EXCLUSIVE: Zix CEO Rick Spurr On Massive New Opportunity

In an exclusive interview with Benzinga, Zix ZIXI Chairman and CEO Rick Spurr discussed Zix’s new product, which has the potential to bring in more revenue than its legacy email encryption offering.

“Three years from now it is very possible that zix one will be a bigger revenue producer than our core products,” said Spurr regarding ZixOne, a bring your own device (BYOD) solution.
Spurr explained the need for ZixOne by starting with how email currently works when employees view corporate email on their own devices: “The way those devices work is they actually take your email out of your corporate Microsoft Exchange server and load it on your phone before you can start to view it. When your phone disconnects from the corporate network, you have corporate data on your phone that can be lost or stolen. That is the security threat of BYOD that we address with ZixOne.”

ZixOne, on the contrary, acts as a window to view your corporate email, but never downloads the content onto your device.

According to Spurr, the addressable market for this technology is massive.

“There are 120 million email addresses in the us alone that are used in the context of business,” started Spurr. The chief executive estimated the size of the market with the amount of email accounts that will need protection and the cost of protection. Three years from now, “how many of those people will have some sort of BYOD protection for reading email on their device? I would speculate it would be 70 percent. Now we are talking about 80-90 million smart phones that will need some sort of solution on them.” When Zix will be dealing with massive volume, Spurr stated, “I am estimating today that we will be generating around 21 dollars per user per year.”

“Lets use 20 for easy math. 20 on a 70 percent penetration rate would be 20 dollars on 84 million, so that's a billion and half to a two billion dollar addressable market.”

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Zix believes it is in a prime position to capture market share because early tools put together by competitors have failed to impress customers. According to Zix’s market research, 60 percent of consumers are unsatisfied with first generation tools.

“We think we have a much simpler and more elegant, more highly secure solution to that problem,” stated Spurr.

Zix is currently trading at 4.12 times sales. With a $200 million market cap, capturing ten percent of a $1.5 billion industry would quadruple the share price, given the current multiple.

Part One: Zix CEO Rick Spurr Breaks Down The Email Encryption Business

Part Three: Zix CEO Rick Spurr Discusses Co's Big Google Deal