Cyren Announces Fourth Quarter and Full Year 2019 Financial Results

Cyren Ltd


Cyren Announces Fourth Quarter and Full Year 2019 Financial Results

Wednesday, March 25, 2020 6:00 AM

Annual revenue increased 7% over prior year

MCLEAN, VA / ACCESSWIRE / March 25, 2020 / Cyren (NASDAQ:CYRN) today announced its fourth quarter and full year 2019 financial results for the period ending December 31, 2019.

During the fourth quarter, Cyren reported quarterly revenues of $9.5 million, compared to $9.5 million during the fourth quarter of 2018. For the full year ended 2019, revenues were $38.4 million compared to $35.9 million in the prior year, which represents a 7% annual increase over 2018.

GAAP net loss for the fourth quarter was $5.3 million, and for the full year 2019, net loss was $18.0 million. Non-GAAP net loss for the quarter improved to $3.3 million and $15.3 million for the full year ended 2019.

"2019 was a transition year for Cyren with new leadership, a revised strategy and more focus on increasing ARR growth, especially in the enterprise market," said Brett Jackson, CEO of Cyren. "We launched several strategy initiatives in Q4 that we believe will drive more aggressive growth and our team is fully engaged in execution. Despite the current uncertain economic conditions, we believe security will remain a top corporate priority and we are confident that our growth initiatives will positively impact our results over the coming quarters."

Fourth Quarter and Full Year 2019 Financial Highlights:

  • Revenues for the fourth quarter of 2019 were $9.5 million, compared to $9.5 million during the fourth quarter of 2018. Revenues for the full year were $38.4 million compared to $35.9 million in 2018.

  • GAAP net loss for the fourth quarter of 2019 was $5.3 million, compared to a net loss of $5.6 million in the fourth quarter of 2018. GAAP net loss for the full year ended 2019 was $18.0 million compared to $19.4 million for the full year 2018.

  • GAAP loss per basic and diluted share for the fourth quarter of 2019 was $0.09, compared to a loss of $0.10 per basic and diluted share for the fourth quarter of 2018. GAAP loss per share was $0.33 in 2019 compared to $0.36 in 2018.

  • Non-GAAP net loss for the fourth quarter of 2019 was $3.3 million, compared to a Non-GAAP net loss of $4.4 million for the fourth quarter of 2018. Non-GAAP net loss for the full year 2019 was $15.2 million, a decrease compared to $16.1 million during 2018.

  • Non-GAAP loss per basic and diluted share was $0.06 for the fourth quarter of 2019, compared to a Non-GAAP loss of $0.08 per share in fourth quarter of 2018. Non-GAAP loss per basic and diluted share was $0.28 for 2019 compared to $0.30 per share in 2018.

  • Cash used in operating activities during the fourth quarter of 2019 was $4.6 million, compared to operating cash usage of $5.6 million during the fourth quarter of 2018.

  • Net cash flow for the fourth quarter of 2019 was $2.0 million, compared to $4.0 million during the fourth quarter of 2018.

  • Cash balance as of December 31, 2019, was $11.6 million, compared to $17.6 million as of December 31, 2018. This includes the proceeds of the Rights Offering which closed in November 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."

Convertible Debentures:

Subsequent to the end of the quarter, on March 17, 2020, Cyren announced a private placement with a select group of accredited and institutional investors for the purchase of $10.25 million aggregate principal amount of convertible debentures. The debentures are unsecured, subordinated obligations of Cyren and carry a 5.75% interest rate per annum, payable semi-annually in cash or ordinary shares at Cyren's election. The debentures have a four year term and mature in March 2024, unless converted in accordance with their terms prior to maturity. The debentures have a conversion price of $0.75 per share and are convertible into 1,333 ordinary shares per $1,000 principal amount of debentures. The closing of the sale of the debentures was completed on March 19, 2020 and therefore the proceeds of the transaction are not included in the cash balance on the balance sheet as of December 31, 2019.

Financial Results Conference Call:

The company will host a conference call at 10 a.m. Eastern Time (4 p.m. Israel Time) on Wednesday, March 25, 2020 to discuss fourth quarter and full year 2019 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 link: https://webcasts.eqs.com/register/cyren2020032510_en/.

For those unable to participate in the live conference call, a replay will be available until April 8, 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 13699898. An archived version of the webcast 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 100% cloud security solutions to protect them against cyber attacks and data loss every day. Powered by the world's largest security cloud, Cyren (NASDAQ: CYRN) delivers fast time-to-protection with award-winning email security, cloud sandboxing and DNS filtering services for business, and threat intelligence solutions for service providers and security vendors like Microsoft, Google and Check Point. 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 legal settlements, 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 our CEO transition, 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     Twelve months ended  
 
  December 31     December 31  
 
  2019     2018     2019     2018  
 
  Unaudited     Unaudited     Unaudited     Unaudited  
 
                       
Revenues
  9,529     9,512     38,391     35,900  
 
                               
Cost of revenues
    4,056       3,856       15,557       14,540  
 
                               
Gross profit
    5,473       5,656       22,834       21,360  
 
                               
 
                               
Operating expenses:
                               
 
                               
Research and development, net
    3,811       4,761       15,801       16,116  
 
                               
Sales and marketing
    3,352       4,069       13,825       16,202  
 
                               
General and administrative
    3,563       2,192       10,877       8,343  
 
                               
Total operating expenses
    10,726       11,022       40,503       40,661  
 
                               
Operating loss
    (5,253 )     (5,366 )     (17,669 )     (19,301 )
 
                               
Other income (expense), net
    4       6       266       (11 )
 
                               
Financial income (expense), net
    (85 )     (164 )     (727 )     (255 )
 
                               
Loss before taxes
    (5,334 )     (5,524 )     (18,130 )     (19,567 )
 
                               
Tax benefit
    (5 )     (48 )     112       153  
 
                               
Net loss
  (5,339)     (5,572)     (18,018)     (19,414)  
 
                               
 
                               
Loss per share - basic and diluted
  (0.09 )   (0.10 )   (0.33 )   (0.36 )
 
                               
Weighted average number of shares outstanding:
                               
Basic and Diluted
    57,473       54,023       55,167       53,634  
 
                               
 
                               
 
                               

CYREN LTD.
RECONCILIATION OF SELECTED GAAP MEASURES TO NON-GAAP MEASURES
(in thousands of U.S.dollars, except per share amounts)

 
  Three months ended     Twelve months ended  
 
  December 31     December 31  
 
  2019     2018     2019     2018  
 
  Unaudited     Unaudited     Unaudited     Unaudited  
 
                       
GAAP gross profit
  5,473     5,656     22,834     21,360  
GAAP gross margin
    57 %     59 %     59 %     59 %
Plus:
                               
Stock-based compensation expense
    143       50       241       174  
Amortization of intangible assets (1)
    888       861       3,252       3,553  
Non-GAAP gross profit
    6,504       6,567       26,327       25,087  
Non-GAAP gross margin
    68 %     69 %     69 %     70 %
 
                               
GAAP operating loss
    (5,253 )     (5,366 )     (17,669 )     (19,301 )
Plus:
                               
Stock-based compensation expense
    1,358       409       2,360       1,440  
Amortization of intangible assets (1)
    1,019       1,008       3,755       4,165  
Capitalization of technology
    (1,230 )     (204 )     (3,740 )     (2,090 )
Settlement of litigation, net
    1,078       -       1,078       -  
Non-GAAP operating loss
    (3,028 )     (4,153 )     (14,216 )     (15,786 )
 
                               
GAAP net loss
    (5,339 )     (5,572 )     (18,018 )     (19,414 )
Plus:
                               
Stock-based compensation expense
    1,358       409       2,360       1,440  
Amortization of intangible assets (1)
    1,019       1,008       3,755       4,165  
Adjustment to earn-out liabilities
    -       22       -       97  
Amortization of deferred tax assets
    (129 )     (58 )     (299 )     (246 )
Gain from an earn-out liability settlement
    -       -       (256 )     -  
Settlement of litigation, net
    1,078       -       1,078       -  
Capitalization of technology
    (1,255 )     (208 )     (3,882 )     (2,094 )
Non-GAAP net loss
  (3,267 )   (4,399 )   (15,261 )   (16,052 )
 
                               
Numerator for non-GAAP EPS calculation
  (3,267 )   (4,399 )   (15,261 )   (16,052 )
Non-GAAP net loss per share
  (0.06 )   (0.08 )   (0.28 )   (0.30 )
 
                               
GAAP weighted-average shares used to
                               
compute net loss per share
    57,473       54,023       55,167       53,634  
 
                               
     
 
                               

(1) 2019 amount includes $224 of impairment related to R&D, an acquired intangible asset from a prior acquisition. 

CYREN LTD.
CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands of U.S. dollars)

 
  December 31     December 31  
 
  2019     2018  
 
  Unaudited     Unaudited  
Assets
           
Current Assets:
           
Cash and cash equivalents
  11,551     17,571  
Trade receivables, net
    2,187       3,658  
Deferred commissions
    948       887  
Prepaid expenses and other receivables
    819       778  
Total current assets
    15,505       22,894  
 
               
Long-term deferred commissions
    1,580       1,880  
Long-term lease deposits
    767       821  
Operating lease right-of-use assets
    8,695       -  
Severance pay fund
    659       503  
Property and equipment, net
    4,410       4,608  
Intangible assets, net
    8,966       8,802  
Goodwill
    20,246       20,519  
Total long-term assets
    45,323       37,133  
Total assets
  60,828     60,027  
 
               
Liabilities and Shareholders' Equity
               
Current Liabilities:
               
Trade payables
  1,184     1,668  
Employees and payroll accruals
    3,427       3,959  
Accrued expenses and other liabilities
    1,145       910  
Operating lease liabilities
    1,946       -  
Earn-out consideration
    -       2,926  
Deferred revenues
    7,208       5,773  
Total current liabilities
    14,910       15,236  
 
               
Deferred revenues
    1,956       503  
Convertible notes
    10,000       10,000  
Long-term operating lease liabilities
    7,174       -  
Deferred tax liability
    796       1,130  
Accrued severance pay
    811       598  
Other liabilities
    470       700  
Total long-term liabilities
    21,207       12,931  
 
               
Shareholders' equity
    24,711       31,860  
Total liabilities and shareholders' equity
  60,828     60,027  
 
               

CYREN LTD.
CONDENSED CONSOLIDATED CASH FLOW DATA
(in thousands of U.S. dollars)

 
  Three months ended     Twelve months ended  
 
  December 31     December 31  
 
  2019     2018     2019     2018  
Cash flows from operating activities:
  Unaudited     Unaudited     Unaudited     Unaudited  
 
                       
Net loss
  (5,339 )   (5,572 )   (18,018 )   (19,414 )
 
                               
Loss on disposal of property and equipment
    (1 )     1       -       15  
Depreciation
    526       422       1,946       1,856  
Stock-based compensation
    1,358       409       2,360       1,440  
Amortization of intangible assets
    1,019       1,008       3,755       4,165  
Amortization of deferred commissions
    2,108       346       1,199       1,351  
Amortization of operating lease right-of-use assets
    280       -       1,331       -  
Interest on convertible notes
    144       40       568       40  
Other expenses (income) related to the earn-out consideration
    -       22       (257 )     97  
Deferred taxes, net
    (140 )     (30 )     (322 )     (182 )
 
                               
Changes in assets and liabilities:
                               
Trade receivables
    1,339       (304 )     1,535       (596 )
Prepaid expenses and other receivables
    436       922       (171 )     530  
Deferred commissions
    (2,062 )     (510 )     (961 )     (2,307 )
Change in long-term lease deposits
    20       5       45       (105 )
Trade payables
    (495 )     (42 )     (759 )     264  
Employees and payroll accruals, accrued expenses and other liabilities
    (843 )     (162 )     (1,028 )     516  
Deferred revenues
    (3,065 )     (2,319 )     2,932       720  
Accrued severance pay, net
    (15 )     (1 )     58       (121 )
Operating lease liabilities
    (171 )     -       (1,246 )     -  
Other long-term liabilities
    277       203       151       274  
Net cash used in operating activities
    (4,624 )     (5,562 )     (6,882 )     (11,457 )
 
                               
Cash flows from investing activities:
                               
 
                               
Proceeds from sale of property and equipment
    2       1       3       1  
Capitalization of technology, net of grants received
    (1,234 )     (140 )     (3,696 )     (1,984 )
Purchase of property and equipment
    (211 )     (331 )     (1,470 )     (3,320 )
Net cash used in investing activities
    (1,443 )     (470 )     (5,163 )     (5,303 )
 
                               
Cash flows from financing activities:
                               
 
                               
Proceeds from convertible notes
    -       10,000       -       10,000  
Proceed from rights offering, net
    7,967       -       7,967       -  
Payment of earnout liability
    -       -       (2,680 )     (604 )
Proceeds from options exercised
    -       117       743       1,393  
Net cash provided by financing activities
    7,967       10,117       6,030       10,789  
Effect of exchange rate changes on cash
    110       (62 )     (14 )     (101 )
Increase (decrease) in cash, cash equivalents and restricted cash
    2,010       4,023       (6,029)       (6,072)  
Cash, cash equivalents and restricted cash at the beginning of the period
    10,117       14,133       18,156       24,228  
Cash, cash equivalents and restricted cash at the end of the period
  12,127     18,156     12,127     18,156  
 
                               
Reconciliation of cash, cash equivalents and restricted cash as shown in the consolidated statements of cash flow:
                               
Cash and cash equivalents
  11,551     17,571     11,551     17,571  
Restricted cash included in long-term restricted lease deposits
    576       585       576       585  
 
                               
Total cash, cash equivalents and restricted cash
  12,127     18,156     12,127     18,156  
 
                               
 
                               

SOURCE: Cyren Ltd via EQS Newswire


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