What: Shares of cybersecurity company Proofpoint (NASDAQ:PFPT) jumped on Thursday after the company reported better-than-expected third-quarter results. The stock closed the day up about 12% from the previous close.

So what: Proofpoint reported quarterly revenue of $69.1 million, up 37% year-over-year and about $3 million higher than analysts expected. Billings also grew at a blistering pace, up 37% year-over-year to $85 million. CEO Gary Steele stated that "Our strong third quarter results reflect Proofpoint's ongoing high competitive win rates, traction with new products along with robust add-on and renewal activity."

The company reported a non-GAAP EPS loss of $0.06, an improvement over the $0.11 loss reported during the same period last year, and five cents better than the average analyst estimate. On a GAAP basis, the company lost $0.71 per share, compared to a loss of $0.46 per share during the same period last year. This discrepancy was driven in part by a near-doubling of the company's stock-based compensation expense.

Now what: In addition to reporting a strong quarter, Proofpoint raised its full-year guidance for both revenue and billings. Revenue is expected to be between $263 million and $264 million, with billings expected to be between $316.8 million and $318.8 million. A non-GAAP EPS loss between $0.35 and $0.36 rounds out the company's guidance.

Despite posting big losses, Proofpoint is free cash flow positive, thanks to both its heavy use of stock-based compensation and its subscription-based business model bringing in cash. With Proofpoint's stock price based mostly on its ability to grow revenue quickly, the company delivered exactly what investors were looking for.

Timothy Green has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. 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.