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CYREN Reports Fourth Quarter and Full Year 2014 Results

February 24, 2015 at 6:10 AM EST

MCLEAN, Va., Feb. 24, 2015 /PRNewswire/ -- CYREN (NASDAQ: CYRN), a global provider of cloud-based cybersecurity solutions, today announced its fourth quarter and full year 2014 financial results for the period ending December 31, 2014.

CYREN Logo.

CYREN closed out the fourth quarter by continuing to execute on the plans it laid out at the beginning of 2014. It was a transformative year, as the company successfully rebranded and launched CYREN as a provider of cybersecurity technology and cyber intelligence solutions, released its cloud-based security as a service WebSecurity platform and generated traction through its new channel sales and direct sales efforts.

"Record fourth quarter bookings, an expanded global partner network and significant new customer acquisitions are strong examples of the increased demand we're seeing in the market," said Lior Samuelson, CEO and Chairman of the Board at CYREN. "Our focus on introducing our new direct sales strategy and expanding our service offerings will enable us to drive growth in 2015."

Fourth Quarter & Full Year 2014 Financial Highlights:

  • Revenues in accordance with U.S. Generally Accepted Accounting Principles (US GAAP) totaled $7.8 million for the fourth quarter of 2014 compared to $8.2 million in the fourth quarter of 2013. Full year 2014 revenues totaled $31.9 million as compared to $32.2 million in 2013.
  • Non-GAAP revenues totaled $7.9 million for the fourth quarter of 2014 compared to $8.4 million in the fourth quarter of 2013. Full year 2014 non-GAAP revenues totaled $32.1 million compared to $32.8 million in 2013. The difference between non-GAAP and GAAP revenue is derived from the fact that deferred revenues consolidated from acquired companies are recorded based on fair value rather than book value for GAAP purposes.
  • GAAP net loss for the fourth quarter of 2014 was $2.2 million compared to a net loss of $7.0 million in the fourth quarter of 2013. Full year 2014 GAAP net loss totaled $7.0 million compared to a GAAP net loss of $9.9 million in 2013.
  • GAAP loss per basic and diluted share for the fourth quarter of 2014 was $0.07, compared to a loss of $0.26 in the fourth quarter of 2013. Full year 2014 GAAP loss per basic share and diluted share was $0.25 compared to a loss of $0.38 in 2013.
  • Non-GAAP net loss for the fourth quarter 2014 was $1.4 million compared to a loss of $1.9 million in the fourth quarter of 2013.  Full year 2014 non-GAAP net loss totaled $4.5 million compared to a loss of $1.3 million in 2013.
  • Non-GAAP loss per basic and diluted share for the fourth quarter 2014 was $0.04, compared to a loss of $0.07 in fourth quarter of 2013. Full year 2014 non-GAAP loss per basic share was $0.16 compared to non-GAAP net loss per diluted share of $0.05 in 2013.
  • Cash used by operating activities during the quarter was $1.5 million.
  • Cash as of December 31, 2014 was $11.1 million, compared to $13.1 million as of September 30, 2014. In addition, the company had drawn $4.8 million under its $7.5 million credit facility.

Operating expenses for the quarter included several one-time items affecting GAAP and non-GAAP results.  These items included a bad debt expense of $0.3 million and a provision for gross receipts taxes of $0.2 million.  These G&A expenses had a negative impact on the quarterly profitability, but should not be considered as ongoing expenses when looking forward into 2015.

For information regarding the non-GAAP financial measures discussed in this release, please see "Use of Non-GAAP Financial Information" and "Reconciliation of Selected GAAP Measures to Non GAAP Measures."

Business Highlights:

  • CYREN delivered record bookings in the fourth quarter of 2014, driven by increasing sales traction with Cyber Intelligence solutions and several new large multi-year contracts, including a high-profile joint venture in Europe. 
  • The flagship CYREN WebSecurity platform added thousands of users, achieved through multiple customer wins in UK, India, Germany, USA , and France.  Notable wins included the company's first enterprise deployment at a UK trade union.
  • CYREN continued to add key distribution partners for CYREN WebSecurity such as ALSO Holding, an information and communications technology provider in Germany.  CYREN WebSecurity will be added to the ALSO CHOICE Cloud Marketplace, which joins SYNNEX's CLOUDSolv solutions marketplace as the second CYREN partner to offer CWS through its online reseller network for selling cloud solutions.
  • The company's cloud-based CYREN WebSecurity solution was named a bronze winner in the Best New Product of the Year - Enterprise category at the Best in Biz Awards 2014, an independent business awards program judged by members of the press and industry analysts.
  • Bangcle, the world's largest mobile application security provider, employed CYREN to offer its 500 million customers two mobile security solutions, CYREN Embedded Antivirus and CYREN Mobile Security for Android, representing the expansion of CYREN's global footprint and commitment to its international partner network.

Use of Non-GAAP Measures 

Non-GAAP financial measures consist of GAAP financial measures adjusted to exclude: stock-based compensation expenses, amortization and impairment of acquired intangible assets, executive termination costs, deferred taxes and deferred revenues related to acquisitions, acquisition related costs, one-time settlement agreements, reorganization expenses and adjustments to earn-out obligations. 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.

Financial Results Conference Call 

The company has scheduled a conference call later today, February 24, 2015, at 10 a.m. Eastern Time (5 p.m. Israel Time) to discuss its fourth quarter and full year 2014 results.

To participate, please call one of the following teleconferencing numbers by dialing in at least 10 minutes before the conference call commences. If you are unable to connect using the toll-free numbers, please try the international dial-in number.

US Dial-in Number: 1-877-440-5804
Israel Dial-in Number: 1-80-925-8243
International Dial-in Number: 1-719-325-4801

The call will be simultaneously webcast live on the investor relations section of CYREN's website at http://www.cyren.com/ir.html.

For those unable to listen to the live call, a webcast replay of the call will be available from the day after the call in the investor relations section of CYREN's corporate website.

About CYREN

CYREN is a leading provider of cloud-based cybersecurity solutions that deliver uncompromising protection through the application of global cyber intelligence. Regardless of the device or its location, CYREN web, email, and anti-malware services deliver powerful protection in both embedded and Security as a Service (SecaaS) deployment options. Organizations rely on CYREN's mass-scale threat detection and proactive security analytics to protect against malware and identify advanced threats. The CYREN GlobalView™ Cloud Platform employs patented Recurrent Pattern Detection™ technology to protect more than 550 million users in 190 countries through 500,000 global points of presence. CYREN is traded on the NASDAQ Capital Market and the Tel Aviv Stock Exchange (TASE) under the trading symbol "CYRN." Visit the CYREN GlobalView Security Center or go to www.CYREN.com.

Blog: blog.cyren.com 
Facebook: www.facebook.com/CyrenWeb 
LinkedIn: www.linkedin.com/company/cyren 
Twitter: twitter.com/CyrenInc

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, reports on Form 6-K and prospectus supplement dated July 24, 2014 and prospectus dated July 3, 2014 filed pursuant to Rule 424(b)(2), which are available through www.sec.gov.  

U.S. Investor Contact
Garth Russell
KCSA Strategic Communications
+1 212 896 1250
grussell@kcsa.com

Israel Investor Contact
Iris Lubitch
EffectiveIR
+972 54 2528007
iris@FinCom.co.il

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 


Twelve months ended 

December 31


December 31


2014


2013


2014


2013


Unaudited


Unaudited


Unaudited


Audited









 Revenues 

$    7,842


$    8,249


$  31,925


$32,248









 Cost of revenues 

1,999


2,012


8,123


7,695









Gross profit 

5,843


6,237


23,802


24,553

















Operating expenses:
















 Research and development, net

2,824


2,663


11,222


9,270









 Sales and marketing 

2,852


2,926


11,802


10,278









 General and administrative 

2,274


3,797


8,047


10,388









 Adjustment of earn-out obligation

(43)


(3,276)


(744)


(3,276)









 Total operating expenses 

7,907


6,110


30,327


26,660









Operating income (loss)

(2,064)


127


(6,525)


(2,107)









Other income (expense)

(13)


-


187


-









Loss from sale of investment in affiliate

-


(1,289)


-


(1,289)









Financial  expense, net 

(162)


(390)


(874)


(1,255)









Net loss before taxes

(2,239)


(1,552)


(7,212)


(4,651)









Tax  benefit (expense) 

83


(5,401)


196


(5,220)









Net loss








$  (2,156)


$  (6,953)


$  (7,016)


$ (9,871)

























Loss per share - basic

$     (0.07)


$     (0.26)


$     (0.25)


$   (0.38)









Loss per share - diluted 

$     (0.07)


$     (0.26)


$     (0.25)


$   (0.38)









Weighted average number of shares outstanding: 








Basic 

31,371


26,471


28,598


26,231









Diluted  

31,371


26,471


28,598


26,231









Certain financial statement data for prior periods has been reclassified to conform to current year financial statement presentation.

 









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


2014


2013


2014


2013


Unaudited


Unaudited


Unaudited


Audited









GAAP operating income (loss)

$  (2,064)


$       127


$  (6,525)


$ (2,107)

Stock-based compensation (1)

265


338


1,220


1,344

Other acquisition related costs (2)

-


-


-


142

Amortization of intangible assets (3)

409


448


1,736


1,755

Adjustment to earn-out liabilities (4)

(43)


(3,276)


(744)


(3,279)

Executive terminations (6)

-


-


208


165

Adjustment to deferred revenues (7)

48


116


202


528

Settlement agreements (8)

128


-


128


91

Reorganization expenses (9)

-


219


75


316









Non-GAAP operating loss

$  (1,257)


$  (2,028)


$  (3,700)


$ (1,045)









GAAP net loss

$  (2,156)


$  (6,953)


$  (7,016)


$ (9,871)

Stock-based compensation (1)

265


338


1,220


1,344

Other acquisition related costs (2)

-


-


-


142

Amortization of intangible assets (3)

409


448


1,736


1,755

Adjustment to earn-out liabilities (4)

4


(3,100)


(445)


(2,398)

Income taxes (5)

(95)


5,756


(412)


5,292

Executive terminations (6)

-


-


208


165

Adjustment to deferred revenues (7)

48


116


202


528

Settlement agreements (8)

128


-


(72)


91

Reorganization expenses (9)

-


219


75


316

Investment impairment (10)

-


1,289


-


1,289









Non-GAAP net loss

$  (1,397)


$  (1,887)


$  (4,504)


$ (1,347)









GAAP loss per share (dilluted)

(0.07)


(0.26)


(0.25)


(0.38)

Stock-based compensation (1)

0.01


0.01


0.04


0.05

Other acquisition related costs (2)

0.00


0.00


0.00


0.01

Amortization of intangible assets (3)

0.01


0.02


0.06


0.07

Adjustment to earn-out liabilities (4)

0.00


(0.12)


(0.02)


(0.09)

Income taxes (5)

(0.00)


0.22


(0.01)


0.20

Executive terminations (6)

0.00


0.00


0.01


0.01

Adjustment to deferred revenues (7)

0.00


0.00


0.01


0.02

Settlement agreements (8)

0.01


0.00


(0.00)


0.00

Reorganization expenses (9)

0.00


0.01


0.00


0.01

Investment impairment (10)

0.00


0.05


0.00


0.05









Non-GAAP loss per share (diluted)

(0.04)


(0.07)


(0.16)


(0.05)









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

31,371


26,471


28,598


26,231









(1) Stock-based compensation 








 Cost of revenues 

$         15


$         12


$         55


$       50

 Research and development 

63


79


292


267

 Sales and marketing 

76


78


292


264

 General and administrative 

111


169


581


763










$       265


$       338


$    1,220


$  1,344

(2) Other acquisition related costs 








General and administrative 

$            -


$            -


$           -


$     142










$             -


$             -


$           -


$     142

(3) Amortization of intangible assets 








 Cost of revenues 

$       202


$       209


$       846


$     773

 Sales and marketing 

207


239


890


982










$       409


$       448


$    1,736


$  1,755

(4) Adjustment to earn-out liabilities








 General and administrative 

$        (43)


$  (3,276)


$      (744)


$ (3,279)

Financial expenses, net 

47


176


299


881










$            4


$  (3,100)


$      (445)


$ (2,398)

(5) Income taxes








Deferred tax asset - tax benefit

$        (95)


$    5,756


$      (412)


$  5,292










$        (95)


$    5,756


$      (412)


$  5,292

(6) Executive terminations 








General and administrative 

$           -


$           -


$       208


$     165










$           -


$           -


$       208


$     165

(7) Adjustment to deferred revenues 








Revenues

$         48


$       116


$       202


$     528










$         48


$       116


$       202


$     528

(8) Settlement agreements








General and administrative 

$       128


$             -


$       128


$       91

Other income

-


-


(200)


-










$       128


$         -


$        (72)


$       91









(9) Reorganization expenses








General and administrative 

$             -


$       219


$         75


$     316










$             -


$       219


$         75


$     316









(10) Investment impairment








Financial expenses, net 

$             -


$    1,289


$           -


$  1,289










$             -


$    1,289


$           -


$  1,289

 





CYREN LTD.





CONDENSED CONSOLIDATED BALANCE SHEETS





(in thousands of U.S. dollars)










December 31


December  31


2014


2013


Unaudited


Audited





                 Assets




    Current Assets:




Cash and cash equivalents 

$          11,063


$             3,757

Trade receivables, net

4,444


5,178

Deferred tax assets

-


48

Prepaid expenses and other receivables

1,019


1,988

 Total current assets 

16,526


10,971





Lease deposits 

70


74

Deferred tax assets

13


-

Severance pay fund 

594


819

Property and equipment, net 

2,401


2,674

Goodwill and intangible assets, net

31,869


36,395

 Total long-term assets 

34,947


39,962

Total assets

$          51,473


$           50,933

















                 Liabilities and Shareholders' Equity




    Current Liabilities:




Credit line

$            4,900


$             3,245

Trade payables

646


859

Employees and payroll accruals 

2,359


3,102

Deferred tax liability

120


-

Accrued expenses and other liabilities 

1,394


1,366

Earn-out consideration

2,269


1,428

Deferred revenues

4,097


4,499

 Total current liabilities 

15,785


14,499





Deferred revenues

1,042


1,646

Deferred tax liability

1,984


2,749

Earn-out consideration

837


2,857

Accrued severance pay 

666


873

Other liabilities

100


-

Total long-term liabilities

4,629


8,125





Shareholders' equity 

31,059


28,309

Total liabilities and shareholders' equity

$          51,473


$           50,933

 









CYREN LTD.









 CONDENSED CONSOLIDATED CASH FLOW DATA









(in thousands of U.S. dollars)


















Three months ended 


Twelve months ended 


December 31


December 31


2014


2013


2014


2013

Cash flows from operating activities:

Unaudited


Unaudited


Unaudited


Audited









Net loss

$  (2,156)


$  (6,953)


$  (7,016)


$(9,871)









Adjustments to reconcile net loss to net cash provided by (used in) operating activities:








Loss on disposal of property and equipment

16


18


15


18

Depreciation 

330


278


1,285


1,136

Stock-based compensation

265


341


1,220


1,344

Amortization of intangible assets

409


448


1,736


1,755

Accrued interest, accretion of discount and exchange rate differences on credit line

22


(24)


124


84

Accretion and change in fair value of earn-out consideration, net

4


(3,100)


(445)


(2,398)

Loss from sale of investment in affiliate

-


1,289


-


1,289









Changes in assets and liabilities:








Trade receivables

(315)


667


866


868

Deferred taxes

(134)


5,444


(318)


4,980

Prepaid expenses and other receivables

363


424


839


(511)

Trade payables

(150)


70


(542)


(248)

Employees and payroll accruals, accrued expenses and other liabilities

213


1,074


(496)


595

Deferred revenues

(516)


(154)


(1,047)


1,180

Accrued severance pay, net

1


(46)


18


(105)

Other long-term liabilities

100


-


100


-

Net cash provided by (used in) operating activities

(1,548)


(224)


(3,661)


116









Cash flows from investing activities:
























Change in long-term lease deposits

4


9


1


(17)

Proceeds from sale of fixed assets

9


-


9


4

Proceeds from sale of investment in affiliates

-


194


-


194

Investment in affiliates

-


-


-


(80)

Purchase of property and equipment

(68)


(397)


(771)


(2,053)

Net cash used in investing activities

(55)


(194)


(761)


(1,952)









Cash flows from financing activities:
















Proceeds from capital issuance, net

-


-


10,239


-

Proceeds from bank loans and credit lines

4,800


3,160


6,800


6,165

Repayment of bank loans

(5,270)


(3,004)


(5,270)


(3,004)

Payment of earn-out consideration

-


-


(351)


(3,994)

Proceeds from options exercised

53


25


384


1,241

Net cash provided by (used in) financing activities

(417)


181


11,802


408

Effect of exchange rate changes on cash and cash equivalents

(11)


22


(74)


48

Increase (decrease) in cash and cash equivalents

(2,031)


(215)


7,306


(1,380)

Cash and cash equivalents at the beginning of the period

13,094


3,972


3,757


5,137

Cash and cash equivalents at the end of the period

$  11,063


$    3,757


$  11,063


$  3,757

 

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SOURCE CYREN

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