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Proofpoint Inc  (NASDAQ:PFPT)
Q2 2019 Earnings Call
Jul. 25, 20194:30 p.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good day, ladies and gentlemen. Welcome to the Proofpoint Second Quarter 2019 Earnings Results Conference Call. [Operator Instructions] At this time, I would like to hand the conference over to Mr. Jason Starr, Vice President, Investor Relations. Please go ahead.

Jason Starr -- Vice President, Investor Relations

Thanks, Lisa. Good afternoon, and welcome to Proofpoint's Second Quarter 2019 Earnings Call. Joining me on the call are Gary Steele, Proofpoint's Chief Executive Officer and Chairman of the Board; and Paul Auvil, Proofpoint's Chief Financial Officer.

Today, we'll be discussing the results announced in our press release that was issued after the market closed this afternoon, a copy of which is available on the Investor Relations section of our website. During the course of this call, we'll make forward-looking statements regarding future events and future financial performance of the company, which are subject to material risks and uncertainties that could cause actual results to differ materially.

We caution you to consider the important risk factors contained in the press release and on this conference call. These risk factors are also more fully detailed under the caption Risk Factors in Proofpoint's filings with the SEC, including our most recent Form 10-Q. These forward-looking statements are based on assumptions that we believe to be reasonable as of today's date, July 25, 2019.

We undertake no obligation to update these statements as a result of new information or future events. Of note, it is Proofpoint's policy to neither reiterate nor to adjust the financial guidance provided on today's call unless it is also done through a public disclosure such as a press release or through the filing of a Form 8-K.

Additionally, we will present both GAAP and non-GAAP financial measures on today's call. These non-GAAP measures exclude a number of items as set forth in our release. These non-GAAP measures are not intended to be considered in isolation from, a substitute for or superior to our GAAP results, and we encourage you to consider all measures when analyzing Proofpoint's performance. A reconciliation of GAAP to non-GAAP measures and a list of the reasons why the company uses these non-GAAP measures are included in today's press release.

Finally, in addition to reading our press releases and SEC filings, we encourage investors to also monitor the Investors section of our website at investors.proofpoint.com as we routinely post investor-oriented information such as news and events, financial filings, webcast, presentations and other relevant materials to it.

So with that said, I'll turn the call over to Gary.

Gary Steele -- Chief Executive Officer and Chairman of the Board

Thanks, Jason. I'd like to thank everyone for joining us on the call today. We are very pleased with our Q2 results, with our team delivering yet another quarter of solid top line and bottom line financial results. Q2 revenues were $214.4 million, ahead of expectations and representing 25% annual growth. Our results demonstrate the strong operating leverage embedded in our business, with our guided profitability metrics such as gross margin, operating income and free cash flow all coming in ahead of our targets.

Our overall business momentum remains strong, driven by a number of key factors, including the demand for our next-generation cloud security and compliance platform, the ongoing migration to the cloud and our unique visibility into the rapidly evolving threat landscape. The competitive environment remains favorable, and our people-centric approach to cybersecurity is resonating with our customers and prospects alike, as evidenced by our continued high win rates, robust demand for our emerging products and our world-class renewal rate, which remains nicely above 90%.

The ongoing migration of enterprise applications and workloads to the cloud provides organizations with many well-known benefits, but it also provides attackers with an entirely new and often unprotected vectors that they can exploit to compromise individuals for financial gain. To deal with these evolving challenges, company needs -- companies need a comprehensive set of people-centric cybersecurity and compliance capabilities to better safeguard their employees whenever and wherever they interact with content beyond the firewall. This new approach has become an imperative for security teams globally, and Proofpoint is uniquely positioned to deliver it by combining our excellence in email security and threat intelligence with our broadening reach across a wide array of critical cloud applications.

Our exceptional visibility into the threat landscape provide security teams with unique and actionable data to enable them to implement additional adaptive controls to improve their overall security posture such as deploying browser isolation or conducting advanced security awareness training and phishing simulation to further protect users that are most frequently targeted by threat actors.

To extend these people-centric capabilities, in May of this year, we acquired Meta Networks, an innovator in zero trust network access. This transaction will provide us with additional adaptive controls to make it far easier for security teams to precisely limit employee and contractor access to specific authorized on-premise cloud and consumer applications and, as such, further reduce an enterprise's exposure to a full breach due to the compromise of an individual employee or contractor. While we're extremely excited about the potential that Meta brings to our people-centric vision, we do not expect that it will generate any meaningful contribution to revenue in 2019.

Before providing a review of some of our key Q2 wins, I'd like to touch on some exciting new product enhancements that we announced earlier this week. Specifically, we launched a significant enhancement to our Proofpoint email and browser isolation offerings called TAP Isolation, which enables seamless integration between our TAP advanced threat detection system and our browser isolation solution in order to further enhance the protection of every end user. This new capability provides security teams with the ability to establish policies and customize when the isolation system is involved. For example, they can deploy a risk-based approach to selectively isolate a user's URL clicks based on risk factors such as their very attacked people or VAP designation.

Similarly, they can choose to isolate high-risk URLs for all users based on categorization such as unknown or unscanned web content. We believe that Proofpoint is the only security company that can customize isolation and other programmable metrics based on each user's risk profile, which greatly simplifies how organizations govern the risk while evaluating their overall security posture.

In terms of functionality, this new isolation solution provides an additional zero trust adaptive control to protect their environment by redirecting these higher-risk users to an isolated environment whenever they click on a link with virtually no impact to their experience and, as such, protecting them while they interact with content on personal email, web and cloud-based collaboration services, all of which have the risk of being exposed to malicious URLs.

While the user is isolated, Proofpoint's isolation engine such as web content conducts a deep scan to detect, mitigate and resolve any threat for that particular set of online content, all while operating within Proofpoint's cloud to protect the user's endpoint from potential compromise. Once a system deems the content to be safe, the user can choose to either remain in isolation or automatically exit the environment and directly interact with the web page.

Now turning to some of our key operating results during the second quarter. The rapidly changing threat landscape and the ongoing transition to the cloud and the migration to Microsoft Office 365, in particular, continue to be dual long-term catalyst that are helping to drive demand for Proofpoint's full suite of security and compliance solutions as existing on-premise infrastructure, by definition, cannot meet the challenges of this new generation of cloud systems and infrastructure.

We also continue to effectively demonstrate the strength of Proofpoint's products when compared to the baseline security solutions provided by Microsoft as part of their Office 365 bundles. Examples of customers who had moved to Office 365 and subsequently decided to upgrade their security capabilities with Proofpoint during the second quarter included a private manufacturing company that purchased Protection and TAP for 20,000 users, a medical services organization that purchased Protection, TAP, Threat Response and Internal Mail Defense for 15,000 users, and a Fortune 500 financial services company that purchased the P1 bundle and privacy for 10,000 users.

We are also pleased with the success of our add-on sales into our customer base, which contributed nicely to our growth this quarter. In particular, we are very encouraged by the ongoing strength in demand for our emerging products led by strong demand for Email Fraud Defense or EFD, Threat Response and, notably, Proofpoint Security Awareness Training or PSAT, which we believe represents yet another attractive opportunity for Proofpoint to drive meaningful growth in an exciting new segment of the cybersecurity market.

Overall, we're seeing strong customer interest with PSAT, with success selling into our existing base as well as driving new account wins. We are also pleased to announce that for the sixth time in a row, Gartner placed PSAT in the Leaders quadrant of its Magic Quadrant for Security Awareness Computer-Based Training, highlighting our superior vision and ability to execute.

We believe our product road map is compelling, and we're seeing meaningful adoption of several new features we've recently released. As we shared in our call in April, our Closed-Loop Email Analysis and Response or CLEAR integration between PSAT and Threat Response is gaining momentum, and I'm pleased to share we now have hundreds of customers that have either enabled this integration or are in the midst of implementation.

As a reminder, this feature enables end users to report suspicious emails with the PhishAlarm analyzer plug-in from PSAT, which are then further evaluated using the full breadth of Proofpoint's threat intelligence. If a message is determined to be malicious, it is automatically extracted from not only that user's mailbox but also anyone else in the organization that received it, all within minutes. This automation is highly valuable to overburdened security teams as it eliminates the need for manual investigation, thereby freeing them to focus on other pressing matters.

Overall, our emerging products continue to be an excellent source of growth, meaningfully outpacing the rest of our product portfolio and, again, contributing over one third of the total new and add-on business closed during the quarter.

A few of the key emerging product wins in Q2 included an agricultural conglomerate that had purchased EFD and Threat Response for 80,000 users; a Fortune 100 insurance company that added PSAT for 100,000 users; a Fortune 100 chemicals company that added PSAT for 50,000 users and a leading private university that added EFD and Threat Response for 70,000 users.

In terms of segment reporting, our compliance segment recorded yet another quarter of solid growth, driven by a record quarter for our archiving business, paired with the accelerating momentum of our PSAT products as well as continued interest in our digital resolutions. As we've shared over the past several quarters, we have seen increased interest in many of the new archiving features we've introduced such as supervision, eDiscovery and analytics visualization, particularly from firms and regulated industries such as healthcare and financial services, and the features are starting to drive demand.

Specifically, I am very pleased to report that in the second quarter, we post our largest archiving and supervision win ever, a Fortune 100 financial institution who contracted with us for an initial five-year term in the mid eight figure range, a small portion of which was built here in the second quarter.

Our archiving pipeline continues to strengthen, given our cloud-based delivery model and many investments in innovation we're making as compared to legacy on-premise competitors. And while we're clearly optimistic in terms of our prospects and positioning in this market, it's important to note that given the size and complexity of these larger opportunities, it can take many quarters for them to mature and meaningfully contribute to our results.

In addition to the significant deal that I just noted, other examples of archiving deals converting in the second quarter included a Fortune 500 technical professional services firm with 20,000 users, an international energy services company with 20,000 users and a financial services firm with 10,000 users.

As we shared last quarter, our product portfolio has steadily grown and, with the addition of Meta, now represents 18 unique services. A key initiative for our go-to-market this year was the launch of our solutions bundles, P0, P1, P2 and P3. We believe that these bundles make it easier for customers to consume these broad capabilities, eliminating the need for multiple sales cycles and greatly simplifying the selling process for our team and importantly for the channel. While this effort is still early, bundled products, again, contributed nicely to our Q2 results, reflecting solid customer interest in this approach, particularly in the entry level of P0 and P1 bundles. I'm also pleased to report that we closed a handful of P2 and P3 wins in Q2 ahead of our expectations when we first launched this program at the start of the year.

Examples of customers that purchased bundles during the second quarter included a Fortune 1000 hospitality company that purchased our P1 bundle and added privacy and browser isolation for 65,000 users; a Fortune 500 retailer that purchased our P1 bundle for 15,000 users; a video game developer that purchased our P2 bundle for 6,000 users; and a nonprofit hospital that purchased our P3 bundle for 7,000 users. We also continue to make progress toward further expansion abroad and are pleased with the quarterly results in our international business, which grew 33% year-over-year and represented 19% of total revenue.

Overall, we believe the operations outside the United States are executing well, as highlighted by notable international deals closed during the quarter such as a Global 2000 food and services company that purchased Protection for 120,000 users; a Global 2000 testing and services company that purchased Protection, TAP and Threat Response for 60,000 users and a subsidiary of a Global 2000 equipment company that purchased our P2 bundle with E-mail Fraud Defense and Proofpoint E-mail Isolation for 3,000 users.

We plan to continue to invest in our international opportunity, including opening additional geographies in order to capitalize on the burgeoning demand for people-centric security around the world. I'm also pleased to report that we are making excellent progress in our efforts to secure FedRAMP certification for our Protection, TAP and DLP solutions, all three of which have now achieved the milestone of authority to operate in cooperation with the Federal Communications Commission, an existing customer who is serving as our sponsor for this endeavor.

This milestone is the final step before full certification. As such, we expect to receive this final certification in the next several weeks. This progress was highlighted earlier this week by the closing of our first new FedRAMP customer, a federal agency with more than 200,000 employees and one that we believe will serve as The White House account in helping us drive further wins within the federal government.

In addition, our Proofpoint Security Awareness Training Solution has achieved in-process designation under the sponsorship of the United States Department of Commerce, and our team is working toward receiving its authority to operate, which we expect to occur within the next 12-months.

And recall that our archiving solution has helped FedRAMP status for several years now. So all in all, our team has made great progress regarding FedRAMP. And while we believe that the government vertical represents another important growth driver for Proofpoint over time, beyond this new agency that we closed here in July, we believe that the federal vertical will be a moderate contributor to our overall business here in the third quarter, given that we are in the early stages of ramping our sales efforts around these soon-to-be-fully certified solutions.

Before turning over to Paul, I'd like to provide you with a quick update on some news regarding our Board of Directors. First, I cannot be more pleased to announce that Dana Evan, who has been a Proofpoint Board member since 2008 and currently serves as our Lead Independent Director, was named the 2019 Director of the Year by the National Association of Corporate Directors. This award recognizes Dana for the integrity, leadership and courage that she displays across all of our Board appointments, and I want to thank her for her excellent work and many contributions to Proofpoint, and I look forward to her ongoing service to the company and to our shareholders.

I'm also pleased to announce the appointment of two new members to our Board of Directors effective July 24. The first new member is Leyla Seka. Leyla spent the past 11 years at Salesforce where she led AppExchange, the world's largest and longest-running business app marketplace. Her expertise in go-to-market, product management, product marketing and business operations will be valuable insights to our Board.

The second new member is Peter Leav. Peter was the President and CEO of BMC Software and, prior to that, served as the President and CEO of Polycom. Peter has in-depth experience in scaling and leading multibillion-dollar enterprise technology businesses and will be a great addition to the Board. On behalf of the Board, I welcome both Leyla and Peter to the Proofpoint team.

So in summary, we continue to execute well, as demonstrated by our strong Q2 results and our market momentum. Our unique people-centric approach to cybersecurity and compliance is clearly resonating with our customers and prospects alike, and we believe we are well positioned to further capitalize on our opportunity to gain share in the over $13 billion total addressable market in the coming years.

With that, let me turn it over to Paul.

Paul Auvil -- Chief Financial Officer

Thanks, Gary. We were quite pleased with our operating results this quarter, which exceeded our guidance on all of our key financial metrics, with many thanks to the hard work of our teams around the world.

Revenue totaled $214.4 million, up 25% year-over-year and above our guidance range of $210 million to $212 million. Billings for the second quarter were $232.1 million, an increase of 17% year-over-year and above the high end of our guidance range of $228 million to $230 million.

As noted on prior calls, under ASC 606, the derivation of our billings metric requires adjustments to reflect unbilled accounts receivable activity during the quarter as well as any right of refund liability. For Q2, the adjustment related to these two items was negative $0.6 million.

Our duration for the quarter was down sequentially from Q1, landing at the lower end of our targeted range of 14 to 20 months and continues to underscore the high quality of our free cash flow generation. This trend in terms of duration is further reflected in our deferred revenue balances, which ended the quarter at $628.5 million, up $18.2 million sequentially, with short term growing by $16 million and long term increasing by only $2.2 million.

In terms of a bit more detail on revenue during Q2, revenues from our advanced threat segment grew 21% year-over-year and represented 73% of total revenue. Our compliance segment grew 36% year-over-year and represented 27% of revenue. Note that when analyzing our advanced threat revenues on a year-over-year basis, it is important to keep in mind the impact of the wind-down of Cloudmark's OEM business, as we've discussed on our prior calls.

As a reminder, over the course of 2018, we eliminated Cloudmark's historical practices selling perpetual licenses, and we also elected to wind down several legacy OEM relationships that were part of their historical business model. When coupled with the negligible revenue growth across the rest of their installed revenue base, the resulting effect has been an estimated 100 basis point reduction in the comparative annual growth over the course of 2019, which is, of course, even more pronounced when considering in the context of our advanced threat segment reporting.

Turning to expenses and profitability for the second quarter. On a non-GAAP basis, our total gross margin was 79%, above our expectations, primarily driven by our strong revenue performance. I would also like to highlight that at 79%, we are now at the high end of our targeted range for 2020 of 77% to 79%, a full year ahead of schedule and a target that we first outlined for investors during our Analyst Day in June of 2016.

During the second quarter, total non-GAAP operating expenses increased 20% over the prior year period to $141.1 million, representing 66% of total revenue. Our non-GAAP operating income for the second quarter was $28.4 million, reflecting an operating margin of over 13%, bringing us into our 2020 targeted range of 13% to 15%, again, a full year ahead of schedule. Non-GAAP net income for the second quarter was $24.1 million, nicely above our guidance range of $19.5 million to $21.5 million, driven by both the revenue performance as well as our lower-than-expected spending in both sales, marketing and R&D.

As we discussed last quarter, beginning January 1, 2019, we are now calculating non-GAAP net income in accordance with the SEC's non-GAAP financial measures compliance and disclosure interpretations, C&DI section 102.11. This quarter's calculation includes $4.7 million in noncash tax expense and an implied tax rate consistent with last quarter of 17%.

Non-GAAP earnings per share for the quarter was $0.41 per fully diluted share, nicely above the high end of our guidance range of $0.34 to $0.37 based on 58.1 million shares. On a GAAP basis, we recorded a net loss for the quarter totaling $28.9 million or $0.52 per share based on 55.8 million shares outstanding.

Moving to the balance sheet. We ended the quarter with $182.7 million in cash, cash equivalents and short-term investments. And in terms of cash flow, we generated $43.4 million in operating cash flow and invested $8.4 million in capital expenditures, resulting in free cash flow for the quarter of $35 million, well ahead of our guidance range of $25 million to $27 million. This strong result was partially driven by better-than-expected billings and collections within the quarter.

Now moving on to guidance for the second half of the year. We expect Q3 billings to be $274 million to $276 million, resulting in year-over-year growth of 24% at the midpoint and in line with our prior commentary. For the full year, we are increasing our billings guidance by $2 million and now expect a range of $1.064 billion to $1.068 billion, representing nearly 22% growth at the midpoint. This guidance range implies Q4 billings of approximately $345 million, reflecting year-over-year growth of 28%.

We expect our Q3 revenue to be in the range of $223 million to $225 million or nearly 22% at the midpoint. For the full year, we are increasing our revenue guidance to $878.5 million to $880.5 million, increasing the midpoint by $3.5 million and representing nearly 23% growth year-over-year at the midpoint. As a reminder, recall that the very strong performance in the fourth quarter of 2018 was driven in part by roughly $3 million in revenue acceleration under ASC 606, as we discussed in January, which creates a challenging baseline for the coming year. And absent a similar effect this year, we expect a growth rate of 20% in the fourth quarter of 2019 or roughly $238 million.

In terms of gross margin guidance, we expect non-GAAP gross margin to be approximately 79% for both Q3 and Q4, representing a slight raise for our annual guidance. For the third quarter, we expect non-GAAP net income of $21.5 million to $23.5 million or $0.37 to $0.40 earnings per share based on 58.6 million fully diluted shares outstanding, as our spending catches up with revenue during the quarter.

Note that this Q3 guidance assumes capital expenditures of $10 million, depreciation of approximately $9 million and an income tax provision of approximately $4.6 million calculated in accordance with C&DI 102.11 at an effective tax rate of 17%.

For the full year, we are increasing our net income guidance from our prior range of $83.5 million to $87 million to an updated range of $94 million to $96 million or $1.61 to $1.64 earnings per share based on 58.5 million fully diluted shares outstanding. Note that this guidance for the year assumes capital expenditures of $38 million, depreciation of roughly $32 million to $34 million and an income tax provision of approximately $19.5 million calculated in accordance with C&DI 102.11.

In terms of free cash flow, please keep in mind that as we had indicated in our press release on May 6 announcing the Meta acquisition, we do expect to repatriate the acquired intellectual property associated with the acquisition from Israel to the United States with a onetime tax payment, which we now estimate to be approximately $10 million, likely to be paid during the third quarter of this year.

So with that as a backdrop, recall that during our Q1 '19 earnings call on April 25, two weeks prior to the announcement of the acquisition, we raised our free cash flow guidance for the full year to a range of $200 million to $204 million. Absent this tax payment for the repatriation of IP, here in July, we are again raising our guidance for the full year with an expected range of $206 million to $208 million, representing a free cash flow margin of roughly 24%, bringing us into our 2020 target range of 24% to 26%, again, a full year ahead of schedule.

Adjusting this guidance for the acquisition-related effects of the estimated tax payment for the repatriation of intellectual property of approximately $10 million expected during Q3, results in an updated guidance range of $196 million to $198 million, with expected breakdown in the second half of the year of $40 million to $42 million in Q3 and approximately $72 million in Q4. We believe that this outlook is particularly compelling given our commitment to innovation and our ongoing investments to pursue the key opportunities in the market.

As a final comment, I would like to highlight that this guidance for 2019 reflects our dual objectives of driving attractive growth in both revenue and free cash flow, which remains a hallmark of Proofpoint's disciplined operating strategy and is further corroborated under the rule of 40 metric, as discussed in prior quarters.

When discussing and considering our 2019 outlook of 23% revenue growth and 22% free cash flow margins, which again absorbs 100 basis points of additional costs associated with the tax impact from the acquisition of Meta Networks, we are still delivering a figure of 45 under the rule of 40 construct, which places us prominently in the top quartile of all publicly traded SaaS companies.

We remain committed to our strategy of driving attractive growth in terms of revenue and free cash flow. So as we think about our opportunity over the next several years, given our significant opportunity to add new customers throughout the world while selling add-on into our ever-expanding installed base, combined with the strong secular trends considering the ongoing migration of workloads and content to the cloud and the ongoing severity in threat landscape, we believe that we can maintain our rule of 40 metric in the mid-40s by driving revenue growth in excess of 20% while maintaining free cash flow margins in the mid-20s.

In conclusion, we continue to execute well, delivering strong top and bottom line operating results in the second quarter and believe that Proofpoint remains well positioned to continue to drive disciplined growth with increasing free cash flow margins built on our proven capability to defend enterprises against today's advanced security and compliance threats.

Before turning it over to the operator for questions. I would like to request that everyone limit themselves to just one question to help reduce the duration of our call and do ensure that everyone has chance to be included in today's discussion.

Thank you very much for taking the time to join us on our call today, and with that, we will be happy to take your questions now. Operator?

Questions and Answers:

Operator

Thank you, sir. [Operator Instructions] We'll go first to Phil Winslow, Wells Fargo.

Philip Winslow -- Wells Fargo Securities -- Analyst

Thanks, guys, and congrats on another great quarter. Just want to focus in on the emerging products, Gary, which you highlighted continuing adoption of, but really, focusing on PSAT. I wonder if you can give just an update on sort of where you stand, I guess, from kind of a couple of perspectives. First, just in terms of just sort of the technology integration into broader portfolio. Then also just the go-to-market motion in terms of you're training the sales force how to sell the gaming [Phonetic] ramped up, et cetera. It's sort of technical and then, call it, go-to-market?

Gary Steele -- Chief Executive Officer and Chairman of the Board

You bet. So broadly speaking, we're really excited about this market and the broader competitive landscape. One of our key values and differentiate us in the market has been this technical integration that we've done. And so it's really twofold. So one is we've integrated our threat intel. And so we can do simulations today on the threats that we're seeing in those types of companies and their type of environment. So we can make our simulations incredibly real world, which has been of high value to customers.

And second, as I referred to in our prepared remarks, this integration that we call CLEAR allows for someone who reports a phish that, that user-reported email can then be evaluated against our full portfolio of threat analytics and threat intel to then determine whether it's malicious, and then we could automatically reach into the [Indecipherable], whether it's Office 365 or on-prem, and pull it out if it's malicious.

So this integration between our core detection environment and PSAT, that's also proven to be high value. And so when we look at the competitive landscape, we're really far out ahead in terms of our offering because we're not just a stand-alone phish simulation and security awareness training company.

And so in terms of go-to-market, to answer the second part of your question, Phil, so the way in which we've approached this is, basically, every seller across the globe has been trained, and then we have a very small team of specialists/experts that then support the broad sales team. And it's been incredibly efficient.

Paul Auvil -- Chief Financial Officer

Yeah. And I think the only thing I'd add there is that the other thing that we find in the market is because we are the largest player in the space right now in terms of scale and global reach, we have a reach across the globe that is unique in this market, which we think is a real advantage for us. As well, because we've worked for many years to develop our relationship with the channel and have, we think, a very good set of channel relationships, we're working very hard to enable the channel to go and help drive in tandem, of course, with our account managers, business not only in the US but around the world. So we think that's an advantage for us in the marketplace at this time.

Philip Winslow -- Wells Fargo Securities -- Analyst

Great. Thanks guys.

Paul Auvil -- Chief Financial Officer

Thank you so much.

Operator

Our next question comes from Taz Koujalgi, Guggenheim Partners.

Imtiaz Koujalgi -- Guggenheim Partners -- Analyst

Hey guys. Thanks for taking my question. If I look at the guidance and your performance in the first half of the year, there's a big inflection and growth coming to the second half. I think the average for first half is about 16%, and the guidance implies second half growth of about 25%, 26%. Can you remind us again what's driving that big inflection in the second half? Why is it you're getting back-end-loaded? And then also if you can comment on what the seasonality of Wombat is. Is Wombat more back-end-loaded than the core Proofpoint business?

Gary Steele -- Chief Executive Officer and Chairman of the Board

Yes. So a couple of things. To your question -- and I think what you're referring to is the relative billings growth rate, right, first half versus second half?

Imtiaz Koujalgi -- Guggenheim Partners -- Analyst

Yes.

Gary Steele -- Chief Executive Officer and Chairman of the Board

And so there are a few things there. One, I would say that the acquired properties above Wombat and Cloudmark tend to be a bit more back-end-loaded. And so you're seeing that effect as we're renewing their activity here in 2019 as compared to '18. So that's one impact.

Second impact is that, as I think you and I probably discussed before, we have, by definition, like disproportionate amounts of business that happened in the second half of the year and especially in the fourth quarter, driven by budget flush. And so each year, of course, we're closing business in those quarters, and then that business renews. And we have not only, of course, business that we closed in 2018 that renews in '19, but we, of course, have one-year deals that closed in '17 that renewed in '18, that renewed in '19. But we also have multiyear deals that were done in prior periods, in both '16 and '17, that are now renewing in '19, that then add to that overall billings growth rate. And then, of course, we do, do more new and add-on business in the fourth quarter than we do in any other quarter during the year.

So it's a combination of all those effects. It's not one thing. It's a variety of things that together drive that higher growth rate in the second half of the year and in Q4 in particular. And then -- yes. And then remind me again, what did you want about Wombat specifically?

Imtiaz Koujalgi -- Guggenheim Partners -- Analyst

Is Wombat more -- is more seasonally back-end-loaded than the core Proofpoint business? How is the businesses in Wombat?

Gary Steele -- Chief Executive Officer and Chairman of the Board

Yes, yes. Yes, yes, I touched on that. Yes. So the business, as it was acquired, was definitely a bit more back-end-loaded with third and fourth quarter compared to the first half. So that, plus Cloudmark, which is very back-end-loaded into Q4, those effects are -- you're seeing flow-through here in '19 compared to '18.

Imtiaz Koujalgi -- Guggenheim Partners -- Analyst

Thank you.

Operator

Our next question comes from Gur Talpaz, Stifel.

Gur Talpaz -- Stifel, Nicolaus & Co. -- Analyst

Okay, great. Thanks for taking my questions and congrats, guys, on another nice quarter. I wanted to ask about Meta Networks here. How natural an adjacency is Meta to what you're doing with your -- kind of with your core business? And then secondarily, when you think about the budgets you're going after with Meta, do you think you can capture spend from VPN-related buckets? Or is it more evangelical in nature? Thank you.

Gary Steele -- Chief Executive Officer and Chairman of the Board

Yes. A couple of things. So one is we're excited about Meta because of the tight adjacency. And so we see Meta as a nice, adaptive control that a customer could adopt that wants to protect higher-risk communities of people. So one of the classic use cases would be putting contractors on the network. They're a risky group because you don't necessarily control their endpoint. You don't want a single endpoint then to infect the entire network. And through Meta, you can use them as -- use the adaptive control of Meta to give them access without exposing them to your entire network.

So we see the adjacency is quite good. We see the buyers are the same. So we're quite excited about it. Having said that, as we talked about in the prepared remarks, we don't expect contribution from Meta in '19. We see that as further out into '20. But we're definitely excited about where this fits.

And then in terms of budget and budget dollars, because of the tight adjacency, I think those dollars come from existing projects, these people trying to figure out this problem. So these are budgeted use cases. And so we feel pretty confident. Although it's quite early, we feel confident that we'll be tapping into budgets that exist versus budgets that have to be created.

Paul Auvil -- Chief Financial Officer

Lisa, let's go to next question.

Operator

Thank you. We'll go to Jonathan Ruykhaver, Robert W. Baird.

Jonathan Ruykhaver -- Robert W. Baird & Co. Incorporated -- Analyst

Yeah. Good afternoon, guys. Congrats on the execution. I'm wondering if we can go back to the productivity issues you faced among some of the newer sales rep late last year when it was first brought up in -- help us understand what those issues were back then and what you're seeing today from that cohort.

Gary Steele -- Chief Executive Officer and Chairman of the Board

Yes. So I'll start, and Paul has a couple of comments. So one was we recognized the fact that we needed a broader enablement program. So our time to get a rep up to speed wasn't as -- wasn't what we thought it could or should be. We basically put in place a comprehensive global enablement program that has proven to be quite effective to take reps that are new to Proofpoint and help them understand how to sell our broad set of products and how to be effective with customers. So that was one of the critical things.

And then I think the second thing was just hiring, and I think we've addressed both of those. We've had very good success meeting our hiring targets and then combining that with this enablement. So those issues that we cited were in our Q3 call last year, so it was over nine-months ago, and we feel like we're well beyond that.

Jonathan Ruykhaver -- Robert W. Baird & Co. Incorporated -- Analyst

Good. Thank you.

Operator

Next up, we'll hear from Walter Pritchard of Citi.

Walter Pritchard -- Citigroup Inc. -- Analyst

Hi. Paul, wondering if you could talk about, in the second half of this year here, what sort of duration -- billings duration you're looking for. I know last year, that popped up in the fourth quarter. And I think even this quarter, we've heard some confusion from folks around duration this quarter. It looks like it was down. But wondering if you could help us understand that trend as you look forward to what you're forecasting in the second half?

Paul Auvil -- Chief Financial Officer

That was a good question. So yes, as I commented on the prepared remarks, our duration was lower than we expected here in Q2 and down near the low end of the range. And you can see that with the fact that long-term deferred revenue only grew by $2 million this quarter. So I was pleased that we delivered the billings results we did despite the compression in duration.

So as I look at the second half of the year in the current guide, I'm assuming duration maintains kind of in the middle of the range, so up a little bit from where we are today. Q2 felt like a little bit of an aberration, but again, this is one of the things about our business. It's very hard to predict at any given time which customers will do one-year, two-year, three-year deals. I may have customers coming off a three-year renewal that decide to move to a one-year renewal. Even though they pay almost 20% more, they choose to do that because they're trying to free up absolute budget dollars to work on other projects.

So duration can be a bit unpredictable, but I feel good about our guidance here for the second half of the year. But to your specific question, I'm assuming that our duration maintains kind of right in that middle of our historical range in the numbers that I guided to.

Walter Pritchard -- Citigroup Inc. -- Analyst

Thanks, Paul.

Operator

Next up is Rob Owens, KeyBanc Capital Markets.

Rob Owens -- KeyBanc Capital Markets -- Analyst

Great. Thanks for taking my questions. I was wondering if you could elaborate a little bit on the strength you're seeing in the archiving business. You mentioned one of your largest wins ever, a mid eight-figure range deal, but you only took some billings in the second quarter. So can we expect follow-on in the back half relative to that deal? And then is this coming from the strength from new customers, existing customers? Maybe you can elaborate there. Thanks.

Paul Auvil -- Chief Financial Officer

Yes. So just specifically on the mechanics of the deal that we closed here in the second quarter, we had a modest amount that was billed here in the current quarter. There may be small little bits that we bill later this year, but those will be very small amounts. And so think of it as something that we'll bill likely roughly on the anniversary each year. So it's kind of a Q2 billings item each year in '20, '21, '22, et cetera. So that's the way the deal is structured. So don't look for any meaningful contributions to billings from this particular contract between now and the end of 2019.

Gary Steele -- Chief Executive Officer and Chairman of the Board

And then in terms -- Rob, in terms of mix of customers new versus existing, this particular deal that we referenced, that was with a customer that had been a security customer for quite some time, and they knew us and we built a strong reputation with that account through the long-established relationship that we built on the security side. And if you look more broadly at the examples of customers that we won, I think there, if I look at it really quickly, the mix is about half were existing customers and half were brand-new customers. So we're winning brand-new customers looking for a next-generation archiving solution that had no relationship with us in the past, but we're also winning customers over that had long-established relationships on the security side.

Rob Owens -- KeyBanc Capital Markets -- Analyst

Great. Thanks, gentlemen.

Operator

Steve Koenig with Wedbush Securities is up next.

Steve Koenig -- Wedbush Securities -- Analyst

Hey, guys, thanks for taking my question. So, as we look down the road, say, next couple of years, and you guys draw toward that 20%-plus revenue growth objective, what growth drivers, whether it's go-to-market drivers, product, et cetera, start to really come in before next year? And then what are you -- of your solution set now and your initiatives you're pursuing now, which of those feeds [Phonetic] are going to be more prominent in fiscal '21, if it's possible to even think that far out?

Paul Auvil -- Chief Financial Officer

Yeah. So I know Gary has a couple of comments he'd like to make here, but this is one of the things that I really like about our setup going into next year is what we'll -- this year, we're over $1 billion of bookings scale, looking to drive toward that number on a revenue basis for next year and then beyond based on our Analyst Day outlook for 2020 from back in 2016, 2017.

What I like about our setup going into this next step for the company's growth is the breadth of opportunities that we have, whether it's going out and driving new business both in the US for the other half of the Fortune 1000 where we have no business or whether it's the Global 2000, particularly in Europe where we're really just getting starting today, whether it's driving that add-on business across the '17, really, '18 if you included Meta Networks products. Our average customer has under three products right now, so there's a ton of add-on opportunity.

And then, of course, just as we look at it, I think we've really got potentially tiger by the tail with some of our newer product categories, as we talked about. So I know Gary probably has a few things to add on top of that.

Gary Steele -- Chief Executive Officer and Chairman of the Board

No, I think Paul captured it. The only thing I would add to that is, as we noted in our prepared remarks, we're just getting started on federal with this investment that we made in FedRAMP and the comprehensive nature that we've taken to ensure that we have breadth across all of our products on FedRAMP. I think we're well positioned there, and we're just getting started. We noted one large deal, but like there's plenty of opportunity there to last for a long time in the coming years ahead.

And then I think from a product strategy point of view, we've been thoughtful about what products can play a role in the short term and what products have opportunities to get further out, and we're making investments thinking through what the next 5 and 10 years look like. And so we are fundamental believers that this rule of four, that we can sustain compelling numbers for a long time.

Steve Koenig -- Wedbush Securities -- Analyst

Great. Thanks guys.

Operator

We'll go to Alex Henderson, Needham.

Alex Henderson -- Needham & Company -- Analyst

Great. Thank you very much. I wondered -- just to go back to the competitive landscape a little bit. We just completed a survey, and we were surprised at how few people cited any willingness to use Microsoft as a security supplier, particularly for email or anything related to identity. So I was -- know you guys have done a little bit more work around recent trends there. Can you just update us on what you're hearing from the field in terms of their change in efficacy versus your performance, give us some detail that allow us to restate that to our customers?

Gary Steele -- Chief Executive Officer and Chairman of the Board

Sure. I think it's very natural as customers make the transition from an on-prem environment to Office 365 that they actively test the base capabilities provided by Microsoft, the combination of EOP, enterprise-only protection, which is included in E3; and then ATP, which is included in E5. And we get tested against those capabilities literally on a daily basis. And the strength of our numbers and the results that we put up are in light of the fact that we consistently can demonstrate to customers that we can deliver not only more effectiveness but also give them more insight and visibility than they would get if they chose the Microsoft solutions. So it's really what's driving it today is the combination of efficacy, and that is that everything from APT style, phish that come through from potentially state actors to more run-of-the-mill stuff. And then it's this broader visibility and insight given the people-centric approach we've taken and the data that you can get from our systems that in, then inform how to drive a broader and better security posture. I think it's a combination of those things that's enabling us to create value for Microsoft Office 365 customers.

Alex Henderson -- Needham & Company -- Analyst

Great, thanks.

Gary Steele -- Chief Executive Officer and Chairman of the Board

You bet.

Operator

We'll go to Ken Talanian, Evercore ISI.

Ken Talanian -- Evercore ISI -- Analyst

Hi, guys, thanks for taking the question. I was wondering, how are you trending against your internal plans for the international expansion? And what are some of the key milestones we can look for in the back half of the year and into next?

Paul Auvil -- Chief Financial Officer

Yes. Obviously, our internal plans typically exceed what we would guide for Wall Street. So with that in mind, I would say that we're generally pleased with how the teams are executing. I think that there's -- we talked a little bit about being a bit behind on building out some of that quota capacity last year. I feel like the team's done a good job driving hiring activity. But we always set high goals for ourselves, are always looking to add more capability in all of our territories around the world, both in the US as well as internationally. So that continues to be something that everybody is driving toward hard. But I'd say we're pleased with the staffing that we've had thus far, but we continue to execute literally every week, every month, every quarter on driving scaling of that team while also doing things to improve how we do enablement, for example, in Europe where we now have a large team. So trying to think a little bit about regional differences and how we train and what products are kind of front and center and of greatest interest to diving into a new account in one of the many countries in Europe as opposed to a sales motion that's worked well in the US. So there are a lot of moving parts there, but I feel like we're executing well, and things have moved along nicely this year.

Gary Steele -- Chief Executive Officer and Chairman of the Board

Yeah. And the thing that I'm super excited about and what's been notable for me is we pursue the path to expand the number of territories where we have Proofpoint employees. So again, within the last nine-months, we opened Italy, opened Spain, expanded Benelux, opened Nordics, opened Middle East. And we're seeing contribution across all those specific territories, and that contribution then gives me confidence that the investments that we're making in the expansion of territories will have great impact over the course of the next several years because we're putting people on the ground that are delivering value to us.

Ken Talanian -- Evercore ISI -- Analyst

Great. Thank you.

Operator

We'll hear from Andrew Nowinski, Piper Jaffray.

Andrew Nowinski -- Piper Jaffray & Co. -- Analyst

Great, thank you. I was just wondering if you could provide any more color on the bundles and their impact specifically on deal sizes in your revenue growth. And I know you mentioned a handful of customers deployed the high-end P2 and P3 bundle. But I think you said they only involved about 5,000 to 6,000 users, which seems like it was well below the minimum deployment size you typically target. So just wondering if you could comment on some traction on bundles and what you're seeing there? Thanks.

Paul Auvil -- Chief Financial Officer

Yeah. So yes, keep in mind that we have a middle enterprise and a small middle enterprise team that focuses on customers all the way down into kind of about high 100s to 1,000 range. So those customers are well within the range of customers that we go after, but of course, we love closing business in the Global 2000, for sure, and that's where we get a lot of leverage.

So I think as Gary talked about in his prepared remarks, what we were pleased about is a couple of things. One, the low-end bundles, P0 and P1, we closed a very large number of deals in the second quarter based on those bundles. So that just creates simplification in executing through the channel, modest uplift on deal value. But for us, it helps make those customers sticky as well because they're buying a broader package of Proofpoint products, albeit a relatively smaller package compared to P2 and P3.

And then with P2 and P3, we put yet another large number of quotes out in the second quarter. And what we were pleased by is when we first rolled all this out at the beginning of the year at our sales kickoff, we didn't really expect to be able to close any P2 or P3 deals in the first half of the year. So the fact that we got a few over the line, we were pretty happy with. So with that, Gary probably has a couple of things to add.

Gary Steele -- Chief Executive Officer and Chairman of the Board

No. I would just say that I am really excited about the traction we've had. And the deals that we noted -- the P1 deal that we noted in the script, one was 65,000 users. The other was 15,000. And on the P2 and P3 bundles, it was 6,000 and 7,000. So these are pretty significant. 6,000 and 7,000 is straight down the fairway for a field sales rep for us. So while they're not 100,000-seat deals, they're really good meaningful deals. And if you look at the broad value that we're delivering with that size of organization, we're super excited. And I think to get from outstanding start in January to closing business in the Q -- in the second quarter is really quite good. So we're super encouraged about where we are. Clearly lots of opportunities ahead of us but super encouraged about where we are.

Andrew Nowinski -- Piper Jaffray & Co. -- Analyst

Great. Thank you, guys.

Gary Steele -- Chief Executive Officer and Chairman of the Board

Thanks.

Operator

Matt Hedberg, RBC Capital Market is next.

Matt Hedberg -- RBC Capital Markets -- Analyst

Sure. Thanks, guys. Hey, there's a lot of talk about sort of -- I think, Paul, you mentioned some of the enthusiasm as you look toward next year. I guess I'm wondering just from a high level, Blake's now been in the seat. It's coming up on a year, I believe, in October from a Head of Sales perspective. Can you just sort of reflect on some of the positive changes he's had on the organization? Obviously, it seems like hiring has been better.

But -- and then maybe broadly speaking, as you look forward for the next year, are there any -- or as you look toward longer-term goals, maybe differently said, are there any other sort of structural changes to the sales force as you think about scaling this business?

Gary Steele -- Chief Executive Officer and Chairman of the Board

Yes. So if I look back over the three quarters that Blake's been at the helm, he's really done a phenomenal job. And I think if you were to ask any single salesperson across the whole company, they would all concur that his incredible enthusiasm and lead from the front style has been a welcomed approach by every single salesperson. He's just incredibly enthusiastic.

And what he's driven is a couple -- a number of things that had been meaningful. So one was getting the global enablement in place. Paul described it for Europe, but there's a lot of work to be done there. We've done a lot of work in the US, two is driving a strong cadence in hiring because, clearly, making sure that we hit our hiring targets is a critical thing and continuing to drive growth. Blake has been instrumental in helping us get adoption of the emerging products through the way in which we've built the sales organization and the expertise we've put in place. So he's had a pretty significant impact in the short period of time he's been in seat.

Having said that, as we look further out, there's really no big structural changes that we anticipate as we think about 2020 or even beyond that. What Blake is focused on is ensuring that we're continuing to drive a broader international footprint that we think will pay off next year, the following year and years after. So that would probably be top of mind for him.

Matt Hedberg -- RBC Capital Markets -- Analyst

All right. Thanks, Gary.

Gary Steele -- Chief Executive Officer and Chairman of the Board

You bet.

Operator

Next up is Catharine Trebnick, Dougherty.

Catharine Trebnick -- Dougherty & Company -- Analyst

Oh, thanks for taking my question. Could you -- how are you doing with the Global 2000? On your prepared remarks, you have some large deals and some more mid-market, 6,000, 7,000 seats. But how well are you penetrating the Global 2000? Thank you.

Gary Steele -- Chief Executive Officer and Chairman of the Board

Catharine, I don't have the exact stat. We did not publish our exact Global 2000 stat, but we continue to have really good traction internationally in those accounts and continue to make traction in the Fortune 1000 in the US.

Jason Starr -- Vice President, Investor Relations

And we break -- Catharine, it's Jason. But we break it out. It's an annual stat for us, but at the end of last year, it was over 24% of the Global 2000. And then again, the Fortune 1000 stat we shared was over 50% -- 53% specifically.

Catharine Trebnick -- Dougherty & Company -- Analyst

All right. Thank you.

Gary Steele -- Chief Executive Officer and Chairman of the Board

We will take next.

Operator

And we'll go to Jonathan Ho, William Blair.

Gary Steele -- Chief Executive Officer and Chairman of the Board

Jonathan, you're out there.

Operator

Your line is open.

Jonathan Ho -- William Blair & Company -- Analyst

Yeah, sorry about that. Can you talk a little bit about the interest level and traction that you're seeing for isolation and maybe the opportunity that you see, I guess, for expanded use cases for the product?

Gary Steele -- Chief Executive Officer and Chairman of the Board

Yes. It's been really interesting. So with the introduction of the integration of TAP, our advanced threat protection system and browser isolation, where, based on policy, you can determine what users will be isolated or what kinds of URLs to be isolated, we've been -- this just went GA, and we've been in early conversation with lots of customers, and the reception has been really, really good. And so we're quite encouraged about the opportunity to bring this capability to our broad customer base through this integration. And while we're just getting started on this, we feel pretty optimistic about that opportunity because you've got the choice. Unlike a lot of other organizations that sell browser isolation, they're really taking people down a pathway you should isolate everything. And we're taking a very different path where we're using the richness of our threat intel and the visibility and insight we have across what users are being attacked to help organizations determine who they want to isolate. And in doing that, it's much easier to get broader adoption of isolation. So we're pretty enthusiastic. [Speech Overlap]

Operator

Keith Weiss, Morgan Stanley, is up next.

Keith Weiss -- Morgan Stanley -- Analyst

Yes. Thank you for a taking question. Calling in here for Melissa Franchi. I wanted to ask about Meta Networks and dig a little bit deeper into that one. In helping me to better understand, like, the competitive environment, it seems like there's a lot of vendors out there who are talking about access control more and more and sort of whether it's Zscaler or Akamai or whatnot. Can you talk about sort of where you look to compete and sort of how you guys look to fit into that broader ecosystem?

Gary Steele -- Chief Executive Officer and Chairman of the Board

You bet. So as I indicated before, I think our approach is really in keeping with our broader people-centric framework and using Meta as an adaptive control where organizations can use the access, the zero trust access, to better secure groups of people as defined in our people-centric model. And so we see ourselves just helping organizations use Meta as a vehicle to ensure that a single individual doesn't infect the entire network. So any risky individual like a contractor doesn't get on the network and infect everyone. So we're taking a very much use case view versus you can think of people who have competitive offers as trying to reframe and restructure someone's entire corporate network, we're not trying to do that. We're really trying to help solve very specific problems that we think are budgeted, and then we can go capture those budget dollars to drive broader adoption of our people-centric model.

Keith Weiss -- Morgan Stanley -- Analyst

Got it. That's [Indecipherable].

Operator

Our next question will come from Shaul Eyal, Oppenheimer & Company.

Shaul Eyal -- Oppenheimer & Co. Inc. -- Analyst

Thank you. Hi, good afternoon, guys. Congrats on the consistent execution. I had a question on the PSAT, the awareness training. So it appears -- as the former Wombat was another successful acquisition, now that it's been about probably, give or take, 18-months into this transaction, do you feel it is probably exceeding your internal expectation? And can you also remind us about the drivers behind it?

Gary Steele -- Chief Executive Officer and Chairman of the Board

Sure. So it's been 15 months. The transaction was finalized basically in March of last year, so we're 15 months. And this has exceeded our expectations. And I think the things that we have seen are, one, this market is moving faster than, I think, everybody anticipated in terms of the broad demand that organizations are showing in terms of need or desire to raise the awareness of the user community. This market, it continues to accelerate in terms of demand. So that is probably the number one thing that we've been super enthusiastic, excited about. And then I think the thing that has been really important is the opportunity to bring together our core detection environment with the trading and thinking of the Wombat capabilities as a very important adaptive control. And that whole message, it works extremely well with our customers.

So I think this is well ahead of where we thought expectations would be, and that's primarily driven by the demand environment. And we feel like we bought the right asset. We've been extremely happy with the capabilities that we're delivering to customers. Customer feedback has been extremely positive. And we think that market has lots of room to run.

Shaul Eyal -- Oppenheimer & Co. Inc. -- Analyst

Thank you.

Operator

Our next question will come from Erik Suppiger, JMP Securities.

Eric Suppiger -- JMP Securities -- Analyst

Thanks for taking the question. Actually, just to follow up on the last one. I'd be curious to, in a sense, one, if you can tell us what PSAT is, maybe got the highest attach rate of the emerging products. And secondly, can you give us a sense of where you think that the tax rate might go?

Paul Auvil -- Chief Financial Officer

So a couple of things. In terms of the most recent quarter, it certainly was one of the strongest of the emerging products. I wouldn't characterize it as the strongest, but it's, call it, top three, with accelerating momentum over the course of the last several quarters. So we feel really good about that. To your specific point on attach rate, the great news is that while we've had some nice success here, recall that when we first acquired Wombat 15 months ago, the overlap in the customer bases was fairly small because they're mostly focused on smaller enterprises kind of in our EMEA [Phonetic] SME [Phonetic] world. They had some Fortune 1000 accounts but not a lot. And so we have a really interesting opportunity to go drive the sale of Wombat into our installed base broadly, and of course, our salespeople get that and are working on it diligently.

I think that as Gary touched on earlier in the call, not only do we have a great platform with PSAT in terms of the training capabilities as well as threat simulation, but then the integration between that platform and the rest of our gateway and what we call TRAP creates a really compelling overall environment for the security operations center or SOC at a typical mid or large-size enterprise to really be able to, in a very optimal way, manage all the different facets of training, threat simulation, feedback from users and then driving improved security posture broadly to the enterprise. So we think that setup is really good. And again, we're really excited for the sixth year in a row to be in the leaders quadrant, and we think that just reflects the ongoing great work of the team in Pittsburgh that is the Wombat development team.

Eric Suppiger -- JMP Securities -- Analyst

Very good. Thank you.

Operator

Next, we'll hear from Gray Powell, Deutsche Bank.

Gray Powell -- Deutsche Bank AG -- Analyst

Great. Thanks, guys. Thanks for working in. Yes, I'll be quick. So what was the run rate revenue from Meta Networks before you acquired it? And then just how fast was it growing? And then any billings contribution in the second half of 2019 that we should think about from the asset? Thanks.

Paul Auvil -- Chief Financial Officer

Yes. I mean Meta was literally rounds to zero, I mean, literally, like thousands of dollars. So they were very early. They'd had some really interesting leadership accounts that they were working with, mostly what I'd call advanced prototype stage where they were running some number of users, proving out that it worked but hadn't really gotten to revenue state yet. So this is really an example where we got a great development team with some really good data points out there in terms of early adopters using the tech but hadn't really started to pay for it yet.

So I think as Gary touched on, we really don't expect much in terms of economic contribution on a top line basis or from billings for Meta for the remainder of the year. I mean I suspect opportunistically we'll close some business, particularly with some of the folks that they were working on with in advanced development phase, if you will. But part of this is that we want to get some users up and running at scale, test out some of the integrations that we're working on that part of -- is part of what makes it a really effective set of adaptive controls and then really broaden it -- the aperture in terms of engaging our sales team likely at our sales kickoff in 2020 to start pushing the initiatives. So I would encourage everyone to think about Meta as something that's got a lot of great potential. It's a really nice tech framework but something that really won't start to contribute to our results until next year.

Gray Powell -- Deutsche Bank AG -- Analyst

Got it. That's really helpful. Thank you.

Paul Auvil -- Chief Financial Officer

Thanks.

Operator

The next question is from Daniel Bartus, Bank of America Merrill Lynch.

Daniel Bartus -- Bank of America Merrill Lynch -- Analyst

Thanks, guys. I'll just ask a quick follow-up on the awareness training. So was wondering, after a couple of quarters, how the pricing is shaking out. Do you guys think it has the same potential upsell as a core product, like, say, TAP? And then when customers are buying it, are they matching it to the number of seats for a product that they would buy, like, email security? Thanks.

Paul Auvil -- Chief Financial Officer

Yes. So pricing on training and threat simulation is a bit less than what someone would pay for TAP. It's a great product. At the low end, if you're sub-1,000 users, it actually is kind of TAP-level pricing. But for large-scale customers, the pricing is a healthy fraction of TAP, but it's not TAP.

So the nice thing about it, to your point, is that like TAP, like Protection, like pretty much every product we sell, you either buy for all of your users or you don't buy it at all because, again, it's one of those things where you want to train everyone in order to make sure that all of your links, the weaker ones and the ones that may appear not to be quite so weak, are properly trained and briefed so that they all know how to properly handle potentially suspicious email that comes in through the gateway.

Daniel Bartus -- Bank of America Merrill Lynch -- Analyst

Great. Thanks, guys.

Operator

Thanks. And our final question today comes from Nick Yako, Cowen and Company.

Nicholas Yako -- Cowen & Company -- Analyst

Thanks for fitting me in guys. You highlighted good demand for EFD and threat response. Just wondering if there's anything you can share around adoption or attach rates for the email related emerging products and then maybe how they're contributing to your overall growth? Thank you.

Paul Auvil -- Chief Financial Officer

Yeah. So if it continues to be a great seller for us, it is, again, one of the other top three in our emerging product category currently. It's had a great run since we acquired those assets several years ago now from Return Path. And that development team that we acquired then and working very closely in concert with both our digital risk development team as well as our advanced threat development team has really kind of reimagined that product category and has enabled us to bring to market something that's very different than anything else that's really available in the market today. And we're quite pleased with that, and it's something that enables our sales team to go in and, in a very differentiated way, go and sell the product. So I think we're both pleased with the sales that we've executed on, like today, but feel like there's still significant opportunity to drive sales and demand. And I would say that a lot of our go-to-market has been kind of US-centric because that's where the early go-to-market assets were that we picked up as part of the acquisition of EFD. There's a big opportunity internationally that we're really just starting to cultivate that, I think, is pulling [Phonetic] it like a growth for that product line going forward.

Gary, I don't know if you have anything to add to that.

Gary Steele -- Chief Executive Officer and Chairman of the Board

No. I think it's got lots of legs, and we're just getting going. Yes.

Nicholas Yako -- Cowen & Company -- Analyst

Great. Thanks, guys.

Gary Steele -- Chief Executive Officer and Chairman of the Board

Thanks.

Operator

And at this time, I would like to hand the conference back over to Gary Steele, CEO of Proofpoint, for any additional or closing remarks.

Gary Steele -- Chief Executive Officer and Chairman of the Board

Great. I want to just take a moment and thank everyone for joining us on the call today. We're very pleased with the Q2 results, the acquisition of Meta, our continued product innovation, and I'm particularly excited about the continued progress with our people-centric approach in cybersecurity. We believe we are well positioned to drive attractive returns for our shareholders, and we look forward to talking to you on our next call and seeing many of you on the conference circuit this quarter. Thanks so much for joining us today.

Operator

[Operator Closing Remarks].

Duration: 67 minutes

Call participants:

Jason Starr -- Vice President, Investor Relations

Gary Steele -- Chief Executive Officer and Chairman of the Board

Paul Auvil -- Chief Financial Officer

Philip Winslow -- Wells Fargo Securities -- Analyst

Imtiaz Koujalgi -- Guggenheim Partners -- Analyst

Gur Talpaz -- Stifel, Nicolaus & Co. -- Analyst

Jonathan Ruykhaver -- Robert W. Baird & Co. Incorporated -- Analyst

Walter Pritchard -- Citigroup Inc. -- Analyst

Rob Owens -- KeyBanc Capital Markets -- Analyst

Steve Koenig -- Wedbush Securities -- Analyst

Alex Henderson -- Needham & Company -- Analyst

Ken Talanian -- Evercore ISI -- Analyst

Andrew Nowinski -- Piper Jaffray & Co. -- Analyst

Matt Hedberg -- RBC Capital Markets -- Analyst

Catharine Trebnick -- Dougherty & Company -- Analyst

Jonathan Ho -- William Blair & Company -- Analyst

Keith Weiss -- Morgan Stanley -- Analyst

Shaul Eyal -- Oppenheimer & Co. Inc. -- Analyst

Eric Suppiger -- JMP Securities -- Analyst

Gray Powell -- Deutsche Bank AG -- Analyst

Daniel Bartus -- Bank of America Merrill Lynch -- Analyst

Nicholas Yako -- Cowen & Company -- Analyst

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