Presented by Yiting(Joanne) Zeng, Yungchi Lo 11/15/2018

Agenda Share Market Prospect and Current Holding Company and Business Review Macroeconomics and Industry Review Financial Analysis and Projection Benchmarking and Valuation Recommendation

Share Market Prospect and Current Holding Purchased 2000 shares @ $2.89/share on April 17, 2012 Basic cost : $5,780 Sold 1000 shares @ 3.96 on April 18, 2016 Current: 1000 shares @ 6.71/share on November 14, 2018 Market value : $6,710 Holding period : 80 months Gain: 232.17% Annualized return: 11.09% -1000 +2000

Company and Business Review Zix Corporation is a leading security technology company provides email encryption, data loss prevention (DLP), threat protection, archiving, and bring-your-own-device (BYOD) solutions to meet the data protection and compliance needs of organizations. Headquartered in Dallas, TX 253 Employees 100% Subscription Revenue 30% of U.S. Banks Are Existing Zix Customers More than 1,200 U.S. Hospitals Are Existing Customers

Company and Business Review Email Encryption Industry leading solution and delivering more than 1.4Mn emails daily Patented best method of delivery system combines strong security with convenient user experience Only plat form to offer a fully transparent solution , eliminating extra steps or passwords for senders of recipients Email Archive Indefinite storage of emails for business legal compliance E-discovery search and hold capabilities Advanced Threat Protection Email Encryption Archiving Mobile Security Data Loss Prevention Email Threat Protection Defend against spam, viruses, zero-day malware, ransomware and phishing Multi-layered approach delivers 99.5% accuracy 30-day business continuity for disaster recovery Data Loss Prevention Addresses the greatest source of data loss — corporate email Organizations can prevent improper exposure of sensitive information outsidethe network Significantly decreases complexity, cost, and deployment time Mobile Security-- ZixOne Provides employees with easy access to email while never storing data on the device Allows organizations to secure corporate data and meet compliance requirements Source: Company Investor Presentation Dated 24th October 2017

Merge & Acquisition History 03/25/2017 09/14/2017 04/03/2018 Addition of Advanced threat protection, antivirus , anti-spam and archiving acquired Greenview Data Inc for USD 6.50M. Expand email encryption capabilities and delivery methods acquired Entelligence Messaging Server Business for USD 1.70M. Expand Unified Archiving, eDiscovery and Compliance Solutions acquired CM2.Com Inc.

Material Expansion of Total Addressable Market in U.S.

Competitors Email Encryption Threat Protection, Archive, and Data Loss Prevention business competes with products and services offered by companies such as Microsoft, Barracuda Networks, Inc., Proofpoint, MIMECast, Virtru, and Micro Focus (Voltage). ZixOne business competes with products and services offered by companies such as AirWatch/VMWare, Citrix (with XenMobile), Blackberry, IBM/Fiberlink (with MaaS360), Microsoft (with ActiveSync), and MobileIron VS

Performance and Market Overview Revenue Breakdown Sales Channels Source: Company Investor Presentation Dated 24th October 2017 Dated 24th VAR: Value Added Resellers MSSP: Managed Security Service Providers *On Dec. 22, 2017 the U.S. enacted the Tax Act that lowered tax rate from 35% to 21% (effective Jan. 1, 2018 resulting in one-time income tax expense (non-cash) of $12.3 million due to adjustment of deferred tax balances.

Management Team Growth Strategy David J Wagner President/CEO New Customer Acquisition Direct & VAR/MSSPs OEM Partners International Expansion Add-on & Cross Sell Expand Licenses Within Installed Base Add-on Products to Increase ARPU Reduce Churn and Increase Retention Increase Renewal Rate (90%+) Invest in Core Email Encryption Solutions Appointed president and CEO in 2016 Prior to Zix, held leadership roles at Entrust for 20 years, including most recently as president Held various finance and accounting positions at Nortel Networks and Raytheon Systems MBA and B.S. in Accounting from The Pennsylvania State University TRA 13.57% compared to peers TRA 2.99% Appointed CFO in 2016 20+ years of investor relations, finance and business development experience Held several senior leadership positions at Entrust and Nortel Networks MBA from The University of Texas at Dallas and an undergraduate degree from Texas Tech University TRA 26.79% compared to peers TRA 0.49% Joined Zix in 2003 20+ years of experience in high-tech marketing Held various management roles at Entrust, including marketing director of European operations B.Com. with honors in marketing from the University of Guelph TRA 9.23% compared to peers TRA 4.43% David E Rockvam VP/CFO Geoffrey R Bibby VP: Marketing David J Wagner President/CEO Growth Strategy

Porter Five Forces Analysis Barrier to Enter: Low Software industry is relatively easier to enter Competition and Rivalry: High Strong competition in market, and industry consolidation may result in stronger competition Expansion in addressable market lead to higher level competition Bargaining Power of Buyers: Moderate Subscription system and cross selling Plenty of large size competitors Differentiate products Bargaining Power of Suppliers: Low Only input is system provider Threats of Substitutes: High Customers may shift to new communication tools Some built-in anti-cyber-risk add ins

Macroeconomics and Industry Review Number of active e-mail accounts worldwide from 2014 to 2019 (in millions) 86% of professionals name email as their favorite mode of communication 66% of email is read on mobile devices. Percentage of email that is considered spam: 49.7%. Global spam volume as percentage of total e-mail traffic from January 2014 to March 2018, by month Source: Kaspersky Lab

Macroeconomics and Industry Review Victims:

S W T O SWOT Analysis Competition form larger competitors Unable to keep up with new cyber threats Innovation in communication technology (Block chain VOIP) Growing demand owing to legislation and increase in cyber risk Leader in BYOD market especially ZixOne Expansion of total addressable market Small size Highly contracted in both product and industry Depend on third party distributors Steady revenue generated from subscription Loyal and growing customer base 90% net dollar revenue retention No customer >2% revenue S W T O

Financial Analysis and Projection Benchmarking and Valuation

Key Facts Can meet immediate obligations(liability) Pay no dividends Not utilized deferred tax assets since 2013 Paid income taxes in 2014-2017 without using DTA The MOST surprise: No debt!! The MOST risk : if failure in acquisition, working capital will increase, resulting in revenue decreasing.  May consider to borrow  payback with PPE or A/R  Liquidity issue  failure in acquisition again.. The MOST abnormal:$8.1 million net loss in 2017 because of Tax Cuts and Jobs Act of 2017

Tax Cuts and Jobs Act of 2017 Tax Cuts and Jobs Act of 2017. The Tax Cuts and Jobs Act is a United States Congressional bill to amend the Internal Revenue Code of 1986, effectively altering the rate of taxation for individuals and businesses. The plan would lower the corporate income tax rate to 21 percent and move the United States from a worldwide to a territorial system of taxation. statutory tax rate decreased from 35% to 21%

Negative Influence from Tax Cuts and Jobs Act of 2017 (I/S) Abnormal On December 22, 2017, the U.S. enacted the Tax Act which significantly changed U.S. tax law. The Tax Act lowered the Company’s statutory tax rate from 35% to 21% effective January 1, 2018. At December 31, 2017, the Company adjusted its deferred tax balances to reflect the new tax rate that resulted in tax expense of $12.5 million.

Positive Influence from Tax Cuts and Jobs Act of 2017 (CF) One time Non-Cash Charge

a signal that once ZIX scales, it could become very profitable. Ratios 1. Profitability Ratio a signal that once ZIX scales, it could become very profitable. Source: ZIX.com

Great: meet its short-term financial obligations. Ratios 3. Financial Leverage Ratios: Debt to Equity Ratio = 0. One insight: When decides to acquire another company, fund is from accumulative Revenue Efficient: at using its assets to generate earnings except 2017. 2. Liquidity Ratio Great: meet its short-term financial obligations.

Dupont Analysis

Financial Projection Forward P/E Assume that deferred tax assets are not utilized. Company pays income taxes at 21%. No change in deferred tax assets

EPS Expect to increase in the future

Discount Rate Three acquisition events happened in 2017 and 2018.

Company Valuation (DCF)

Company Valuation ( 1st Group of Comparable Companies) Capital IQ Company Screening Report Screening Criteria 1) Industry Classifications: Application Software OR Security Software 2) Geographic Locations: United States of America 3) Total Enterprise Value [Latest] ($USDmm, Historical rate): is between 50 and 550 4) EBITDA [Latest Annual] ($USDmm, Historical rate): is between 7 and 19 (Unreported data set to 0) 5) Total Revenue [Latest Annual] ($USDmm, Historical rate): is between 40 and 90 (Unreported data set to 0) 6) Total Debt [Latest Annual] ($USDmm, Historical rate): is less than 10 (Unreported data set to 0) Source: Capital IQ

Company Valuation (2nd Group of Comparable Companies 2) Share Price 6.80 6.35 Source: Capital IQ

Operating Statistics Source: Capital IQ

Health Panel Additional Information Source: Capital IQ

Hold Recommendation 10% 20% 40% 30% Growing industry High Gross Margin, EBITDA Margin and EBIT Margin 20% Hold 40% Company Life Cycle Competitive advantage 30%