What happened

Shares of Zix (NASDAQ:ZIXI) gained as much as 16.2% on Friday. The email security specialist published its fourth-quarter earnings report, edging out Wall Street's estimates.

So what

Fourth-quarter sales rose by 72% year over year to land at $50.4 million. Your average analyst would have settled for $49.6 million. Earnings were in line with the Street's consensus, posting a 41% decline to $50.4 million. Looking ahead, the company's earnings guidance stuck close to the analyst view for both the first quarter and the full fiscal year, but revenue projections came in 5% ahead of the respective analyst views.

Rendering of a green padlock icon on a black background.

Image source: Getty Images.

Now what

Sales nearly doubled thanks to a couple of significant acquisitions. The company picked up email encryption expert DeliverySlip for $14 million and cloud-based cybersecurity expert AppRiver for $275 million, closing both of these deals in the spring of 2019. In the earnings call, management expressed satisfaction over the integration process and argued Zix plus AppRiver is turning out to be greater than the sum of its parts.

That being said, Zix remains unprofitable on a trailing basis, and its free cash flows are running very close to the breakeven point. I'd like to see a firmer grip on positive earnings before recommending that you buy this stock. The sidelines are fine for now.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.