Tufin Announces Second Quarter 2020 Results

Tufin (NYSE: TUFN), a company pioneering a policy-centric approach to security and IT operations, today announced financial results for the second quarter ended June 30, 2020.

"I am pleased with the progress we made in the second quarter, despite the challenging environment,” said Ruvi Kitov, CEO and co-founder of Tufin. "Our business improved compared to the acute disruptions due to COVID-19 that we experienced at the end of the first quarter and we are confident that our company is on the path to recovery. Customers are recognizing the critical value of increased security and efficiency that Tufin delivers in an environment where security professionals must do more with less. However, general business conditions remain challenging and uncertainty high. Our leadership position in the market, competitive advantages, strong cash position and experienced management team, positions us well to return to growth as the environment improves.”

Financial Highlights for the Second Quarter Ended June 30, 2020

Revenue:

• Total revenue was $23.0 million, down 8% compared with the second quarter of 2019.
• Product revenue was $7.9 million, down 27% compared with the second quarter of 2019.
• Maintenance and professional services revenue was $15.1 million, up 7% compared with the second quarter of 2019.

Gross Profit:

• GAAP gross profit was $18.3 million, or 79% of total revenue, compared to $20.2 million in the second quarter of 2019, or 80% of total revenue.
• Non-GAAP gross profit was $18.7 million, or 81% of total revenue, compared to $20.5 million in the second quarter of 2019, or 82% of total revenue.

Operating Loss:

• GAAP operating loss was $8.2 million, compared to $7.7 million in the second quarter of 2019.
• Non-GAAP operating loss was $4.5 million, compared to $5.1 million in the second quarter of 2019.

Net Loss:

• GAAP net loss was $8.8 million, or a loss of $0.25 per share, compared to a GAAP net loss of $8.2 million, or a loss of $0.26 per share, in the second quarter of 2019.
• Non-GAAP net loss was $5.2 million, or a loss of $0.15 per share, compared to a loss of $5.6 million, or a loss of $0.18 per share, in the second quarter of 2019.

Balance Sheet and Cash Flow:

• Cash flow used for operating activities during the six months ended June 30, 2020 was $11.2 million, compared to cash flow generated from operating activities of $1.5 million during the six months ended June 30, 2019.
• Total cash, cash equivalents, restricted cash and marketable securities as of June 30, 2020 were $108.5 million, compared to $121.7 million as of December 31, 2019.

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 six months ended June 30, 2020 and 2019. An explanation of these measures is also included under the heading "Non-GAAP Financial Measures.”

Recent Business Highlights

• Launched the Tufin Marketplace, a digital platform where customers can find and deploy apps and extensions that enhance the overall value of their security policy management implementations by integrating security policy data with other security technologies and practices.
• Launched the Tufin Vulnerability Mitigation App. The app allows organizations to ensure effective remediation and automated mitigation using a risk-based approach and is integrated with leading vulnerability management solutions to enrich vulnerability intelligence with real-time network insights
• Named Mitch DeBerdt as Country manager for Japan. In this role, Mitch will establish and execute sales strategies to grow Tufin’s business across the region. Mitch brings more than 17 years of sales experience across several leadership roles in both software and hardware, including recent leadership roles at Varonis Systems and Digital Guardian.

Business Outlook

"I’m encouraged by the overall sequential business improvement we saw in the second quarter,” said Jack Wakileh, CFO. "Our pipeline remains healthy and is higher year over year. However, due to continued uncertainty associated with COVID-19 we will not be providing specific financial guidance for Q3 or the full year at this time. We intend to resume providing guidance as soon as we have enough visibility to do so and we will evaluate this on a quarter to quarter basis.”

Conference Call Information

To participate in Tufin’s second quarter earnings conference call, please use this link: http://www.directeventreg.com/registration/event/5267864. After registering, a confirmation will be sent through email, including dial in details and unique conference call codes for entry. Registration is open through the live call. 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 (U.S.) or (416) 621-4642 (international). The replay passcode is 5267864. An archive of the webcast will also be available on the investor relations section of the company website 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 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

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 profit (loss) and non-GAAP net income 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 profit and net income, 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.

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: the impact of COVID-19 on the budgets of our clients and on economic conditions generally; 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 Company’s annual report on Form 20-F filed with the Securities and Exchange Commission on March 18, 2020. 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 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.

Find out more at: www.tufin.com

Follow Tufin on Twitter: @TufinTech

Read more on Tufin’s blog: Suite Talk

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