Proofpoint: 3 Takeaways From Citi Presentation

Proofpoint Inc (NASDAQ: PFPT) CFO Paul Auvil participated in a presentation at Citi’s SMID conference. Citi’s Walter H Pritchard mentioned the key highlights of the presentation:

Takeaway #1: Opportunities For Share Gains

Auvil seeks to continue gaining share in the core email market, at the cost of Cisco Systems, Inc. (NASDAQ: CSCO). The largest opportunity continues to be Symantec Corporation (NASDAQ: SYMC), since it is the #1 player in the market. The MFE partnership is expected to boost the brand, with MFE recommending Proofpoint to its customer base.

“Auvil also highlighted opportunity in the archiving market, with VERITAS having put its Enterprise Vault (#1 in archiving) into sustaining engineering mode,” analyst Walter Pritchard wrote.

Takeaway #2: Channel Traction Ahead

Proofpoint was witnessing early traction via Ingram Micro Inc. (NYSE: IM). Here, Proofpoint was able to reach resellers that were selling to larger companies. In Europe, the company was gaining traction with partners that had moved away from competitors that had recently reduced channel margins.

“Auvil noted that the European market is about 80% the size of the US and recent progress with large accounts in this territory leaves the company poised to accelerate growth here through 2016,” Pritchard said.

Takeaway #3: Margin Focus, Stock-Based Comp

Auvil highlighted a ramp in profitability, even with growth as the priority. Regarding stock-based compensation, the CFO indicated the intermediate term goal of achieving annual dilution in the 4-5 percent range.

Pritchard maintained a Buy rating for the company, with a price target of $62.