What happened

After the company reported strong fourth-quarter and full-year earnings, shares of Proofpoint (NASDAQ:PFPT), a high-flying software-as-a-service company focused on digital security, had risen 12% as of 11:25 a.m. EST on Friday.

So what

Here's a look at the key numbers from the company's earnings report:

  • Total revenue grew 35% to $198.5 million. That was nicely ahead of the $192.4 million in revenue that Wall Street had expected.
  • Billings increased 43% to $270 million.
  • Non-GAAP (generally accepted accounting principles) gross margin increased 100 basis points to 79%.
  • GAAP earnings per share were negative $0.39.
  • Non-GAAP net income was $29.1 million, or $0.51. That was far ahead of the $0.35 that market watchers were projecting. 
  • Cash balance at year end was $232 million. 
Criminal with laptop in hands

Image source: Getty Images.

Here's a look at the results from the full year:

  • Revenue grew 38% to $717 million.
  • Billings increased 37% to $639 million.
  • Non-GAAP net income grew 45% to $82.5 million, or $1.47 per share. 

Given the expectation-smashing numbers, it isn't hard to figure out why shareholders are having a great day. 

Check out the latest Proofpoint earnings call transcript.

Now what

Proofpoint's management team expects that the good times will continue in 2019. Here's a look at the guidance being shared with investors today:

  • First-quarter revenue is expected to land between $198 million and $200 million. That's slightly ahead of the $198.1 million that Wall Street was expecting.
  • First quarter non-GAAP net income is expected to be in the range of $18 million to $20.0 million, or $0.31 to $0.35 per share. That also compares favorably to the $0.31 that analysts were projecting.
  • Full-year 2019 revenue is expected to come in between $870 million to $874 million. That's a smidge behind the $875.4 million that market watchers were forecasting.
  • Full-year 2019 net income is expected to be in the range of $94 million to $98 million, or $1.60 to $1.67 per share. Wall Street was expecting $1.65 in adjusted earnings for the year.

Since Proofpoint's full-year guidance is a bit lower than expectations, you might expect the company's stock to be selling off sharply today. However, this company has established a history of blowing past its own guidance targets. That fact is likely causing traders to view the company's guidance as overly conservative.

Overall, Proofpoint's strong revenue, billings, and adjusted earnings growth clearly show that its solutions are resonating in the marketplace. With strong growth on the horizon and margin expansion underway, this appears to be a great SaaS stock for growth investors to add to their watchlist.