Cyren Announces Second Quarter 2017 Financial Results
MCLEAN, Va., Aug. 16, 2017 /PRNewswire/ -- Cyren (NASDAQ: CYRN) today announced its second quarter 2017 financial results for the period ending June 30, 2017.
The second quarter was highlighted by continued expansion of Cyren's enterprise SaaS platform strategy. During the quarter, Cyren increased the number of new enterprise customers using the Cyren Cloud Security (CCS) platform for email, web, or DNS security. In the first half of 2017, the company added approximately 125 new enterprise SaaS customers, with over 500% growth in North America compared to the same period a year ago. In addition, Cyren's EMEA partner program is expanding rapidly and the company has certified over 10 channel partners to sell Cyren's internet security services.
Cyren also won significant new and renewal contracts in the Threat Intelligence Services business which will have a positive impact on revenues beginning in the third and fourth quarter. Due to timing of expiring contracts and ramp-up of revenue recognition for new customer contracts, the second quarter shows a small decline in revenue compared to the first quarter.
"Over the past quarter we saw unprecedented ransomware attacks, most notably with the WannaCry and Petya outbreaks that affected hundreds of thousands of computers globally. Fortunately Cyren's customers were unaffected by these outbreaks, as our systems detected and blocked all of the variants of these viruses without a single customer infection reported," said Lior Samuelson, CEO and Chairman of the Board at Cyren. "This is significant because it shows the ability of our cloud platform to detect and block attacks before they impact the endpoint. I believe that this fast time-to-protection provides us with a significant advantage over our competitors and will lead to increasing revenues in future quarters."
Second Quarter 2017 Financial Highlights:
-- Revenues for the second quarter of 2017 were $7.8 million, up from $7.6
million for the second quarter of 2016. Revenues for the first half of
2017 were $15.7 million compared to $15.0 million for the same period in
2016, an increase of 5%.
-- GAAP net loss for the second quarter of 2017 was $2.7 million, compared
to a net loss of $0.8 million in the second quarter of 2016 and $2.5
million last quarter.
-- GAAP loss per basic and diluted share for the second quarter of 2017 was
$0.07, compared to a loss of $0.02 per basic and diluted share for the
second quarter of 2016 and $0.06 per share last quarter.
-- Non-GAAP net loss for the second quarter of 2017 was $2.5 million,
compared to a Non-GAAP net loss of $0.2 million for the second quarter
of 2016 and $2.4 million last quarter.
-- Non-GAAP loss per basic and diluted share was $0.07 for the second
quarter of 2017, compared to a Non-GAAP loss of $0.00 per share in
second quarter of 2016.
-- Operating cash usage during the second quarter was $1.8 million,
compared to operating cash usage of $0.2 million in the second quarter
of 2016.
-- Net cash usage during the second quarter was $2.0 million, compared to
net cash usage of $1.1 million during the second quarter of 2016.
-- Cash balance as of June 30, 2017 was $11.6 million, compared to $13.5
million as of March 31, 2017. The company carries convertible notes with
a principal balance of $6.3 million which were issued at the end of Q1
2017.
For information regarding the non-GAAP financial measures discussed in this release, please see "Use of Non-GAAP Financial Measures" and "Reconciliation of Selected GAAP Measures to Non-GAAP Measures."
Recent Business Highlights:
-- Cyren signed a number of new customers who deployed multiple services
using Cyren's newly released CCS 4.0 platform, which delivers email
security, web security, DNS security and cloud sandboxing all from the
same integrated multi-tenant cloud platform. Cyren's install base of
over 1,000 enterprise accounts represents a large upsell opportunity for
Cyren customers to deploy multiple cloud security services over the
coming quarters.
-- During the quarter, Cyren renewed and expanded several customers using
its Threat Intelligence Services, including more than doubling the
contract value of one of its largest customers to total more than $6
million over the next three years. The well-known marquee customer
recently added Cyren's Phishing Intelligence solution to protect
millions of enterprise users from advanced malware and phishing attacks.
-- In June, Cyren was awarded a cybersecurity grant from the Israeli
Innovation Authority (IIA) at Israel's Ministry of Economy and Industry.
The grant follows similar awards in 2015 and 2016, and will offset R&D
expenses by approximately $930 thousand during 2017. The grant reduced
R&D expenses by approximately $487 thousand during the quarter, though
there was no cash impact during the quarter.
Financial Results Conference Call:
The company will host a conference call at 10 a.m. Eastern Time (5 p.m. Israel Time) on Wednesday, August 16, 2017.
U.S. Dial-in Number: 1-888-296-4215
Israel Dial-in Number: 1-80-924-5905
International Dial-in Number: 1-719-785-9446
The call will be simultaneously webcast live on the investor relations section of Cyren's website at www.cyren.com/ir.html, or by using the following link: http://public.viavid.com/index.php?id=125720.
For those unable to participate in the live conference call, a replay will be available until August 30, 2017. To access the replay, the U.S. dial in number is 1-844-512-2921 and the non-U.S. dial in number is 1-412-317-6671. Callers will be prompted for replay conference ID number 3387763. An archived version of the webcast will also be available on the investor relations section of the company's website.
About Cyren:
More than 1.3 billion users around the world rely on Cyren's 100% cloud internet security solutions to protect them against cyber attacks and data loss every day. Powered by the world's largest security cloud, Cyren (NASDAQ and TASE: CYRN) delivers fast time to protection from cyber threats with award-winning security as a service for web, email, sandboxing, and DNS for enterprises, and embedded threat intelligence solutions for security vendors and service providers. Customers like Google, Microsoft and Check Point are just a few of the businesses that depend on Cyren every day to power their security. Learn more at www.Cyren.com.
Blog: http://blog.cyren.com
Facebook: www.facebook.com/CyrenWeb
LinkedIn: www.linkedin.com/company/cyren
Twitter: www.twitter.com/CyrenInc or www.twitter.com/cyren_ir
Use of Non-GAAP Financial Measures:
Non-GAAP financial measures consist of GAAP financial measures adjusted to exclude: stock-based compensation expenses, amortization of acquired intangible assets, executive termination costs, deferred taxes and deferred revenues related to acquisitions, one-time gain from sale of investment in affiliate, adjustments to earn-out obligations, capitalization of technology, accretion of discount on convertible note and change in fair value of the embedded conversion feature. The purpose of such adjustments is to give an indication of the company's performance exclusive of non-cash charges and other items that are considered by management to be outside of the company's core operating results. The company's non-GAAP financial measures are not meant to be considered in isolation or as a substitute for comparable GAAP measures, and should be read only in conjunction with the company's consolidated financial statements prepared in accordance with GAAP.
Company management regularly uses supplemental non-GAAP financial measures internally to understand, manage and evaluate the business and make operating decisions.
These non-GAAP measures are among the primary factors management uses in planning for and forecasting future periods. The company believes this adjustment is useful to investors as a measure of the ongoing performance of the business. The company believes these non-GAAP financial measures provide consistent and comparable measures to help investors understand the company's current and future operating cash flow performance. These non-GAAP financial measures may differ materially from the non-GAAP financial measures used by other companies. Reconciliation between results on a GAAP and non-GAAP basis is provided in a table immediately following the Consolidated Statements of Income. The presentation of this non-GAAP financial information is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with GAAP. Management uses both GAAP and non-GAAP measures when evaluating the business internally and therefore felt it important to make these non-GAAP adjustments available to investors.
This press release contains forward-looking statements, including projections about the company's business, within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. For example, statements in the future tense, and statements including words such as "expect," "plan," "estimate," "anticipate," or "believe" are forward-looking statements. These statements are based on information available at the time of the press release and the company assumes no obligation to update any of them. The statements in this press release are not guarantees of future performance and actual results could differ materially from current expectations as a result of numerous factors, including business conditions and growth or deterioration in the internet security market, technological developments, products offered by competitors, availability of qualified staff, and technological difficulties and resource constraints encountered in developing new products, as well as those risks described in the company's Annual Reports on Form 20-F and reports on Form 6-K, which are available through www.sec.gov.
Company Contact
Mike Myshrall, CFO
Cyren
+1.703.760.3320
mike.myshrall@cyren.com
Israel Investor Contact
Iris Lubitch
SmarTeam
+972.54.2528007
iris@smartteam.co.il
Media Contact
Matthew Zintel
Zintel Public Relations
+1.281.444.1590
matthew.zintel@zintelpr.com
CYREN LTD.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands of U.S. dollars, except per share amounts)
Three months ended Six months ended
June 30 June 30
------- -------
2017 2016 2017 2016
---- ---- ---- ----
Unaudited Unaudited Unaudited Unaudited
Revenues $7,757 $7,559 $15,716 $14,970
Cost of revenues 2,997 2,562 6,029 4,613
----- ----- ----- -----
Gross profit 4,760 4,997 9,687 10,357
----- ----- ----- ------
Operating expenses:
Research and
development, net 2,353 2,103 4,643 4,381
Sales and marketing 3,751 2,027 7,324 4,770
General and
administrative 1,679 1,691 3,242 3,388
----- ----- ----- -----
Total operating
expenses 7,783 5,821 15,209 12,539
Operating loss (3,023) (824) (5,522) (2,182)
Other income 450 - 451 7
Financial expense,
net (130) (40) (205) (133)
---- --- ---- ----
Loss before taxes (2,703) (864) (5,276) (2,308)
Tax benefit
(expense) 42 25 97 (26)
--- --- --- ---
Net loss $(2,661) $(839) $(5,179) $(2,334)
======= ===== ======= =======
Loss per share -
basic $(0.07) $(0.02) $(0.13) $(0.06)
====== ====== ====== ======
Loss per share -
diluted $(0.07) $(0.02) $(0.13) $(0.06)
====== ====== ====== ======
Weighted average number of shares
outstanding:
Basic 39,231 39,121 39,193 39,121
====== ====== ====== ======
Diluted 39,231 39,121 39,193 39,121
====== ====== ====== ======
CYREN LTD.
RECONCILIATION OF SELECTED GAAP MEASURES TO NON-GAAP MEASURES
(in thousands of U.S.dollars, except per share amounts)
Three months ended Six months ended
June 30 June 30
------- -------
2017 2016 2017 2016
---- ---- ---- ----
Unaudited Unaudited Unaudited Unaudited
GAAP operating loss $(3,023) $(824) $(5,522) $(2,182)
Stock-based
compensation (1) 281 250 561 497
Amortization of
intangible assets (2) 1,117 855 2,157 1,249
Executive terminations
(5) - 57 - 57
Adjustment to deferred
revenues (6) - 24 - 66
Capitalization of
technology (8) (595) (459) (1,721) (1,406)
---- ---- ------ ------
Non-GAAP operating loss $(2,220) $(97) $(4,525) $(1,719)
======= ==== ======= =======
GAAP net loss $(2,661) $(839) $(5,179) $(2,334)
Stock-based
compensation (1) 281 250 561 497
Amortization of
intangible assets (2) 1,117 855 2,157 1,249
Adjustment to earn-out
liabilities and related
expenses (3) 32 - 63 -
Amortization of deferred
tax assets (4) (61) (73) (121) (150)
Executive terminations
(5) - 57 - 57
Adjustment to deferred
revenues (6) - 24 - 66
Gain from sale of
investment in affiliate
(7) (450) - (450) -
Capitalization of
technology (8) (613) (459) (1,739) (1,437)
Accretion of discount on
convertible note (9) 171 - 171 -
Change in fair value of
embedded conversion
feature on convertible
note (10) (267) - (267) -
---- --- ---- ---
Non-GAAP net loss $(2,451) $(185) $(4,804) $(2,052)
======= ===== ======= =======
GAAP loss per share
(diluted) $(0.07) $(0.02) $(0.13) $(0.06)
Stock-based
compensation (1) 0.00 0.01 0.01 0.02
Amortization of
intangible assets (2) 0.03 0.02 0.06 0.03
Adjustment to earn-out
liabilities and related
expenses (3) 0.00 0.00 0.00 0.00
Amortization of deferred
tax assets (4) (0.00) (0.00) (0.00) 0.00
Executive terminations
(5) 0.00 0.00 0.00 0.00
Adjustment to deferred
revenues (6) 0.00 0.00 0.00 0.00
Gain from sale of
investment in affiliate
(7) (0.01) 0.00 (0.01) 0.00
Capitalization of
technology (8) (0.02) (0.01) (0.05) (0.04)
Accretion of discount on
convertible note (9) 0.00 0.00 0.00 0.00
Change in fair value of
embedded conversion
feature on convertible
note (10) (0.00) 0.00 (0.00) 0.00
----- ---- ----- ----
Non-GAAP loss per share
(diluted) $(0.06) $(0.00) $(0.12) $(0.05)
====== ====== ====== ======
Numbers of shares used
in computing non-GAAP
loss per share
(diluted) 39,231 39,121 39,193 39,121
====== ====== ====== ======
(1) Stock-based compensation
----------------------------
Cost of revenues $29 $15 $59 $27
Research and development 85 83 167 166
Sales and marketing 58 54 113 106
General and
administrative 109 98 222 198
--- --- --- ---
$281 $250 $561 $497
==== ==== ==== ====
(2) Amortization of intangible assets
-------------------------------------
Cost of revenues $949 $665 $1,823 $871
Sales and marketing 168 190 334 378
--- --- --- ---
$1,117 $855 $2,157 $1,249
====== ==== ====== ======
(3) Adjustment to earn-out liabilities and related
expenses
--------------------------------------------------
Financial expenses, net $32 $ - $63 $ -
=== =============== === ===============
(4) Amortization of deferred tax assets
---------------------------------------
Tax benefit (expense) $(61) $(73) $(121) $(150)
==== ==== ===== =====
(5) Executive terminations
--------------------------
Sales and marketing $ - $57 $ - $57
=============== === =============== ===
(6) Adjustment to deferred revenues
-----------------------------------
Revenues $ - $24 $ - $66
=============== === =============== ===
(7) Gain from sale of investment in affiliate
---------------------------------------
Other Income $(450) $ - $(450) $ -
===== =============== ===== ===============
(8) Capitalization of technology
--------------------------------
Research and development $(595) $(459) $(1,721) $(1,406)
Financial expenses, net (18) - (18) (31)
--- --- --- ---
$(613) $(459) $(1,739) $(1,437)
===== ===== ======= =======
(9) Accretion of discount on convertible note
---------------------------------------
Financial expenses, net $171 $ - $171 $ -
==== =============== ==== ===============
(10) Change in fair value of embedded conversion
feature on convertible note
------------------------------------------------
Financial expenses, net $(267) $ - $(267) $ -
===== =============== ===== ===============
CYREN LTD.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands of U.S. dollars)
June 30 December 31
------- -----------
2017 2016
---- ----
Unaudited Audited
Assets
Current Assets:
Cash and cash
equivalents $11,568 $10,621
Trade
receivables,
net 3,364 3,061
Prepaid
expenses and
other
receivables 1,797 918
----- ---
Total current
assets 16,729 14,600
------ ------
Property and
equipment, net 2,027 2,081
Goodwill and
intangible
assets, net 30,792 29,867
Severance pay
fund 606 604
Lease deposits 410 380
Total long-
term assets 33,835 32,932
------ ------
Total assets $50,564 $47,532
======= =======
Liabilities and Shareholders' Equity
Current Liabilities:
Trade payables $791 $764
Employees and
payroll
accruals 2,773 2,528
Accrued
expenses and
other
liabilities 1,015 755
Earn-out
consideration 3,364 3,041
Deferred
revenues 4,605 4,609
Total current
liabilities 12,548 11,697
------ ------
Long term
Convertible
Note 4,340 -
Embedded
conversion
feature on
Convertible
Note 1,864 -
Deferred
revenues 1,246 1,788
Deferred tax
liability 1,378 1,374
Accrued
severance pay 871 816
Other
liabilities 128 119
Total long-
term
liabilities 9,827 4,097
----- -----
Shareholders'
equity 28,189 31,738
------ ------
Total
liabilities
and
shareholders'
equity $50,564 $47,532
======= =======
CYREN LTD.
CONDENSED CONSOLIDATED CASH FLOW DATA
(in thousands of U.S. dollars)
Three months ended Six months ended
June 30 June 30
------- -------
2017 2016 2017 2016
---- ---- ---- ----
Cash flows from
operating
activities: Unaudited Unaudited Unaudited Unaudited
Net loss $(2,661) $(839) $(5,179) $(2,334)
Adjustments to reconcile net loss to net
cash provided by (used in) operating
activities:
----------------------------------------
Loss on disposal
of property and
equipment 1 1 1 3
Depreciation 280 320 555 643
Stock-based
compensation 281 250 561 497
Amortization of
intangible assets 1,117 855 2,157 1,249
Accrued interest
and accretion of
discount on
credit line - - - (19)
Accrued interest
and accretion of
discount on
convertible note 171 - 171 -
Change in fair
value of embedded
conversion
feature on
convertible note (267) - (267) -
Other income
related to
investment in
affiliate (450) - (450) -
Other expenses
related to the
earn-out
consideration 33 - 64 -
Deferred taxes (42) (47) (95) (120)
Changes in assets and liabilities:
---------------------------------
Trade receivables (414) (31) (389) 98
Prepaid expenses
and other
receivables (453) (171) (849) (363)
Change in long-
term lease
deposits (5) (214) (27) (228)
Trade payables (81) 155 9 (54)
Employees and
payroll accruals,
accrued expenses
and other
liabilities 703 154 485 114
Deferred revenues (57) (580) (546) 3,247
Accrued severance
pay, net 23 (18) 53 42
Other long-term
liabilities - (2) - (3)
Net cash provided
by (used in)
operating
activities (1,821) (167) (3,746) 2,772
Cash flows from investing activities:
Proceeds from sale
of investment in
affiiate 450 - 450 -
Capitalization of
technology, net
of grants
received (613) (459) (1,739) (1,437)
Purchase of
property and
equipment (119) (386) (473) (649)
Net cash used in
investing
activities (282) (845) (1,762) (2,086)
Cash flows from financing activities:
Proceeds from
convertible note - - 6,300 -
Payment of credit
line - - - (4,150)
Proceeds from
options exercised 61 - 67 -
--- ---
Net cash provided
by (used in)
financing
activities 61 - 6,367 (4,150)
Effect of exchange
rate changes on
cash 72 (46) 88 53
Increase
(decrease) in
cash and cash
equivalents (1,970) (1,058) 947 (3,411)
Cash and cash
equivalents at
the beginning of
the period 13,538 14,026 10,621 16,379
------ ------ ------ ------
Cash and cash
equivalents at
the end of the
period $11,568 $12,968 $11,568 $12,968
======= ======= ======= =======
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