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Cyren Announces First Quarter 2018 Financial Results

May 22, 2018 at 6:00 AM EDT
Continued Growth in Enterprise Business; Cyren Achieves Largest-Ever Contract Win

MCLEAN, Va., May 22, 2018 /PRNewswire/ -- Cyren (NASDAQ: CYRN) today announced its first quarter 2018 financial results for the period ending March 31, 2018.

During the first quarter, Cyren grew its enterprise bookings at a rate of 260% compared to the first quarter of 2017.  The growth was the result of continued traction with channel partners in Europe and the US, and the company added approximately 60 new enterprise customers and resellers during the period. 

The success during the quarter culminated in the signing of the company's largest-ever contract, a three-year multi-million dollar agreement with Microsoft announced in April to extend Cyren's anti-phishing solution to millions of Office 365 enterprise users.  Due to the timing of the contract, there was no revenue impact during the first quarter, but it is anticipated to have a material impact on revenue throughout the rest of 2018.

"Cyren had an excellent quarter in terms of new customer and partner acquisition," said Lior Samuelson, CEO and Chairman of the Board at Cyren. "We added several new resellers into the Cyren Cloud Security ecosystem, and we're thrilled to have our anti-phishing technology selected by the world's largest and most well known provider of enterprise email solutions."

First Quarter 2018 Financial Highlights:

  • Revenues for the first quarter of 2018 were $7.6 million, compared to $8.0 million during the first quarter of 2017.
  • GAAP net loss for the first quarter of 2018 was $5.3 million, compared to a net loss of $2.5 million in the first quarter of 2017.
  • GAAP loss per basic and diluted share for the first quarter of 2018 was $0.10, compared to a loss of $0.06 per basic and diluted share for the first quarter of 2017.
  • Non-GAAP net loss for the first quarter of 2018 was $4.9 million, compared to a Non-GAAP net loss of $2.4 million for the first quarter of 2017.
  • Non-GAAP loss per basic and diluted share was $0.09 for the first quarter of 2018, compared to a Non-GAAP loss of $0.06 per share in first quarter of 2017.
  • Operating cash usage during the first quarter was $4.6 million, compared to operating cash usage of $1.9 million in the first quarter of 2017.
  • Cash usage, excluding financing activities, during the first quarter of 2018 was $6.0 million, compared to cash usage, excluding financing activities, of $3.4 million during the first quarter of 2017.
  • Cash balance as of March 31, 2018 was $17.9 million, compared to $13.5 million as of March 31, 2017 and $24.0 million as of December 31, 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 Highlights:

  • In January, Cyren announced an agreement with CARVIR, a global cyber security distributor. CARVIR selected Cyren to provide Cyren Cloud Security (both Web Security and Email Security) to over 500 MSP partners and tens of thousands of business customers.
  • Cyren recently announced a strategic partnership and revenue contract with Meta Networks, a technology leader in secure cloud-native networking to utilize Cyren DNS and Web Security in Meta's Network-as-a-Service SD-WAN solution in order to protect enterprise customers around the world.
  • During Q1, Cyren released version 4.3 of its CCS platform, which adds email imposter protection, cloud access security with application control, single sign-on authentication with SAML, and cryptocurrency mining protection. Cyren's cryptocurrency mining protection is unique in the industry and introduces a new URL filtering category with the ability to block sites which exploit the user's device resources (CPU and RAM), for the purpose of cryptocurrency mining.
  • Cyren's board of directors appointed Lauren Zletz from Warburg Pincus as a member of the Cyren board, as of May 15, 2018, for an initial term that will expire at Cyren's next annual shareholders meeting, at which time, her re-election for an additional term will be brought for shareholders' approval.

Financial Results Conference Call:

The company will host a conference call at 10 a.m. Eastern Time (5 p.m. Israel Time) on Tuesday, May 22, 2018 to discuss first quarter results.

U.S. Dial-in Number:

1-800-289-0438

Israel Dial-in Number:

1-80-921-2883

International Dial-in Number:  

1-323-794-2423

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=129687.  

For those unable to participate in the live conference call, a replay will be available until June 5, 2018. 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 8346828. 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

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 

March 31


2018


2017


Unaudited


Unaudited





 Revenues 

$    7,636


$    7,959





 Cost of revenues 

3,382


3,032





Gross profit 

4,254


4,927









Operating expenses:








 Research and development, net

3,355


2,290





 Sales and marketing 

4,252


3,573





 General and administrative 

2,038


1,563





 Total operating expenses 

9,645


7,426





Operating loss

(5,391)


(2,499)





Other income (expense)

(2)


1





Financial income (expense), net 

4


(75)





Loss before taxes

(5,389)


(2,573)





Tax benefit (expense)

46


55









Net loss

$  (5,343)


$  (2,518)









Loss per share - basic

$    (0.10)


$    (0.06)





Loss per share - diluted 

$    (0.10)


$    (0.06)





Weighted average number of shares outstanding: 




Basic 

53,381


39,179





Diluted  

53,381


39,179

 

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


2018


2017


Unaudited


Unaudited





GAAP operating loss

$  (5,391)


$  (2,499)

Stock-based compensation (1)

323


280

Amortization of intangible assets (2)

1,009


1,040

Capitalization of technology (5)

(877)


(1,126)

Non-GAAP operating loss

$  (4,936)


$  (2,305)





GAAP net loss

$  (5,343)


$  (2,518)

Stock-based compensation (1)

323


280

Amortization of intangible assets (2)

1,009


1,040

Adjustment to earn-out liabilities and related expenses (3)

27


31

Amortization of deferred tax assets (4)

(64)


(60)

Capitalization of technology (5)

(877)


(1,126)

Non-GAAP net loss

$  (4,925)


$  (2,353)





GAAP loss per share (diluted)

$    (0.10)


$    (0.06)

Stock-based compensation (1)

0.01


0.00

Amortization of intangible assets (2)

0.02


0.03

Adjustment to earn-out liabilities and related expenses (3)

0.00


0.00

Amortization of deferred tax assets (4)

(0.00)


0.00

Capitalization of technology (5)

(0.02)


(0.03)

Non-GAAP loss per share (diluted)

$    (0.09)


$    (0.06)





Numbers of shares used in computing non-GAAP loss per share (diluted)

53,381


39,179





(1) Stock-based compensation 




Cost of revenues 

$         31


$         30

Research and development 

91


82

Sales and marketing 

101


55

General and administrative 

100


113


$       323


$       280





(2) Amortization of intangible assets 




Cost of revenues 

$       852


$       874

Sales and marketing 

157


166


$    1,009


$    1,040





(3) Adjustment to earn-out liabilities and related expenses




Financial expenses, net 

$         27


$         31





(4) Amortization of deferred tax assets




Tax benefit (expense)

$        (64)


$        (60)





(5) Capitalization of technology




Research and development

$     (877)


$  (1,126)

 

CYREN LTD.


CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands of U.S. dollars)






March 31


December 31


2018


2017


Unaudited


Audited





Assets




    Current Assets:




Cash and cash equivalents 

$  17,940


$         23,981

Trade receivables, net

2,261


2,890

Deferred commissions

990


-

Prepaid expenses and other receivables

2,017


1,339

 Total current assets 

23,208


28,210





Long-term deferred commissions

327


-

Lease deposits 

603


379

Severance pay fund 

640


714

Property and equipment, net 

3,185


2,787

Intangible assets, net

10,994


11,018

Goodwill

21,521


21,128

 Total long-term assets 

37,270


36,026

Total assets

$  60,478


$         64,236









Liabilities and Shareholders' Equity




    Current Liabilities:




Trade payables

$    1,000


$           1,017

Employees and payroll accruals 

3,183


3,239

Accrued expenses and other liabilities 

1,038


1,012

Earn-out consideration

3,717


3,588

Deferred revenues

4,485


5,032

 Total current liabilities 

13,423


13,888





Deferred revenues

562


524

Deferred tax liability

1,341


1,355

Accrued severance pay 

864


930

Other liabilities

507


438

Total long-term liabilities

3,274


3,247





Shareholders' equity 

43,781


47,101

       Total liabilities and shareholders' equity

$  60,478


$         64,236

 

CYREN LTD.


 CONDENSED CONSOLIDATED CASH FLOW DATA

(in thousands of U.S. dollars)






Three months ended 


March 31


2018


2017

Cash flows from operating activities:

Unaudited


Unaudited





Net loss

$   (5,343)


$   (2,518)





Adjustments to reconcile net loss to net cash used in operating activities:




Depreciation 

455


275

Stock-based compensation

323


280

Amortization of intangible assets

1,009


1,040

Amortization of deferred commissions

318


-

Other expenses related to the earn-out consideration

27


31

Deferred taxes

(47)


(53)





Changes in assets and liabilities:




Trade receivables

587


25

Prepaid expenses and other receivables

(659)


(396)

Deferred commissions

(328)


-

Change in long-term lease deposits

(223)


(22)

Trade payables

(39)


90

Employees and payroll accruals, accrued expenses and other liabilities

(252)


(218)

Deferred revenues

(509)


(489)

Accrued severance pay, net

8


30

Other long-term liabilities

61


-

Net cash used in operating activities

(4,612)


(1,925)





Cash flows from investing activities:








Capitalization of technology, net of grants received

(662)


(1,126)

Purchase of property and equipment

(822)


(354)

Net cash used in investing activities

(1,484)


(1,480)





Cash flows from financing activities:








Proceeds from convertible note

-


6,300

Proceeds from options exercised

19


6

Net cash provided by financing activities

19


6,306

Effect of exchange rate changes on cash

36


16

Increase (decrease) in cash and cash equivalents

(6,041)


2,917

Cash and cash equivalents at the beginning of the period

23,981


10,621

Cash and cash equivalents at the end of the period

$  17,940


$  13,538

 

CYREN Logo. (PRNewsFoto/CYREN)

 

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