Second quarter revenue of $25.7 million increased 12% year-over-year
GAAP operating loss of $11.4 million and non-GAAP operating loss of $7.6 million

Boston, MA and Tel Aviv, Israel – August 11, 2021 - Tufin (NYSE: TUFN), a company pioneering a policy-centric approach to security and IT operations, today announced financial results for the second quarter ended June 30, 2021.

“We are pleased to deliver another quarter of year-over-year revenue growth, with the subscription transition in the second quarter progressing ahead of our forecast,” said Ruvi Kitov, Tufin’s CEO and Co-Founder. “We expanded our security policy management capabilities, with the announcement of the Tufin Orchestration Suite R21-2 and the new additions to the marketplace for rule life cycle management. I am encouraged by our progress thus far in 2021, and believe we are well-positioned for the second half of the year.”

Kitov added, “Early indications give us confidence in our strategic direction and the effectiveness of our transformation. We continue to remain agile as we execute our long-term strategy to transition our business to a subscription revenue model while driving long-term value for all of our stakeholders.”  

Financial Highlights for the Second Quarter Ended June 30, 2021

Revenue:

  • Total revenue was $25.7 million, up 12% compared with the second quarter of 2020.
  • Product revenue was $9.7 million, up 23% compared with the second quarter of 2020.
  • Maintenance and professional services revenue was $16.0 million, up 6% compared with the second quarter of 2020.

Gross Profit:

  • GAAP gross profit was $19.9 million, or 77% of total revenue, compared to $18.3 million in the second quarter of 2020, or 79% of total revenue. 
  • Non-GAAP gross profit was $20.5 million, or 80% of total revenue, compared to $18.7 million in the second quarter of 2020, or 81% of total revenue.

Operating Loss:

  • GAAP operating loss was $11.4 million, compared to $8.2 million in the second quarter of 2020.  
  • Non-GAAP operating loss was $7.6 million, compared to $4.5 million in the second quarter of 2020.

Net Loss:

  • GAAP net loss was $11.9 million, or a loss of $0.32 per share, compared to a GAAP net loss of $8.8 million, or a loss of $0.25 per share, in the second quarter of 2020.  
  • Non-GAAP net loss was $8.2 million, or a loss of $0.22 per share, compared to a loss of $5.2 million, or a loss of $0.15 per share, in the second quarter of 2020.

Balance Sheet and Cash Flow:

  • Cash flow used for operating activities during the six months ended June 30, 2021 was $1.9 million, compared to cash flow used for operating activities of $11.2 million during the six months ended June 30, 2020.
  • Total cash, cash equivalents, restricted cash and marketable securities as of June 30, 2021 were $101.9 million, compared to $104.0 million as of December 31, 2020. 

The tables at the end of this press release include a reconciliation of GAAP to non-GAAP gross profit, operating loss and net loss for the three and six months ended June 30, 2021 and 2020. An explanation of these measures is also included under the heading “Non-GAAP Financial Measures.” 

Recent Business Highlights

  • Tufin announced the release of Tufin Orchestration Suite R21-2, enabling users to accelerate and optimize security and network operations to improve productivity, audit readiness, and security.
  • Tufin announced a new Marketplace app, the Rule Lifecycle Management (RLM). This app simplifies and manages the rules review and certification process by automatically identifying expiring or expired rules and mapping them to their owners, enabling a simple recertification or decertification of rules.
  • Tufin announced its annual Partner of the Year award winners during the annual regional partner summits that preceded the Tufinnovate User Conferences in the Americas, EMEA, and APAC. Tufin recognized its top regional partners for their commitment, year-over-year growth, and support annually.
  • Tufin was named a Top Company to Work for in High-Tech in Israel by BDI Code, based on a methodology developed by CofaceBdi which includes ranking criteria such as profitability, growth rate, community contribution, and company culture.

Business Outlook 

Based on information available as of August 11, 2021, Tufin is issuing guidance as indicated below:  

Third Quarter 2021:
    •    Total revenue between $23.5 and $27.5 million
    •    Non-GAAP operating loss between $10.3 and $6.9 million

Full Year 2021:
    •    Total revenue between $105.0 and $113.0 million
    •    Non-GAAP operating loss between $30.4 and $23.6 million

Conference Call Information

In conjunction with this announcement, the Company will host a conference call today, August 11, 2021, at 8:00am Eastern Time, to discuss the Company’s second quarter financial results and its business outlook. To participate in the call, please dial 877-407-2988 in the U.S. or 201-389-0923 for international participants and enter Conference ID# 13721839. The call will also be webcast live on Tufin’s Investor Relations website at investors.tufin.com.
 
Following the conference call, an archive of the webcast will be available on the investor relations section of the Company website’s two hours after the live call ends.

Non-GAAP Financial Measures

We believe that providing non-GAAP financial measures that exclude, as applicable, share-based compensation expense and certain non-recurring costs, as well as, the tax effect of these non-GAAP adjustments, allows for more meaningful comparisons between our operating results from period to period. These non-GAAP financial measures are an important tool for financial and operational decision-making and for evaluating our operating results over different periods: 

  • We define non-GAAP gross profit as gross profit excluding share-based compensation expense.
  • We define non-GAAP operating profit (loss) as operating profit (loss) excluding share-based compensation expense, shelf registration costs and one-time expenses associated with the reorganization of one of our subsidiaries.
  • We define non-GAAP net income (loss) as net income (loss) excluding share-based compensation expense, shelf registration costs, one-time expenses associated with the reorganization of one of our subsidiaries and the tax effect of these non-GAAP adjustments.

Because of varying available valuation methodologies, subjective assumptions and the variety of equity instruments that can impact a company’s non-cash expense, we believe that providing non-GAAP financial measures that exclude non-cash share-based compensation expense allow for more meaningful comparisons between our operating results from period to period. In addition, we believe that providing non-GAAP financial measures that exclude one-time expenses associated with the reorganization of one of our subsidiaries and secondary offering costs allow for more meaningful comparisons between our operating results from period to period since these non-recurring costs are not representative or indicative of our ongoing operations. We also believe that the tax effects related to the non-GAAP adjustments set forth above do not reflect the performance of our core business and would impact period-to-period comparability.

Other companies, including companies in our industry, may calculate non-GAAP gross profit, non-GAAP operating income (loss) and non-GAAP net income (loss) differently or not at all, which reduces the usefulness these non-GAAP financial measures for comparison. You should consider these non-GAAP financial measures along with other financial performance measures, including gross profit, operating income (loss) and net income (loss), and our financial results presented in accordance with U.S. GAAP. Tufin urges investors to review the reconciliation of its non-GAAP financial measures to the comparable U.S. GAAP financial measures included below, and not to rely on any single financial measure to evaluate its business.

Guidance for non-GAAP financial measures excludes, as applicable, share-based compensation expense and certain non-recurring costs, as applicable. A reconciliation of the non-GAAP financial measures guidance to the corresponding GAAP measures is not available on a forward-looking basis due to the uncertainty regarding, and the potential variability and significance of, the amounts of share-based compensation expense and certain non-recurring costs, as applicable, that are excluded from the guidance. Accordingly, a reconciliation of the non-GAAP financial measures guidance to the corresponding GAAP measures for future periods is not available without unreasonable effort.

Cautionary Language Concerning Forward-Looking Statements

This release contains forward-looking statements, which express the current beliefs and expectations of Tufin’s (the “Company”) management. In some cases, forward-looking statements may be identified by terminology such as “believe,” “may,” “estimate,” “continue,” “anticipate,” “intend,” “should,” “plan,” “expect,” “predict,” “potential” or the negative of these terms or other similar expressions.  Such statements involve a number of known and unknown risks and uncertainties that could cause the Company’s future results, performance or achievements to differ significantly from the results, performance or achievements expressed or implied by such forward-looking statements. Important factors that could cause or contribute to such differences include risks relating to: the impact of COVID-19 on the budgets of our clients and on economic conditions generally; political conditions and economic downturns, particularly in the areas where we operate; compliance, managerial and regulatory risks associated with international sales and operations; our expectation that policy-centric, automated solutions will garner a growing share of enterprise security spending; our expectations for growth in certain key verticals and geographic regions and our intention to expand internationally; our ability to maintain effective internal controls over financial reporting; our expectations concerning seasonality and the predictability of our sales cycle; expectations regarding customer relationships developed by our hybrid sales model; the inability to acquire new customers or sell additional products and services to existing customers; competition from a wide variety of competitive vendors; our ability to compete and increase positive market awareness of our brand; our ability to align future and past performance by generating sufficient revenue; successfully managing our business model and growth as a result of our transition to a subscription-based product model; the compatibility of our offerings with the existing technologies of our customers; reliance on certain products and customers to generate large portions of our revenue, as well as reliance on a single third-party manufacture to fulfill certain orders; ; the effect of cybersecurity threats or attacks on our technologies, products or services; real or perceived shortcomings, defects or vulnerabilities in our solutions or internal network system; compliance with laws, regulations and requirements in the jurisdictions where we operate; expectations regarding the outcome of current litigation; ability to protect and defend our intellectual property rights; ; effectively investing in, growing and maintaining key personnel; and other factors discussed under the heading “Risk Factors” in the Company’s most recent annual report on Form 20-F filed with the Securities and Exchange Commission. Forward-looking statements in this release are made pursuant to the safe harbor provisions contained in the Private Securities Litigation Reform Act of 1995. These forward-looking statements are made only as of the date hereof, and the Company undertakes no obligation to update or revise the forward-looking statements, whether as a result of new information, future events or otherwise.

 

TUFIN SOFTWARE TECHNOLOGIES LTD.

CONDENSED CONSOLIDATED BALANCE SHEETS

U.S. dollars in thousands

(Unaudited)

 

 

December 31,

 

 

June 30,

 

 

 

2020

 

 

2021

 

Assets

 

 

 

 

 

 

CURRENT ASSETS:

 

 

 

 

 

 

Cash and cash equivalents

 

 

58,449

 

 

 

55,851

 

Marketable Securities – short term

 

 

19,586

 

 

 

26,250

 

    Accounts receivable (net of allowance for credit losses of $85 at December 31, 2020 and

    June 30, 2021)

 

 

16,674

 

 

 

10,378

 

Prepaid expenses and other current assets

 

 

7,159

 

 

 

8,460

 

Total current assets

 

 

101,868

 

 

 

100,939

 

NON CURRENT ASSETS:

 

 

 

 

 

 

 

 

Long-term restricted bank deposits

 

 

3,268

 

 

 

3,230

 

Marketable Securities - long term

 

 

22,705

 

 

 

16,603

 

Property and equipment, net

 

 

4,502

 

 

 

4,590

 

Operating lease assets

 

 

18,802

 

 

 

17,650

 

Deferred costs

 

 

6,348

 

 

 

6,131

 

Deferred tax assets

 

 

1,346

 

 

 

1,853

 

Other non-current assets

 

 

1,512

 

 

 

1,357

 

Total non-current assets

 

 

58,483

 

 

 

51,414

 

Total assets

 

 

160,351

 

 

 

152,353

 

 

TUFIN SOFTWARE TECHNOLOGIES LTD.

CONDENSED CONSOLIDATED BALANCE SHEETS

 U.S. dollars in thousands (except share data)

(Unaudited)

 

 

 

December 31,

 

 

June 30,

 

 

 

2020

 

 

2021

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

 

 

 

CURRENT LIABILITIES:

 

 

 

 

 

 

Trade payables

 

 

4,147

 

 

 

5,878

 

Employee and payroll accrued expenses

 

 

17,985

 

 

 

15,865

 

Other accounts payables

 

 

578

 

 

 

677

 

Operating lease liabilities – current

 

 

3,185

 

 

 

3,238

 

Deferred revenues

 

 

24,940

 

 

 

29,695

 

Total current liabilities

 

 

50,835

 

 

 

55,353

 

NON-CURRENT LIABILITIES:

 

 

 

 

 

 

 

 

Long-term deferred revenues

 

 

12,815

 

 

 

16,713

 

Non-current operating lease liabilities

 

 

20,240

 

 

 

18,563

 

Other non-current liabilities

 

 

1,282

 

 

 

1,347

 

Total non-current liabilities

 

 

34,337

 

 

 

36,623

 

Total liabilities

 

 

85,172

 

 

 

91,976

 

 

 

 

 

 

 

 

 

 

SHAREHOLDERS’ EQUITY:

 

 

 

 

 

 

 

 

Ordinary shares of NIS 0.015 par value; 150,000,000 shares authorized at December 31, 2020 and June 30, 2021, respectively; 35,972,470 and 37,252,251 shares issued and outstanding at December 31, 2020 and June 30, 2021, respectively;

 

 

148

 

 

 

153

 

Additional paid-in capital

 

 

178,864

 

 

 

187,535

 

Accumulated other comprehensive income (loss)

 

 

5

 

 

 

(18)

 

Accumulated deficit

 

 

(103,838)

 

 

 

(127,293)

 

TOTAL SHAREHOLDERS’ EQUITY

 

 

75,179

 

 

 

60,377

 

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

160,351

 

 

 

152,353

 

 

TUFIN SOFTWARE TECHNOLOGIES LTD.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

 U.S. dollars in thousands (except per share data)

(Unaudited)

 

Three Months Ended

Six Months Ended

 

 

June 30,

 

 

June 30,

 

 

June 30,

 

 

June 30,

 

 

2020

 

 

2021

 

 

2020

 

 

2021

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

Product

 

7,901

 

 

9,747

 

 

13,705

 

 

 

15,778

 

Maintenance and professional services

 

15,131

 

 

15,991

 

 

30,571

 

 

 

31,320

 

Total revenues

 

23,032

 

 

25,738

 

 

44,276

 

 

 

47,098

 

Cost of revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

Product

 

660

 

 

578

 

 

1,213

 

 

 

1,331

 

Maintenance and professional services

 

4,096

 

 

5,215

 

 

9,113

 

 

 

9,866

 

Total cost of revenues

 

4,756

 

 

5,793

 

 

10,326

 

 

 

11,197

 

Gross profit

 

18,276

 

 

19,945

 

 

33,950

 

 

 

35,901

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

8,033

 

 

10,414

 

 

18,211

 

 

 

20,054

 

Sales and marketing

 

13,636

 

 

14,668

 

 

31,465

 

 

 

28,232

 

General and administrative

 

4,793

 

 

6,289

 

 

9,724

 

 

 

11,885

 

Total operating expenses

 

26,462

 

 

31,371

 

 

59,400

 

 

 

60,171

 

Operating loss

 

(8,186)

 

 

(11,426)

 

 

(25,450)

 

 

 

(24,270)

 

Financial income (expense), net

 

(127)

 

 

(306)

 

 

436

 

 

 

(241)

 

Loss before taxes on income

 

(8,313)

 

 

(11,732)

 

 

(25,014)

 

 

 

(24,511)

 

Taxes on income

 

(500)

 

 

(133)

 

 

(843)

 

 

 

1,056

 

Net loss

 

(8,813)

 

 

(11,865)

 

 

(25,857)

 

 

 

(23,455)

 

Basic and diluted net loss per ordinary share

 

(0.25)

 

 

(0.32)

 

 

(0.73)

 

 

 

(0.64)

 

Weighted average number of shares used in computing net loss per ordinary share - basic and diluted

 

35,650

 

 

37,023

 

 

35,552

 

 

 

36,715

 

 

Share-based Compensation Expense:

 

 

 

Three Months Ended

 

 

Six Months Ended

 

June 30,

 

 

June 30,

 

 

June 30,

 

 

June 30,

 

2020

 

 

2021

 

 

2020

 

 

2021

Cost of revenues

467

 

 

538

 

 

962 

 

 

1,061

Research and development

 

1,113

 

 

1,235

 

 

2,183

 

 

 

2,362

Sales and marketing

 

1,022

 

 

902

 

 

2,209

 

 

 

1,643

General and administrative

 

935

 

 

1,147

 

 

1,838

 

 

 

2,104

Total share-based compensation expense

 

3,537

 

 

3,822

 

 

7,192

 

 

 

7,170

 

 

 

 

TUFIN SOFTWARE TECHNOLOGIES LTD.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

 U.S. dollars in thousands

(Unaudited)

 

 

Six Months Ended

 

 

 

June 30,

 

 

 

2020

 

 

2021

 

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

 

 

 

Net loss

 

 

(25,857

)

 

 

(23,455)

 

Adjustment to reconcile net loss to net cash provided by (used in) operating activities:

 

 

 

 

 

 

 

 

Depreciation

 

 

694

 

 

 

837

 

Amortization of premium on marketable securities

 

 

-

 

 

 

167

 

Share-based compensation

 

 

7,192

 

 

 

7,170

 

Exchange rate differences on cash, cash equivalents and restricted cash

 

 

127

 

 

 

173

 

Other

 

 

2

 

 

 

-

 

Change in operating assets and liability items:

 

 

 

 

 

 

 

 

Accounts receivable, net

 

 

5,469

 

 

 

6,296

 

Prepaid expenses and other current assets

 

 

(3,349)

 

 

 

(1,483)

 

Deferred costs

 

 

230

 

 

 

290

 

Deferred taxes and other non-current assets

 

 

137

 

 

 

(352)

 

Trade payables

 

 

(129)

 

 

 

1,731

 

Employee and payroll accrued expenses

 

 

(534)

 

 

 

(1,650)

 

Other accounts payable and non-current liabilities

 

 

60

 

 

 

178

 

Operating lease

 

 

(242)

 

 

 

(472)

 

Deferred revenues

 

 

4,988

 

 

 

8,653

 

Net cash used in operating activities

 

 

(11,212)

 

 

 

(1,917)

 

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 

 

 

 

 

 

Purchase of fixed assets

 

 

(1,598)

 

 

 

(938)

 

Investment in marketable securities

 

 

(10,638)

 

 

 

(16,127)

 

Proceeds from maturities of marketable securities

 

 

-

 

 

 

15,409

 

Net cash used in investing activities

 

 

(12,236

)

 

 

(1,656)

 

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

 

 

 

 

 

    Proceeds from exercise of stock options

 

 

954

 

 

 

1,580

 

    Changes in withholding tax related to employee stock plans

 

 

(1,227)

 

 

 

(470)

 

    Net cash provided by (used in) financing activities

 

 

(273)

 

 

 

1,110

 

 

 

 

 

 

 

 

 

 

Effect of exchange rate changes on cash, cash equivalents and restricted cash

 

 

(127)

 

 

 

(173)

 

 

 

 

 

 

 

 

 

 

DECREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH

 

 

(23,848)

 

 

 

(2,636)

 

 

 

 

 

 

 

 

 

 

CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT BEGINNING OF PERIOD

 

 

121,729

 

 

 

61,717

 

CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT END OF PERIOD

 

 

97,881

 

 

 

59,081

 

 

 

 

 

 

 

 

 

 

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

 

 

 

 

 

 

 

 

Property and equipment purchased but not yet paid

 

 

-

 

 

 

35

 

 

 

 

 

 

 

 

 

 

 

TUFIN SOFTWARE TECHNOLOGIES LTD.

RECONCILIATION OF GAAP MEASURES TO NON-GAAP MEASURES

U.S. dollars in thousands (except per share data)

(Unaudited)

Reconciliation of Gross Profit to Non-GAAP Gross Profit:

 

 

 

 

 

 

 

 

Three Months Ended

 

 

Six Months Ended

 

 

June 30,

 

 

June 30,

 

 

June 30,

 

 

June 30,

 

 

2020

 

 

2021

 

 

2020

 

 

2021

 

 Gross profit

18,276

 

 

19,945

 

 

33,950 

 

 

35,901

 

 Plus:

 

 

 

 

 

 

 

 

 

 

 

 

 

 Share-based compensation

 

467

 

 

538

 

 

962

 

 

 

1,061

 

 Non-GAAP gross profit

 

18,743

 

 

20,483

 

 

34,912

 

 

 

36,962

 

 

 

Reconciliation of Operating Loss to Non-GAAP Operating Loss:

 

 

 

 

 

 

 

 

Three Months Ended

 

 

Six Months Ended

 

 

June 30,

 

 

June 30,

 

 

June 30,

 

 

June 30,

 

 

2020

 

 

2021

 

 

2020

 

 

2021

 

 Operating loss

(8,186)

 

 

(11,426)

 

 

(25,450)

 

 

(24,270)

 

 Plus:

 

 

 

 

 

 

 

 

 

 

 

 

 

 Share-based compensation

 

 

 3,537

 

 

 

 3,822

 

 

                                  7,192

 

 

 

7,170

 

Shelf registration costs

 

 

126

 

 

 

-

 

 

126

 

 

 

-

 

One-time reorganization charges

 

-

 

 

-

 

 

322

 

 

 

-

 

 Non-GAAP operating loss

 

 

 (4,523)

 

 

 

(7,604)

 

 

                              (17,810)

 

 

 

(17,100)

 

 

 

Reconciliation of Net Loss to Non-GAAP Net Loss:

 

 

 

 

 

 

 

 

Three Months Ended

 

 

Six Months Ended

 

 

June 30,

 

 

June 30,

 

 

June 30,

 

 

June 30,

 

 

2020

 

 

2021

 

 

2020

 

 

2021

 

 Net loss

(8,813)

 

 

(11,865)

 

 

(25,857)

 

 

(23,455)

 

 Plus:

 

 

 

 

 

 

 

 

 

 

 

 

 

Share-based compensation

 

 

3,537

 

 

 

3,822

 

 

                                  7,192

 

 

 

7,170

 

Shelf registration costs

 

 

 126

 

 

 

-

 

 

                                     126

 

 

 

-

 

One-time reorganization charges

 

-

 

 

-

 

 

322

 

 

 

-

 

Taxes on income related to non-GAAP adjustments

 

 

 (95)

 

 

 

(114)

 

 

                                     (267)

 

 

 

(1,719)

 

 Non-GAAP net loss

 

 

(5,245)

 

 

 

(8,157)

 

 

                              (18,484)

 

 

 

(18,004)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Non-GAAP net loss per share

 Basic and diluted

 

(0.15)

 

 

(0.22)

 

 

(0.52)

 

 

 

(0.49)

 

 

Weighted average number of shares

 

35,650

 

 

37,023

 

 

35,552

 

 

 

36,715

 

 

 

                                 

 

About Tufin 

Tufin (NYSE: TUFN) simplifies management of some of the largest, most complex networks in the world, consisting of thousands of firewall and network devices and emerging hybrid cloud infrastructures. Enterprises select the company’s Tufin Orchestration Suite™ to increase agility in the face of ever-changing business demands while maintaining a robust security posture. The Suite reduces the attack surface and meets the need for greater visibility into secure and reliable application connectivity. With over 2000 customers since its inception, Tufin’s network security automation enables enterprises to implement changes in minutes instead of days, while improving their security posture and business agility. 

Find out more at: www.tufin.com

Follow Tufin on Twitter: @TufinTech

Read more on Tufin’s blog: Suite Talk

Investor Relations Contact:
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Susan Rivera
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susan.rivera@tufin.com

Source: Tufin