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Email encryption market / Zix Corp (zixi)


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Zix Corp came up in a screening of quality companies that I did. Upon looking closer I became intrigued as I found characteristics that I favor:

- Industry characteristics: (Relatively) few direct competitors (albeit big ones: Cisco, McAfee and Proofpoint) servicing a large group of clients (government, healthcare, finance, etc) - the company is servicing over 7.000 clients with no single client contributing more than 2% of revenues - through a service based business model with high renewal rates (+90%). From the clients perspective it is a vital service although it represents only a minor part of the clients total costs (meaning that changes in cost of service will have minor impact the clients income statement). 

- Scaling properties of the business model. 

- The company has been showing rapid growth, high margins and high RoE.

- Huge growth potential (f.ex. international expansion)

- Recent shareholder activism (http://finance.yahoo.com/news/meldrum-asset-management-delivers-letter-123800907.html)


As one would naturally suspect from a tech stock, outstanding options are in excess of 10% of outstanding shares...


I´ve only just started looking into this one, so I would be interested to see if any other board member has already been kicking the tiers on this one.


Of course this company proclaims to be miles ahead of anybody in the industry and that their products are vastly superior to others. As there seem to be quite a few programmers/techies/IT guys on the thread, I would greatly appreciate some Devil´s advocate contribution regarding technology (as this is far out of my Circle of Competence).

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