Third quarter revenue of $28.0 million
increased 9% year-over-year
GAAP operating loss of $9.0 million and
non-GAAP operating loss of $5.4 million
Tufin (NYSE: TUFN), a company pioneering a policy-centric
approach to security and IT operations, today announced financial
results for the third quarter ended September 30, 2021.
“I am very pleased to report another good quarter, driven by 17%
year-over-year product revenue growth,” said Ruvi Kitov, Tufin’s
CEO and Co-Founder. “We added several significant subscription
deals, with subscriptions representing approximately 46% of new
business bookings for the first nine months of the year;
positioning us well ahead of our goals in our transition to a
subscription-based model. We made substantial progress across our
strategic initiatives, completed the key hires to round out our
sales management, and saw more organizations across multiple
industries emerging from the challenges of the pandemic, ready to
invest in network security policy automation.”
Kitov continued, “Our results demonstrate not only our ability
to drive new growth, but also our ability to serve our existing
customers, as we help them navigate today’s rapidly changing IT
environment and the ever-increasing security threats. We believe we
are well-positioned to continue to deliver value for all of our
stakeholders going forward.”
Financial Highlights for the Third Quarter Ended September
30, 2021
Revenue:
- Total revenue was $28.0 million, up 9% compared with the third
quarter of 2020.
- Product revenue was $11.7 million, up 17% compared with the
third quarter of 2020.
- Maintenance and professional services revenue was $16.3
million, up 4% compared with the third quarter of 2020.
Gross Profit:
- GAAP gross profit was $22.2 million, or 79% of total revenue,
compared to $21.0 million in the third quarter of 2020, or 82% of
total revenue.
- Non-GAAP gross profit was $22.6 million, or 81% of total
revenue, compared to $21.6 million in the third quarter of 2020, or
84% of total revenue.
Operating Loss:
- GAAP operating loss was $9.0 million, compared to $5.0 million
in the third quarter of 2020.
- Non-GAAP operating loss was $5.4 million, compared to $1.0
million in the third quarter of 2020.
Net Loss:
- GAAP net loss was $9.4 million, or a loss of $0.25 per share,
compared to a GAAP net loss of $5.1 million, or a loss of $0.14 per
share, in the third quarter of 2020.
- Non-GAAP net loss was $6.3 million, or a loss of $0.17 per
share, compared to a loss of $1.2 million, or a loss of $0.03 per
share, in the third quarter of 2020
Balance Sheet and Cash Flow:
- Cash flow used for operating activities during the nine months
ended September 30, 2021 was $10.6 million, compared to cash flow
used for operating activities of $15.7 million during the nine
months ended September 30, 2020.
- Total cash, cash equivalents, restricted cash and marketable
securities as of September 30, 2021 were $92.9 million, compared to
$104.0 million as of December 31, 2020.
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 and nine months ended September 30,
2021 and 2020. An explanation of these measures is also included
under the heading “Non-GAAP Financial Measures.”
Recent Business Highlights
- Tufin announced it was named “Policy Management Solution of the
Year” by CyberSecurity Breakthrough Awards, a leading independent
market intelligence organization that recognizes the top companies,
technologies, and products in the global information security
market.
- Tufin announced the release of Tufin Orchestration Suite R21-3,
featuring a new integration with Zscaler Cloud Firewall, to
centralize and simplify Secure Access Service Edge (SASE) policy
management alongside other vendors’ security policies. This release
also includes a new security policy dashboard, providing real-time,
unified insight into operational, security, and compliance data
from multiple security platforms. In addition, with R21-3, users
can accelerate data center migration by leveraging new SecureChange
workflows to automatically clone security policies of networks and
remove obsolete networks from these policies across the
multi-vendor, hybrid environment.
Business Outlook
Based on information available as of November 09, 2021, Tufin is
issuing guidance as indicated below:
Fourth Quarter 2021:
Full Year 2021:
Conference Call Information
In conjunction with this announcement, the Company will host a
conference call today, November 9, 2021, at 8:00am Eastern Time, to
discuss the Company’s third quarter financial results and its
business outlook. To participate in the call, please dial
877-407-2988 in the U.S. or 201-389-0923 for international
participants and enter Conference ID# 13724309. The call will also
be webcast live on Tufin’s Investor Relations website at
investors.tufin.com.
Following the conference call, an archive of the webcast will be
available on the investor relations section of the Company
website’s 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 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 2,000
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
We believe that providing non-GAAP financial measures that
exclude, as applicable, share-based compensation expense and
certain non-recurring costs, as well as, the tax effect of these
non-GAAP adjustments, allows for more meaningful comparisons
between our operating results from period to period. These non-GAAP
financial measures are an important tool for financial and
operational decision-making and for evaluating our operating
results over different periods:
-
We define non-GAAP gross profit as gross profit excluding
share-based compensation expense.
-
We define non-GAAP operating profit (loss) as operating profit
(loss) excluding share-based compensation expense, shelf
registration costs and one-time expenses associated with the
reorganization of one of our subsidiaries.
-
We define non-GAAP net income (loss) as net income (loss)
excluding share-based compensation expense, shelf registration
costs, one-time expenses associated with the reorganization of one
of our subsidiaries and the tax effect of these non-GAAP
adjustments.
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 allow for more meaningful comparisons between our operating
results from period to period. In addition, we believe that
providing non-GAAP financial measures that exclude shelf
registration costs and one-time expenses associated with the
reorganization of one of our subsidiaries allows for more
meaningful comparisons between our operating results from period to
period since these non-recurring costs are not representative or
indicative of our ongoing operations. We also believe that the tax
effects related to the non-GAAP adjustments set forth above do not
reflect the performance of our core business and would impact
period-to-period comparability.
Other companies, including companies in our industry, may
calculate non-GAAP gross profit, non-GAAP operating income (loss)
and non-GAAP net income (loss) differently or not at all, which
reduces the usefulness these non-GAAP financial measures for
comparison. You should consider these non-GAAP financial measures
along with other financial performance measures, including gross
profit, operating income (loss) and net income (loss), 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 and certain
non-recurring costs. 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 and certain
non-recurring costs, as applicable, 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 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: the
impact of the novel coronavirus (“COVID-19”) on the budgets of our
clients and on economic conditions generally; successful management
of our business model, as well as current and future growth,
particularly with respect to our plans to transition to a
subscription-based business model over time; political conditions
and economic downturns, particularly in the areas where we operate;
compliance, managerial and regulatory risks associated with
international sales and operations; our expectation that
policy-centric, automated solutions will garner a growing share of
enterprise security spending; our expectations for growth in
certain key verticals and geographic regions and our intention to
expand internationally; our ability to maintain effective internal
controls over financial reporting; our expectations concerning
seasonality and the predictability of our sales cycle; our
expectations regarding customer relationships developed by our
hybrid sales model; our expectations regarding customer
relationships, including our ability to acquire new customers or
sell additional products and services to existing customers;
competition from a wide variety of competitive vendors; our ability
to compete and increase positive market awareness of our brand; our
ability to align future and past performance by generating
sufficient revenue; the compatibility of our offerings with the
existing technologies of our customers; plans to deploy additional
cloud-based subscription products over time; reliance on certain
products and customers to generate large portions of our revenue,
as well as reliance on a single third-party manufacture to fulfill
certain orders; our intention to make further investments in our
products, including the Tufin Orchestration Suite; our expectations
regarding sales of our newest business product, SecureCloud, as
well as sales driven by channel partners and technology alliance
partners through joint selling efforts; out dependence on a single
manufacturer to fulfill certain software license orders; the effect
of cybersecurity threats or attacks on our technologies, products
or services; real or perceived shortcomings, defects or
vulnerabilities in our solutions or internal network system;
compliance with laws, regulations and requirements in the
jurisdictions where we operate; expectations regarding the outcome
of current litigation; ability to protect and defend our
intellectual property rights; effectively managing, investing in,
growing and maintaining key personnel; growth in the enterprise
security and network management product markets; volatility of our
share price and trading market activity; impact of being
incorporated and located in Israel; expectations regarding our tax
classifications; and other factors discussed under the heading
“Risk Factors” in the Company’s most recent annual report on Form
20-F filed with the Securities and Exchange Commission.
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
U.S. dollars in
thousands
(Unaudited)
December 31,
September 30,
2020
2021
Assets
CURRENT ASSETS:
Cash and cash equivalents
$
58,449
55,365
Marketable Securities - short term
19,586
18,191
Accounts receivable (net of allowance for
credit losses of $85 at December 31, 2020
and September 30, 2021)
16,674
11,110
Prepaid expenses and other current
assets
7,159
9,524
Total current assets
101,868
94,190
NON CURRENT ASSETS:
Long-term restricted bank deposits
3,268
3,251
Marketable Securities - long term
22,705
16,092
Property and equipment, net
4,502
4,882
Deferred costs
6,348
7,400
Deferred tax assets
1,346
2,199
Operating lease assets
18,802
17,059
Other non-current assets
1,512
1,304
Total non-current assets
58,483
52,187
Total assets
$
160,351
146,377
TUFIN SOFTWARE TECHNOLOGIES
LTD.
CONDENSED CONSOLIDATED BALANCE
SHEETS
U.S. dollars in thousands
(except share data)
(Unaudited)
December 31,
September 30,
2020
2021
LIABILITIES AND SHAREHOLDERS’
EQUITY
CURRENT LIABILITIES:
Trade payables
$
4,147
5,392
Employee and payroll accrued expenses
17,985
17,825
Other accounts payables
578
734
Operating lease liabilities – current
3,185
3,304
Deferred revenues
24,940
27,544
Total current liabilities
50,835
54,799
NON-CURRENT LIABILITIES:
Long-term deferred revenues
12,815
17,136
Non-current operating lease
liabilities
20,240
17,981
Other non-current liabilities
1,282
1,385
Total non-current liabilities
34,337
36,502
Total liabilities
85,172
91,301
SHAREHOLDERS’ EQUITY:
Ordinary shares of NIS 0.015 par value;
150,000,000 shares authorized at December 31, 2020 and September
30, 2021, respectively; 35,972,470 and 37,754,199 shares issued and
outstanding at December 31, 2020 and September 30, 2021,
respectively;
148
154
Additional paid-in capital
178,864
191,657
Accumulated other comprehensive income
5
(3)
Accumulated deficit
(103,838)
(136,732)
TOTAL SHAREHOLDERS’ EQUITY
75,179
55,076
TOTAL LIABILITIES AND SHAREHOLDERS’
EQUITY
160,351
146,377
TUFIN SOFTWARE TECHNOLOGIES
LTD.
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
U.S. dollars in thousands
(except per share data)
(Unaudited)
Three Months Ended
Nine Months Ended
September 30,
September 30,
September 30,
September 30,
2020
2021
2020
2021
Revenues:
Product
10,000
11,734
23,705
27,512
Maintenance and professional services
15,606
16,281
46,177
47,601
Total revenues
25,606
28,015
69,882
75,113
Cost of revenues:
Product
523
844
1,736
2,175
Maintenance and professional services
4,044
4,971
13,157
14,837
Total cost of revenues
4,567
5,815
14,893
17,012
Gross profit
21,039
22,200
54,989
58,101
Operating expenses:
Research and development
8,071
9,674
26,282
29,728
Sales and marketing
12,988
15,455
44,453
43,687
General and administrative
4,994
6,028
14,718
17,913
Total operating expenses
26,053
31,157
85,453
91,328
Operating loss
(5,014)
(8,957)
(30,464)
(33,227)
Financial income (expense), net
240
(385)
676
(626)
Loss before taxes on income
(4,774)
(9,342)
(29,788)
(33,853)
Taxes on income
(373)
(97)
(1,216)
959
Net loss
(5,147)
(9,439)
(31,004)
(32,894)
Basic and diluted net loss per ordinary
share
(0.14)
(0.25)
(0.87)
(0.89)
Weighted average number of shares used in
computing net loss per ordinary share, basic and diluted
35,758
37,478
35,621
36,971
Share-based Compensation
Expense:
Three Months Ended
Nine Months Ended
September
30,
September 30,
September 30,
September
30,
2020
2021
2020
2021
Cost of revenues
574
393
1,536
1,454
Research and development
1,244
846
3,427
3,208
Sales and marketing
1,118
1,094
3,327
2,737
General and administrative
1,056
1,211
2,894
3,315
Total share-based compensation expense
3,992
3,544
11,184
10,714
TUFIN SOFTWARE TECHNOLOGIES
LTD.
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
U.S. dollars in
thousands
(Unaudited)
Nine Months Ended
September 30,
2020
2021
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net loss
(31,004)
(32,894)
Adjustment to reconcile net loss to net
cash used in operating activities:
Depreciation
1,068
1,403
Share-based compensation
11,184
10,714
Amortization of premium on marketable
securities
35
237
Exchange rate differences on cash, cash
equivalents and restricted cash
276
279
Change in operating assets and
liabilities items:
Accounts receivable, net
4,580
5,564
Prepaid expenses and other current
assets
(3,126)
(2,735)
Deferred costs
232
(953)
Deferred taxes and other non-current
assets
255
(645)
Trade payables
119
1,245
Employee and payroll accrued expenses
184
354
Other accounts payable and non-current
liabilities
(533)
279
Operating lease
(220)
(397)
Deferred revenues
1,258
6,925
Net cash used in operating
activities
(15,692)
(10,624)
CASH FLOWS FROM INVESTING
ACTIVITIES:
Purchase of fixed assets
(1,960)
(1,370)
Investment in marketable
securities
(26,182)
(16,127)
Proceeds from maturities of
marketable securities
-
23,919
Net cash used in investing
activities
(28,142)
6,422
CASH FLOWS FROM FINANCING
ACTIVITIES:
Proceeds from exercise of share
options
1,081
1,894
Changes in withholding tax
related to employee share plans
(1,233)
(514)
Net cash provided by (used in)
financing activities
(152)
1,380
Effect of exchange rate
changes on cash, cash equivalents and restricted cash
(276)
(279)
INCREASE (DECREASE) IN CASH, CASH
EQUIVALENTS AND RESTRICTED CASH
(44,262)
(3,101)
CASH, CASH EQUIVALENTS AND RESTRICTED
CASH AT BEGINNING OF PERIOD
121,729
61,717
CASH, CASH EQUIVALENTS AND RESTRICTED
CASH AT END OF PERIOD
77,467
58,616
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
Property and equipment purchased but not
yet paid
-
29
TUFIN SOFTWARE TECHNOLOGIES
LTD.
RECONCILIATION OF GAAP
MEASURES TO NON-GAAP MEASURES
U.S. dollars in thousands
(except per share data)
(Unaudited)
Reconciliation of Gross Profit to
Non-GAAP Gross Profit:
Three Months Ended
Nine Months Ended
September 30,
September 30,
September 30,
September 30,
2020
2021
2020
2021
Gross profit
21,039
22,200
54,989
58,101
Plus:
Share-based compensation
574
393
1,536
1,454
Non-GAAP gross profit
21,613
22,593
56,525
59,555
Reconciliation of Operating Loss to
Non-GAAP Operating Loss:
Three Months Ended
Nine Months Ended
September 30,
September 30,
September 30,
September 30,
2020
2021
2020
2021
Operating loss
(5,014)
(8,957)
(30,464)
(33,227)
Plus:
Share-based compensation
3,992
3,544
11,184
10,714
Shelf registration costs
126
One-time reorganization charges
322
Non-GAAP operating loss
(1,022)
(5,413)
(18,832)
(22,513)
Reconciliation of Net Loss to Non-GAAP
Net Loss:
Three Months Ended
Nine Months Ended
September 30,
September 30,
September 30,
September 30,
2020
2021
2020
2021
Net loss
(5,147)
(9,439)
(31,004)
(32,894)
Plus:
Share-based compensation
3,992
3,544
11,184
10,714
Shelf registration costs
-
-
126
-
One-time reorganization charges
-
-
322
-
Taxes on income related to non-GAAP
adjustments
(18)
(358)
(285)
(2,077)
Non-GAAP net loss
(1,173)
(6,253)
(19,657)
(24,257)
Non-GAAP net income per share - basic and
diluted
(0.03)
(0.17)
(0.55)
(0.66)
Weighted average number of shares
35,758
37,478
35,621
36,971
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.
Find out more at: www.tufin.com
Follow Tufin on Twitter: @TufinTech
Read more on Tufin’s blog: Suite Talk
View source
version on businesswire.com: https://www.businesswire.com/news/home/20211109005619/en/
Investor Relations: investors@tufin.com
Susan Rivera Corporate Communications Manager
susan.rivera@tufin.com
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