Cyren Reports Third Quarter 2020 Financial Results
Cyren (NASDAQ:CYRN) reported its Q3 2020 results, revealing a year-over-year revenue decline to $9.1 million from $9.5 million, primarily due to the phase-out of legacy products. The GAAP net loss widened to $4.9 million, compared to a $3.5 million loss in Q3 2019. Operating cash usage increased significantly to $3.6 million. Despite these challenges, Cyren's next-gen email security product, Cyren Inbox Security, has gained traction, securing new enterprise clients. The company ended the quarter with $12.9 million in cash and cash equivalents.
- Launched Cyren Inbox Security, gaining traction with enterprise clients.
- End of Q3 saw over 60,000 mailboxes protected and 15 million emails analyzed weekly.
- Attracted industry attention with mentions in Gartner's 2020 Market Guide.
- Year-over-year revenue fell to $9.1 million from $9.5 million.
- GAAP net loss increased to $4.9 million from $3.5 million in Q3 2019.
- Operating cash usage during Q3 2020 was $3.6 million, compared to $1.7 million in Q3 2019.
Cyren Inbox Security continues to gain momentum supporting company's growth strategy
MCLEAN, VA / ACCESSWIRE / November 16, 2020 / Cyren (NASDAQ:CYRN), a provider of email security and threat intelligence solutions, today announced its third quarter 2020 financial results for the period ending September 30, 2020.
"The third quarter was our first full quarter in the market with our next generation email security product, Cyren Inbox Security, and we are very pleased with product-market fit and customer wins within the quarter," said Brett Jackson, Chief Executive Officer of Cyren. "With most employees working from home, there has been an uptick in compromised email and phishing attempts, and increased demand for innovative solutions to combat these attacks. During the third quarter, we closed a number of new enterprise customers in the US and Europe, ranging from 3,000 to 20,000 users. It is clear to us that the phishing problem is widespread, the addressable market is large and Cyren Inbox Security has the potential to be a significant new enterprise revenue stream for our company."
Third Quarter 2020 Financial Highlights:
- Revenues for the third quarter of 2020 were
$9.1 million , compared to$9.5 million during the third quarter of 2019. Revenue declined year-over-year as a result of the wind-down of retired legacy products, while recognition from new enterprise offerings introduced during Q2 have not yet had a material impact on quarterly results. - GAAP net loss for the third quarter of 2020 was
$4.9 million , compared to a net loss of$3.5 million in the third quarter of 2019. GAAP net loss includes lower R&D capitalization from prior quarters and a one-time adjustment for previously capitalized technology development totaling$0.7 million . - GAAP loss per basic and diluted share for the third quarter of 2020 was
$0.08 , compared to a loss of$0.06 per basic and diluted share for the third quarter of 2019. - Non-GAAP net loss for the third quarter of 2020 was
$2.9 million , compared to a Non-GAAP net loss of$3.5 million for the third quarter of 2019. - Non-GAAP loss per basic and diluted share was
$0.05 for the third quarter, compared to a Non-GAAP loss of$0.06 per share in Q3 2019. - Cash and cash equivalents balance as of September 30, 2020, was
$12.9 million , compared to$11.6 million as of December 31, 2019. - Operating cash usage during the third quarter of 2020 was
$3.6 million , compared to operating cash flow of usage$1.7 million during the third quarter of 2019. - Net cash flow for the third quarter of 2020 was negative
$3.2 million , compared to negative$2.9 million during the third quarter of 2019.
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:
- During the third quarter, Cyren continued to experience strong market reaction to its next generation email security product focused on the phishing problem for enterprise users of Microsoft 365. At the end of the third quarter, Cyren Inbox Security was protecting over 60,000 mailboxes and analyzing over 15 million suspicious emails on a weekly basis.
- Also in the quarter, Cyren launched its incident response service which provides 24x7 expert support for phishing investigation and remediation. Cyren Incident Response Service is a complementary add-on service to Cyren Inbox Security that relieves the burden on IT and security teams from complicated and time consuming threat investigation and response.
- Cyren's CIS and email security offerings attracted the attention of industry analysts and were highlighted as innovative cloud-based phishing solutions in Gartner's 2020 Market Guide for Email Security as well as Forrester's 'Now Tech' Report on enterprise email security providers.
Financial Results Conference Call:
The company will host a conference call at 4:30 p.m. Eastern Time on Monday, November 16, 2020 to discuss third quarter results.
U.S. Dial-in Number: 1-877-407-0312
Israel Dial-in Number: 1-80-940-6247
International Dial-in Number: 1-201-389-0899
The call will be simultaneously webcast live on the investor relations section of Cyren's website at https://ir.cyren.com, or by using the following link: https://www.webcast-eqs.com/cyren20201116/en.
For those unable to participate in the live conference call, a replay will be available until November 30, 2020. To access the replay, the U.S. dial in number is 1-877-660-6853 and the non-U.S. dial in number is 1-201-612-7415. Callers will be prompted for replay conference ID number 13713213. An archived version of the call will also be available on the investor relations section of the company's website at https://ir.cyren.com/events.
About Cyren:
More than 1.3 billion users around the world rely on Cyren's cloud security solutions to protect them against cyber attacks and data loss every day. Powered by GlobalView, Cyren's global security cloud that identifies emerging threats on a global basis in real-time, Cyren (NASDAQ: CYRN) delivers fast time-to-protection with embedded threat detection services, threat intelligence and enterprise email security products for leading email providers, cybersecurity vendors, service providers and enterprises. 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
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, and deferred taxes related to acquisitions, adjustments to earn-out obligations, and capitalization of technology. 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 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 publicly filed reports, which are available through www.sec.gov.
Company Contact:
Mike Myshrall, CFO
Cyren
+1.703.760.3320
mike.myshrall@cyren.com
CYREN LTD.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands of U.S. dollars, except per share amounts)
| Three months ended September 30 | Nine months ended September 30 | |||||||||||||||
| 2020 | 2019 | 2020 | 2019 | |||||||||||||
| Unaudited | Unaudited | Unaudited | Unaudited | |||||||||||||
Revenues | $ | 9,114 | $ | 9,496 | $ | 27,944 | $ | 28,862 | ||||||||
Cost of revenues | 3,792 | 3,712 | 11,168 | 11,501 | ||||||||||||
Gross profit | 5,322 | 5,784 | 16,776 | 17,361 | ||||||||||||
Operating expenses: | ||||||||||||||||
Research and development, net | 4,769 | 3,516 | 12,264 | 11,990 | ||||||||||||
Sales and marketing | 2,942 | 3,027 | 9,123 | 10,473 | ||||||||||||
General and administrative | 2,302 | 2,484 | 6,992 | 7,314 | ||||||||||||
Total operating expenses | 10,013 | 9,027 | 28,379 | 29,777 | ||||||||||||
Operating loss | (4,691 | ) | (3,243 | ) | (11,603 | ) | (12,416 | ) | ||||||||
Other income, net | 1 | (3 | ) | 9 | 262 | |||||||||||
Financial expenses, net | (235 | ) | (321 | ) | (757 | ) | (642 | ) | ||||||||
Loss before taxes | (4,925 | ) | (3,567 | ) | (12,351 | ) | (12,796 | ) | ||||||||
Tax benefit | 33 | 37 | 94 | 117 | ||||||||||||
Net loss | $ | (4,892 | ) | $ | (3,530 | ) | $ | (12,257 | ) | $ | (12,679 | ) | ||||
Loss per share - basic and diluted | $ | (0.08 | ) | $ | (0.06 | ) | $ | (0.20 | ) | $ | (0.23 | ) | ||||
Weighted average number of shares outstanding: | ||||||||||||||||
Basic and Diluted | 60,580 | 54,554 | 60,103 | 54,389 | ||||||||||||
CYREN LTD.
RECONCILIATION OF SELECTED GAAP MEASURES TO NON-GAAP MEASURES
(in thousands of U.S. dollars, except per share amounts)
| Three months ended | Nine months ended | |||||||||||||||
| September 30 | September 30 | |||||||||||||||
| 2020 | 2019 | 2020 | 2019 | |||||||||||||
| Unaudited | Unaudited | Unaudited | Unaudited | |||||||||||||
GAAP gross profit | $ | 5,322 | $ | 5,784 | $ | 16,776 | $ | 17,361 | ||||||||
GAAP gross margin | 58 | % | 61 | % | 60 | % | 60 | % | ||||||||
Plus: | ||||||||||||||||
Stock-based compensation expense | 21 | 36 | 85 | 98 | ||||||||||||
Amortization of intangible assets | 673 | 758 | 1,698 | 2,364 | ||||||||||||
Non-GAAP gross profit | 6,016 | 6,578 | 18,559 | 19,823 | ||||||||||||
Non-GAAP gross margin | 66 | % | 69 | % | 66 | % | 69 | % | ||||||||
GAAP operating loss | (4,690 | ) | (3,243 | ) | (11,603 | ) | (12,416 | ) | ||||||||
Plus: | ||||||||||||||||
Stock-based compensation expense | 724 | 419 | 1,876 | 1,002 | ||||||||||||
Amortization of intangible assets | 788 | 885 | 2,071 | 2,736 | ||||||||||||
Expense (Capitalization) of technology | 536 | (1,118 | ) | (1,067 | ) | (2,510 | ) | |||||||||
Settlement of litigation, net | - | - | - | - | ||||||||||||
Non-GAAP operating loss | (2,643 | ) | (3,057 | ) | (8,723 | ) | (11,188 | ) | ||||||||
GAAP net loss | (4,892 | ) | (3,530 | ) | (12,257 | ) | (12,679 | ) | ||||||||
Plus: | ||||||||||||||||
Stock-based compensation expense | 724 | 419 | 1,876 | 1,002 | ||||||||||||
Amortization of intangible assets | 788 | 885 | 2,071 | 2,736 | ||||||||||||
Adjustment to earn-out liabilities | - | - | - | - | ||||||||||||
Amortization of deferred tax assets | (48 | ) | (55 | ) | (144 | ) | (170 | ) | ||||||||
Gain from an earn-out liability settlement | - | - | - | (256 | ) | |||||||||||
Settlement of litigation, net | - | - | - | - | ||||||||||||
Expense (Capitalization) of technology | 531 | (1,169 | ) | (1,126 | ) | (2,627 | ) | |||||||||
Non-GAAP net loss | $ | (2,896 | ) | $ | (3,450 | ) | $ | (9,580 | ) | $ | (11,994 | ) | ||||
Numerator for non-GAAP EPS calculation | $ | (2,896 | ) | $ | (3,450 | ) | $ | (9,580 | ) | $ | (11,994 | ) | ||||
Non-GAAP net loss per share | $ | (0.05 | ) | $ | (0.06 | ) | $ | (0.16 | ) | $ | (0.22 | ) | ||||
GAAP weighted-average shares used to | ||||||||||||||||
compute net loss per share | 60,580 | 54,554 | 60,103 | 54,389 | ||||||||||||
CYREN LTD.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands of U.S. dollars)
| September 30 | December 31 | |||||||
| 2020 | 2019 | |||||||
| Unaudited | ||||||||
Assets | ||||||||
Current Assets: | ||||||||
Cash and cash equivalents | 12,894 | $ | 11,551 | |||||
Trade receivables, net | 2,348 | 2,187 | ||||||
Deferred commissions | 1,004 | 948 | ||||||
Prepaid expenses and other receivables | 1,284 | 819 | ||||||
Total current assets | 17,530 | 15,505 | ||||||
Long-term deferred commissions | 1,243 | 1,580 | ||||||
Long-term lease deposits | 863 | 767 | ||||||
Operating lease right-of-use assets | 11,191 | 8,695 | ||||||
Severance pay fund | 646 | 659 | ||||||
Property and equipment, net | 4,410 | 4,410 | ||||||
Intangible assets, net | 8,093 | 8,966 | ||||||
Goodwill | 20,818 | 20,246 | ||||||
Total long-term assets | 47,264 | 45,323 | ||||||
Total assets | $ | 64,794 | $ | 60,828 | ||||
Liabilities and Shareholders' Equity | ||||||||
Current Liabilities: | ||||||||
Trade payables | $ | 1,103 | $ | 1,184 | ||||
Employees and payroll accruals | 3,676 | 3,427 | ||||||
Accrued expenses and other liabilities | 1,160 | 1,145 | ||||||
Operating lease liabilities | 1,889 | 1,946 | ||||||
Deferred revenues | 9,272 | 7,208 | ||||||
Total current liabilities | 17,100 | 14,910 | ||||||
Deferred revenues | 1,064 | 1,956 | ||||||
Convertible notes | 10,000 | 10,000 | ||||||
Convertible debentures | 9,344 | - | ||||||
Long-term operating lease liabilities | 9,678 | 7,174 | ||||||
Deferred tax liability | 646 | 796 | ||||||
Accrued severance pay | 762 | 811 | ||||||
Other liabilities | 653 | 470 | ||||||
Total long-term liabilities | 32,147 | 21,207 | ||||||
Shareholders' equity | 15,547 | 24,711 | ||||||
Total liabilities and shareholders' equity | $ | 64,974 | $ | 60,828 | ||||
CYREN LTD.
CONDENSED CONSOLIDATED CASH FLOW DATA
(in thousands of U.S. dollars)
| Three months ended | Nine months ended | |||||||||||||||
| September 30 | September 30 | |||||||||||||||
| 2020 | 2019 | 2020 | 2019 | |||||||||||||
Cash flows from operating activities: | Unaudited | Unaudited | Unaudited | Unaudited | ||||||||||||
Loss | $ | (4,892 | ) | $ | (3,530 | ) | (12,257 | ) | $ | (12,679 | ) | |||||
Adjustments to reconcile loss to net cash provided by (used in) operating activities: | ||||||||||||||||
Loss on disposal of property and equipment | (1 | ) | - | 12 | 1 | |||||||||||
Depreciation | 594 | 484 | 1,809 | 1,420 | ||||||||||||
Stock-based compensation | 724 | 419 | 1,876 | 1,002 | ||||||||||||
Amortization of intangible assets | 788 | 885 | 2,071 | 2,736 | ||||||||||||
Amortization of deferred commissions | 378 | (297 | ) | 1,181 | (909 | ) | ||||||||||
Amortization of operating lease right-of-use assets | 586 | 338 | 1,508 | 1,051 | ||||||||||||
Interest on convertible notes | 153 | 142 | 436 | 424 | ||||||||||||
Interest and amortization of debt issuance costs on Convertible Debentures | 188 | - | 400 | - | ||||||||||||
Other income related to the earn-out consideration | - | - | - | (257 | ) | |||||||||||
Deferred taxes, net | (53 | ) | (55 | ) | (171 | ) | (182 | ) | ||||||||
Changes in assets and liabilities: | ||||||||||||||||
Trade receivables | 36 | (509 | ) | (126 | ) | 196 | ||||||||||
Prepaid expenses and other receivables | (73 | ) | 168 | (456 | ) | (607 | ) | |||||||||
Deferred commissions | (236 | ) | 353 | (900 | ) | 1,101 | ||||||||||
Change in long-term lease deposits | (3 | ) | 2 | (89 | ) | 25 | ||||||||||
Trade payables | (175 | ) | 559 | (289 | ) | (264 | ) | |||||||||
Employees and payroll accruals, accrued expenses and other liabilities | (43 | ) | 39 | (90 | ) | (185 | ) | |||||||||
Deferred revenues | (955 | ) | (357 | ) | 1,034 | 5,997 | ||||||||||
Accrued severance pay, net | (37 | ) | 5 | (36 | ) | 73 | ||||||||||
Operating lease liabilities | (591 | ) | (342 | ) | (1,545 | ) | (1,075 | ) | ||||||||
Other long-term liabilities | 21 | (15 | ) | 184 | (126 | ) | ||||||||||
Net cash (used in) operating activities | (3,590 | ) | (1,711 | ) | (5,448 | ) | (2,258 | ) | ||||||||
Cash flows from investing activities: | ||||||||||||||||
Proceeds from sale of property and equipment | 2 | 1 | 6 | 1 | ||||||||||||
Capitalization of technology | 489 | (1,027 | ) | (1,100 | ) | (2,462 | ) | |||||||||
Purchase of property and equipment | (105 | ) | (309 | ) | (1,543 | ) | (1,259 | ) | ||||||||
Net cash provided by (used in) investing activities | 386 | (1,335 | ) | (2,637 | ) | (3,720 | ) | |||||||||
Cash flows from financing activities: | ||||||||||||||||
Proceeds from convertible debenture, net of debt issuance costs | - | - | 9,442 | - | ||||||||||||
Payment of earn-out consideration | - | - | - | (2,680 | ) | |||||||||||
Proceeds from options exercised | - | 231 | - | 743 | ||||||||||||
Net cash provided (used) by financing activities | - | 231 | 9,442 | (1,937 | ) | |||||||||||
Effect of exchange rate changes on cash | (1 | ) | (76 | ) | (14 | ) | (124 | ) | ||||||||
Increase (decrease) in cash, cash equivalents and restricted cash | (3,205 | ) | (2,891 | ) | 1,343 | (8,039 | ) | |||||||||
Cash, cash equivalents and restricted cash at the beginning of the period | 16,675 | 13,008 | 12,127 | 18,156 | ||||||||||||
Cash, cash equivalents and restricted cash at the end of the period | $ | 13,470 | $ | 10,117 | $ | 13,470 | $ | 10,117 | ||||||||
Reconciliation of cash, cash equivalents and restricted cash as shown in the consolidated statements of cash flow: | ||||||||||||||||
Cash and cash equivalents | $ | 12,894 | $ | 9,546 | $ | 12,894 | $ | 9,546 | ||||||||
Restricted cash included in long-term restricted lease deposits | 576 | 571 | 576 | 571 | ||||||||||||
Total cash, cash equivalents and restricted cash | $ | 13,470 | $ | 10,117 | $ | 13,470 | $ | 10,117 | ||||||||
SOURCE: Cyren
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FAQ
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