CYREN Reports Second Quarter 2015 Results and Provides Business Update Following Capital Raise
"As of today, we have an established foundation of users and reference customers, as well as a growing sales pipeline for our cloud-based CYREN WebSecurity (CWS) platform. We are already seeing the positive effects of this heightened brand awareness, as we are now attracting bigger, higher-quality RFPs and sales opportunities from potential customers," stated
He added: "We experienced an overwhelming response from our recent public offering, which was oversubscribed and validates that institutional investors believe in
During the quarter,
Second Quarter 2015 Financial Highlights:
- Revenues in accordance with U.S. Generally Accepted Accounting Principles (US GAAP) totaled
$6.7 million for the second quarter of 2015, compared to$8.3 million for the second quarter of 2014 and$7.0 million for the first quarter of 2015. The reduction in revenue was primarily due to the weakness of the Euro sinceJune 2014 and customer agreements that were not renewed at the end of their terms. - Non-GAAP revenues totaled
$6.8 million for the second quarter of 2015, compared to$8.3 million for the second quarter of 2014 and$7.0 million for the first quarter of 2015. 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. - R&D expense for the second quarter of 2015 declined to
$1.8 million from$3.1 million for the same period last year. This decline is attributable to the net capitalization of some software development costs, a new R&D grant from theOffice of the Chief Scientist at theMinistry of Economy of Israel , and appreciation of the U.S. dollar versus the Euro and Shekel. - GAAP net loss for the second quarter of 2015 was
$0.6 million , compared to a loss of$2.0 million in the second quarter of 2014 and a loss of$1.7 million in the first quarter of 2015. - GAAP loss per basic and diluted share for the second quarter of 2015 was
$0.02 , compared to a loss of$0.08 for the second quarter of 2014. - Non-GAAP net loss for the second quarter of 2015 was
$1.2 million , compared to a loss of$1.1 million for the second quarter of 2014 and a loss of$1.0 million in the first quarter of 2015. - Non-GAAP loss per basic and diluted share was
$0.04 for the second quarters of both 2015 and 2014. - Cash provided by operating activities during the quarter was
$0.3 million . - Cash as of
June 30, 2015 was$7.9 million , compared to$8.5 million as ofMarch 31, 2015 . The cash position as ofJune 30, 2015 does not reflect the$11.5 million in net proceedsCYREN raised in a public offering that priced onAugust 12, 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."
Recent Business Highlights:
- Integrated CYREN WebSecurity with the SPARK® platform from WiFi SPARK, a
UK -based managed WiFi service provider, which operates over 100,000 access points acrossEurope . This integration utilizesCYREN's recently-launched DNS-based policy enforcement for CWS and further validates the market's interest in this solution. - Launched the CYREN Next Generation Sandbox service, which uniquely harnesses the power of automated, multi-layered sandboxing capabilities that rely on global cyber intelligence, instead of traditional human analysis or reactive procedures initiated due to customer infection or attack.
- Announced that Securepoint, a German-based provider of network access, network security and mail archiving solutions, has added three new layers of
CYREN cybersecurity technologies alongside its existing use of CYREN Antispam and Antimalware. - Announced Cyveillance, a subsidiary of QinetiQ, has launched a phishing protection service for enterprise and government customers. The service utilizes
CYREN's Phishing Intelligence feed, which is delivered real-time from theCYREN cloud as part of its Cyber Intelligence Suite. - Awarded a government grant of
NIS 3.6 million (approximately$0.9 million ) from theOffice of the Chief Scientist (OCS) at theMinistry of Economy of Israel . - Completed a public stock offering, resulting in gross proceeds of
$12.6 million , excluding fees and expenses. Total proceeds include sale of shares offered under the underwriter's over-allotment option.
Financial Results Conference Call:
The Company has scheduled a conference call later today,
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: |
1-888-397-5352 |
Israel Dial-in Number: |
1-80-924-5906 |
International Dial-in Number: |
1-719-325-2491 |
The call will be simultaneously webcast live on the investor relations section of
For those unable to listen to the live call, a webcast replay of the call will be available beginning the day after the call; the replay link can be found by visiting the investor relations section of
About
Founded in 1991,
Blog: blog.cyren.com
Facebook: www.facebook.com/CyrenWeb
LinkedIn: www.linkedin.com/company/cyren
Twitter: twitter.com/CyrenInc or twitter.com/CYREN_IR
To download
Use of Non-GAAP 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 settlement agreements, reorganization expenses, 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 may contain forward-looking statements, including projections about our 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 to us at the time of the presentation; we assume no obligation to update any of them. The statements in this presentation are not guarantees of future performance and actual results could differ materially from our current expectations as a result of numerous factors, including business conditions and growth or deterioration in the Internet market, commerce and the general economy, both domestic as well as international; fewer than expected
new-partner relationships; competitive factors, including pricing pressures; technological developments, and products offered by competitors; the ability of our OEM partners to successfully penetrate markets with products integrated with
U.S. Investor Contact
+1 212 896 1250
grussell@kcsa.com
Israel Investor Contact
SmartTteam
+972 54 2528007
Iris@smartteam.co.il
Company Contact
+1 703 760 3320
mike.myshrall@CYREN.com
Media Contact
Zintel Public Relations
+1 281 444 1590
matthew.zintel@zintelpr.com
Logo - http://photos.prnewswire.com/prnh/20140120/SF48846LOGO
| |||||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||
(in thousands of U.S. dollars, except per share amounts) | |||||||
Three months ended |
Six months ended | ||||||
|
| ||||||
2015 |
2014 |
2015 |
2014 | ||||
Unaudited |
Unaudited |
Unaudited |
Unaudited | ||||
Revenues |
$ 6,726 |
$ 8,262 |
|
| |||
Cost of revenues |
2,105 |
2,065 |
4,168 |
4,087 | |||
Gross profit |
4,621 |
6,197 |
9,551 |
12,265 | |||
Operating expenses: |
|||||||
Research and development, net |
1,799 |
3,081 |
4,508 |
5,981 | |||
Sales and marketing |
2,197 |
3,137 |
4,439 |
6,129 | |||
General and administrative |
1,295 |
1,882 |
2,709 |
4,149 | |||
Adjustment of earn-out obligation |
(75) |
- |
(77) |
- | |||
Total operating expenses |
5,216 |
8,100 |
11,579 |
16,259 | |||
Operating loss |
(595) |
(1,903) |
(2,028) |
(3,994) | |||
Other income |
4 |
- |
4 |
200 | |||
Financial expense, net |
(132) |
(167) |
(283) |
(463) | |||
Net loss before taxes |
(723) |
(2,070) |
(2,307) |
(4,257) | |||
Tax benefit (expense) |
75 |
75 |
(11) |
120 | |||
Net loss |
|||||||
$ (648) |
$ (1,995) |
$ (2,318) |
$ (4,137) | ||||
Loss per share - basic |
$ (0.02) |
$ (0.08) |
$ (0.07) |
$ (0.16) | |||
Loss per share - diluted |
$ (0.02) |
$ (0.08) |
$ (0.07) |
$ (0.16) | |||
Weighted average number of shares outstanding: |
|||||||
Basic |
31,444 |
26,577 |
31,421 |
26,548 | |||
Diluted |
31,444 |
26,577 |
31,421 |
26,548 |
| |||||||
RECONCILIATION OF SELECTED GAAP MEASURES TO NON-GAAP MEASURES | |||||||
(in thousands of U.S.dollars, except per share amounts) | |||||||
Three months ended |
Six months ended | ||||||
|
| ||||||
2015 |
2014 |
2015 |
2014 | ||||
Unaudited |
Unaudited |
Unaudited |
Unaudited | ||||
GAAP operating loss |
$ (595) |
$ (1,903) |
$ (2,028) |
$ (3,994) | |||
Stock-based compensation (1) |
270 |
357 |
533 |
661 | |||
Amortization of intangible assets (2) |
383 |
467 |
768 |
891 | |||
Adjustment to earn-out liabilities (3) |
(75) |
- |
(77) |
- | |||
Executive terminations (5) |
- |
69 |
- |
208 | |||
Adjustment to deferred revenues (6) |
42 |
52 |
85 |
104 | |||
Settlement agreements (7) |
(628) |
- |
(628) |
- | |||
Reorganization expenses (8) |
- |
- |
- |
75 | |||
Capitalization of technology (9) |
(505) |
- |
(505) |
- | |||
Non-GAAP operating loss |
$ (1,108) |
$ (958) |
$ (1,852) |
$ (2,055) | |||
GAAP net loss |
$ (648) |
$ (1,995) |
$ (2,318) |
$ (4,137) | |||
Stock-based compensation (1) |
270 |
357 |
533 |
661 | |||
Amortization of intangible assets (2) |
383 |
467 |
768 |
891 | |||
Adjustment to earn-out liabilities (3) |
(52) |
96 |
(29) |
189 | |||
Income taxes (4) |
(82) |
(113) |
(165) |
(214) | |||
Executive terminations (5) |
- |
69 |
- |
208 | |||
Adjustment to deferred revenues (6) |
42 |
52 |
85 |
104 | |||
Settlement agreements (7) |
(628) |
- |
(628) |
(200) | |||
Reorganization expenses (8) |
- |
- |
- |
75 | |||
Capitalization of technology (9) |
(511) |
- |
(511) |
- | |||
Non-GAAP net loss |
$ (1,226) |
$ (1,067) |
$ (2,265) |
$ (2,423) | |||
GAAP loss per share (diluted) |
$ (0.02) |
$ (0.08) |
$ (0.07) |
$ (0.16) | |||
Stock-based compensation (1) |
0.01 |
0.01 |
0.02 |
0.02 | |||
Amortization of intangible assets (2) |
0.01 |
0.02 |
0.02 |
0.03 | |||
Adjustment to earn-out liabilities (3) |
(0.00) |
0.00 |
(0.00) |
0.01 | |||
Income taxes (4) |
(0.00) |
(0.00) |
(0.01) |
(0.01) | |||
Executive terminations (5) |
0.00 |
0.00 |
0.00 |
0.01 | |||
Adjustment to deferred revenues (6) |
0.00 |
0.00 |
0.00 |
0.01 | |||
Settlement agreements (7) |
(0.02) |
0.00 |
(0.02) |
(0.01) | |||
Reorganization expenses (8) |
0.00 |
0.00 |
0.00 |
0.00 | |||
Capitalization of technology (9) |
(0.02) |
0.00 |
(0.01) |
0.00 | |||
Non-GAAP loss per share (diluted) |
$ (0.04) |
$ (0.04) |
$ (0.07) |
$ (0.09) | |||
Numbers of shares used in computing non-GAAP loss per share (diluted) |
31,444 |
26,577 |
31,421 |
26,548 | |||
(1) Stock-based compensation |
|||||||
Cost of revenues |
$ 18 |
$ 13 |
$ 34 |
$ 25 | |||
Research and development |
73 |
74 |
137 |
147 | |||
Sales and marketing |
63 |
72 |
136 |
144 | |||
General and administrative |
116 |
198 |
226 |
345 | |||
$ 270 |
$ 357 |
$ 533 |
$ 661 | ||||
(2) Amortization of intangible assets |
|||||||
Cost of revenues |
$ 188 |
$ 235 |
$ 378 |
$ 432 | |||
Research and development |
1 |
- |
1 |
- | |||
Sales and marketing |
194 |
232 |
389 |
459 | |||
$ 383 |
$ 467 |
$ 768 |
$ 891 | ||||
(3) Adjustment to earn-out liabilities |
|||||||
General and administrative |
$ (75) |
$ - |
$ (77) |
$ - | |||
Financial expenses, net |
23 |
96 |
48 |
189 | |||
$ (52) |
$ 96 |
$ (29) |
$ 189 | ||||
(4) Income taxes |
|||||||
Deferred tax asset - tax benefit |
$ (82) |
$ (113) |
$ (165) |
$ (214) | |||
$ (82) |
$ (113) |
$ (165) |
$ (214) | ||||
(5) Executive terminations |
|||||||
General and administrative |
$ - |
$ 69 |
$ - |
$ 208 | |||
$ - |
$ 69 |
$ - |
$ 208 | ||||
(6) Adjustment to deferred revenues |
|||||||
Revenues |
$ 42 |
$ 52 |
$ 85 |
$ 104 | |||
$ 42 |
$ 52 |
$ 85 |
$ 104 | ||||
(7) Settlement agreements |
|||||||
General and administrative |
$ (628) |
$ - |
$ (628) |
$ - | |||
Other income |
- |
- |
- |
(200) | |||
$ (628) |
$ - |
$ (628) |
$ (200) | ||||
(8) Reorganization expenses |
|||||||
General and administrative |
$ - |
$ - |
$ - |
$ 75 | |||
$ - |
$ - |
$ - |
$ 75 | ||||
(9) Capitalization of technology |
|||||||
Research and development |
$ (505) |
$ - |
$ (505) |
$ - | |||
Financial expenses, net |
(6) |
- |
(6) |
- | |||
$ (511) |
$ - |
$ (511) |
$ - |
| |||
CONDENSED CONSOLIDATED BALANCE SHEETS | |||
(in thousands of U.S. dollars) | |||
|
| ||
2015 |
2014 | ||
Unaudited |
Audited | ||
Assets |
|||
Current Assets: |
|||
Cash and cash equivalents |
$ 7,870 |
$ 11,063 | |
Trade receivables, net |
3,595 |
4,444 | |
Prepaid expenses and other receivables |
2,084 |
1,019 | |
Total current assets |
13,549 |
16,526 | |
Lease deposits |
76 |
70 | |
Deferred tax assets |
- |
13 | |
Deferred issuance costs |
153 |
- | |
Severance pay fund |
575 |
594 | |
Property and equipment, net |
2,151 |
2,401 | |
Goodwill and intangible assets, net |
30,000 |
31,869 | |
Total long-term assets |
32,955 |
34,947 | |
Total assets |
|
$ 51,473 | |
Liabilities and Shareholders' Equity |
|||
Current Liabilities: |
|||
Credit line |
$ 4,492 |
$ 4,900 | |
Trade payables |
755 |
646 | |
Employees and payroll accruals |
2,082 |
2,359 | |
Deferred tax liability |
117 |
120 | |
Accrued expenses and other liabilities |
912 |
1,394 | |
Earn-out consideration |
2,868 |
2,269 | |
Deferred revenues |
3,187 |
4,097 | |
Total current liabilities |
14,413 |
15,785 | |
Deferred revenues |
1,365 |
1,042 | |
Deferred tax liability |
1,688 |
1,984 | |
Earn-out consideration |
- |
837 | |
Accrued severance pay |
690 |
666 | |
Other liabilities |
92 |
100 | |
Total long-term liabilities |
3,835 |
4,629 | |
Shareholders' equity |
28,256 |
31,059 | |
Total liabilities and shareholders' equity |
|
$ 51,473 |
| |||||||
CONDENSED CONSOLIDATED CASH FLOW DATA | |||||||
(in thousands of U.S. dollars) | |||||||
Three months ended |
Six months ended | ||||||
|
| ||||||
2015 |
2014 |
2015 |
2014 | ||||
Cash flows from operating activities: |
Unaudited |
Unaudited |
Unaudited |
Unaudited | |||
Net loss |
$ (648) |
$ (1,995) |
$ (2,318) |
$ (4,137) | |||
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: |
|||||||
Depreciation |
329 |
321 |
649 |
642 | |||
Stock-based compensation |
270 |
357 |
533 |
661 | |||
Amortization of intangible assets |
383 |
467 |
768 |
891 | |||
Accrued interest, accretion of discount and exchange rate differences on credit line |
22 |
4 |
65 |
56 | |||
Accretion and change in fair value of earn-out consideration, net |
(52) |
96 |
(29) |
189 | |||
Changes in assets and liabilities: |
|||||||
Trade receivables |
183 |
1,099 |
943 |
358 | |||
Deferred taxes |
(80) |
(18) |
(124) |
(119) | |||
Prepaid expenses and other receivables |
(312) |
310 |
(1,089) |
535 | |||
Trade payables |
(83) |
(426) |
96 |
(258) | |||
Change in long-term lease deposits |
(6) |
(7) |
(8) |
(5) | |||
Employees and payroll accruals, accrued expenses and other liabilities |
48 |
718 |
(692) |
(498) | |||
Deferred revenues |
173 |
(612) |
(607) |
(410) | |||
Accrued severance pay, net |
24 |
3 |
42 |
27 | |||
Net cash provided by (used in) operating activities |
251 |
317 |
(1,771) |
(2,068) | |||
Cash flows from investing activities: |
|||||||
Capitalization of technology, net of grants received |
(511) |
- |
(511) |
- | |||
Purchase of property and equipment |
(227) |
(212) |
(401) |
(558) | |||
Net cash used in investing activities |
(738) |
(212) |
(912) |
(558) | |||
Cash flows from financing activities: |
|||||||
Proceeds from bank loans and credit lines |
- |
1,000 |
4,400 |
2,000 | |||
Repayment of bank loans |
(73) |
- |
(4,873) |
- | |||
Deferred issuance costs |
(153) |
- |
(153) |
- | |||
Payment of earn-out consideration |
- |
(351) |
- |
(351) | |||
Proceeds from options exercised |
84 |
33 |
153 |
328 | |||
Net cash provided by (used in) financing activities |
(142) |
682 |
(473) |
1,977 | |||
Effect of exchange rate changes on cash and cash equivalents |
10 |
(10) |
(37) |
(4) | |||
Increase (decrease) in cash and cash equivalents |
(619) |
777 |
(3,193) |
(653) | |||
Cash and cash equivalents at the beginning of the period |
8,489 |
2,327 |
11,063 |
3,757 | |||
Cash and cash equivalents at the end of the period |
$ 7,870 |
$ 3,104 |
$ 7,870 |
$ 3,104 |
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