ZeroFox Announces Fourth Quarter and Fiscal Year 2024 Financial Results
Reports Record Annual Recurring Revenue and Positive Free Cash Flow
WASHINGTON, March 15, 2024 (GLOBE NEWSWIRE) -- ZeroFox Holdings, Inc. (Nasdaq: ZFOX), an enterprise software-as-a-service leader in external cybersecurity, today announced financial results for the fourth quarter and fiscal year ended January 31, 2024.
"Q4 was another positive quarter for ZeroFox with sustained top line growth and positive free cash flow" said James C. Foster. Founder and CEO of ZeroFox. "We believe that our results validate the growing need for an AI-enabled, converged external cybersecurity platform to protect enterprises from advanced external threats."
Fourth Quarter Fiscal Year 2024 Financial Highlights
-- Revenue: Total revenue was $60.5 million, an increase of 33%
year-over-year.
-- Annual Recurring Revenue ("ARR") was $188.4 million, an increase of 20%
year-over-year.
-- Gross margin: GAAP gross margin was 35% and non-GAAP gross margin was
44%. GAAP subscription gross margin was 53% and non-GAAP subscription
gross margin was 73%.
-- Loss from Operations: GAAP loss from operations was $228.6 million.
Non-GAAP loss from operations was $2.2 million. GAAP loss from operations
includes a goodwill impairment charge of $212.1 million.
-- Cash and Cash Equivalents were $33.1 million on January 31, 2024, an
increase of approximately $3.3 million from October 31, 2023.
Full Year Fiscal Year 2024 Financial Highlights
-- Revenue: Total revenue was $233.3 million.
-- Gross margin: GAAP gross margin was 32% and non-GAAP gross margin was
41%. GAAP subscription gross margin was 51% and non-GAAP subscription
gross margin was 73%.
-- Loss from Operations: GAAP loss from operations was $353.0 million.
Non-GAAP loss from operations was $17.9 million. GAAP loss from
operations includes a goodwill impairment charge of $284.2 million.
Recent Highlights
-- Announced $289 million in contract awards from the U.S. Office of
Personnel Management (OPM) for the continued provision of digital
identity protection services to the 22.1 million individuals impacted by
previous security incidents.
-- Awarded nine badges in G2's Winter 2024 Report across five categories,
including brand protection, dark web monitoring, fraud detection, and
threat intelligence.
Proposed Transaction with Haveli Investments
As announced on February 6, 2024, ZeroFox has entered into a definitive agreement to be acquired by Haveli Investments, a private equity firm focused on the software and technology-enabled services sectors, in an all-cash transaction with an enterprise value of approximately $350 million. The transaction is expected to close in the first half of 2024, subject to customary closing conditions, including approval by ZeroFox stockholders and the receipt of required regulatory approvals. The transaction is not subject to any financing condition. Upon the completion of the transaction, ZeroFox's common stock and warrants will no longer be publicly listed on the Nasdaq Global Market and the Nasdaq Capital Market, respectively, and ZeroFox will become a privately held company. For more information about the pending transaction with Haveli Investments, please see ZeroFox's Current Report on Form 8-K filed with the U.S. Securities and Exchange Commission (the "SEC") on February 6, 2024, and the Company's preliminary proxy statement on Schedule 14A filed with the SEC on March 8, 2024.
Given the transaction with Haveli Investments, ZeroFox will not be hosting an earnings conference call or live webcast to discuss its fourth quarter and fiscal year 2024 financial results and ZeroFox will not be providing guidance for the first quarter or full fiscal year 2025. For further detail and discussion of ZeroFox's financial performance please refer to ZeroFox's Annual Report on Form 10-K for the fiscal year ended January 31, 2024.
Additional information regarding the non-GAAP financial measures and key business measures discussed in this release, including an explanation of these measures and how each is calculated, is included below under the heading "Use of Non-GAAP Financial Measures and Key Business Measures." A reconciliation of non-GAAP to GAAP financial measures has also been provided in the financial tables included below and is available on our Investor Relations website.
About ZeroFox
ZeroFox (Nasdaq: ZFOX), an enterprise software-as-a-service leader in external cybersecurity, has redefined security outside the corporate perimeter on the internet, where businesses operate, and threat actors thrive. The ZeroFox platform combines advanced AI analytics, digital risk and privacy protection, full-spectrum threat intelligence, and a robust portfolio of breach, incident and takedown response capabilities to expose and disrupt phishing and fraud campaigns, botnet exposures, credential theft, impersonations, data breaches, and physical threats that target your brands, domains, people, and assets. Join thousands of customers, including some of the largest public sector organizations as well as finance, media, technology and retail companies to stay ahead of adversaries and address the entire lifecycle of external cyber risks. ZeroFox and the ZeroFox logo are trademarks or registered trademarks of ZeroFox, Inc. and/or its affiliates in the U.S. and other countries. Visit www.zerofox.com for more information.
Forward-Looking Statements
Certain statements in this press release are "forward-looking statements" under the Private Securities Litigation Reform Act of 1995. All statements, other than statements of historical fact, that address activities, events or developments that we expect, believe or anticipate will or may occur in the future, including statements related to the proposed transaction with Haveli Investments (the "Merger"). Forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those anticipated by these forward-looking statements. The inclusion of any statement in this press release does not constitute an admission by ZeroFox or any other person that the events or circumstances described in such statement are material. These risks and uncertainties include, but are not limited to, the following: our ability to meet expectations regarding the timing and completion of the proposed Merger; the possibility that the conditions to the closing of the proposed Merger are not satisfied, including the risk that the required regulatory approvals are not obtained or that our stockholders do not approve the proposed Merger; the occurrence of any event, change or other circumstances that could result in the definitive agreement to be acquired (the "Merger Agreement") being terminated or the proposed Merger not being completed on the terms reflected in the Merger Agreement, or at all; the risk that the Merger Agreement may be terminated in circumstances that require us to pay a termination fee; potential litigation relating to the proposed Merger; the risk that the proposed Merger and its announcement could have adverse effects on the market price of our common stock; the ability of each party to consummate the proposed Merger; risks related to the possible disruption of management's attention from our ongoing business operations due to the proposed Merger; the effect of the announcement of the proposed Merger on our ability to retain and hire key personnel and maintain relationships with customers and business partners; the risk of unexpected costs or expenses resulting from the proposed Merger; defects, errors, or vulnerabilities in the ZeroFox platform, the failure of the ZeroFox platform to block malware or prevent a security breach, misuse of the ZeroFox platform, or risks of product liability claims that would harm our reputation and adversely impact our business, operating results, and financial condition; if our enterprise platform offerings do not interoperate with our customers' network and security infrastructure, or with third-party products, websites or services, our results of operations may be harmed; we may not timely and cost-effectively scale and adapt our existing technology to meet our customers' performance and other requirements; our ability to introduce new products and solutions and features is dependent on adequate research and development resources and our ability to successfully complete acquisitions; our success depends, in part, on the integrity and scalability of our systems and infrastructure; we rely on third-party cloud providers to host and operate our platform, and any disruption of or interference with our use of these offerings may negatively affect our ability to maintain the performance and reliability of our platform which could cause our business to suffer; we rely on software and services from other parties; we have a history of losses, and we may not be able to achieve or sustain profitability in the future; if organizations do not adopt cloud, and/or SaaS-delivered external cybersecurity solutions that may be based on new and untested security concepts, our ability to grow our business and our results of operations may be adversely affected; we have experienced rapid growth in recent periods, and if we do not manage our future growth, our business and results of operations will be adversely affected; we face intense competition and could lose market share to our competitors, which could adversely affect our business, financial condition, and results of operations; competitive pricing pressure may reduce revenue, gross profits, and adversely affect our financial results; adverse general and industry-specific economic and market conditions and reductions in customer spending, in either the private or public sector, including as a result of inflation and geopolitical uncertainty such as the ongoing conflict between Russia and Ukraine and the Israel-Hamas War, may reduce demand for our platform or
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