About Zix

Zix Corporation (Zix) operates as a cloud provider of email security, productivity and compliance solutions. The company delivers solutions for email encryption, data loss prevention (DLP), advanced threat protection, unified archiving, and cloud data backup. As a leading provider of cloud-based cybersecurity, compliance, and productivity solutions for businesses of all sizes, the company focuses on the protection of business communication, enabling its customers to secure data and meet compliance needs. The company serves organizations in many industries, with particular emphasis on the healthcare (including multiple major hospitals and several Blue Cross Blue Shield plans), financial services (including several major U.S. Banks), and insurance and government (including the U.S. Securities and Exchange Commission (the ‘SEC’)) sectors. The company’s email encryption and DLP capabilities enable the secure exchange of email that includes sensitive information. Through a comprehensive secure messaging service, called Email Encryption, the company allows an enterprise to use policy-driven rules to determine which email messages should be sent securely or quarantined for review to comply with regulations or company-defined policies. The company designed its solution to alleviate the recipient’s burden by enabling the delivery of encrypted email automatically and transparently. The company enables transparent delivery through The Directory, an email encryption community, which is designed to share identities of its tens of millions of members; the company’s patented Best Method of Delivery, which is designed to deliver email in the most secure, most convenient method possible for the recipient; and policy-based encryption, which automatically encrypts and decrypts messages with sensitive content. The company’s Email Encryption solution enables DLP capabilities for email by combining proven policy and content scanning capabilities with quarantine functionality. The company owns Greenview Data, Inc. (Greenview), an email security company. The company’s acquisition of Greenview addresses increasing buyer demand for email security bundles by adding advanced threat protection, antivirus, anti-spam and archiving capabilities to its industry-leading email encryption. The company, through the acquisition of Greenview, provides two new solutions, such as Advanced Email Threat Protection and Information Archive. Advanced Email Threat Protection defends organizations from zero-day malware, ransomware, phishing, CEO fraud, W-2 phishing attacks, spam and viruses in email with multi-layer filtering techniques. Information Archive is a cloud-based email retention solution that enables user retrieval, compliance and eDiscovery. Available as a standalone or add-on solution for other products, the company’s Information Archive includes policy-based retention, automatic indexing and flexible search capabilities for audit and legal requirements. The company also owns CM2.COM, Inc., doing business as Erado (Erado), a unified archiving company. Erado strengthened the company’s archiving solutions with unified archiving, supervision, security, and messaging solutions for customers that demand bundled services. Erado’s long- standing focus on helping its customers comply with FINRA and SEC regulations helped further strengthen the company’s offerings for customers with compliance requirements. This acquisition also expanded the company’s cloud-based email archiving capabilities into more than 50 content channels, including social media, instant message, mobile, web, audio and video. In addition, the company owns AppRiver LLC (AppRiver), a leading provider of cloud-based cybersecurity solutions for small and medium businesses (SMB). The combined company creates a primary cloud-based security solutions provider, particularly for the small and mid-size enterprise market. This acquisition further strengthened that alignment by bolstering the company’s Advanced Threat Protection offerings, expanding the company’s go-to-market channels, and providing a cloud platform to drive even more value for the company’s customers and partners. In addition, the company can directly offer Microsoft’s substantial catalog of productivity and Microsoft Office 365 cloud email solutions. The company also owns DeliverySlip Inc. (DeliverySlip), expanding the company’s portfolio with additional email encryption, information rights management, e-signatures, and secure file sharing solutions. In November 2020, the company acquired CloudAlly Ltd. (CloudAlly), a pioneer of enterprise-grade, software-as-a-service (SaaS) cloud backup and recovery solutions. CloudAlly provides a secure cloud data backup solution for critical business information, including backup services for Microsoft O365 cloud email, Google applications, and Salesforce. The company’s business operations and service offerings are supported by the ZixData Center, which is ISO 27001 certified SOC2 accredited and SOC 3 certified for applicable services. The company’s Email Encryption Service allows a user to send encrypted email to any email user anywhere and on any Internet-enabled device. Encrypted email is delivered through the patented Best Method of Delivery protocol which automatically determines the most direct and appropriate means of delivery, based on the sender’s and recipient’s communications environment and preferences. The company’s Best Method of Delivery makes the technology simple for end users and provides flexibility and ease of implementation for information technology professionals. Zix Email Encryption also includes the company’s email data loss prevention capabilities that automatically detect sensitive data using the company’s pre-built filters that cover many of industry regulations, including the Health Information Portability and Accountability Act (HIPAA), the Gramm-Leach-Bliley Act (GLBA), and state privacy laws. The company also provides the ability to build new custom filters to meet the needs of any business. Zix Information Archive solution provides additional compliance protection, archiving not only email communication but all types of business communication, including instant messaging, chat, social media, web and much more. The company also provides advanced supervisory capabilities for highly regulated companies and enables the digital sharing of eDiscovery results with outside auditors and legal counsel. The company has added a Cloud Data Backup service through the acquisition of CloudAlly. The company’s Cloud Data Backup enables the secure backup and recovery of cloud services, such as Microsoft Office 365 and Sharepoint, Google Workspace, Salesforce, Dropbox and more. The company’s backup and recovery capabilities include automated or on-demand backup and non-destructive restore. The company also enables both customers and partners to manage their Zix security and compliance services through its Secure Cloud platform. Secure Cloud provides a centralized management platform where Zix services can be accessed. As a multi-tenant environment, partners can add services and manage their customers, while integrating Secure Cloud with their own back office systems. By combining the company’s solutions, as well as selling Microsoft productivity and email solutions, the company makes it possible for customers to build a secure modern workplace that protects their business communication. The company provides security, productivity and compliance in an easy to implement and manage cloud service. Regulatory Drivers The company’s customers include the federal regulators in the FFIEC, as well as state banking regulators. The company’s service has been a recommended solution of the Conference of State Bank Supervisors, whose members regulate state-chartered banks across the U.S. Sales and Marketing The company sells its email encryption, DLP, advanced threat protection, unified archiving, and cloud data backup services through a direct sales force that focuses on larger businesses and a telesales force that focuses on small to medium-sized accounts. The company also uses a network of resellers and other distribution partners, including other managed service providers (MSP) seeking security, productivity, and compliance offerings. As of December 31, 2020, the company had nearly 5,000 monthly transacting MSP partners. Research and Development The company incurred research and development expenses of $22.8 million for the year ended December 31, 2020. Intellectual Property As of December 31, 2020, the company owned 48 U.S. patents with various expiration dates through 2036, and 10 pending U.S. applications. Seasonality The company typically experiences less new business in the first quarter of the calendar year (year ended December 2020). The company’s annual budget anticipates this in its forecasting of the first quarter, but historically this has not resulted in a material impact to its revenue or earnings on a seasonal basis. The first quarter typically includes a slight decline in profitability and cash flow for the company, as the company’s first quarter includes increases in cost associated with payroll taxes, sales and marketing investments for the year and timing of the payment of the company’s annual bonus program and retention bonuses associated with its acquisitions. Competition The company views its primary competitors in the email security space to be Proofpoint, Mimecast, and Barracuda Networks. The company is also competing against PAX8, Datto, Sherweb, Virtru (known for email encryption), Agari (known for threat protection), Smarsh (known for archive), and Veeam (known for cloud data backup). History The company was incorporated in Texas in 1988. It was formerly known as Amtech Corporation and changed its name to ZixIt Corporation in 1999. Further, the company changed its name to Zix Corporation in 2002.