Tufin Announces First Quarter 2021 Results | Financial Buzz

Tufin Announces First Quarter 2021 Results

Tufin (NYSE: TUFN), a company pioneering a policy-centric approach to security and IT operations, today announced financial results for the first quarter ended March 31, 2021.

“We are pleased to deliver another quarter of year-over-year product revenue growth, with the subscription transition in the first quarter exceeding our expectations,” said Ruvi Kitov, Tufin’s CEO and Co-Founder. “We expanded our security policy management capabilities, with the announcement of the Tufin Orchestration Suite version R 21-1, and the new additions to the marketplace for vulnerability management and Cisco ACI automation.”

Kitov added, “We continue to work on our transformation and strive to improve execution and remain agile, to fully participate in the ongoing recovery and set the stage for long-term growth. Early indications give us confidence that our strategic direction and the effectiveness of our actions thus far in 2021 will drive long-term value for our stakeholders.”

Financial Highlights for the First Quarter Ended March 31, 2021

Revenue:

  • Total revenue was $21.4 million, up 1% compared with the first quarter of 2020.
  • Product revenue was $6.0 million, up 4% compared with the first quarter of 2020.
  • Maintenance and professional services revenue was $15.3 million, in line with the first quarter of 2020.

Gross Profit:

  • GAAP gross profit was $16.0 million, or 75% of total revenue, compared to $15.7 million in the first quarter of 2020, or 74% of total revenue.
  • Non-GAAP gross profit was $16.5 million, or 77% of total revenue, compared to $16.2 million in the first quarter of 2020, or 76% of total revenue.

Operating Loss:

  • GAAP operating loss was $12.8 million, compared to operating loss of $17.3 million in the first quarter of 2020.
  • Non-GAAP operating loss was $9.5 million, compared to non-GAAP operating loss of $13.3 million in the first quarter of 2020.

Net Loss:

  • GAAP net loss was $11.6 million, or a loss of $0.32 per share, compared to net loss of $17.0 million, or a loss of $0.48 per share, in the first quarter of 2020.
  • Non-GAAP net loss was $9.8 million, or a loss of $0.27 per share, compared to non-GAAP loss of $13.2 million, or a loss of $0.37 per share, in the first quarter of 2020.

Balance Sheet and Cash Flow:

  • Cash flow generated from operating activities during the three months ended March 31, 2021 was $9.3 million, compared to cash flow generated from operating activities of $0.5 million during the three months ended March 31, 2020.
  • Total cash, cash equivalents restricted cash and marketable securities as of March 31, 2021 were $113.9 million, compared to $104.0 million as of December 31, 2020.

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 months ended March 31, 2021 and 2020. An explanation of these measures is also included under the heading “Non-GAAP Financial Measures.”

Recent Business Highlights

  • Announced the release of Tufin Orchestration Suite R 21-1. Integrating SecureChange and SecureCloud, the latest version adds automation capabilities for Microsoft Azure customers. It also extends the automation capabilities of SecureChange to include external platforms that are not directly managed by the Tufin Orchestration Suite, enabling customers to centrally manage security changes for any platform across their hybrid environment.
  • Announced two new Marketplace apps:

    • The Policy Change Automation (PCA) app for Cisco ACI enables automation of ACI contracts through an integration of SecureChange with Ansible playbooks.
    • The Vulnerability-Based Change Automation App (VCA) automatically retrieves data from vulnerability scanners and reflects the results in the risk assessment step of a change request. Customers can ensure there are no risky vulnerabilities in the source or destination of a change ticket before provisioning new network access.
  • Announced that CRN named Addie Finch, Tufin’s Director of Channel Sales, Americas, to the Women of the Channel list for 2021, which recognizes the achievements of female leaders in the IT channel.

Business Outlook

Based on information available as of May 13, 2021, Tufin is issuing guidance as indicated below:

Second Quarter 2021:

  • Total revenue between $21.0 and $25.0 million
  • Non-GAAP operating loss between $12.7 and $9.3 million

Full Year 2021:

  • Total revenue between $105.0 and $113.0 million
  • Non-GAAP operating loss between $33.8 and $27.0 million

Conference Call Information

In conjunction with this announcement, the Company will host a conference call today, May 13, 2021, at 8:00am Eastern Time, to discuss the Company’s first quarter financial results and its business outlook. To participate in the call, please dial 877-407-2988 in the U.S. or 201-389-0923 for international participants and enter Conference ID# 13718996. The call will also be webcast live on Tufin’s Investor Relations website at investors.tufin.com.

Following the conference call, an archive of the webcast will be available on the investor relations section of the Company website’s 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 income (loss) as operating income (loss) excluding share-based compensation expense and one-time expenses associated with reorganization in of one of our subsidiaries.
  • We define non-GAAP net income as net income excluding share-based compensation expense, one-time expenses associated with reorganization in 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 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 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, as applicable, share-based compensation expense and certain non-recurring costs, 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 certain non-recurring costs, 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: 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 most recent annual report on Form 20-F filed with the Securities and Exchange Commission. 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.

 

TUFIN SOFTWARE TECHNOLOGIES LTD.

CONDENSED CONSOLIDATED BALANCE SHEETS

U.S. dollars in thousands

(Unaudited)

 

 

 

December 31,

 

 

March 31,

 

 

 

2020

 

 

2021

 

Assets

 

 

 

 

 

 

CURRENT ASSETS:

 

 

 

 

 

 

Cash and cash equivalents

 

 

58,449

 

 

 

67,400

 

Marketable Securities – short term

 

 

19,586

 

 

 

19,632

 

Accounts receivable (net of allowance for credit losses of $85 at December 31, 2020

and March 31, 2021)

 

 

16,674

 

 

 

8,019

 

Prepaid expenses and other current assets

 

 

7,159

 

 

 

8,508

 

Total current assets

 

 

101,868

 

 

 

103,559

 

NON CURRENT ASSETS:

 

 

 

 

 

 

 

 

Long-term restricted bank deposits

 

 

3,268

 

 

 

3,164

 

Marketable Securities – long term

 

 

22,705

 

 

 

23,678

 

Property and equipment, net

 

 

4,502

 

 

 

4,401

 

Operating lease assets

 

 

18,802

 

 

 

18,231

 

Deferred costs

 

 

6,348

 

 

 

6,155

 

Deferred tax assets

 

 

1,346

 

 

 

1,592

 

Other non-current assets

 

 

1,512

 

 

 

1,619

 

Total non-current assets

 

 

58,483

 

 

 

58,840

 

Total assets

 

 

160,351

 

 

 

162,399

 

 

TUFIN SOFTWARE TECHNOLOGIES LTD.

CONDENSED CONSOLIDATED BALANCE SHEETS

U.S. dollars in thousands (except share data)

(Unaudited)

 

 

December 31,

 

 

March 31,

 

 

 

2020

 

 

 

2021

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

 

 

 

CURRENT LIABILITIES:

 

 

 

 

 

 

Trade payables

 

 

4,147

 

 

 

 

4,413

 

 

Employee and payroll accrued expenses

 

 

17,985

 

 

 

 

17,227

 

 

Other accounts payables

 

 

578

 

 

 

 

751

 

 

Operating lease liabilities – current

 

 

3,185

 

 

 

 

3,138

 

 

Deferred revenues

 

 

24,940

 

 

 

 

31,103

 

 

Total current liabilities

 

 

50,835

 

 

 

 

56,632

 

 

NON-CURRENT LIABILITIES:

 

 

 

 

 

 

 

 

Long-term deferred revenues

 

 

12,815

 

 

 

 

17,404

 

 

Non-current operating lease liabilities

 

 

20,240

 

 

 

 

18,874

 

 

Other non-current liabilities

 

 

1,282

 

 

 

 

1,306

 

 

Total non-current liabilities

 

 

34,337

 

 

 

 

37,584

 

 

Total liabilities

 

 

85,172

 

 

 

 

94,216

 

 

COMMITMENTS AND CONTINGENCIES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SHAREHOLDERS’ EQUITY:

 

 

 

 

 

 

 

 

Ordinary shares of NIS 0.015 par value; 150,000,000 shares authorized at December 31, 2020 and March 31, 2021; 35,972,470 and 36,770,773 shares issued and outstanding at December 31, 2020 and March 31, 2021, respectively

 

 

148

 

 

 

 

152

 

 

Additional paid-in capital

 

 

178,864

 

 

 

 

183,481

 

 

Accumulated other comprehensive income (loss)

 

 

5

 

 

 

 

(22

)

 

Accumulated deficit

 

 

(103,838

)

 

 

 

(115,428

)

 

TOTAL SHAREHOLDERS’ EQUITY

 

 

75,179

 

 

 

 

68,183

 

 

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

160,351

 

 

 

 

162,399

 

 

 

TUFIN SOFTWARE TECHNOLOGIES LTD.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

U.S. dollars in thousands (except per share amounts)

(Unaudited)

 

 

Three Months Ended

 

 

March 31,

 

 

March 31,

 

 

 

2020

 

 

 

2021

 

 

 

Revenues:

 

 

 

 

 

 

Product

 

5,804

 

 

 

6,031

 

 

 

Maintenance and professional services

 

15,440

 

 

 

15,329

 

 

 

Total revenues

 

21,244

 

 

 

21,360

 

 

 

Cost of revenues:

 

 

 

 

 

 

 

Product

 

553

 

 

 

753

 

 

 

Maintenance and professional services

 

5,017

 

 

 

4,651

 

 

 

Total cost of revenues

 

5,570

 

 

 

5,404

 

 

 

Gross profit

 

15,674

 

 

 

15,956

 

 

 

Operating expenses:

 

 

 

 

 

 

 

Research and development

 

10,178

 

 

 

9,640

 

 

 

Sales and marketing

 

17,829

 

 

 

13,564

 

 

 

General and administrative

 

4,931

 

 

 

5,596

 

 

 

Total operating expenses

 

32,938

 

 

 

28,800

 

 

 

Operating loss

 

(17,264

)

 

 

(12,844

)

 

 

Financial income, net

 

563

 

 

 

65

 

 

 

Loss before taxes on income

 

(16,701

)

 

 

(12,779

)

 

 

Taxes on income

 

(343

)

 

 

1,189

 

 

 

Net loss

 

(17,044

)

 

 

(11,590

)

 

 

Basic and diluted net loss per ordinary share

 

(0.48

)

 

 

(0.32

)

 

 

Weighted average number of shares used in computing net loss per ordinary share – basic and diluted

 

35,453

 

 

 

36,395

 

 

 

Share-based Compensation Expense:

 

Three Months Ended

 

 

 

March 31,

 

 

March 31,

 

 

 

2020

 

 

2021

 

 

Cost of revenues

495

 

 

523

 

 

Research and development

 

1,070

 

 

1,127

 

 

Sales and marketing

 

1,187

 

 

741

 

 

General and administrative

 

903

 

 

957

 

 

Total share-based compensation expense

 

3,655

 

 

3,348

 

 

 

 

 
 

TUFIN SOFTWARE TECHNOLOGIES LTD.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited, U.S. dollars in thousands)

 

 

 

Three Months Ended

 

 

 

March 31,

 

 

 

2020

 

 

 

2021

 

 

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

 

 

 

Net loss

 

 

(17,044

)

 

 

(11,590

Adjustment to reconcile net loss to net cash provided by operating activities:

 

 

 

 

 

 

 

 

Depreciation

 

 

332

 

 

 

 

404

 

 

Share-based compensation

 

 

3,655

 

 

 

 

3,348

 

 

Amortization of premium and accretion of discount on marketable securities, net

 

 

 

 

 

 

80

 

 

Exchange rate differences on cash, cash equivalents and restricted cash

 

 

297

 

 

 

 

526

 

 

Other

 

 

2

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Change in operating assets and liability items:

 

 

 

 

 

 

 

 

Accounts receivable

 

 

6,051

 

 

 

 

8,655

 

 

Prepaid expenses and other current assets

 

 

(1,400

)

 

 

 

(1,514

)

 

Deferred costs

 

 

264

 

 

 

 

230

 

 

Deferred taxes and other non-current assets

 

 

15

 

 

 

 

(353

)

 

Trade payables

 

 

(74

)

 

 

 

266

 

 

Employee and payroll accrued expenses

 

 

(13

)

 

 

 

(839

)

 

Other accounts payable and non-current liabilities

 

 

1,200

 

 

 

 

188

 

 

Operating lease

 

 

(686

)

 

 

 

(842

)

 

Deferred revenues

 

 

7,861

 

 

 

 

10,752

 

 

Net cash provided by operating activities

 

 

460

 

 

 

 

9,311

 

 

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 

 

 

 

 

 

Purchase of fixed assets

 

 

(1,018

)

 

 

(294

)

 

Investment in marketable securities

 

 

 

 

 

 

(10,076

)

 

Proceeds from maturities of marketable securities

 

 

 

 

 

 

8,995

 

 

Net cash used in investing activities

 

 

(1,018

)

 

 

 

(1,375

)

 

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

 

 

 

 

 

Changes in withholding taxes related to employee stock plans

 

 

(1,078

)

 

 

 

80

 

 

Proceeds from exercise of stock options

 

 

711

 

 

 

 

1,357

 

 

Net cash provided by (used in) financing activities

 

 

(367

)

 

 

 

1,437

 

 

 

 

 

 

 

 

 

 

 

Effect of exchange rate changes on cash, cash equivalents and restricted cash

 

 

(297

)

 

 

 

(526

)

 

 

 

 

 

 

 

 

 

 

INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH

 

 

(1,222

)

 

 

 

8,847

 

 

 

 

 

 

 

 

 

 

 

CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT BEGINNING OF PERIOD

 

 

121,729

 

 

 

 

61,717

 

 

CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT END OF PERIOD

 

 

120,507

 

 

 

 

70,564

 

 

 

 

 

 

 

 

 

 

 

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

 

 

 

 

 

 

 

 

Property and equipment purchased but not yet paid

 

 

53

 

 

 

 

58

 

 

Exercise of share options

 

 

93

 

 

 

 

 

 

 

TUFIN SOFTWARE TECHNOLOGIES LTD.

RECONCILIATION OF GAAP MEASURES TO NON-GAAP MEASURES

(Unaudited, U.S. dollars in thousands)

 

Reconciliation of Gross Profit to Non-GAAP Gross Profit:

 

 

 

 

 

 

Three Months Ended

 

 

March 31,

 

 

March 31,

 

 

 

2020

 

 

2021

 

 

Gross profit

15,674

 

 

 

15,956

 

 

 

Plus:

 

 

 

 

 

 

 

Share-based compensation

 

495

 

 

 

523

 

 

 

Non-GAAP gross profit

 

16,169

 

 

 

16,479

 

 

 

 

 

 

 

Reconciliation of Operating loss to Non-GAAP Operating loss:

 

 

 

 

 

 

Three Months Ended

 

 

 

March 31

 

 

March 31,

 

 

 

2020

 

 

2021

 

 

Operating loss

(17,264

)

 

 

(12,844

)

 

 

Plus:

 

 

 

 

 

 

 

Share-based compensation

 

3,655

 

 

 

3,348

 

 

 

One-time reorganization charges

 

322

 

 

 

 

 

 

Non-GAAP Operating loss

 

(13,287

)

 

 

(9,496

)

 

 

 

 

 

Reconciliation of Net loss to Non-GAAP Net loss:

 

 

 

 

 

 

Three Months Ended

 

 

 

March 31,

 

 

March 31,

 

 

 

2020

 

 

2021

 

 

Net loss

(17,044

)

 

 

(11,590

)

 

 

Plus:

 

 

 

 

 

 

 

Share-based compensation

 

3,655

 

 

 

3,348

 

 

 

Other

 

322

 

 

 

 

 

 

Taxes on income related to non-GAAP adjustments

 

(172

)

 

 

(1,605

)

 

 

Non-GAAP Net loss

 

(13,239

)

 

 

(9,847

)

 

 

 

 

 

 

 

 

 

 

Non-GAAP net income per share

Basic and diluted

 

(0.37

)

 

 

(0.27

)

 

 

 Weighted average number of shares

 

35,453

 

 

 

36,395

 

 

 

 

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 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

Contacts

Investor Relations:

Jackie Marcus or Michael Cummings

investors@tufin.com

Media Relations:

Susan Rivera

Corporate Communications Manager, Tufin

susan.rivera@tufin.com

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