Zix Closes Acquisition of AppRiver, Creating Leading Cloud-based Cybersecurity Solutions Provider

DALLAS–(BUSINESS WIRE)–Zix
Corporation
(Zix) (NASDAQ: ZIXI), a leader in email security,
has closed its previously announced acquisition of AppRiver, a leading
provider of cloud-based cybersecurity solutions, for $275 million in
cash, subject to a customary working capital adjustment and reduction
for outstanding AppRiver indebtedness, certain accrued items and
transaction expenses.

“Today is a significant day for Zix and AppRiver employees, customers,
partners, and shareholders, as we complete the acquisition of AppRiver
and create one of the leading email and security solutions providers,
particularly for the small and mid-size business market,” said David
Wagner
, Zix’s Chief Executive Officer. “Over the last three years we
aligned our business with the growth drivers that are propelling our
industry, especially our customers’ migration to the cloud, which is
still in its early innings. This acquisition further strengthens that
alignment by bolstering our security offerings, expanding our
go-to-market channels, and providing a stronger cloud platform to drive
even more value for our customers and partners. We’re excited to enter
this new chapter of our value creation journey. We will focus on
integrating the two businesses, accelerating our growth through channel
partners and cross-selling, and increasing our profitability through
cost synergies and improved attach rates.”

As previously announced, concurrent with the close of the acquisition,
Zix entered into a credit agreement with a syndicate of financial
institutions and SunTrust Bank, as administrative agent, for a new
five-year $175 million term loan, a $10 million delayed draw term loan
facility and a $25 million revolving credit facility. The company also
secured a new $100 million convertible preferred equity investment from
True Wind Capital. In connection with True Wind’s convertible preferred
equity investment, Zix expanded its board of directors to eight members
and appointed True Wind Founding Partner James H. Greene, Jr. and True
Wind Principal Brandon Van Buren as directors.

As previously disclosed, the Annual Recurring Revenue (ARR) of the
combined company (representing the projected future revenue to be
generated over the ensuing 12-month period) is approximately $180
million at the time of closing. Zix is targeting ARR of approximately
$200 million to $207 million for 2019, which represents an organic
growth rate of approximately 11% to 15% year-over-year. Zix management
is also expecting revenue of approximately $47 million to $50 million
with a 24% adjusted EBITDA margin in the fourth quarter of 2019.

The company will provide more complete guidance on its fourth quarter
and full year 2018 earnings call, scheduled for February 28, 2019.

About Zix Corporation

Zix Corporation (Zix) is a leader in email security. Trusted by the
nation’s most influential institutions in healthcare, finance and
government, Zix delivers a superior experience and easy-to-use solutions
for email encryption and data loss prevention, advanced threat
protection, unified information archiving and bring your own device
(BYOD) mobile security. Focusing on the protection of business
communication, Zix enables its customers to better secure data and meet
compliance needs. Zix is publicly traded on the Nasdaq Global Market
under the symbol ZIXI. For more information, visit www.zixcorp.com.

Statements in this release that are not purely historical facts or that
necessarily depend upon future events, including statements about future
business combination and/or related financing transactions, forecasts of
sales, revenue, EBITDA, earnings, earnings per share or similar
financial measures, potential benefits of future business combination
transactions or strategic relationships, or other statements about
anticipations, beliefs, expectations, hopes, intentions or strategies
for the future, may be forward-looking statements within the meaning of
Section 21E of the Securities Exchange Act of 1934, as amended. Readers
are cautioned not to place undue reliance on forward-looking statements.
All forward-looking statements are based upon information available to
Zix on the date this release was issued. Zix undertakes no obligation to
publicly update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise. Any
forward-looking statements involve risks and uncertainties that could
cause actual events or results to differ materially from the events or
results described in the forward-looking statements, including but not
limited to risks or uncertainties related to the acquisition and
integration of newly acquired companies and businesses, the company’s
taking on significant new indebtedness and/or issuance of significant
new equity to finance its acquisitions, market acceptance of both
existing and new Zix solutions, changing market dynamics resulting from
technological change and innovation as well as ongoing customer
migration of IT solutions to the “cloud”, and how privacy and data
security laws may affect demand for Zix data protection solutions. Zix
may not succeed in addressing these and other risks. Further information
regarding factors that could affect Zix financial and other results can
be found in the risk factors section of Zix’s most recent annual report
on Form 10-K filed with the Securities and Exchange Commission, as those
risk factors may be supplemented in subsequent quarterly reports on Form
10-Q.

Contacts

Zix Company Contact
Geoff Bibby
(214) 370-2241
gbibby@zixcorp.com

Zix Investor Contact
Matt Glover and Najim Mostamand, CFA
Liolios
Group, Inc.
(949) 574-3860
ZIXI@liolios.com

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