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Zix: The Market Will Soon Give Way

Apr. 08, 2021 10:44 PM ETZix Corporation (ZIXI)2 Comments
Kayode Omotosho profile picture
Kayode Omotosho


  • Zix's growth metrics are improving. This trend is expected to flow to the bottom line in the coming quarters.
  • The market continues to value Zix modestly due to its highly leveraged capital structure.
  • There are also worries about the sustainability of revenue growth given its modest cash position.
  • These developments continue to make Zix's risk/reward opportunity favorable.
  • Assuming double-digit ARR growth in 2021, Zix's valuation will remain cheap at a sales multiple of 3x using the current enterprise value.

This article was written by

Kayode Omotosho profile picture
Kayode's strategy aligns only with businesses that have competitive moats, solid financials, good management, and minimal exposure to macro headwinds.-------------------------------------Coverage tilted towards tech stocks (IoT, Cybersecurity, Cloud, DevOps, Data management)

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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Comments (2)

Wimal profile picture
@Kayode Omotosho Do you have first-hand experience using Zixi's software?
There are so many small email security offerings out there.
I wonder if they will all be eventually made *redundant* by dominant companies such as Microsoft?

As your article mentions;

"Microsoft Office 365 backup and recovery represents nearly half of that market and was the #1 product extension requested by our channel partners."
Source: Zix
Kayode Omotosho profile picture

Hi emthree,

1. I don't use Zix.

2. I don't think Microsoft can put them all out. Players like Zix provide solution bundles that extend beyond email security.

3. Zix was able to pull off an acquisition that looked quite impossible relative to its liquidity position. The acquisition improved its growth story.
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