Here's Why ZixCorp Shares Sank

ZixCorp reported modest growth in the first quarter but still troubles investors with its outlook. Find out whether this dip is a buying opportunity or a reason to avoid this stock altogether.

Apr 23, 2014 at 1:34PM

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of ZixCorp (NASDAQ:ZIXI), a provider of email encryption and data loss prevention software to government and the health care, financial, and insurance industries, dipped as much as 13% after the release of the company's first-quarter earnings results last night.

So what: For the quarter, ZixCorp reported a 3.4% increase in revenue to $12.2 million, with its backlog increasing 10.6% to $65.9 million, but new first-year orders also declining 5.3% to $2 million. Adjusted profit inched up by just 1.2% to $0.03 per share. By comparison, Wall Street was anticipating $12.3 million in revenue and $0.03 in EPS, so this was more or less in line. Where investors' shares were "bugged" was with regard to ZixCorp's second-quarter guidance. The company is calling for $12.3 million-$12.6 million in revenue and EPS of $0.02-$0.03, whereas the Street was looking for $12.9 million in revenue and a profit of $0.04 per share. The good news is that ZixCorp is reaffirming its full-year guidance of $0.15-$0.17 in EPS on $53 million-$55 million in revenue, right in line with expectations.

Now what: ZixCorp has been one disappointment after another. For more than a decade now I can recall the buzz surrounding its digital-encryption technology, and during that time hackers and would-be thieves have only gotten smarter. You would think that a network security provider would have absolutely no issue growing its top line, but that simply isn't the case with ZixCorp. On the bright side, the company is profitable and it's getting aggressive with the marketing of its product, which I hope will translate into much better growth for the sake of shareholders. But until we see that much improved performance, I would suggest taking a wait-and-see approach.

ZixCorp may offer shareholders a lot of potential, but there's a good chance it may not be able to keep pace wit this top stock in 2014
There's a huge difference between a good stock and a stock that can make you rich. The Motley Fool's chief investment officer has selected his No. 1 stock for 2014, and it's one of those stocks that could make you rich. You can find out which stock it is in the special free report "The Motley Fool's Top Stock for 2014." Just click here to access the report and find out the name of this under-the-radar company.

Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.

Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Money to your ears - A great FREE investing resource for you

The best way to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as “binge-worthy finance.”

Feb 1, 2016 at 5:03PM

Whether we're in the midst of earnings season or riding out the market's lulls, you want to know the best strategies for your money.

And you'll want to go beyond the hype of screaming TV personalities, fear-mongering ads, and "analysis" from people who might have your email address ... but no track record of success.

In short, you want a voice of reason you can count on.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich," rated The Motley Fool as the #1 place online to get smarter about investing.

And one of the easiest, most enjoyable, most valuable ways to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as "binge-worthy finance."

Whether you make it part of your daily commute or you save up and listen to a handful of episodes for your 50-mile bike rides or long soaks in a bubble bath (or both!), the podcasts make sense of your money.

And unlike so many who want to make the subjects of personal finance and investing complicated and scary, our podcasts are clear, insightful, and (yes, it's true) fun.

Our free suite of podcasts

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. The show is also heard weekly on dozens of radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable. Rule Breaker Investing and Answers are timeless, so it's worth going back to and listening from the very start; the other three are focused more on today's events, so listen to the most recent first.

All are available for free at www.fool.com/podcasts.

If you're looking for a friendly voice ... with great advice on how to make the most of your money ... from a business with a lengthy track record of success ... in clear, compelling language ... I encourage you to give a listen to our free podcasts.

Head to www.fool.com/podcasts, give them a spin, and you can subscribe there (at iTunes, Stitcher, or our other partners) if you want to receive them regularly.

It's money to your ears.

 


Compare Brokers