According to a recent Verified Market Research report, the global email encryption market in the post-COVID-19 scenario is estimated to grow 24% annually to $19.27 billion by 2027 driven by the Bring Your Own Device (BYOD) trend and the continued adoption of cloud services, which has accelerated due to the global pandemic. San Francisco-based Proofpoint (Nasdaq: PFPT) recently announced its third-quarter results that surpassed market expectations for the quarter.

Proofpoint’s Financials

Proofpoint’s Q3 revenues grew 17% over the year to $266.7 million, ahead of the market’s forecast of $261.54 million. EPS of $0.59 was also significantly better than the market’s forecast of $0.39 per share.

By segment, Subscription revenues grew 16.2% to $260.7 million. Hardware and services revenues grew 92.8% to $6 million. Billings grew 6% to $294.4 million.

For the fourth quarter, Proofpoint forecast revenues of $268-$270 million. It expects to end the year with revenues of $1024.9-$1044.9 million. Its EPS guidance is $1.88-$1.91 for the year.

Proofpoint’s Product Expansion in Cyber Attack Aftermath

The recent cyber attack news in the US has sent shockwaves down both cybersecurity providers and consumers. Recent news of the attack claims that as many as 250 organizations were impacted by the attack. According to a recent New York Times report, the US government has spent billions of dollars over the past few years to build its cyber-offensive capabilities. These include a giant war room at Fort Meade, Maryland for United States Cyber Command and the installation of a defensive sensor system named Einstein all around the country. But the Russian hack appears to have sailed past these efforts without even alerting Einstein.

While the federal agencies continue to chase after the hackers, the attack has opened up a big market opportunity for cybersecurity vendors. Some analysts believe that the data breach could lead to a $200 billion growth opportunity among cybersecurity vendors in the next five years. Threat intelligence players like Proofpoint are cashing in on this growth by releasing several new products.

During the quarter Proofpoint announced the launch of its Content Capture capabilities for Microsoft Teams and Slack. The global pandemic has accelerated the need for organizations to find an effective way for employees to communicate while ensuring digital communications compliance. Firms need to capture, retain, and review employee communications to adhere to rules set forth by regulators. Microsoft Teams is becoming a critical tool for communication, and organizations need to be able to balance employee productivity with the need to capture and supervise content for regulatory purposes in the new work-from-home environment.

The new launch allows Proofpoint to help companies use these collaborative solutions to deliver expanded communications while ensuring digital communications compliance. Similar to its e-mail archiving service, Content Capture captures messages and content in native format, preserves the original context of messages and content at the point of capture and in transport, records edits and deletions of captured content, and ensures that the data captured is stored with complete accuracy.

Proofpoint is seeing significant traction in add-on sales of its products. During the quarter, add-on product sales contributed approximately 60% of its new annual recurring revenue growth. In particular, there was significant strength in demand for its emerging products, which represented over 40% of the total new and add-on business closed led by demand for Proofpoint Security Awareness Training, Email Fraud Defense, Cloud App Security Broker, Threat Response, and Insider Threat Management.

To continue to drive growth of these products, it continues to bundle these emerging products through its P0 through P3 offerings. These bundles aggregate its advanced threat and compliance capabilities into holistic solutions that are easier for customers to consume and consolidate their spending with Proofpoint while also greatly simplifying the selling process for sales teams and channel partners.

Proofpoint’s stock is trading at $136.41 with a market capitalization of $7.9 billion. It touched a 52-week high of $137.84 in December. The stock had fallen to a 52-week low of $83.81 in March when most stocks tumbled.