Zix Corporation
Q1 2017 Earnings Call Transcript

Published: 26 Apr 2017

[Operator:]

Good day ladies and gentleman and welcome to Zix Corporation's First Quarter 2017 Earnings Conference Call. At this time all participants are in a listen only mode. Later we will conduct a question and answer session and instructions will follow at that time. [Operator Instructions] As a reminder this conference call is being recorded. Now, I would now like to turn the conference over to Geoff Bibby, Vice President of Marketing. Sir, you may begin.

[Geoff Bibby:]

Thank you. Good afternoon, everyone, and thank you for joining our first quarter 2017 earnings conference call. With me today is our CEO, Dave Wagner; and our CFO, Dave Rockvam. After the market closed, we issued a press release announcing our results for the first quarter ended March 31, 2017, a copy of which is available in the Investor Relations section of our Web site at www.zixcorp.com. Please note that 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 risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. It’s important to note also that the company undertakes no obligation to update such statement. We caution you to consider risk factors that could cause actual results to differ materially from those in the forward-looking statements contained in today’s press release and in this conference call. The Risk Factors section of our most recent Form 10-K filing with the SEC provides examples of those risks. During the call, we’ll 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 GAAP to non-GAAP measures is included in today's press release, which can be found in the Investor Relations section of our Web site. Now with that, I would like to turn the call over to Dave Wagner for his opening remarks. Dave?

[Dave Wagner:]

Thanks, Geoff. Good afternoon and thank you everyone for joining us today. I'm particularly pleased with the team's performance in the first quarter. We delivered strong financial results, completed a strategic acquisition and launched a major new product all in the last 90 days. During today's Dave and I will update you on each of our financial highlights, but at a high level, revenue in the first quarter came in at a record $15.9 million an 11% increase from Q1 last year. Adjusted EBITDA of $4.5 million represents a 28% of revenue and was up 9% from a year ago and New First Year Orders of $2.1 million also increased 9% from Q1 last year. In addition to these strong financial results in mid-March we announced the acquisition of Greenview Data, an email security company for approximately $6.5 million in cash. Since 2001, Greenview Data have organically build its own industry leading platform of advanced threat protection, anti-spam, anti-virus and archiving solutions. Over that time Greenview Data has garnered an expanding base of 4,000 customers and has developed a strong reputation for providing unparalleled technical support. Their business is extremely complimentary to Zix's existing solution. In fact Greenview has been reselling our industry leading email encryption solutions to their customer base for the past 10 years. We are very pleased to add the Greenview Data teams to Zix's family. Greenview Data will continue to sell their solutions through their existing channels product seeable future. And most impressive accomplishment in the quarter might be that in just 33 days following the acquisition, our collected teams worked closely together to launch our newest offering ZixProtect. ZixProtect leverages multilayer filtering technique to protect organization against zero-day malware, ransomware, phishing, spam, and viruses in email. ZixProtect is a cloud based solution that is commercial available in three bundle ZixProtect Essential, Plus and Premium. The Board also announced a $10 million share repurchase program earlier today. What I hope the Q1 accomplishments demonstrates to you is the company's commitment to investing in profitable growth in a balanced way. A way that balances organic growth initiatives, acquisition and share repurchases to achieve the next stage of Zix's profitable growth. I would now like to turn the call over to Dave Rockvam to provide more details on the financials for the quarter, then I’ll return to provide a brief update on our progress on the seven pillars as well as more detail on the Greenview Data acquisition and ZixProtect.

[Dave Rockvam:]

Thank you, Dave, and good afternoon everyone. In addition to the operational milestones we achieved during Q1, we generated another period of solid financial results. As demonstrated by our record revenue in annual contract value and increased cash flow from a year ago. This combination continues to guide us on our journey as a profitable growth company. Turning to our financial numbers in more detail. As Dave mentioned, revenue for the first quarter increased 11% to $15.9 million from $14.3 million in the same quarter last year. Q1 revenue exceeded our revenue guidance and represented at the highest level of quarterly revenue recorded in the Company’s history. The primary drivers for the increase in revenue were new customer orders and add-on sales to existing customers. In particular, the continued successful attach rate of our ZixQuarantine and ZixInsight products and the migration of new and existing customers to our cloud encryption solution drove the growth. We are also able to recognize approximately $100,000 of revenue in the quarter from Greenview Data. New First Year Orders for the quarter were up 9% to 2.1 million from $1.9 million in Q1 of last year. The increase was primarily due to the continued success of our direct and reseller channels which were up 15% over the first quarter of last year. We did recognize a very small amount of New First Year Orders from Greenview Data in the quarter. Turning to our expenses. We encourage you to reference today’s full earnings release which is posted on our website for further details, including a reconciliation of the GAAP to non-GAAP results, which exclude non-cash tax expense, non-cash stock-based compensation expense and expenses related to litigation. I would also like to point out that Q1 expenses included half a month of Greenview Data expenses. Our adjusted gross profit for the quarter was $13.1 million or 82.7% of total revenues. This was an improvement from $11.9 million or 82.7% of total revenue in the first quarter of 2016. In Q2, we will experience an increase in cost of sales due to the addition of a full quarter of cost associated with Greenview Data, which comprises a large portion of their total costs. Our adjusted R&D expenses for the first quarter of 2017 were $2.3 million or 14.7% of total revenue compared to $2.1 million or 14.7% of total revenue in the first quarter of last year. The increase in adjusted R&D expenses was due to continued investment in our core encrypted email solution, particularly towards enhancing our rapidly growing hosted service and centralized management platform. Our adjusted selling and marketing expenses for the quarter were $5 million or 31.3% of total revenue compared to $4.3 million or 29.7% reported in Q1 of last year. The increase in adjusted selling and marketing expenses for the quarter was primarily due to the investments we made for our company rebrand and the implementation of our customer success model which emphasizes improved customer retention and satisfaction. For the first quarter of 2017, our adjusted general and administrative expenses were $2 million or 12.8% of total revenue compared to $2 million or 13.8% of total revenue reported in Q1 of last year. Regarding income taxes, we expect to continue reporting income tax expense consistent with the amount for last year, resulting in an effective GAAP tax rate of approximately 35% for the first quarter. This expense is largely non-cash due to our NOLs. Going forward, we expect the cash component of our taxes to remain in line with prior quarters. On a GAAP basis, we generated net income for the first quarter of $1.8 million or $0.03 for a fully diluted share, which was insistent with the amount we reported in Q1 of last year. Our first quarter non-GAAP adjusted net income was $3.7 million or $0.07 per fully diluted share. $0.07 per share was higher than our guidance for the period and was up 14% from the amount we reported in Q1 of last year. And finally, our adjusted EBITDA for Q1 2017 totaled $4.5 million which was up 9% from the $4.1 million we reported in Q1 of last year. As a percentage of total revenue, adjusted EBITDA for the quarter declined slightly from 28.6% to 28.1%. We expect our adjusted EBITDA margin, though higher in recent quarters, to move closer to 25% in the second quarter as we incorporate a four quarter of Greenview Data expense in your P&L while not getting full credit for their revenue. EBITDA percentage should move back toward our 2016 level in the fourth quarter of this year. Our 2017 operating model includes approximately $2.5 million of depreciation. Cash flow from operations for the first quarter of 2017 was $4.1 million. We continue to maintain the strong balance sheet with $23.4 million in cash and no debt. And our CapEx for the quarter was $463,000. Our backlog, which represents the dollar value of committed contracts, was $78.9 million as of March 31, 2017, which was up $3.4 million or 5% compared to the same date last year. Of this amount, we expect to recognize approximately $45 million or 57% as revenue over the next 12 months. At the end of the first quarter, our ACV or Annual Contract Value totaled a record $64.1 million, up 10% from Q1 of last year. From an industry perspective, the breakdown of our ACV was 50% from healthcare, 28% from financial services, 7% from government and 15% from other verticals. Now breaking down ACV by product. ZixQuarantine and ZixInsight, our data loss prevention products, accounted for more than $1.7 million of ACV, which was up 73% from Q1 of last year. ZixOne, our bring-your-own-device security product, accounted for nearly $1.2 million of total ACV and was up 13% year-over-year. And finally, the remainder of our email protection suite accounted for the remaining $61.2 million of the total ACV. Given our shift to selling bundled offerings which Dave discussed earlier, we do not plan on breaking out ACV by product going forward. However, we will continue to report total ACV as we feel it is an important SaaS metrics to demonstrate our continued growth. Shifting gears to our financial outlook for the second quarter ending June 30. We currently anticipate revenue to range between $16.1 million and $16.4 million, representing an increase of 8% to 10% compared to Q2 of last year. We are forecasting fully diluted GAAP earnings per share to be between $0.02 and $0.03 and fully diluted non-GAAP adjusted earnings per share to be $0.06. The slightly lower EPS forecasted for Q2 again has to do with the inclusion of the full quarter or Greenview Data expenses, while we're not able to recognize the full value of the businesses revenue. Based on our operational momentum and current pipeline of business, along with the acquisition of Greenview Data, we’re increasing our revenue guidance for 2017 to range between $66.2 million and $66.7 million. This represents an increase of 10% to 11% compared to the revenue in fiscal 2016. As a reminder, the revenue range in our 2017 full year guidance is predicated on our ability to continue to win new customers, maintain healthy renewal rates and execute on the Greenview Data acquisition. We're also refining our fully diluted GAAP earnings per share guidance to be between $0.10 and $0.12. And reiterating fully diluted non-GAAP adjusted earnings per share to be $0.28 for fiscal 2017. This completes my financial summary. For a more detailed analysis of our financial results, please reference our Form 10-Q, which we plan to file by May 8th. Dave?

[Dave Wagner:]

Thanks for the financial preview, Dave. I would now like to take a moment to talk about the first quarter in relation to each of our seven growth pillars. The first pillar which is securing new customer orders to our direct and indirect sales channels was a leading driver of our strong results for Q1. Looking at our New First Year Orders breakdown for the quarter, 41% were delivered through our direct sales effort, 46% through borrowers and MSP, 9% from OEM partners and 4% from web sales. Pillar one, New First Year Orders growth was up 15% year-over-year, driven again primarily by success in our enterprise team. A quick review of our Top 5 new customer wins for the quarter will give you some insights into what's driving pillar number one. Our Top 5 new customers included three healthcare company, a university and a technology solutions company. Three of the five were not currently using email encryption in a meaningful way, two of the five were competitive displacements. Like last quarter, ease-of-use was a primary reason we were able to displace the competition. This quarter, there was also a customer focus on the quality of our Lexicons which was a key factor and helping us to three of the five top new customer wins. Our [indiscernible] were especially important to the university. Overall, we continued to be the preferred email encryption solutions for firms who care about their patient and their consumer's data and about their end users experience. Turning to our second pillar which is to accelerate growth to our key channel partnerships with Google and Cisco, as I mentioned earlier OEMs contributed only 9% of New First Year Orders during Q1 compared to the contribution of 16% in the year ago period. The decline was mainly due to our large customer order placed through one of our OEM in Q1 of last year which has renewed, but which was not replicated and therefore impacts the year-over-year comparison of New First Year Orders. Despite the slow progress of each of this partnership we did, experience from positive milestones both with Cisco and Google during Q1 which collectively suggests that we can drive more meaningful results from these partnerships going forward. Looking first at Cisco, we are seeing good pipeline build as a result of the side-by-side selling efforts with Cisco's security account managers. In Q1 we won a very large insurer in Singapore. This was a five year, six figure total order for Zix. But almost a seven-figure deal for the end distributors. This deal highlights to Cisco and our channel partner, the value providing ZCT for a best in class encryption solutions as part of the larger Cisco email protects in bundle. So despite the small number Cisco New First Year Orders were up year-over-year and we have developed increasing confidence in our strategy as the pipeline continues to build. Turning briefly to Google, we recently announced the newest version of Game, which strengthen email encryption for G Suite users by including automatics scanning as our trusted content filters. This should allow us to improve our win rates and retention rates with Google going forward. Pillar three and pillar four have to do with selling more seeds [ph] and more products into our case. ZixOne, ZixQuarantine and ZixInsight, all had solid quarters as Dave reported. We continue to be pleased with the attach rates we are seeing for these products. ZixQuarantine is now sold over 16% of our hosted accounts and our attach rate for ZixOne as a percentage of customers as opposed to seeds 11%. In total sales for existing customers accounted for approximately 40% of New First Year Orders which is very much in line with previous quarters. Up until now, we've talked about this add on solutions primarily in terms of serving a single purpose, with the launch of ZixProtect however our capabilities have expanded and we are bundling our offers as part of one comprehensive platform that addresses a broad range of email data protection need in one easy to use solution. As a result beginning next quarter we will being moving to using attach rate for product reporting. Moving to the fifth growth pillar, increasing our renewal rates. Time and again you've heard us talk about the importance of pillar five which is one of the three core elements of our customer success modeled, while we've enjoyed great success, in the past maintaining our core renewal rate above 90% we've failed to achieve this target for Q1 because we lost the Top 10 customers during the quarter. It's important to note that we did not lose this customer due to a lack of execution or a lack of Zix's email encryption capabilities. On the contrary, the customer recognized that our email encryption solution is the gold standard. However, they had an acute budgetary challenge to address a weakness with our incumbent anti-barrels, anti-spam solution. While switching [indiscernible] vendors as common in our customer base it's rare to see these results in customers also switching out of our email encryption solution, which is why we view this dropped below 90% as an anomaly, not a trend. Our sixth pillar is doing best in our core email encryption solutions. Our hosted customer base grew by 103% compared to the first quarter of 2016 which demonstrates the strong customer reception this platform has receiving. We are delivering substantial incremental value to our customers using our core email encryption solutions through several enhancements we made as export including multi-facts authentication [ph], rolling space to administration and single sign-on capabilities. We are also including a host of experience with improved policy management capability and enhanced reporting. Our customers shift to our cloud benefits us as we are able to create stronger customer relationships and drive higher attach rates for our products as we noted earlier. Looking ahead we will continues to innovate and enhanced the full capabilities of our platform and products suite to expand our market position in the broader email data protection space. Our seventh and last pillar relates to exploring English speaking international market that presents us with the attractive opportunities to continued driving profitable growth. I noted the international customer win with Cisco in Singapore, an English-speaking market. While Singapore is not on our core market list, this when does evident from success of our strategic and tends to leverage Cisco's access international market. In south Africa's specifically the enforcements of the Poppy Acts was delayed until at least December 2017, but our partner remains focused and they continue to build their pipeline, it's just building a little more slowing due to enforcement delay. So that's a brief update on our seven pillars, to allow us time to talk about our acquisition of Greenview Data and a rely it launch of ZixProtect. We are incredibly pleased with the acquisition of Greenview Data, as it represents a critical milestone in the advancement of the strategy that the leadership team and the board have been working on since I joined a little over a year-ago. As we mapped out on strategy to accelerate the growth of Zix for the long-term it became clear that to achieve our goals we needed to expand our total addressable market. We also needed to address the desire of our customers especially our smaller customers to buy an email protection bundled that includes not only email encryption DLP, but also messaging security for advance threats, malware and span protection as well as archiving. As we concluded our strategic intent work and began to focus on targets, Greenview Data quickly moved to the top of our list. Because they were an existing Zix partner, we knew that they had an existing integration between there platform and the Zix gateway for email encryption, we also knew that they had a strong reputation for providing brilliant customer [ph] support to their customers. As we looked closure, what we found even more compelling was there approach for preventing unwanted emails. They used a layered approach that is never relied on signature based technique to prevent email threats. And as a result they have a solution that is effective against advanced email threats like ransomware and phishing. Greenview Data adds 4,000 customers to our base, who are primarily sold through online channels targeted to small businesses. We plan to keep the sales of their existing products through their existing channel for the foreseeable future. But we will also increasingly up sell with other Zix products and we will be leveraging their online fulfillment channel for Zix products as well. Directly as result of the strong fit and the strong underlying technology of Greenview Data, we were able to collaborate and launch ZixProtect and ZixArchiving products within weeks of completing the acquisition. We’re very excited about this new product launch. As I mentioned during my opening remarks ZixProtect is a cloud base solution that's commercially available in three bundles. This bundling capability combined with the simplified per user pricing enables us to better respond to changing market dynamics. And will make it easier for customers and partners to do business with us. Although we are only one week into ZixProtect launch we're already seeing strong interest from both existing customer and new prospects and we already made our first sale. Our growth strategy for the remainder of the year will continue to be focused on executing on our seven growth pillars. Our results and accomplishment in the first quarter demonstrate the companies commitment to use a balanced approach to accelerate our profitable growth. We have a strong subscription based business that generates meaningful increasing cash flow, which we plan to continue to invest through a balanced capital allocation strategy that includes organic growth initiative, acquisitions that generate immediate benefits and synergies like Greenview Data and share repurchases as just announced again today. Taking all of this together we believe we're on track to achieve the next stage of the Zix's profitable growth. Now with that, we’re ready to open the call for your questions.

[Operator:]

Thank you. [Operator Instructions]. Our first question comes from Mike Malouf with Craig-Hallum. Your line is open.

[Mike Malouf:]

I'm wondering, it sounds like you got little bit of positive momentum coming out of Cisco, is this in a particular -- for a particular sales group or person over in Singapore or are you getting a pipeline that is pretty broad based, may be even here in the U.S.? Can you give us a --?

[Dave Wagner:]

That’s a great question Mike, what we’re seeing is really results of the shift we made last fall to line up and what I'm calling the side-by-side selling. And in the Singapore deal we did have a person, they assisted Cisco and the distributor in making that sale and that has that partner in that region of the world energized and better trained to presents the solution to customers in that region. But also obviously have more resources in the U.S. and so we are seeing more of the pipeline build back here in the United States.

[Mike Malouf:]

Okay great, it's good to see. And then you made a national tuck-in acquisition with Greenview and I am just wondering how is the landscape out there for further acquisitions, you have been at the helm for a while and I know you have been looking for this, other types of acquisitions, can you give us a little bit of color on that?

[Dave Wagner:]

Well, finding the right target takes time and attention and discipline and work. It takes first having a strategy that you're confident in, you can execute in. So that foundational work that we did as a team for the 9 or 10 months leading up to the process [indiscernible], that foundation work is really key. We think there is a way to continue a balanced strategy over the coming years to find nice tuck-in targets in our core markets and our outstanding markets including broader email protection landscape.

[Mike Malouf:]

Okay. And then just a final housekeeping, I think you said in your announcement on the Greenview Data acquisition that you expected 1.5 million of revenue, which would basically push the mid-point up by a 1.5 million, you move the mid-point up about 1.2 million, so probably a little bit of conservatism, but that move in the guidance, is that pretty much all related than to the Greenview acquisition?

[Dave Wagner:]

It is. It's shifting as we go through the year, we will continue to tighten at home the revenue guidance, so as we look at the -- we bring it in, go through all your different accounting that you have go through when you bring in a business especially one that's a subscription, we are really honing that in. So I would say yes, you are right on, its just kind of tightening that range a little bit.

[Mike Malouf:]

Okay great, thanks a lot for taking my questions.

[Operator:]

Thank you. Our next question comes from Joe Maxa, Dougherty & Company. Your line is open.

[Joe Maxa:]

Follow up on the Greenview, as I think about the revenue build for this year, the 1.2 million to 1.5 million something like that, that’s should sound like Greenview by itself and the true level would not include the synergies with you selling product, but you basically generated from them, what is ZixProtect and ZixArchive?

[Dave Wagner:]

So we've build what we believe is that constructive model, that would include our sales in-encryption business, our sales, margins in second half of year don’t contribute a lot to the revenue. So we have that -- we have our base plan build in and that was all. Everything we know is built into our guidance as Dave suggested and has little bit -- a tightening range where it was at the beginning of the quarter and it'll tightening up as we move through the year.

[Dave Rockvam:]

I think we're real pleased that after 33 days as Dave mentioned, we are able to; one, get them integrated in; but two, bill the launch the ZixProtect portfolio and get us moving quickly. And so as Dave said, the sales team is moving, we had our first sale already from the ZixProtect side, so that gets us up to a good start.

[Joe Maxa:]

What percent of their cost, you said the majority of it is in the cost of goods, so you are not seeing a ton of OpEx added to your business, can you give us a ballpark what we should be looking at for OpEx from Greenview or just a good base?

[Dave Rockvam:]

For the year, I think what you'll see is on gross margin will tick down just a couple of points and probably R&D will tick up a point, gross margin will tick downs to a more 81% and R&D will tick up to more between 15 and 16. So that's where most of the cost will end up residing. So as we said on the cash flow basis they would be neutral for this year to as given you the book -- the booking should flow in. So you're looking at an expense run rate of 2.8 million to 3 million in total, so once you get into a full-year with them.

[Joe Maxa:]

Right I see that okay. Can you talk a little bit more about that customer you lost, why you lost that customer again, the Top 10?

[Dave Wagner:]

Well we perceive it to be more of an anomaly where they had some sort of issue which we're not completely aware, don't have detail ADAF [ph] provider, they needed to free up budget and when they did that they went through a bundled solution even though when they had a lesser solution on email encryption side. So it was really a budgetary driver that drove them to have to move away from Zix.

[Joe Maxa:]

Right, got it that makes sense. And lastly I did notice that even though you had a good quarter, talking about New First Year Orders your total orders were down year-over-year was there anything unusual in that, any push outs or timing of orders I would guess, but I just wonder if there was an unusual we should be aware of?

[Dave Rockvam:]

Nothing unusual, a little bit on timing and then like you -- the one larger order would have been have been in there, so that's kinds of ties it out.

[Joe Maxa:]

So would have been a renewal in that piece okay?

[Dave Rockvam:]

Yes, it would have been a renewal in this quarter, so that's the one that would have made the difference there.

[Joe Maxa:]

Got it. Okay, thank you.

[Operator:]

Thank you. Our next question comes from Michael Kim with Imperial Capital. Your line is open.

[Michael Kim:]

You've talked a little about focusing increasing on bundle sales for new customers. I'm kind of curious if you provide feedback on how customers are budgeting for protection and encryption whether you've seen [technical difficulty] for lending spend or just, what the selling motion could look like?

[Dave Wagner:]

Yes, so as I mentioned the first thing our customer surveys and our customer base and the broader base suggested that if that specially in that corporate market under a 1,000 employee customers are increasingly looking for messaging security advanced threats ADAF [ph] bundled with their encryption vendor. So we have a strong indication that our base of customers would like to have that service. I think it also, as you alluded to makes us more competitive against the bundlers in the low end, where we are -- we have the full suite of solutions available as well. We're looking -- obviously -- initially, we would expect more sales into our installed base of customers who already know about our outstanding service and support, and want to take advantage of bundling in with us. And then as we position with new prospects, why I'm so pleased about the repacking we did as part of the product launch is we gone to a very simple per user pricing, no bands, just straight you buy 50 -- the 51st [ph] just costs a little bit more, so it goes right up. So it's very easy for our customers and for our channel partners to build out that quote and then it's very for our sales people to position good, better, best; ZixProtect with the ADAF advance malware protection, ZixProtect Plus, building in the email encryption capability and then ZixProtect Premium adds in our, what we previously called our, Lexicon then, ZixQuarantine and ZixInsight. So it makes it a much easier packaging sales and then on the side with any of the packages you get a discounted ability to buy Archiving and/or BYOD protection through ZixOne. So it makes that much easier for the sales people and the partners to position our product which we also think is going to make a nice different in our selling motion.

[Michael Kim:]

And as for that target audience or target customer base, do you have a sense, if were to fully penetrate the customer all the products and what the potential surprising opportunity could look like.

[Dave Wagner:]

Know that the first big thing is that it increases our TAM, so usually 1.6 billion of address form security gateway market. So you get that kind of eight-fold increase in our addressable market. The way we approach the customer base, we sell as you know the highest value, our encryption solutions, so we'll be looking more towards roughly a doubling or no less than a doubling of the total bundled price when we put everything together.

[Michael Kim:]

Got it and then some of the other email securities vendors talked rate escalation in business email compromise, the EC type of attached [ph], what do you see as the opportunity to that and any authentication, supports for DMRC [ph] authentication?

[Dave Wagner:]

So we'll be, as you would expect increasingly focused on building out the platform, from the Greenview test data technology. But the great thing is they've always approached email protection, they've always built in multi-layers as it would be very easy to add increasing capability like DMARC, as that technology becomes more wildly available and deployed, but it already does a really nice job of filtering out unwanted email and business email compromises causing or trying to cause somebody to make an action like an add or spam, so like filtering our those call to action, we already have some pretty good protection against those kinds of threats.

[Operator:]

Thank you. [Operator Instructions] I'm showing no further questions at time. I would like to turn the conference back over to Mr. Wagner for any closing remarks.

[Dave Wagner:]

I just want to thank everybody for your time and attention and support of Zix and I look forward to speaking to you in 90 days or so.

[Operator:]

Ladies and gentleman thank you for your participation in today's conference. This does conclude the program and you may now disconnect. Everyone have a great day.