Zix Hires Citigroup To Negotiate Sale Of Company: Report

Zix has a valuation of $476 million and competes against significantly larger email security vendors such as Mimecast and Proofpoint, the latter of which was sold to private equity firm Thoma Bravo in August for $12.3 billion.

Zix has hired financial services giant Citigroup to negotiate a sale of the email security vendor to other companies or private equity firms, Reuters reported.

The Dallas-based email security provider is exploring strategic alternatives that include a sale of the company, according to Reuters, which cited people familiar with the matter. There is no certainty any deal regarding the sale of Zix will be reached, sources told Reuters. Both Zix and Citigroup declined to comment to CRN on the Reuters report.

Zix’s stock is up $0.73 (9.53 percent) to $8.39 per share in trading Tuesday morning, which is the highest the company’s stock has traded since Feb. 25. The Reuters report was published after the market closed Monday. Zix’s stock has been publicly traded on the Nasdaq for nearly 32 years.

[Related: Zix AppRiver Exec: Global Expansion Aligns One-On-One Approach To Helping Partners Grow]

The company has a valuation of $476 million and competes against significantly larger email security vendors such as Mimecast and Proofpoint, the latter of which was sold to private equity firm Thoma Bravo in August for $12.3 billion in the largest cybersecurity acquisition of all time. Zix moved into the MSP market with its $275 million purchase of email and web security stalwart AppRiver in January 2019.

Zix was founded in 1988 and employed 543 people as of Dec. 31, 2020, down 4.1 percent from 566 employees a year earlier, according to regulatory filings. Approximately 92 percent of Zix’s workforce is in the U.S.--primarily in Dallas or Gulf Breeze, Fla.-- with the remaining 8 percent in international locations. AppRiver was based in Gulf Breeze.

The company’s revenue for the 2020 calendar year surged to $218.5 million, up 26 percent from $173.4 million in 2019 due primarily to the AppRiver acquisition. Its loss for 2020 improved to $15.5 million, or $0.29 per diluted share, 37.3 percent better than the loss of $24.6 million, or $0.46 per diluted share, the year prior.

Despite the growth, Zix’s sales are less than half that of publicly traded email security rival Mimecast, which saw revenue surge in its fiscal year ended March 31, 2021, to $501.4 million, up 17.4 percent from $427 million a year earlier. And Zix is less than a quarter the size of top competitor Proofpoint, which saw revenue in 2020 climb to $1.05 billion, up 18 percent from $888.2 million a year earlier.

Zix last year expanded its product suite into Microsoft Office 365 backup with the purchase of cloud-based data backup and recovery provider CloudAlly. Buying Israel-based CloudAlly for $30 million has helped Zix customers safeguard Office 365, Google Workspace, SharePoint, OneDrive, Salesforce, Dropbox and Box with backup and recovery from any point in time with unlimited data retention.

The company has 5,500 solution provider partners and conducts 60 percent of its business through its channel, CRNtv reported earlier this month. Jason Macias has been responsible for all of Zix’s MSP, VAR and DMR business since joining the company in July 2019 as regional vice president of North American sales, while Justin Gilbert joined the company in April 2020 as senior director of channel marketing.

Zix in April 2020 combined the security and compliance offering from its 2019 acquisition of AppRiver with its own to create a single platform that safeguards digital communication tools. The company spent $20 million to develop Zix Secure Cloud and enhance its platform and application capabilities since closing the AppRiver purchase 14 months earlier, CEO Dave Wagner told CRN at the time.