Cyren Announces First Quarter 2020 Financial Results
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Cyren Announces First Quarter 2020 Financial Results

Wednesday, May 13, 2020 6:00 AM
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Net Loss Decreases And Company Launches New Cloud-based Anti-Phishing Product for Enterprises

MCLEAN, VA / ACCESSWIRE / May 13, 2020 / Cyren (NASDAQ:CYRN) today announced its first quarter 2020 financial results for the period ending March 31, 2020.

During the first quarter, Cyren reported quarterly revenues of $9.6 million, compared to $9.7 million during the first quarter of 2019. GAAP net loss for the quarter was $2.8 million, down 40% compared to the $4.6 million net loss reported during the first quarter of 2019, due to lower operating expenses compared to the prior year.

"Due to the Covid-19 pandemic, the first quarter was a very difficult period for companies around the globe," said Brett Jackson, CEO of Cyren. "Despite the challenging external environment, our team remained focused and we exceeded our Q1 bookings target. We also experienced strong contract renewals during the period, including several large, multi-year agreements. Cybersecurity remains a priority for customers in our target markets. Given that most companies are now relying on a remote work environment, we do not see a relaxing of security postures. In fact, organizations are more reliant on email than ever, and protecting users from email-based threats is critical."

First Quarter 2020 Financial Highlights:

  • Revenues for the first quarter of 2020 were $9.6 million, compared to $9.7 million during the first quarter of 2019.
  • GAAP net loss for the first quarter of 2020 was $2.8 million, compared to a net loss of $4.6 million in the first quarter of 2019, representing a decrease in loss of 40% year over year.
  • GAAP loss per basic and diluted share for the first quarter of 2020 was $0.05, compared to a loss of $0.08 per basic and diluted share for the first quarter of 2019.
  • Non-GAAP net loss for the first quarter of 2020 was $2.8 million, compared to a Non-GAAP net loss of $4.4 million for the first quarter of 2019, representing a decrease of 36%.
  • Non-GAAP loss per basic and diluted share was $0.05 for the first quarter of 2020, compared to a Non-GAAP loss of $0.08 per share in first quarter of 2019.
  • Cash used in operating activities during the first quarter of 2020 was $4.4 million, compared to operating cash usage of $1.3 million during the first quarter of 2019, when the company received a multi-year, multi-million dollar prepayment from one of its largest customers.
  • Net cash flow for the first quarter of 2020 was positive $3.5 million, compared to negative $5.1 million during the first quarter of 2019. Net cash flow in the quarter includes $9.4 million in financing activities as the result of a convertible debenture offering that closed in March.
  • Cash balance as of March 31, 2020, was $15.1 million, compared to $11.6 million as of December 31, 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 first quarter, Cyren renewed two of its largest threat intelligence customers to multi-year, multi-million dollar contracts using the company's embedded threat detection services.
  • On March 17, 2020, Cyren announced a private placement with a select group of accredited investors for the purchase of $10.25 million aggregate principal amount of convertible debentures.
  • In April, Cyren launched a new cloud-based email security product targeting enterprise customers who are trying to cope with the growing phishing problem. Cyren Inbox Security is fully integrates within Microsoft 365 (formerly Office 365), and is the first service to combine continuous email monitoring and threat detection with automated response and remediation.
  • Cyren also announced in April, a distribution agreement with Arrow Electronics to distribute Cyren Inbox Security in Europe, the Middle East, and Africa (EMEA). "Our digitally transformed world introduces organisations to a growing number of new and evolving security threats - it's important to stay ahead of the curve and make sure that weaknesses in corporate distributed infrastructure aren't exploited and working with Cyren Inbox Security in EMEA will provide a way for customers to eliminate and protect a business and its employees," explained Alexis Brabant, vice president sales of Arrow`s enterprise computing solutions business in EMEA.

Financial Results Conference Call:

The company will host a conference call at 10 a.m. Eastern Time (5 p.m. Israel Time) on Wednesday, May 13, 2020 to discuss first 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://webcasts.eqs.com/cyren20200513/en.

For those unable to participate in the live conference call, a replay will be available until May 27, 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 13703081. 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 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 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
[email protected]

CYREN LTD.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands of U.S. dollars, except per share amounts)

 
  Three months ended  
 
  March 31  
 
  2020     2019  
 
  Unaudited     Unaudited  
 
           
Revenues
  9,649     9,655  
 
               
Cost of revenues
    3,598       4,000  
 
               
Gross profit
    6,051       5,655  
 
               
 
               
Operating expenses:
               
 
               
Research and development, net
    3,344       4,177  
 
               
Sales and marketing
    3,036       3,856  
 
               
General and administrative
    2,214       2,432  
 
               
Total operating expenses
    8,594       10,465  
 
               
Operating loss
    (2,543 )     (4,810 )
 
               
Other income, net
    6       248  
 
               
Financial expenses, net
    (231 )     (53 )
 
               
Loss before taxes
    (2,768 )     (4,615 )
 
               
Tax benefit
    17       39  
 
               
Net loss
  (2,751)     (4,576)  
 
               
 
               
Loss per share - basic and diluted
  (0.05 )   (0.08 )
 
               
Weighted average number of shares outstanding:
               
Basic and Diluted
    59,684       54,177  
 
               
 
               

CYREN LTD.
RECONCILIATION OF SELECTED GAAP MEASURES TO NON-GAAP MEASURES

(in thousands of U.S.dollars, except per share amounts)

 
  Three months ended  
 
  March 31  
 
  2020     2019  
 
  Unaudited     Unaudited  
 
           
GAAP gross profit
  6,051     5,655  
GAAP gross margin
    63 %     59 %
Plus:
               
Stock-based compensation expense
    44       29  
Amortization of intangible assets
    431       839  
Non-GAAP gross profit
    6,526       6,523  
Non-GAAP gross margin
    68 %     68 %
 
               
GAAP operating loss
    (2,543 )     (4,810 )
Plus:
               
Stock-based compensation expense
    645       269  
Amortization of intangible assets
    560       963  
Capitalization of technology
    (1,213 )     (742 )
Settlement of litigation, net
    -       -  
Non-GAAP operating loss
    (2,551 )     (4,320 )
 
               
GAAP net loss
    (2,751 )     (4,576 )
Plus:
               
Stock-based compensation expense
    645       269  
Amortization of intangible assets
    560       963  
Adjustment to earn-out liabilities
    -       -  
Amortization of deferred tax assets
    (48 )     (57 )
Gain from an earn-out liability settlement
    -       (256 )
Settlement of litigation, net
    -       -  
Capitalization of technology
    (1,244 )     (770 )
Non-GAAP net loss
  (2,838 )   (4,427 )
 
               
Numerator for non-GAAP EPS calculation
  (2,838 )   (4,427 )
Non-GAAP net loss per share
  (0.05 )   (0.08 )
 
               
GAAP weighted-average shares used to
               
compute net loss per share
    59,684       54,177  
 
               

CYREN LTD.
CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands of U.S. dollars)

 
  March 31     December 31  
 
  2020     2019  
 
  Unaudited        
Assets
           
Current Assets:
           
Cash and cash equivalents
  15,061     11,551  
Trade receivables, net
    2,830       2,187  
Deferred commissions
    1,101       948  
Prepaid expenses and other receivables
    1,141       819  
Total current assets
    20,133       15,505  
 
               
Long-term deferred commissions
    1,465       1,580  
Long-term lease deposits
    859       767  
Operating lease right-of-use assets
    11,843       8,695  
Severance pay fund
    550       659  
Property and equipment, net
    5,157       4,410  
Intangible assets, net
    9,609       8,966  
Goodwill
    19,974       20,246  
Total long-term assets
    49,457       45,323  
Total assets
  69,590     60,828  
 
               
Liabilities and Shareholders' Equity
               
Current Liabilities:
               
Trade payables
  2,044     1,184  
Employees and payroll accruals
    3,443       3,427  
Accrued expenses and other liabilities
    1,036       1,145  
Operating lease liabilities
    1,876       1,946  
Deferred revenues
    5,314       7,208  
Total current liabilities
    13,713       14,910  
 
               
Deferred revenues
    1,727       1,956  
Convertible notes
    10,000       10,000  
Convertible debentures
    9,447       -  
Long-term operating lease liabilities
    10,364       7,174  
Deferred tax liability
    720       796  
Accrued severance pay
    679       811  
Other liabilities
    623       470  
Total long-term liabilities
    33,560       21,207  
 
               
Shareholders' equity
    22,317       24,711  
Total liabilities and shareholders' equity
  69,590     60,828  
 
               
 
               

CYREN LTD.
CONDENSED CONSOLIDATED CASH FLOW DATA

(in thousands of U.S. dollars)

 
  Three months ended  
 
  March 31  
 
  2020     2019  
Cash flows from operating activities:
  Unaudited     Unaudited  
 
           
Loss
  (2,751 )   (4,576 )
 
               
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:      
Gain (loss) on disposal of property and equipment
    (13 )     1  
Depreciation
    618       461  
Stock-based compensation
    645       269  
Amortization of intangible assets
    560       966  
Amortization of deferred commissions
    350       (332 )
Amortization of operating lease right-of-use assets
    389       351  
Interest on convertible notes
    141       140  
Interest and amortization of debt issuance costs on Convertible Debentures
    24       -  
Other income related to the earn-out consideration
    -       (256 )
Deferred taxes, net
    (64 )     (69 )
 
               
Changes in assets and liabilities:
               
Trade receivables
    (652 )     678  
Prepaid expenses and other receivables
    (326 )     (738 )
Deferred commissions
    (388 )     407  
Change in long-term lease deposits
    (114 )     20  
Trade payables
    45       (405 )
Employees and payroll accruals, accrued expenses and other liabilities
    (491 )     (274 )
Deferred revenues
    (2,073 )     2,463  
Accrued severance pay, net
    (23 )     41  
Operating lease liabilities
    (420 )     (365 )
Other long-term liabilities
    153       (111 )
Net cash used in operating activities
    (4,390 )     (1,329 )
 
               
Cash flows from investing activities:
               
 
               
Proceeds from sale of property and equipment
    2       -  
Capitalization of technology
    (1,001 )     (627 )
Purchase of property and equipment
    (558 )     (544 )
Net cash used in investing activities
    (1,557 )     (1,171 )
 
               
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
    -       189  
Net cash provided (used) by financing activities
    9,442       (2,491 )
Effect of exchange rate changes on cash
    (6 )     (126 )
Increase (decrease) in cash, cash equivalents and restricted cash
    3,489       (5,117)  
Cash, cash equivalents and restricted cash at the beginning of the period
    12,127       18,156  
Cash, cash equivalents and restricted cash at the end of the period
  15,616     13,039  
 
               
Reconciliation of cash, cash equivalents and restricted cash as shown in the consolidated statements of cash flow:
               
Cash and cash equivalents
  15,061     12,444  
Restricted cash included in long-term restricted lease deposits
    555       595  
 
               
Total cash, cash equivalents and restricted cash
  15,616     13,039  
 
               
 
               

SOURCE: Cyren Ltd

Cyren Ltd
Exchange:
Ticker:
NASDAQ
CYRN
$0.98
-4.8844
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