Tufin Announces Fourth Quarter and Full Year 2019 Results

Tufin (NYSE: TUFN), a company pioneering a policy-centric approach to security and IT operations, today announced financial results for the fourth quarter ended December 31, 2019.

"2019 was a transformative year for Tufin as we became a public company and surpassed $100 million in revenue. However, our fourth quarter results were impacted by sales execution challenges primarily in North America. We are disappointed with the fourth quarter and have begun taking steps to improve execution” said Ruvi Kitov, CEO and co-founder. "We continue to see strong demand for our solutions in the marketplace, and our leadership position, long-term growth initiatives and recent organizational changes position us well to capitalize on the large opportunity ahead in security policy management.”

Financial Highlights for the Fourth Quarter Ended December 31, 2019

Revenue:

• Total revenue was $30.1 million, up 3% compared with the fourth quarter of 2018.
• Product revenue was $14.3 million, down 16% compared with the fourth quarter of 2018.
• Maintenance and professional services revenue was $15.8 million, up 30% compared with the fourth quarter of 2018.

Operating Income (Loss):

• GAAP operating loss was $7.4 million, compared to operating income of $3.5 million in the fourth quarter of 2018.
• Non-GAAP operating loss was $1.9 million, compared to non-GAAP operating income of $4.5 million in the fourth quarter of 2018.

Net Income (Loss):

• GAAP net loss was $7.2 million, or a loss of $0.21 per diluted share, compared to a GAAP net income of $2.8 million, or $0.10 per diluted share, in the fourth quarter of 2018.
• Non-GAAP net loss was $2.4 million, or a loss of $0.07 per diluted share, compared to non-GAAP net income of $3.8 million, or $0.13 per diluted share, in the fourth quarter of 2018.

Financial Highlights for the Full Year Ended December 31, 2019

Revenue:

• Total revenue was $103.3 million, up 22% compared with 2018.
• Product revenue was $47.4 million, up 11% compared with 2018.
• Maintenance and professional services revenue was $55.9 million, up 32% compared with 2018.

Operating Income (Loss):

• GAAP operating loss was $27.0 million, compared to operating loss of $1.9 million in 2018.
• Non-GAAP operating loss was $15.2 million, compared to non-GAAP operating income of $1.2 million in 2018.

Net Loss:

• GAAP net loss was $28.1 million, or a loss of $1.04 per diluted share, compared to GAAP net loss of $4.3 million, or $0.53 per diluted share, in 2018.
• Non-GAAP net loss was $17.1 million, or a loss of $0.63 per diluted share, compared to non-GAAP net loss of $1.1 million, or $0.13 per diluted share, in 2018.

Balance Sheet and Cash Flow:

• Cash flow used for operating activities during the twelve months ended December 31, 2019 was $9.6 million, compared to cash flow provided by operating activities of $4.6 million during the twelve months ended December 31, 2018.
• Total cash, cash equivalents and restricted cash as of December 31, 2019 were $121.7 million, compared to $17.6 million as of December 31, 2018.

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 twelve months ended December 31, 2019 and 2018. An explanation of these measures is also included under the heading "Non-GAAP Financial Measures.”

Recent Business Highlights

• Announced general availability of SecureCloud, enabling companies to secure hybrid cloud environments without compromising security or business agility. Tufin is the first and only company to provide unified security policy management for the hybrid cloud.
• Announced availability on GSA Schedule 70 through immixGroup. The new relationship will enable government agencies to take greater advantage of Tufin’s security policy automation technology to remain agile, yet secure, in the face of digital transformation.
• Updated Global Partner Program to help both Tufin and its partners better support sophisticated enterprise infrastructures and cloud deployments, facilitate partner profitability through enhanced incentives, and expand new business opportunities.

Business Outlook

Based on information available as of February 13, 2020, Tufin is issuing guidance as indicated below:

First Quarter 2020:

• Total revenue between $23.0 million and $26.0 million.
• Non-GAAP operating loss between $10.5 million and $13.0 million

Full Year 2020:

• Total revenue between $117.0 million and $123.0 million
• Non-GAAP operating loss between $22.5 million and $27.5 million

Conference Call Information

To participate in Tufin’s fourth quarter earnings conference call, please dial (866) 211-3126 in the U.S. or (647) 689-6579 for international participants and enter Conference ID# 836324. The call will also be webcast live on Tufin’s Investor Relations website at investors.tufin.com. Following the conference call, a replay will be available at (800) 585-8367 (domestic) or (416) 621-4642 (international). The replay passcode is 836324. An archived webcast of this conference call will be available on the investor relations section of the company website.

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 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

Because of varying available valuation methodologies, subjective assumptions 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, secondary offering costs and 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 income (loss) as operating income (loss) excluding share-based compensation expense and secondary offering costs.
• We define non-GAAP net income (loss) as net income (loss) excluding share-based compensation expense secondary offering costs and the tax effect of these non-GAAP adjustments.

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 share-based compensation expense and other non-recurring items, as applicable. 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 other non-recurring items, 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 (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 secondary public offering filed with the Securities and Exchange Commission on December 5, 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.

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

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