2015 was $31.4 million or $0.77 per share based on 40.5 million weighted average shares outstanding.  This compares to a GAAP net loss of $17.4 million or $0.45 per share based on 38.3 million weighted average shares outstanding in the prior-year period.

    Non-GAAP net loss for the fourth quarter of 2015 was $4.4 million or $0.11 per share based on 40.5 million weighted average shares outstanding.  This compares to a non-GAAP net loss of $3.6 million or $0.09 per share based on 38.3 million weighted average shares outstanding during the same period last year.


  • Adjusted EBITDA: Adjusted EBITDA for the fourth quarter of 2015 was $0.6 million compared to $0.5 million for the fourth quarter of 2014.

  • Cash and Cash Flow: As of December 31, 2015, Proofpoint had cash, cash equivalents and short term investments of $406.2 million, a decrease of $10.2 million from the end of the prior quarter primarily due to the cash used for an acquisition.

    The company generated $8.1 million in net cash from operations for the fourth quarter of 2015 compared to $15.5 million during the fourth quarter of 2014. The company generated $0.4 million in free cash flow for the quarter compared to $10.9 million during the same period last year.


"We were very pleased with our results for the fourth quarter, capping off another great year for the company," stated Paul Auvil, chief financial officer of Proofpoint.  "During 2015, we delivered full year billings and revenue growth of 39% and 36%, respectively, and we more than tripled free cash flow over the prior year."

Full Year 2015 Financial Highlights

  • Revenue: Total revenue for the full year of 2015 was $265.4 million, an increase of 36%, compared to $195.6 million in 2014.   

  • Billings: Total billings were $324.3 million for the full year of 2015, an increase of 39% compared to 2014. 

  • Gross Profit: GAAP gross profit for the full year of 2015 was $181.3 million compared to $129.9 million for 2014.  Non-GAAP gross profit for the full year of 2015 was $194.5 million compared to $137.1 million for 2014.  GAAP gross margin for the full year of 2015 was 68% compared to 66% for 2014. Non-GAAP gross margin was 73% for the full year of 2015, compared to 70% for 2014.

  • Operating Loss: GAAP operating loss for the full year of 2015 was $85.9 million compared to a loss of $51.1 million during 2014.  Non-GAAP operating loss for the full year of 2015 was $8.1 million, compared to a loss of $9.5 million during 2014.

  • Net Loss: GAAP net loss for the full year of 2015 was $106.5 million or $2.68 per share based on 39.8 million weighted average shares outstanding.  This compares to a GAAP net loss of $64.2 million or $1.72 per share based on 37.4 million weighted average shares outstanding in 2014.

    Non-GAAP net loss for the full year of 2015 was $13.9 million or $0.35 per share based on 39.8 million weighted average shares outstanding.  This compares to a loss of $15.0 million or $0.40 per share based on 37.4 million weighted average shares outstanding for 2014.

  • Adjusted EBITDA: Adjusted EBITDA for the full year of 2015 was $4.6 million compared to negative $0.5 million for 2014.

  • Cash Flow: The company generated $45.5 million in net cash from operations for the full year of 2015 compared to generating $21.3 million during 2014.  The company generated $19.7 million in free cash flow for the full year of 2015 compared to $6.3 million during 2014.


A reconciliation of GAAP to non-GAAP financial measures has been provided in the financial tables included in this press release.  An explanation of these measures and how they are calculated are also included below under the heading "Non-GAAP Financial Measures."

Fourth Quarter and Recent Business Highlights:

  • We ended 2015 with over 1,100 active, paying TAP customers, almost doubling since the first quarter of 2015.

  • Announced a partnership with Palo Alto Networks whereby the companies have collaborated to provide customers with extended protection from and intelligence into the sophisticated attacks targeting users, data, and content via email and social media.

  • Chosen as the exclusive partner for Intel Security customers as they end-of-life their email security product line.

  • Launched the industry's first Instagram security solution which automatically identifies Instagram security threats, compliance violations and inappropriate content for removal.   

  • Positioned in the Leaders quadrant of Gartner's 2015 Magic Quadrant for Enterprise Information Archiving for the fourth consecutive year.

  • Acquired Socialware, a leading provider of social media compliance solutions.


Financial Outlook

As of January 28, 2016 Proofpoint is providing guidance for its first quarter and full year 2016 as follows:

  • First Quarter 2016 Guidance: Total revenue is expected to be in the range of $75.5 million to $76.5 million.  Billings are expected to be in the range of $90.0 million to $92.0 million.  Adjusted EBITDA loss is expected to be in the range of $0.5 million to $1.0 million.  Non-GAAP EPS loss is expected to be in the range of $0.14 to $0.15 based on approximately 41.0 million weighted average shares outstanding.  

  • Full Year 2016 Guidance: Total revenue is expected to be in the range of $345.0 million to $348.0 million.  Billings are expected to be in the range of $428.0 million to $431.0 million.  Adjusted EBITDA is expected to be in the range of $12.0 million to $14.0 million.  Non-GAAP EPS loss is expected to be in the range of $0.21 to $0.26 based on approximately 41.7 million weighted average shares outstanding.  Free cash flow, defined as operating cash flow less capital expenditures, is expected to be in the range of $31.0 million to $35.0 million, which assumes capital expenditures of $28.0 million to $30.0 million for the full year.


Quarterly Conference Call

Proofpoint will host a conference call today at 1:30 p.m. Pacific Time (4:30 p.m. Eastern Time) to review the company's financial results for the fourth quarter and full year ended December 31, 2015.  To access this call, dial (877) 741-4245 for the U.S. or Canada and (719) 325-4773 for international callers with conference ID #8909114.  A live webcast of the conference call will be accessible from the Investors section of Proofpoint's website at investors.proofpoint.com, and a recording will be archived and accessible at investors.proofpoint.com.  An audio replay of this conference call will also be available through February 11, 2016, by dialing (877) 870-5176 for the U.S. or Canada or (858) 384-5517 for international callers, and entering passcode #8909114.

About Proofpoint, Inc.

Proofpoint, Inc. (NASDAQ:PFPT) is a leading next-generation security and compliance company that provides cloud-based solutions for comprehensive threat protection, incident response, secure communications, social media security, compliance, archiving and governance. Organizations around the world depend on Proofpoint's expertise, patented technologies and on-demand delivery system. Proofpoint protects against phishing, malware and spam, while safeguarding privacy, encrypting sensitive information, and archiving and governing messages and critical enterprise information. More information is available at www.proofpoint.com.

Proofpoint is a trademark or registered trademark of Proofpoint, Inc. in the U.S. and other countries. All other trademarks contained herein are the property of their respective owners.

Forward-Looking Statements

This press release contains forward-looking statements that involve risks and uncertainties. These forward-looking statements include statements regarding momentum in the company's business, market position, future growth, market share and future financial results. It is possible that future circumstances might differ from the assumptions on which such statements are based. Important factors that could cause results to differ materially from the statements herein include: failure to maintain or increase renewals and increased business from existing customers and failure to generate increased business through existing or new channel partner relationships; uncertainties related to continued success in sales growth and market share gains; failure to convert sales opportunities into definitive customer agreements; risks associated with successful implementation of multiple integrated software products and other product functionality; competition, particularly from larger companies with more resources than Proofpoint; risks related to new target markets, new product introductions and innovation and market acceptance thereof; the ability to attract and retain key personnel; potential changes in strategy; risks associated with management of growth; lengthy sales and implementation cycles, particularly in larger organizations; the time it takes new sales personnel to become fully productive; unforeseen delays in developing new technologies and the uncertain market acceptance of new products or features; technological changes that make Proofpoint's products and services less competitive; security breaches, which could affect our brand; the impact of changes in foreign currency exchange rates; the effect of general economic conditions, including as a result of specific economic risks in different geographies and among different industries; risks related to integrating the employees, customers and technologies of acquired businesses; assumption of unknown liabilities from acquisitions; ability to retain customers of acquired entities; and the other risk factors set forth from time to time in our filings with the SEC, including our Quarterly Report on Form 10-Q for the quarter ended September 30, 2015, and the other reports we file with the SEC, copies of which are available free of charge at the SEC's website at www.sec.gov or upon request from our investor relations department.  All forward-looking statements herein reflect our opinions only as of the date of this release, and Proofpoint undertakes no obligation, and expressly disclaims any obligation, to update forward-looking statements herein in light of new information or future events.

Non-GAAP Financial Measures

We have provided in this release financial information that has not been prepared in accordance with GAAP. We use these non-GAAP financial measures internally in analyzing our financial results and believe they are useful to investors, as a supplement to GAAP measures, in evaluating our ongoing operational performance. We believe that the use of these non-GAAP financial measures provides an additional tool for investors to use in evaluating ongoing operating results and trends and in comparing our financial results with other companies in our industry, many of which present similar non-GAAP financial measures to investors. 

Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. Investors are encouraged to review the reconciliation of these non-GAAP financial measures to their most directly comparable GAAP financial measures below. As previously mentioned, a reconciliation of our non-GAAP financial measures to their most directly comparable GAAP measures has been provided in the financial statement tables included below in this press release.

Non-GAAP gross profit and gross margin. We define non-GAAP gross profit as GAAP gross profit, less stock-based compensation expense and the amortization of intangibles associated with acquisitions. We define non-GAAP gross margin as non-GAAP gross profit divided by GAAP revenue. We consider these non-GAAP financial measures to be useful metrics for management and investors because they exclude the effect of stock-based compensation expense and the amortization of intangibles associated with acquisitions so that our management and investors can compare our recurring core business operating results over multiple periods. There are a number of limitations related to the use of non-GAAP gross profit and non-GAAP gross margin versus gross profit and gross margin, in each case, calculated in accordance with GAAP. For example, stock-based compensation has been and will continue to be for the foreseeable future a significant recurring expense in our business. Stock-based compensation is an important part of our employees' compensation and impacts their performance. In addition, the components of the costs that we exclude in our calculation of non-GAAP gross profit and non-GAAP gross margin may differ from the components that our peer companies exclude when they report their non-GAAP results.  Management compensates for these limitations by providing specific information regarding the GAAP amounts excluded from non-GAAP gross profit and non-GAAP gross margin and evaluating non-GAAP gross profit and non-GAAP gross margin together with gross profit and gross margin calculated in accordance with GAAP.

Non-GAAP operating loss. We define non-GAAP operating loss as operating loss less stock-based compensation expense and the amortization of intangibles and costs associated with acquisitions and litigation. We consider this non-GAAP financial measure to be a useful metric for management and investors because they exclude the effect of stock-based compensation expense and the amortization of intangibles and costs associated with acquisitions and litigation so that our management and investors can compare our recurring core business operating results over multiple periods. There are a number of limitations related to the use of non-GAAP operating loss versus operating loss calculated in accordance with GAAP. For example, as noted above, non-GAAP operating loss excludes stock-based compensation expense. In addition, the components of the costs that we exclude in our calculation of non-GAAP operating loss may differ from the components that our peer companies exclude when they report their non-GAAP results of operations. Management compensates for these limitations by providing specific information regarding the GAAP amounts excluded from non-GAAP operating loss and evaluating non-GAAP operating loss together with operating loss calculated in accordance with GAAP.

Non-GAAP net loss. We define non-GAAP net loss as net loss less stock-based compensation expense and the amortization of intangibles and costs associated with acquisitions and litigation, and non-cash interest expense related to the convertible debt discount and issuance costs for the convertible debt offering. We consider this non-GAAP financial measure to be a useful metric for management and investors for the same reasons that we use non-GAAP operating loss. However, in order to provide a complete picture of our recurring core business operating results, we also exclude from non-GAAP net loss the tax effects associated with stock-based compensation and the amortization of intangibles and costs associated with acquisitions and litigation, and non-cash interest expense related to the convertible debt discount and issuance costs for the convertible debt offering. We used a 5 percent effective tax rate to calculate non-GAAP net loss for the fourth quarter of 2015 and 3 percent for the fourth quarter of 2014. We believe that a 6-10% effective tax rate range is a reasonable estimate of the near-term normalized tax rate under our current global operating structure. The same limitations described above regarding our use of non-GAAP operating loss also apply to our use of non-GAAP net loss.

Billings. We define billings as revenue recognized plus the change in deferred revenue from the beginning to the end of the period, but excluding additions to deferred revenue from acquisitions. We consider billings to be a useful metric for management and investors because billings drive deferred revenue, which is an important indicator of the health and visibility of our business, and has historically represented a majority of the quarterly revenue that we recognize. There are a number of limitations related to the use of billings versus revenue calculated in accordance with GAAP. Billings include amounts that have not yet been recognized as revenue, but exclude additions to deferred revenue from acquisitions. We may also calculate billings in a manner that is different from other companies that report similar financial measures. Management compensates for these limitations by providing specific information regarding GAAP revenue and evaluating billings together with revenues calculated in accordance with GAAP.

Adjusted EBITDA. We define adjusted EBITDA as net loss, adjusted to exclude: depreciation, amortization of intangibles, interest income (expense), net, provision for income taxes, stock-based compensation, acquisition- and litigation-related expense, other income (expense), net. We believe that the use of adjusted EBITDA is useful to investors and other users of our financial statements in evaluating our operating performance because it provides them with an additional tool to compare business performance across companies and across periods. We use adjusted EBITDA in conjunction with traditional GAAP operating performance measures as part of our overall assessment of our performance, for planning purposes, including the preparation of our annual operating budget, to evaluate the effectiveness of our business strategies and to communicate with our board of directors concerning our financial performance. We do not place undue reliance on adjusted EBITDA as our only measure of operating performance. Adjusted EBITDA should not be considered as a substitute for other measures of financial performance reported in accordance with GAAP. There are limitations to using this non-GAAP financial measure, including that other companies may calculate this measure differently than we do, that it does not reflect our capital expenditures or future requirements for capital expenditures and that it does not reflect changes in, or cash requirements for, our working capital.

Free cash flow. We define free cash flow as net cash provided by operating activities minus capital expenditures. We consider free cash flow to be a liquidity measure that provides useful information to management and investors about the amount of cash generated by the business that, after the acquisition of property and equipment, can be used for strategic opportunities, including investing in our business, making strategic acquisitions, and strengthening the balance sheet. Analysis of free cash flow facilitates management's comparisons of our operating results to competitors' operating results. A limitation of using free cash flow versus the GAAP measure of net cash provided by operating activities as a means for evaluating our company is that free cash flow does not represent the total increase or decrease in the cash balance from operations for the period because it excludes cash used for capital expenditures during the period. Management compensates for this limitation by providing information about our capital expenditures on the face of the cash flow statement and in the "Management's Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources" section of our quarterly and annual reports filed with the SEC.

Proofpoint, Inc.
Consolidated Statements of Operations
(In thousands, except per share amounts)
(Unaudited)
         
         
  Three Months Ended
December 31,
 Twelve Months Ended
December 31,
   2015   2014   2015   2014 
Revenue:        
Subscription $72,472  $52,770  $257,329  $187,527 
Hardware and services  2,467   3,424   8,068   8,080 
Total revenue  74,939   56,194   265,397   195,607 
Cost of revenue:(1)(2)        
Subscription  20,374   14,841   71,746   53,136 
Hardware and services  3,518   4,602   12,312   12,543 
Total cost of revenue  23,892   19,443   84,058   65,679 
Gross profit  51,047   36,751   181,339   129,928 
Operating expense:(1)(2)        
Research and development  20,092   14,203   74,459   51,903 
Sales and marketing  45,157   29,795   156,156    102,455 
General and administrative  10,827   7,194   36,616   26,679 
Total operating expense  76,076   51,192   267,231   181,037 
Operating loss  (25,029)  (14,441)  (85,892)  (51,109)
Interest expense  (5,912)  (2,828)  (18,000)  (11,213)
Other expense, net  (292)  (858)  (1,927)  (2,230)
Loss before (provision for) benefit from income taxes  (31,233)  (18,127)  (105,819)  (64,552)
(Provision for) benefit from income taxes  (142)  753   (635)  313 
Net loss $(31,375)  $(17,374) $(106,454) $(64,239)
Net loss per share, basic and diluted $(0.77) $(0.45) $(2.68) $(1.72)
Weighted average shares outstanding, basic and diluted  40,531   38,265   39,787   37,381 
         
(1)  Includes stock‑based compensation expense as follows:         
Cost of subscription revenue $1,408  $766  $5,028  $2,404 
Cost of hardware and services revenue  324   173   1,098   604 
Research and development  5,110   2,721   20,672   10,204 
Sales and marketing  6,016   3,632   21,511   10,795 
General and administrative  3,379    1,915   11,785   6,997 
Total stock-based compensation expense $16,237  $9,207  $60,094   $31,004 
(2)  Includes intangible amortization expense as follows:        
Cost of subscription revenue $2,165  $1,244  $7,079  $4,157 
Research and development  22   23   91   93 
Sales and marketing  1,235   1,192   5,074   4,494 
General and administrative  -   12   12   46 
Total intangible amortization expense $3,422  $ 2,471  $12,256  $8,790 


Proofpoint, Inc.
Consolidated Balance Sheets
(In thousands, except per share amounts)
(Unaudited)
     
  December 31, December 31,
   2015   2014 
Assets    
Current assets:    
Cash and cash equivalents $346,205   $180,337 
Short-term investments  60,032   34,649 
Accounts receivable, net  54,522   40,912 
Inventory  485   499 
Deferred product costs  2,228   1,847 
Prepaid expenses and other current assets  5,695    7,994 
Total current assets  469,167   266,238 
Property and equipment, net  34,501   18,718 
Deferred product costs  314   307 
Goodwill  133,769   107,504 
Intangible assets, net  41,330   27,086 
Other assets  3,733   4,163 
Total assets $682,814  $424,016 
Liabilities and Stockholders' Equity    
Current liabilities:    
Accounts payable $14,081  $9,249 
Accrued liabilities  35,053   24,220 
Equipment loans and capital lease obligations  32   695 
Deferred rent  496   569 
Deferred revenue  182,195   123,550 
Total current liabilities  231,857   158,283 
Convertible senior notes  345,699    161,396 
Long-term capital lease obligations  123   - 
Long-term deferred rent  2,033   2,099 
Other long term liabilities  1,188   6,640 
Long-term deferred revenue  41,531   39,125 
Total liabilities  622,431   367,543 
      
Stockholders' equity    
         
Common stock, $0.0001 par value; 200,000 shares authorized at December 31, 2015 and 2014; 40,840 and 38,665 shares issued and outstanding at December 31, 2015 and 2014, respectively  4   4 
Additional paid-in capital  441,104   330,744 
Accumulated other comprehensive loss  (23)  (27)
Accumulated deficit   (380,702)  (274,248)
Total stockholders' equity  60,383   56,473 
Total liabilities and stockholders' equity $682,814  $424,016 


Proofpoint, Inc.
Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
         
  Three Months Ended
December 31,
 Twelve Months Ended
December 31,
   2015   2014   2015   2014 
Cash flows from operating activities        
Net loss $(31,375) $(17,374) $(106,454) $(64,239)
Adjustments to reconcile net loss to net cash provided by operating activities:        
Depreciation and amortization  6,960   4,984   24,900   17,823 
Loss on disposal of property and equipment  38   2   162   2 
Amortization of investment premiums, net of accretion of purchase discounts  12   182   103   312 
Provision for allowance for doubtful accounts  27   84   (231)  175 
Stock‑based compensation  16,237   9,207   60,094   31,004 
Change in fair value of contingent earn-outs  -   -   -   5 
Amortization of debt issuance costs and accretion of debt discount  5,022   2,234    14,933   8,753 
Changes in assets and liabilities:        
Accounts receivable  (16,010)  (8,006)  (12,117)  (14,666)
Inventory  353   798   14   328 
Deferred products costs  90   (17)  (388)  (791)
Prepaid expenses  181   411   (1,829)  (945)
Other current assets  (519)  1,004   104   (351)
Deferred income taxes  153   (695)  509   (691)
Noncurrent assets  2    15   47   (23)
Accounts payable  4,633   1,416   2,460   189 
Accrued liabilities  (486)  1,879   4,448   3,995 
Earn-out payment  -   -   -   (13)
Deferred rent  164   635   (165)  2,315 
Deferred revenue  22,570   18,692   58,951   38,093 
Net cash provided by operating activities  8,052   15,451   45,541   21,275 
Cash flows from investing activities        
Proceeds from sales and maturities of short-term investments  4,597    3,353   39,056   11,353 
Purchase of short-term investments  (16,459)  -   (64,537)  (37,805)
Purchase of property and equipment  (7,700)  (4,593)  (25,827)  (14,988)
Acquisitions of business, net of cash acquired  (11,499)  (31,645)  (51,553)  (53,680)
Net cash used in investing activities  (31,061)  (32,885)  (102,861)  (95,120)
Cash flows from financing activities        
Proceeds from issuance of common stock  6,702   5,900    18,583   17,640 
Withholding taxes related to restricted stock net share settlement  (5,652)  (2,331)  (18,108)  (4,170)
Payments of debt issuance costs  -   -   (371)  (191)
Proceeds from issuance of convertible senior notes
  -   -   223,790   - 
Repayments of equipment loans and capital lease obligations  (7)  (415)  (706)  (1,655)
Holdback payments for prior acquisitions  -   -   -   (741)
Earn-out payment  -   -   -   (487)
Net cash provided by financing activities  1,043   3,154   223,188   10,396 
Net increase (decrease) in cash and cash equivalents  (21,966)  (14,280)  165,868   (63,449)
Cash and cash equivalents        
Beginning of period  368,171   194,617   180,337   243,786 
End of period $346,205  $180,337  $346,205  $180,337 


Reconciliation of Non-GAAP Measures
(In thousands, except per share amounts)
(Unaudited)
         
  Three Months Ended Twelve Months Ended
  December 31, December 31,
   2015   2014   2015    2014 
         
GAAP gross profit $51,047  $36,751   $181,339  $129,928 
GAAP gross margin  68%  65%  68%  66%
Plus:        
Stock-based compensation expense   1,732   939   6,126   3,008 
Intangible amortization expense  2,165   1,244   7,079   4,157 
Non-GAAP gross profit  54,944   38,934   194,544   137,093 
Non-GAAP gross margin  73%  69%  73%  70%
         
GAAP operating loss  (25,029)  (14,441)  (85,892)  (51,109)
Plus:        
Stock-based compensation expense  16,237   9,207   60,094   31,004 
Intangible amortization expense  3,422   2,471   12,256   8,790 
Acquisition-related expenses  360   233   911   612 
Litigation-related expenses  2,045   514   4,577   1,175 
Non-GAAP operating loss  (2,965)  (2,016)  (8,054)  (9,528)
         
GAAP net loss  (31,375)  (17,374)  (106,454)  (64,239)
Plus:         
Stock-based compensation expense  16,237   9,207   60,094   31,004 
Intangible amortization expense  3,422   2,471   12,256   8,790 
Acquisition-related expenses  360   233   911   612 
Litigation-related expenses  2,045   514   4,577   1,175 
Interest expense - debt discount and issuance costs  5,022   2,234   14,933   8,753 
Income tax benefit  (70)  (857)  (181)  (1,066)
Non-GAAP net loss  (4,359)  (3,572)  (13,864)  (14,971)
         
         
Shares used in computing non-GAAP net loss per share, basic and diluted  40,531   38,265   39,787   37,381 
         
Non-GAAP net loss per share, basic and diluted $(0.11) $(0.09) $(0.35) $(0.40)


Reconciliation of Net Loss to Adjusted EBITDA
(In thousands)
(Unaudited)
         
  Three Months Ended Twelve Months Ended
  December 31, December 31,
    2015   2014   2015   2014 
         
Net loss $(31,375) $(17,374) $(106,454) $(64,239)
Depreciation  3,538   2,512   12,644    9,033 
Amortization of intangible assets  3,422   2,471   12,256   8,790 
Interest expense  5,912   2,828    18,000   11,213 
Provision for (benefit from) income taxes  142   (753)  635   (313)
EBITDA $(18,361) $(10,316) $(62,919) $(35,516)
         
Stock-based compensation expense $16,237  $9,207  $60,094  $31,004 
Acquisition-related expenses  360   233   911   612 
Litigation-related expenses  2,045   514   4,577   1,175 
Other expense, net  292   858   1,927   2,230 
Adjusted EBITDA $573  $496  $4,590  $(495)
          
         
Reconciliation of Total Revenue to Billings
(In thousands)
(Unaudited)
         
  Three Months Ended Twelve Months Ended
  December 31, December 31,
   2015    2014   2015   2014 
         
Total revenue $74,939  $56,194  $265,397  $195,607 
          
Deferred revenue        
Ending  223,726   162,675   223,726   162,675 
Beginning  199,756   143,384    162,675   123,983 
Net Change  23,970   19,291   61,051   38,692 
Less:        
Deferred revenue contributed by acquisitions  (1,400)  (600)  (2,100)   (600)
Billings $97,509  $74,885  $324,348  $233,699 


Reconciliation of GAAP Cash Flows from Operations to Free Cash Flows
(In thousands)
(Unaudited)
         
  Three Months Ended Twelve Months Ended
  December 31, December 31,
   2015    2014   2015   2014 
         
GAAP cash flows provided by operating activities $8,052  $15,451  $45,541  $21,275 
Less:        
Purchases of property and equipment  (7,700)  (4,593)  (25,827)  (14,988)
Non-GAAP free cash flows $352  $10,858  $19,714  $6,287 


MEDIA CONTACT:

PATRICIA HOGAN

PROOFPOINT, INC.

408-763-3863

PHOGAN@PROOFPOINT.COM



INVESTOR CONTACT:

SETH POTTER

ICR, INC. FOR PROOFPOINT, INC.

646-277-1230

SETH.POTTER@ICRINC.COM 

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Source: Proofpoint, Inc.

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