Cyber Security

ZeroFox announced Q4 and Fiscal Year 2024 Financial Results

Reports Record Annual Recurring Revenue and Positive Free Cash Flow

ZeroFox Holdings, Inc. (Nasdaq: ZFOX), an enterprise software-as-a-service leader in external cybersecurity, today announced financial results for the fourth quarter and fiscal year ended January 31, 2024.

“Q4 was another positive quarter for ZeroFox with sustained top line growth and positive free cash flow” said James C. Foster. Founder and CEO of ZeroFox. “We believe that our results validate the growing need for an AI-enabled, converged external cybersecurity platform to protect enterprises from advanced external threats.”

Fourth Quarter Fiscal Year 2024 Financial Highlights

  • Revenue: Total revenue was $60.5 million, an increase of 33% year-over-year.
  • Annual Recurring Revenue (“ARR”) was $188.4 million, an increase of 20% year-over-year.
  • Gross margin: GAAP gross margin was 35% and non-GAAP gross margin was 44%. GAAP subscription gross margin was 53% and non-GAAP subscription gross margin was 73%.
  • Loss from Operations: GAAP loss from operations was $228.6 million. Non-GAAP loss from operations was $2.2 million. GAAP loss from operations includes a goodwill impairment charge of $212.1 million.
  • Cash and Cash Equivalents were $33.1 million on January 31, 2024, an increase of approximately $3.3 million from October 31, 2023.

Full Year Fiscal Year 2024 Financial Highlights

  • Revenue: Total revenue was $233.3 million.
  • Gross margin: GAAP gross margin was 32% and non-GAAP gross margin was 41%. GAAP subscription gross margin was 51% and non-GAAP subscription gross margin was 73%.
  • Loss from Operations: GAAP loss from operations was $353.0 million. Non-GAAP loss from operations was $17.9 million. GAAP loss from operations includes a goodwill impairment charge of $284.2 million.

Recent Highlights

  • Announced $289 million in contract awards from the U.S. Office of Personnel Management (OPM) for the continued provision of digital identity protection services to the 22.1 million individuals impacted by previous security incidents.
  • Awarded nine badges in G2’s Winter 2024 Report across five categories, including brand protection, dark web monitoring, fraud detection, and threat intelligence.

Proposed Transaction with Haveli Investments
As announced on February 6, 2024, ZeroFox has entered into a definitive agreement to be acquired by Haveli Investments, a private equity firm focused on the software and technology-enabled services sectors, in an all-cash transaction with an enterprise value of approximately $350 million. The transaction is expected to close in the first half of 2024, subject to customary closing conditions, including approval by ZeroFox stockholders and the receipt of required regulatory approvals. The transaction is not subject to any financing condition. Upon the completion of the transaction, ZeroFox’s common stock and warrants will no longer be publicly listed on the Nasdaq Global Market and the Nasdaq Capital Market, respectively, and ZeroFox will become a privately held company. For more information about the pending transaction with Haveli Investments, please see ZeroFox’s Current Report on Form 8-K filed with the U.S. Securities and Exchange Commission (the “SEC”) on February 6, 2024, and the Company’s preliminary proxy statement on Schedule 14A filed with the SEC on March 8, 2024.

Given the transaction with Haveli Investments, ZeroFox will not be hosting an earnings conference call or live webcast to discuss its fourth quarter and fiscal year 2024 financial results and ZeroFox will not be providing guidance for the first quarter or full fiscal year 2025. For further detail and discussion of ZeroFox’s financial performance please refer to ZeroFox’s Annual Report on Form 10-K for the fiscal year ended January 31, 2024.

Additional information regarding the non-GAAP financial measures and key business measures discussed in this release, including an explanation of these measures and how each is calculated, is included below under the heading “Use of Non-GAAP Financial Measures and Key Business Measures.” A reconciliation of non-GAAP to GAAP financial measures has also been provided in the financial tables included below and is available on our Investor Relations website.

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