Boston, MA and Tel Aviv, Israel - June 13, 2019 - Tufin® (NYSE: TUFN), a company pioneering a policy-centric approach to security and IT operations, today announced financial results for the first quarter ended March 31, 2019.
“We are pleased to deliver our first financial results as a public company for the first quarter of 2019,” said Ruvi Kitov, Tufin CEO. “We closed a strong quarter, especially with large enterprises, in which we saw continued validation and demand for network security policy automation. Our solid execution combined with our differentiated solutions continue to drive our success across all geographies and verticals. Increased network complexity and digital transformation are both acting as catalysts for Tufin in our large, under-penetrated market.”
First Quarter 2019 Financial Highlights
The tables at the end of this press release include a reconciliation of GAAP to non-GAAP gross profit, operating income and net income for the three months ended March 31, 2019 and 2018. An explanation of these measures is also included under the heading “Non-GAAP Financial Measures.”
Recent Business Highlights
Second Quarter and Full Year 2019 Outlook
Based on information available as of June 13, 2019, Tufin is issuing guidance as indicated below:
Second Quarter 2019:
Full Year 2019:
Conference Call Information
To participate in Tufin’s first quarter earnings conference call, please dial (866) 211-3126 in the U.S. or (647) 689-6579 for international participants and enter Conference ID# 5777476. The call will also be webcast live on Tufin’s Investor Relations website at investors.tufin.com. An archive of the webcast will be available on the investor relations section of the company website two hours after the live call ends.
About Tufin
Tufin (NYSE: TUFN) simplifies management of some of the largest, most complex networks in the world, consisting of thousands of firewall and network devices and emerging hybrid cloud infrastructures. Enterprises select the company’s Tufin Orchestration Suite™ to increase agility in the face of ever-changing business demands while maintaining a robust security posture. The Suite reduces the attack surface and meets the need for greater visibility into secure and reliable application connectivity. With over 2000 customers since its inception, Tufin’s network security automation enables enterprises to implement changes in minutes instead of days, while improving their security posture and business agility.
Non-GAAP Financial Measures
Because of varying available valuation methodologies, subjective assumptions and the variety of equity instruments that can impact a company’s non-cash expense, we believe that providing non-GAAP financial measures that exclude non-cash share-based compensation expense allows for more meaningful comparisons between our operating results from period to period. This non-GAAP financial measure is an important tool for financial and operational decision-making and for evaluating our operating results over different periods.
Other companies, including companies in our industry, may calculate non-GAAP operating profit (loss) differently or not at all, which reduces the usefulness of non-GAAP operating profit (loss) as a comparative measure. You should consider non-GAAP operating profit (loss) along with other financial performance measures, including operating profit, and our financial results presented in accordance with U.S. GAAP. Tufin urges investors to review the reconciliation of its non-GAAP financial measures to the comparable U.S. GAAP financial measures included below, and not to rely on any single financial measure to evaluate its business.
Guidance for non-GAAP financial measures excludes, as applicable, share-based compensation expense. A reconciliation of the non-GAAP financial measures guidance to the corresponding GAAP measures is not available on a forward-looking basis due to the uncertainty regarding, and the potential variability and significance of, the amounts of share-based compensation expense that are excluded from the guidance. Accordingly, a reconciliation of the non-GAAP financial measures guidance to the corresponding GAAP measures for future periods is not available without unreasonable effort.
Cautionary Language Concerning Forward-Looking Statements
This release contains forward-looking statements, which express the current beliefs and expectations of Tufin’s (the “Company”) management. In some cases, forward-looking statements may be identified by terminology such as “believe,” “may,” “estimate,” “continue,” “anticipate,” “intend,” “should,” “plan,” “expect,” “predict,” “potential” or the negative of these terms or other similar expressions. Such statements involve a number of known and unknown risks and uncertainties that could cause the Company’s future results, performance or achievements to differ significantly from the results, performance or achievements expressed or implied by such forward-looking statements. Important factors that could cause or contribute to such differences include risks relating to: changes in the rapidly evolving enterprise network landscape; failure to effectively manage growth; potential near-term declines in our operating and net profit margins and our revenue growth rate; real or perceived shortcomings, defects or vulnerabilities in the Company’s solutions or internal network system, or the failure of the Company’s customers or channel partners to correctly implement the Company’s solutions; fluctuations in quarterly results of operations; the inability to acquire new customers or sell additional products and services to existing customers; competition from a wide variety of competitive vendors; the Company’s ability to successfully integrate potential future acquisitions; and other factors discussed under the heading “Risk Factors” in the final prospectus for the Company’s initial public offering filed with the Securities and Exchange Commission on April 11, 2019. Forward-looking statements in this release are made pursuant to the safe harbor provisions contained in the Private Securities Litigation Reform Act of 1995. These forward-looking statements are made only as of the date hereof, and the Company undertakes no obligation to update or revise the forward-looking statements, whether as a result of new information, future events or otherwise.
TUFIN SOFTWARE TECHNOLOGIES LTD.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited, U.S. dollars in thousands)
|
December 31, |
March 31, |
|
2018 |
2019 |
LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED SHARES AND SHAREHOLDERS’ DEFICIT |
|
|
CURRENT LIABILITIES: |
|
|
Current maturities of long-term loan |
222 |
56 |
Trade payables |
3,096 |
6,040 |
Employee and payroll accrued expenses |
9,976 |
10,198 |
Other accounts payables |
4,890 |
2,284 |
Operating lease liabilities short term |
- |
1,143 |
Deferred revenues |
18,172 |
25,007 |
Total current liabilities |
36,356 |
44,728 |
NON-CURRENT LIABILITIES: |
|
|
Long-term deferred revenues |
13,292 |
18,777 |
Operating lease liabilities long term |
- |
14,230 |
Other non-current liabilities |
732 |
762 |
Total non-current liabilities |
14,024 |
33,769 |
Total liabilities |
50,380 |
78,497 |
COMMITMENTS AND CONTINGENCIES (Note 9) |
|
|
REDEEMABLE CONVERTIBLE PREFERRED SHARES: |
|
|
Series A preferred shares of NIS 0.015 par value: 10,000,000 preferred shares authorized at December 31, 2018 and March 31, 2019; 7,592,803 preferred shares issued and outstanding at December 31, 2018 and March 31, 2019; |
5,073 |
5,073 |
Series B preferred shares of NIS 0.015 par value: 3,333,333 preferred shares authorized at December 31, 2018 and March 31, 2019; 2,668,333 preferred shares issued and outstanding at December 31, 2018 and March 31, 2019; |
4,310 |
4,310 |
Series C preferred shares of NIS 0.015 par value: 4,666,667 preferred shares authorized at December 31, 2018 and March 31, 2019; 4,621,592 preferred shares issued and outstanding at December 31, 2018 and March 31, 2019; |
12,416 |
12,416 |
Series D preferred shares of NIS 0.015 par value: 1,534,021 preferred shares authorized at December 31, 2018 and March 31, 2019; 1,534,021 preferred shares issued and outstanding at December 31, 2018 and March 31, 2019 |
4,900 |
4,900 |
TOTAL REDEEMABLE CONVERTIBLE PREFERRED SHARES |
26,699 |
26,699 |
REDEEMABLE CONVERTIBLE PREFERRED SHARES: |
|
|
SHAREHOLDERS’ DEFICIT: |
|
|
Ordinary shares of NIS 0.015 par value; 52,666,712 shares authorized at December 31, 2018 and March 31, 2019; 8,265,988 and 8,301,280 shares issued and outstanding at December 31, 2018 and March 31, 2019; |
30 |
30 |
Comprehensive income |
10,337 |
11,479 |
Accumulated deficit |
(40,313) |
(44,761) |
TOTAL SHAREHOLDERS’ DEFICIT |
(29,946) |
(33,252) |
TOTAL LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED SHARES AND SHAREHOLDERS’ DEFICIT |
47,133 |
71,944 |
TUFIN SOFTWARE TECHNOLOGIES LTD.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited, U.S. dollars in thousands, except per share amounts)
|
Three Months Ended |
|
|
|
March 31, |
March 31, |
|
|
2018 |
2019 |
|
Revenues: |
|
|
|
Product |
8,422 |
10,623 |
|
Maintenance and professional services |
9,478 |
11,831 |
|
Total revenues |
17,900 |
22,454 |
|
Cost of revenues: |
|
|
|
Product |
657 |
529 |
|
Maintenance and professional services |
2,575 |
3,509 |
|
Total cost of revenues |
3,232 |
4,038 |
|
Gross profit |
14,668 |
18,416 |
|
Operating expenses: |
|
|
|
Research and development |
4,670 |
6,503 |
|
Sales and marketing |
9,147 |
13,600 |
|
General and administrative |
1,097 |
2,588 |
|
Total operating expenses |
14,914 |
22,691 |
|
Operating loss |
(246) |
(4,275) |
|
Financial income (loss), net |
(112) |
40 |
|
Loss before taxes on income |
(358) |
(4,235) |
|
Taxes on income |
(368) |
(213) |
|
Net loss |
(726) |
(4,448) |
|
Basic and diluted net loss per ordinary share |
(0.09) |
(0.54) |
|
Weighted average number of shares used in computing net loss per ordinary share, basic and diluted |
7,997,832 |
8,281,662 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Share-based Compensation Expense: |
|
|
|
|
Three Months Ended |
|
|
|
March 31, |
March 31, |
|
|
2018 |
2019 |
|
Cost of Revenues |
111 |
235 |
|
Research and Development |
91 |
138 |
|
Sales and marketing |
167 |
489 |
|
General and administrative |
53 |
230 |
|
Total share-based compensation expense |
422 |
1,092 |
|
TUFIN SOFTWARE TECHNOLOGIES LTD.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited, U.S. dollars in thousands, except per share amounts)
|
Three Months Ended |
|
|
|
March 31, |
March 31, |
|
|
2018 |
2019 |
|
Revenues: |
|
|
|
Product |
8,422 |
10,623 |
|
Maintenance and professional services |
9,478 |
11,831 |
|
Total revenues |
17,900 |
22,454 |
|
Cost of revenues: |
|
|
|
Product |
657 |
529 |
|
Maintenance and professional services |
2,575 |
3,509 |
|
Total cost of revenues |
3,232 |
4,038 |
|
Gross profit |
14,668 |
18,416 |
|
Operating expenses: |
|
|
|
Research and development |
4,670 |
6,503 |
|
Sales and marketing |
9,147 |
13,600 |
|
General and administrative |
1,097 |
2,588 |
|
Total operating expenses |
14,914 |
22,691 |
|
Operating loss |
(246) |
(4,275) |
|
Financial income (loss), net |
(112) |
40 |
|
Loss before taxes on income |
(358) |
(4,235) |
|
Taxes on income |
(368) |
(213) |
|
Net loss |
(726) |
(4,448) |
|
Basic and diluted net loss per ordinary share |
(0.09) |
(0.54) |
|
Weighted average number of shares used in computing net loss per ordinary share, basic and diluted |
7,997,832 |
8,281,662 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Share-based Compensation Expense: |
|
|
|
|
Three Months Ended |
|
|
|
March 31, |
March 31, |
|
|
2018 |
2019 |
|
Cost of Revenues |
111 |
235 |
|
Research and Development |
91 |
138 |
|
Sales and marketing |
167 |
489 |
|
General and administrative |
53 |
230 |
|
Total share-based compensation expense |
422 |
1,092 |
TUFIN SOFTWARE TECHNOLOGIES LTD.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited, U.S. dollars in thousands)
|
Three Months Ended |
|
|
March 31, |
|
|
2018 |
2019 |
CASH FLOWS FROM OPERATING ACTIVITIES: |
|
|
Net loss |
(726) |
(4,448) |
Adjustment to reconcile net loss to net cash provided by (used in) operating activities: |
|
|
Depreciation |
132 |
367 |
Bad debt expense |
- |
28 |
Compensation related to options granted to employees |
422 |
1,092 |
Other |
(26) |
(201) |
Change in operating assets and liability items: |
|
|
Accounts receivable |
7,693 |
2,708 |
Prepaid expenses and other current assets |
(1,060) |
(639) |
Deferred costs |
(67) |
(184) |
Deferred taxes and other non-current assets |
(33) |
(381) |
Trade payables |
1,120 |
2,729 |
Employee and payroll accrued expenses |
(1,431) |
222 |
Other accounts payable and non-current liabilities |
(525) |
(2,546) |
Operating lease |
- |
838 |
Deferred revenues |
10,344 |
12,320 |
Net cash provided by operating activities |
15,843 |
11,905 |
CASH FLOWS FROM INVESTING ACTIVITIES: |
|
|
Purchase of fixed assets |
(157) |
(844) |
Amounts withdrawn from severance fund |
3 |
(10) |
Net cash used in investing activities |
(154) |
(854) |
CASH FLOWS FROM FINANCING ACTIVITIES: |
|
|
Proceeds from exercise of stock options |
81 |
50 |
Deferred offering costs |
- |
(103) |
Payment of long-term loan |
(167) |
(166) |
Net cash used in financing activities |
(86) |
(219) |
Effect of exchange rate changes on cash, cash equivalents and restricted cash |
22 |
208 |
INCREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH |
15,625 |
11,040 |
CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT BEGINNING OF YEAR |
15,620 |
17,598 |
CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT END OF PERIOD |
31,245 |
28,638 |
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: |
|
|
Property and equipment purchased but not yet paid |
54 |
212 |
Unpaid offering costs |
- |
666 |
TUFIN SOFTWARE TECHNOLOGIES LTD.
RECONCILIATION OF GAAP MEASURES TO NON-GAAP MEASURES
(Unaudited, U.S. dollars in thousands)
Reconciliation of Gross Profit to Non-GAAP Gross Profit:
|
|
|
|
Three Months Ended |
|
|
March 31, |
March 31, |
|
2018 |
2019 |
Gross profit |
14,668 |
18,416 |
Plus: |
|
|
Share-based compensation |
111 |
235 |
Non-GAAP gross profit |
14,779 |
18,651 |
|
|
|
|
|
|
Reconciliation of Operating loss to Non-GAAP Operating Income (loss): |
|
|
|
|
|
|
Three Months Ended |
|
|
March 31, |
March 31, |
|
2018 |
2019 |
Operating loss |
(246) |
(4,275) |
Plus: |
|
|
Share-based compensation |
422 |
1,092 |
Non-GAAP Operating income (loss) |
176 |
(3,183) |
|
|
|
|
|
|
Reconciliation of Net loss to Non-GAAP Net loss: |
|
|
|
|
|
|
Three Months Ended |
|
|
March 31, |
March 31, |
|
2018 |
2019 |
Net loss |
(726) |
(4,448) |
Plus: |
|
|
Share-based compensation |
422 |
1,092 |
Non-GAAP net loss |
(304) |
(3,356) |
|
|
|
Non-GAAP net income per share |
|
|
Basic and diluted |
(0.04) |
(0.41) |
|
|
|
Weighted average number of shares |
7,997,832 |
8,281,662 |