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A Headline Miss Doesn't Dent the Shares

With a record-high backlog in tow as well, we expect this tech name to trade much higher by year-end.
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Zix (ZIXI) announced lower-than-expected quarterly results overnight. This Alert is a review of the company's numbers, and we're not recommending any trades for the model portfolio.

Zix earned $0.03 a share in the quarter, or a penny below expectations. Revenue grew 15%, year over year, to $11.8 million, also falling short of the consensus analyst estimate. On the other hand, the company maintained its full-year guidance, and new first-year orders (NYFO) rose 22% from the previous year.

The lower profit was a result of increased spending for Zix's "bring your own device" product, which the company plans to launch in the third quarter. Management said it's seeing strong customer interest in this area, and Zix has also signed eight deals for its new "data-loss prevention" offering. As a result, the company generated a record amount of total orders during the quarter, which ended with its highest-ever backlog.

Despite the headline miss, the stock is ticking higher today, with a current quote around $3.76. We maintain our Two rating on the company, and we believe that shares could trade up toward $5 by the end of the year.

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