Riding High: Zix Corp.

(RTTNews) - Email is one of the most widely used communication tools in any business. As you may know, email is prone to many security risks like spam, malware, phishing, data breaches, and hacking, to name a few. According to the FBI, over $3 billion has been stolen in the past three years from business email compromise scams.

The Company we are profiling today is Zix Corp. (ZIXI), a leader in email security, which focuses on the protection of business communication.

Zix offers easy-to-use solutions for email encryption and data loss prevention, and email mobile security to the nation's most influential institutions in healthcare, finance and government.

Zix operates as a 100% subscription-based business model, wherein the cash is collected from customers upfront annually. The Company has over 19,000 customers.

The Company's products include Zix Email Encryption, ZixQuarantine and ZixOne, which are sold through a direct sales force that focuses on larger businesses and a telesales force that focuses on small to medium-sized businesses. Zix also uses a network of resellers and other distribution partners to sell its products. Google continues to be Zix's largest third party reseller.

Revenue retention is important to drive revenue growth and strong customer renewal rate is very much needed for a profitable growth. Zix has a strong renewal rate with roughly 90% revenue retention.

A look at Zix's balance sheet over the past 3 years shows that its revenue and net income has increased year-over-year.

In the first quarter ended March 31, 2017, the Company's net income was $1.8 million or $0.03 per share on revenue of $15.9 million. This compared with a net income of $1.6 million or $0.03 per share and revenue of $14.3 million in the year-ago quarter. Non-GAAP earnings per share increased to $0.07 in the first quarter of 2017, up 14% over the comparable year-ago quarter.

The Company's *annual contract value in Q1, 2017 increased 11% to a record $64.4 million. *Annual Contract Value is the average annualized revenue per customer contract, excluding any one time fees. (Source: Baremetrics).

As it continues to secure new customer orders and add-ons for both additional licenses and new products, the Company is confident of future growth.

For the second quarter of 2017, Zix has forecast revenue to range between $16.1 million and $16.4 million, representing an increase of 8% to 10% year-over-year. GAAP earnings per share are expected to be in a range of $0.02 and $0.03, and non-GAAP earnings per share to be $0.06 for the second quarter 2017.

Looking ahead to full year 2017, the Company expects revenue to range between $66.2 million and $66.7 million, representing an increase of 10% to 11% compared to 2016. GAAP earnings per share are forecast to be between $0.10 and $0.12, and non-GAAP earnings per share guidance are anticipated to be of $0.28 for this year.

As of March 31, 2017, the Company had cash of $23.4 million and no debt.

Shares of Zix, which touched a 52-week high of $6.44 on June 8, 2017, have gained more than 26% year-to-date. The stock closed Friday's (June 9) trading at $6.26, down 1.42%.

Can the Company's high-margin predictable business model, healthy balance sheet and a strong outlook for revenue growth and market share expansion continue to drive its stock price higher?