Cyren Ltd: Cyren Announces Third Quarter 2019 Financial Results

Year-to-date revenue up 9% despite slight revenue decline during quarter

MCLEAN, VA / ACCESSWIRE / November 13, 2019 / Cyren (NASDAQ:CYRN) today announced its third quarter 2019 financial results for the period ending September 30, 2019.

During the third quarter, Cyren reported quarterly revenues of $9.5 million, compared to $9.6 million during the third quarter of 2018. For the first three quarters of 2019, year-to-date revenues were $28.9 million, which represents a 9% annual increase over the first three quarters of 2018.

GAAP net loss for the quarter was $3.5 million, compared to $4.4 million during the third quarter of 2018. Year-to-date, net loss declined to $12.7 million compared to a net loss of $13.8 million over the same period a year ago.

“Our top priority is driving more aggressive growth and we are refining our strategy to take advantage of the market opportunities we see,” said Brett Jackson, CEO of Cyren. “Our team has made very good progress over the past several months and are now very focused on execution. We expect to begin seeing the benefits from our key initiatives emerging over the next several quarters.”

Third Quarter 2019 Financial Highlights:

  • Revenues for the third quarter of 2019 were $9.5 million, compared to $9.6 million during the third quarter of 2018.
  • GAAP net loss for the third quarter of 2019 was $3.5 million, compared to a net loss of $4.4 million in the third quarter of 2018.
  • GAAP loss per basic and diluted share for the third quarter of 2019 was $0.06, compared to a loss of $0.08 per basic and diluted share for the third quarter of 2018.
  • Non-GAAP net loss for the third quarter of 2019 was $3.5 million, compared to a Non-GAAP net loss of $3.3 million for the third quarter of 2018.
  • Non-GAAP loss per basic and diluted share was $0.06 for the third quarter of 2019, compared to a Non-GAAP loss of $0.06 per share in third quarter of 2018.
  • Cash used in operating activities during the third quarter of 2019 was $1.7 million, compared to operating cash usage of $2.6 million during the third quarter of 2018.
  • Net cash flow for the third quarter of 2019 was negative $2.9 million, compared to negative $3.1 million during the third quarter of 2018.
  • Cash balance as of September 30, 2019, was $9.5 million, compared to $17.6 million as of December 31, 2018. This does not include the proceeds of the Rights Offering detailed below.

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.”

Rights Offering:

During the third quarter, Cyren announced a Rights Offering to shareholders of record as of September 25. Right holders were entitled to purchase one ordinary share at a subscription price of $1.73 per share. The Rights Offering closed on November 6, 2019 and generated approximately $8 million of gross proceeds to Cyren, which is not reflected in the September 30, 2019 cash balance. Pursuant to the Rights Offering, Cyren issued a total of 4,635,584 ordinary shares at $1.73 per share, including 4,624,277 shares issued to the company’s majority shareholder, WP XII Investments B.V., an entity controlled by funds affiliated with Warburg Pincus. After the offering, Cyren now has 59,319,391 shares outstanding.

Financial Results Conference Call:

The company will host a conference call at 10 a.m. Eastern Time (5 p.m. Israel Time) on Wednesday, November 13, 2019 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://webcasts.eqs.com/cyren20191113/.

For those unable to participate in the live conference call, a replay will be available until November 27, 2019. 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 13696074. 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 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.

 

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

 
  Three months ended     Nine months ended  
 
  September 30     September 30  
 
  2019     2018     2019     2018  
 
  Unaudited     Unaudited     Unaudited     Unaudited  
 
                       
Revenues
  9,496     9,562     28,862     26,388  
 
                               
Cost of revenues
    3,712       3,670       11,501       10,684  
 
                               
Gross profit
    5,784       5,892       17,361       15,704  
 
                               
 
                               
Operating expenses:
                               
 
                               
Research and development, net
    3,516       4,336       11,990       11,355  
 
                               
Sales and marketing
    3,027       3,931       10,473       12,133  
 
                               
General and administrative
    2,484       2,166       7,314       6,151  
 
                               
Total operating expenses
    9,027       10,433       29,777       29,639  
 
                               
Operating loss
    (3,243 )     (4,541 )     (12,416 )     (13,935 )
 
                               
Other income (expense), net
    (3 )           262       (17 )
 
                               
Financial income (expense), net
    (321 )     7       (642 )     (91 )
 
                               
Loss before taxes
    (3,567 )     (4,534 )     (12,796 )     (14,043 )
 
                               
Tax benefit
    37       107       117       201  
 
                               
Net loss
  (3,530)     (4,427)     (12,679)     (13,842)  
 
                               
 
                               
Loss per share – basic and diluted
  (0.06 )   (0.08 )   (0.23 )   (0.26 )
 
                               
Weighted average number of shares outstanding:
                               
Basic and Diluted
    54,554       53,679       54,389       53,503  
 
                               

 

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  
 
  2019     2018     2019     2018  
 
  Unaudited     Unaudited     Unaudited     Unaudited  
 
                       
GAAP gross profit
  5,784     5,892     17,361     15,704  
GAAP gross margin
    61 %     62 %     60 %     60 %
Plus:
                               
Stock-based compensation
    36       48       98       124  
Amortization of intangible assets
    758       907       2,364       2,692  
Non-GAAP gross profit
    6,578       6,847       19,823       18,520  
Non-GAAP gross margin
    69 %     72 %     69 %     70 %
 
                               
GAAP operating loss
    (3,243 )     (4,541 )     (12,416 )     (13,935 )
Plus:
                               
Stock-based compensation
    419       358       1,002       1,031  
Amortization of intangible assets
    883       1,060       2,736       3,157  
Capitalization of technology
    (1,118 )     (242 )     (2,510 )     (1,886 )
Non-GAAP operating loss
    (3,059 )     (3,365 )     (11,188 )     (11,633 )
 
                               
GAAP net loss
    (3,530 )     (4,427 )     (12,679 )     (13,842 )
Plus:
                               
Stock-based compensation expense
    419       358       1,002       1,031  
Intangible amortization expense
    883       1,060       2,736       3,157  
Adjustment to earn-out liabilities
          23             75  
Amortization of deferred tax assets
    (55 )     (62 )     (170 )     (188 )
Gain from an earn-out liability settlement
                (256 )      
Capitalization of technology
    (1,169 )     (242 )     (2,627 )     (1,886 )
Non-GAAP net loss
  (3,452 )   (3,290 )   (11,994 )   (11,653 )
 
                               
Numerator for non-GAAP EPS calculation
  (3,452 )   (3,290 )   (11,994 )   (11,653 )
Non-GAAP net loss per share
  (0.06 )   (0.06 )   (0.22 )   (0.22 )
 
                               
GAAP weighted-average shares used to
                               
compute net loss per share
    54,554       53,679       54,389       53,503  
 
                               

 

CYREN LTD.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands of U.S. dollars)

 
           
 
  September 30     December 31  
 
  2019     2018  
 
  Unaudited     Audited  
Assets
           
Current Assets:
           
Cash and cash equivalents
  9,546     17,571  
Trade receivables, net
    3,499       3,658  
Deferred commissions
    930       887  
Prepaid expenses and other receivables
    1,329       778  
Total current assets
    15,304       22,894  
 
               
Long-term deferred commissions
    1,646       1,880  
Long-term lease deposits
    782       821  
Operating lease right-of-use assets
    8,974        
Severance pay fund
    610       503  
Property and equipment, net
    4,437       4,608  
Intangible assets, net
    8,667       8,802  
Goodwill
    19,904       20,519  
Total long-term assets
    45,020       37,133  
Total assets
  60,324     60,027  
 
               
Liabilities and Shareholders’ Equity
               
Current Liabilities:
               
Trade payables
  1,402     1,668  
Employees and payroll accruals
    3,690       3,959  
Accrued expenses and other liabilities
    1,421       910  
Operating lease liabilities
    1,298        
Earn-out consideration
          2,926  
Deferred revenues
    9,270       5,773  
Total current liabilities
    17,081       15,236  
 
               
Deferred revenues
    2,944       503  
Convertible notes
    10,000       10,000  
Long-term operating lease liabilities
    7,993        
Deferred tax liability
    912       1,130  
Accrued severance pay
    778       598  
Other liabilities
    337       700  
Total long-term liabilities
    22,964       12,931  
 
               
Shareholders’ equity
    20,279       31,860  
Total liabilities and shareholders’ equity
  60,324     60,027  
 
               
 
     

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

 
  Three months ended     Nine months ended  
 
  September 30     September 30  
 
  2019     2018     2019     2018  
Cash flows from operating activities:
  Unaudited     Unaudited     Unaudited     Unaudited  
 
                       
Net loss
  (3,530 )   (4,427 )   (12,679 )   (13,842 )
 
                               
 
                               
Loss on disposal of property and equipment
                1       14  
Depreciation
    484       438       1,420       1,434  
Stock-based compensation
    419       358       1,002       1,031  
Amortization of intangible assets
    885       1,060       2,736       3,157  
Amortization of deferred commissions
    (297 )     445       (909 )     1,005  
Amortization of operating lease right-of-use assets
    338             1,051        
Interest on convertible notes
    142             424        
Other expenses (income) related to the earn-out consideration
          23       (257 )     75  
Deferred taxes, net
    (55 )     (57 )     (182 )     (152 )
 
                               
Changes in assets and liabilities:
                               
Trade receivables
    (509 )     (607 )     196       (292 )
Prepaid expenses and other receivables
    168       306       (607 )     (392 )
Deferred commissions
    353       (954 )     1,101       (1,797 )
Change in long-term lease deposits
    2       5       25       (110 )
Trade payables
    559       375       (264 )     306  
Employees and payroll accruals, accrued expenses and other liabilities
    39       346       (185 )     677  
Deferred revenues
    (357 )     110       5,997       3,040  
Accrued severance pay, net
    5       21       73       (120 )
Operating lease liabilities
    (342 )           (1,075 )      
Other long-term liabilities
    (15 )     1       (126 )     71  
Net cash provided by (used in) operating activities
    (1,711 )     (2,557 )     (2,258 )     (5,895 )
 
                               
Cash flows from investing activities:
                               
 
                               
Proceeds from sale of property and equipment
    1             1        
Capitalization of technology, net of grants received
    (1,027 )     (384 )     (2,462 )     (1,844 )
Purchase of property and equipment
    (309 )     (1,156 )     (1,259 )     (2,989 )
Net cash used in investing activities
    (1,335 )     (1,540 )     (3,720 )     (4,833 )
 
                               
Cash flows from financing activities:
                               
 
                               
Payment of earnout liability
                (2,680 )     (604 )
Proceeds from options exercised
    231       984       743       1,276  
Net cash provided by (used in) financing activities
    231       984       (1,937 )     672  
Effect of exchange rate changes on cash
    (76 )     12       (124 )     (39 )
Increase (decrease) in cash, cash equivalents and restricted cash
    (2,891)       (3,101)       (8,039)       (10,095)  
Cash, cash equivalents and restricted cash at the beginning of the period
    13,008       17,234       18,156       24,228  
Cash, cash equivalents and restricted cash at the end of the period
  10,117     14,133     10,117     14,133  
 
                               
Reconciliation of cash, cash equivalents and restricted cash as shown in the consolidated statements of cash flow:
                               
Cash and cash equivalents
  9,546     13,527     9,546     13,527  
Restricted cash included in long-term restricted lease deposits
    571       606       571       606  
 
                               
Total cash, cash equivalents and restricted cash
  10,117     14,133     10,117     14,133  
 
                               
 
                               

Company Contact
Mike Myshrall, CFO
Cyren

+1.703.760.3320
mike.myshrall@cyren.com

SOURCE: Cyren Ltd

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