In case you live under the world’s biggest rock, you’ll know that our planet continues to generate an incredible mass of digital data.
What’s more, the amount of data created is expanding at breakneck speed, as more people are getting connected to the web.
- The number of new, fixed-line internet users jumped by 8.8% to 2.4 billion in 2012 (the latest data available). Consider: That’s only around one-third of the world’s population. The number is projected to rise to 3.6 billion by 2017.
- There are currently 6.6 billion mobile subscribers.
- By the end of this year, mobile devices are projected to account for 30% of total web traffic – up from a measly 0.9% as recently as 2009.
- And Cisco (CSCO) says global IP traffic will soar threefold between 2012 and 2017.
In short, our data usage is only going to rise, as mobile device connectivity continues to grow… as wearable technology expands… and as the “Internet of Things” connects machines to machines (M2M) like never before. Cisco says M2M connections will jump from two billion in 2012 to six billion by 2017.
All told, we’re creating an enormous amount of data. How much?
Well, we created 2.8 zettabytes in 2012. But that number is expected to double by 2015.
To put that in perspective, the entire World Wide Web only contained 0.5 zettabytes in 2009.
Simply put, Big Data is Big Business.
But with all our data flying around the ether, it’s more susceptible to being hacked or stolen by unscrupulous cyber thugs. For example, you probably recall how thieves managed to breach Target’s (TGT) payment system at the end of 2013, gaining access to 40 million customers’ bank details.
It means the cost of cyber attacks is soaring. The Ponemon Institute’s “2013 Cost of Cyber Crime Study” shows that the average cost for businesses who’ve suffered breaches over a 10-month period is $11.5 million. That’s up 78% since 2009.
Needless to say, the security of our data is absolutely critical. But Founder and Chairman, Larry Ponemon, says criminals are very intelligent in how they use technology to carry out their online assaults.
However, these cyber thugs have met their match…
The Behind-the-Scenes Small Cap Safeguarding Your Data
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In December, I recommended Zix Corporation (ZIXI) – a Dallas-based company that provides email encryption and data security solutions to major banks, government agencies, hospitals and insurance firms.
At the time, ZIXI traded at $4.45. In early January, it made a nice move to $4.94, as CRT Capital initiated coverage of ZIXI, and issued a “Buy” rating on the stock.
Since then, ZIXI has pulled back to $4.50, and some readers have asked for my latest take.
Well, I haven’t changed my mind on the company. Here’s why…
A Beefy Backlog and Record Revenue
On Zix’s fourth-quarter earnings call, it reported stellar numbers for both the quarter and fiscal 2013 overall.
In the fourth quarter…
- Zix grew its revenue by 5%, to $12.3 million – just ahead of the consensus top-end estimates. That produced earnings of $0.06 per share – on par with expectations.
- Total orders jumped to $14.1 million – up 9% from Q4 2012. New, first-year orders totaled $2.3 million – a 6% rise over Q4 2012.
- Zix’s backlogged orders hit a record high of $65.7 million. That’s up 14% from Q4 2012.
For fiscal 2013…
- Zix notched record-high sales of $48.1 million – up 11% from 2012.
- Adjusted net annual income came in at $10.5 million, or $0.17 per diluted share.
- And the company closed the year with a cash flow balance of $27.5 million – up $4.5 million from last year.
Of those healthy numbers, the standout information for me in terms of Zix’s future potential is the company’s high backlog numbers and its record-beating revenue last year.
In short, demand for Zix’s business is up. Way up! So much so, the company can’t even keep pace!
Zix’s growth underscores the underlying strength of its base email encryption business. And once the company gets caught up, and the millions of dollars of “new” money officially hit the books, I expect ZIXI shares to rise as a result.
Not only that… when you add this growth to the company’s new products launching this year – ZixDLP and ZixOne – plus the steady stream of resales from Google (GOOG), you can see why I’m optimistic about Zix’s business in 2014 – and beyond.
And I’m not the only one…
Due to the robust sales momentum and multi-millions in unrealized revenue, analysts now expect Zix to earn $53 million to $55 million in 2014.
So there’s still time to take advantage. This hidden gem has a strong chance of breaking through the $5 mark in the coming months.
Your eyes in the Pipeline,