Data sourced from stocksbeat.com, originally published August 2019. All figures reflect conditions as of that date and should not be used for current investment decisions.
Overview
Zix Corporation (NASDAQ: ZIXI) and Splunk Inc. (NASDAQ: SPLK) are both classified as application software companies, but they serve substantially different markets and use cases. Zix focuses on email security, encryption, and data loss prevention (DLP) for regulated industries, while Splunk provides a broad machine-data intelligence platform used for security, IT operations, and observability. This article compares the two companies across key financial and market metrics as reported in mid-2019.
Earnings and Valuation
The table below summarises gross revenue (in millions), Price/Sales ratio, Earnings Per Share (EPS), and Price/Earnings ratio for both companies.
| Gross Revenue ($M) | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
|---|---|---|---|---|---|
| Zix Corporation | 8 | 4.04 | N/A | 0.09 | 103.52 |
| Splunk Inc. | 129 | 10.20 | N/A | -2.11 | 0.00 |
Splunk’s significantly higher revenue reflects its larger scale and broader market reach. However, Splunk reported a negative EPS of -2.11 at the time, indicating the company was still investing heavily in growth at the expense of near-term profitability — a common pattern among high-growth SaaS companies. Zix, by contrast, posted a positive EPS of 0.09, though its P/E ratio of 103.52 indicates the market priced in significant future growth relative to current earnings.
Profitability
Return on equity (ROE) and return on assets (ROA) provide insight into how efficiently each company uses its capital.
| Net Margins | Return on Equity | Return on Assets | |
|---|---|---|---|
| Zix Corporation | 0.00% | 9.2% | 2.8% |
| Splunk Inc. | 0.00% | 0% | 0% |
Both companies reported 0% net margins at this snapshot date. Zix showed a positive ROE of 9.2% and ROA of 2.8%, suggesting it was generating some return for shareholders from its asset base. Splunk’s 0% on both metrics reflects its then-negative earnings position. Neither figure indicates strong near-term profitability, which is typical for software companies in aggressive growth phases.
Volatility and Risk
Beta is a measure of a stock’s price volatility relative to the broader market (S&P 500, where beta = 1.0).
- Zix Corporation had a beta of 0.88, meaning it was approximately 12% less volatile than the S&P 500 at the time — a relatively stable profile for a small-cap software company.
- Splunk Inc. had a beta of 2.02, making it approximately twice as volatile as the broader market. This is consistent with high-growth, high-valuation software stocks that can experience large price swings in response to earnings reports or macro sentiment shifts.
Liquidity
Current and Quick ratios measure a company’s ability to meet short-term obligations. A ratio above 1.0 generally indicates sufficient liquidity.
- Zix Corporation: Current Ratio of 0.4, Quick Ratio of 0.4 — both below 1.0, indicating potential short-term liquidity constraints.
- Splunk Inc.: Current Ratio of 3.2, Quick Ratio of 3.2 — well above 1.0, reflecting a strong liquidity position, likely supported by substantial cash raised through equity offerings and revenue growth.
Splunk’s significantly stronger liquidity ratios suggest it was better positioned to meet near-term financial obligations at the time of this analysis.
Analyst Recommendations
| Sell Ratings | Hold Ratings | Buy Ratings | Rating Score | |
|---|---|---|---|---|
| Zix Corporation | 0 | 0 | 2 | 3.00 |
| Splunk Inc. | 1 | 3 | 22 | 2.85 |
Both companies carried predominantly bullish analyst sentiment. Zix had a unanimous 2-analyst buy consensus with a price target of $10.50 and implied upside of approximately 29.47% from the then-current price. Splunk attracted far more analyst coverage — 22 buy ratings out of 26 total — with an average price target of $153.27 and implied upside of approximately 17.74%.
While Zix showed a higher percentage upside based on consensus targets, Splunk’s breadth of analyst coverage and absolute buy-rating count reflects far greater institutional interest and liquidity.
Insider and Institutional Ownership
- Zix Corporation: 76.8% institutional ownership; 3.3% insider ownership.
- Splunk Inc.: 94.8% institutional ownership; 0.9% insider ownership.
Splunk’s higher institutional ownership is consistent with its larger market capitalisation and inclusion in major indices and fund mandates. Zix’s higher insider ownership percentage may reflect greater alignment between management and shareholders, though the absolute number of shares held by insiders is much smaller.
Stock Performance (as of mid-2019)
| Weekly | Monthly | Quarterly | Half-Yearly | Yearly | YTD | |
|---|---|---|---|---|---|---|
| Zix Corporation | +1.56% | -3.29% | +9.89% | +24.28% | +70.60% | +58.99% |
| Splunk Inc. | -3.32% | +7.96% | +0.37% | +10.21% | +41.86% | +29.05% |
Over the trailing year and YTD periods shown, Zix Corporation significantly outperformed Splunk in price appreciation. Zix’s 70.6% one-year gain versus Splunk’s 41.86% demonstrates that smaller-cap stocks can produce outsized returns in bullish conditions, though typically with higher risk. Both stocks delivered strong absolute returns during this period, reflecting broader strength in cloud and software equities in 2019.
Company Profiles
Zix Corporation
Founded in 1983 (formerly ZixIt Corporation, renamed in 2002) and headquartered in Dallas, Texas, Zix Corporation provides email encryption, data loss prevention, and mobile email security solutions. Its primary customers are in regulated industries including healthcare, financial services, insurance, and government.
Core products at the time of writing included:
- Zix Email Encryption: Policy-driven email encryption to meet regulatory compliance requirements.
- ZixGateway: Automatic encryption and decryption of messages containing sensitive content.
- ZixDirectory: A shared identity community enabling encrypted email delivery across organisations.
- Best Method of Delivery: A patented system that selects the optimal encryption delivery method based on sender and recipient environment.
- ZixQuarantine: An email-specific DLP solution designed for rapid deployment.
- ZixOne: A mobile email application that provides access to corporate email without persistently storing data on the device, reducing exposure from device loss or theft.
Zix distributes its products through a direct sales force and a network of resellers and channel partners.
Splunk Inc.
Incorporated in 2003 and headquartered in San Francisco, California, Splunk provides a machine data intelligence platform used globally by organisations across many industries for security, IT operations, and business analytics.
Key products and capabilities at the time included:
- Splunk Enterprise: The core on-premises platform for collecting, indexing, searching, monitoring, and analysing machine data from any source or format.
- Splunk Cloud: A fully managed cloud-delivered version of Splunk Enterprise.
- Splunk Light: A simplified log search and analysis product for small IT environments.
- Splunk Enterprise Security (ES): A SIEM solution for detecting and responding to emerging security threats.
- Splunk User Behavior Analytics (UBA): Machine-learning-based detection of insider threats and advanced cyber-attacks.
- Splunk IT Service Intelligence (ITSI): Monitoring of IT service health and key performance indicators.
- Splunk Analytics for Hadoop: Integration with Hadoop and Amazon S3 for large-scale data exploration.
- Splunkbase and Splunk Answers: Community platforms for sharing apps, integrations, and support.
Splunk serves a wide range of verticals including financial services, government, healthcare, retail, telecommunications, and technology.
Summary
As of mid-2019, Zix Corporation presented a more favourable picture on several traditional financial metrics — positive EPS, higher ROE and ROA, stronger stock price momentum, and a higher analyst-implied upside percentage. Splunk, however, offered far superior liquidity, substantially greater revenue scale, deeper analyst coverage, and higher institutional ownership — all indicators of a more mature and closely followed public company.
The two companies are not direct competitors in a practical sense: Zix’s niche is email security for regulated industries, while Splunk addresses a much broader data intelligence and security analytics market. Investors and practitioners evaluating either company should consult current financial data, as conditions have changed significantly since 2019.
Note: All data in this article reflects figures available as of August 2019. This article is not investment advice.