UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): November 25, 2019
Proofpoint, Inc.
(Exact name of registrant as specified in its charter)
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Delaware |
001-35506 |
51-0414846 |
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(State or other jurisdiction of incorporation) |
(Commission File Number) |
(I.R.S. Employer Identification No.) |
892 Ross Drive,
Sunnyvale CA 94089
(Address of principal executive offices, and Zip Code)
(408) 517-4710
(Registrant’s telephone number, including area code)
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
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Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered |
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Common Stock |
PFPT |
Nasdaq |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
| Item 2.01 | Completion of Acquisition or Disposition of Assets. |
On November 25, 2019, Proofpoint, Inc., a Delaware corporation (“Proofpoint”), completed its previously announced acquisition of ObserveIT Ltd., an Israeli company (“ObserveIT”), pursuant to that Share Purchase Agreement, dated November 2, 2019 (the “Purchase Agreement”), by and among Proofpoint, ObserveIT, Proofpoint Israel Holdings Limited, an Israeli company and wholly owned subsidiary of Proofpoint, (“Proofpoint Israel Holdings Limited”), and Shareholder Representative Services LLC, a Colorado limited liability company, as agent to ObserveIT’s securityholders.
Pursuant to the terms of the Purchase Agreement, Proofpoint Israel Holdings Limited acquired 100% of the issued and outstanding equity interests of ObserveIT (the “Acquisition”) for an aggregate all-cash purchase price of approximately $225 million. The consideration was subject to an adjustment based on customary purchase price adjustment provisions for closing net working capital, transaction expenses, indebtedness, and the aggregate exercise price of ObserveIT’s outstanding options as of the closing of the Acquisition. An aggregate of approximately $3.25 million of the purchase price was placed in escrow to satisfy indemnification obligations and certain post-closing purchase price adjustments that may be determined to be owed to Proofpoint, its subsidiaries or affiliates. Proofpoint also issued restricted stock units with an aggregate fair market value of approximately $18 million to certain employees of ObserveIT, which are subject to vesting conditions based on such employees’ continued employment with Proofpoint or its subsidiaries, and assumed ObserveIT’s unvested options held by continuing employees.
The foregoing description of the Purchase Agreement is only a summary, does not purport to be complete and is qualified in its entirety by reference to the Purchase Agreement, which will be filed with Proofpoint’s Annual Report on Form 10-K for the year ending December 31, 2019.
| Item 7.01 | Regulation FD Disclosure. |
On November 25, 2019, Proofpoint issued a press release announcing the completion of the Acquisition. A copy of the press release is furnished as Exhibit 99.1 to this Current Report and is incorporated herein by reference.
The information contained in this Item 7.01 of Current Report on Form 8-K and Exhibit 99.1 attached hereto (the “7.01 Information”) will not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor will the 7.01 Information be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, regardless of any general incorporation language in such filing, except as shall be expressly set forth by specific reference in such filing.
| Item 9.01 | Financial Statements and Exhibits. |
(d) Exhibits.
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Exhibit
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Description |
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99.1 |
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104 |
Cover Page Interactive Data File (embedded within the Inline XBRL document). |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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Proofpoint, Inc. |
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Date: November 25, 2019 |
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By: |
/s/ Paul Auvil |
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Paul Auvil Chief Financial Officer |
Exhibit 99.1
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MEDIA CONTACT: KRISTY CAMPBELL PROOFPOINT, INC. 408-517-4710 KCAMPBELL@PROOFPOINT.COM |
INVESTOR CONTACT: JASON STARR PROOFPOINT, INC. 408-585-4351 JSTARR@PROOFPOINT.COM |
Proofpoint Completes the Acquisition of ObserveIT
Combined solution will solve legacy endpoint data loss prevention challenges and deliver real security value through detection, response, and compliance
Sunnyvale, Calif.—November 25 , 2019 – Proofpoint, Inc., (NASDAQ: PFPT), a leading cybersecurity and compliance company, today announced it has completed its acquisition of ObserveIT, the leading insider threat management platform. By combining ObserveIT’s lightweight endpoint agent technology and data risk analytics with Proofpoint’s industry-leading information classification, threat detection, and intelligence, enterprises will have unprecedented insight into user activity with their sensitive data, wherever it resides and the ability to immediately remediate risk.
“More than 30% of all data breaches are the result of insider threats and only a people-centric approach to data security can effectively prevent these breaches from happening,” said Gary Steele, chairman of the board and chief executive officer of Proofpoint. “As more companies look to successfully transition to the cloud, traditional ways of protecting data and intellectual property aren’t enough. Our acquisition of ObserveIT will help organizations overcome the challenges of legacy data loss prevention (DLP) and compliance by extending our market-leading email and cloud access security broker (CASB) DLP capabilities with endpoint. By joining email and data-at-rest solutions, Proofpoint will deliver the industry’s first truly innovative enterprise DLP offering in years.”
Companies worldwide are in a constant battle to stop cybercriminals from stealing employee credentials, to correct accidental user behaviors that can result in unintended data loss, and to prevent malicious employee action. Through this acquisition, Proofpoint will provide security teams with the capability to understand and respond to data being mishandled, whether on a corporate device, in a cloud app like Office 365, or via email allowing teams to rapidly detect, investigate, and prevent potential insider threat incidents.
Financial Impact
ObserveIT’s revenue model has historically operated under a perpetual licensing model which Proofpoint intends to promptly transition to subscription. ObserveIT’s annualized expense run rate was just over $40 million as of the third quarter of 2019.
Proofpoint expects that ObserveIT’s financial results will be nominally accretive for the company’s revenue and billings guidance for Q4 2019, last provided on October 24, 2019, and nominally dilutive to its guidance for non-gaap net income and free cash flow for the same period. For fiscal year 2020, the inorganic revenue and billings contribution from ObserveIT’s historical business model is expected to be quite limited due to the planned shift to a subscription-based model.
Proofpoint intends to provide additional commentary on the acquisition of ObserveIT during the company’s fourth quarter and year-ended 2019 earnings call to be held in early 2020.
For more information on Proofpoint’s people-centric, cloud-based security solutions, please visit www.proofpoint.com/products.
About Proofpoint, Inc.
Proofpoint, Inc. (NASDAQ: PFPT) is a leading cybersecurity and compliance company that protects organizations’ greatest assets and biggest risks: their people. With an integrated suite of cloud-based solutions, Proofpoint helps companies around the world stop targeted threats, safeguard their data, and make their users more resilient against cyberattacks. Leading organizations of all sizes, including more than half of the Fortune 1000, rely on Proofpoint’s people-centric security and compliance solutions to mitigate their most critical risks across email, the cloud, social media, and the web. More information is available at www.proofpoint.com.
Connect with Proofpoint: Twitter | LinkedIn | Facebook | YouTube
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Proofpoint is a trademark or registered trademark of Proofpoint, Inc. in the U.S. and other countries. All other trademarks contained herein are the property of their respective owners.
Forward-Looking Statements
This press release contains forward-looking statements that involve risks and uncertainties. These forward-looking statements include statements regarding future financial impact of the acquisition, future financial results for Proofpoint, and benefits of the acquisition and integration of ObserveIT’s products. It is possible that future circumstances might differ from the assumptions on which such statements are based. Important factors that could cause results to differ materially from the statements herein include: risks related to integrating the employees, customers and technologies of the acquired business; assumption of unknown liabilities ; ability to retain customers of ObserveIT; risks associated with successful implementation of multiple integrated software products and other product functionality; competition, particularly from larger companies with more resources than Proofpoint; risks related to new target markets, new product introductions and innovation and market acceptance thereof; the ability to attract and retain key personnel; potential changes in strategy; unforeseen delays in developing new technologies and the uncertain market acceptance of new products or features; global economic conditions; and the other risk factors set forth from time to time in our filings with the SEC, including our Quarterly Report on Form 10-Q for the three months ended September 30, 2019, and the other reports we file with the SEC, copies of which are available free of charge at the SEC’s website
at www.sec.gov or the investors section of Proofpoint’s website at investors.proofpoint.com. All forward-looking statements herein reflect our opinions only as of the date of this release, and Proofpoint undertakes no obligation, and expressly disclaims any obligation, to update forward-looking statements herein in light of new information or future events.