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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 8-K

  

CURRENT REPORT

 

Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934

 

Date of Report (Date of earliest event reported): August 16, 2021

  

CYREN LTD.

(Exact name of Registrant as specified in its charter)

  

Israel   000-26495   Not applicable
(State or other jurisdiction of   (Commission file number)   (I.R.S. Employer
incorporation or organization)       Identification No.)

 

10 Ha-Menofim St., 5th Floor    
Herzliya, Israel   4672561
(Address of principal executive offices)   (Zip Code)

 

011–9729–863–6888

(Registrant’s telephone number, including area code)

  

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

  Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

  Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

  Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

  Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of Each Class   Trading Symbol(s)   Name of Each Exchange on Which Registered
Ordinary Shares, par value ILS 0.15 per share   CYRN   Nasdaq Capital Market

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

 

Emerging growth company

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

 

 

 

Item 2.02 Results of Operations and Financial Condition

 

On August 16, 2021, Cyren Ltd. issued a press release announcing its financial and operational results for the second quarter ended June 30, 2021. A copy of the press release is attached hereto as Exhibit 99.1.

 

All information in Item 2.02 of this Form 8-K and in Exhibit 99.1 attached hereto is furnished but not filed.

 

Item 9.01 Financial Statements and Exhibits.

 

(d) Exhibits

 

Exhibit No.   Description of Exhibits
     
99.1   Press Release of Cyren Ltd. Dated August 16, 2021
104  

Cover Page Interactive File (the cover page tags are embedded within the Inline XBRL document). 

 

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SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

  CYREN LTD.
   
Date: August 16, 2021 /s/ Kenneth Tarpey
  Kenneth Tarpey
  Chief Financial Officer

 

 

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Exhibit 99.1

 

PRESS RELEASE    

  

 

Cyren Announces Second Quarter 2021 Financial Results

- - -

 

Cyren Inbox Security, Anti-Phishing for the Enterprise, Achieves Record ARR Growth

 

McLean, Va. – August 16, 2021 – Cyren (NASDAQ: CYRN) today announced its second quarter 2021 financial results for the period ending June 30, 2021.

 

During the second quarter, Cyren reported quarterly revenues of $7.6 million, compared to $9.2 million during the second quarter of 2020. GAAP net loss for the quarter was $5.6 million, compared to the $4.6 million net loss reported during the second quarter of 2020, due to lower revenues, partially offset by lower operating expenses compared to the prior year.

 

“While overall revenues declined year-over-year, this decline was predominantly within our legacy threat intelligence services OEM business. Churn in the quarter was very low and customer satisfaction has never been higher. However, we had some anticipated customer contract reductions, with some occurring in 2020, that impacted the year-over-year comparison”, said Brett Jackson, CEO of Cyren.

“In our opinion, the key Q2 highlight for shareholders, however, is the significant acceleration of our new enterprise anti-phishing business, led by our Cyren Inbox Security offering. This acceleration was driven by an increase in customer order volume which resulted in new and expansion ARR growth of approximately 240% from Q1 2021. We believe this acceleration is likely to continue in Q3 based on the strength of our pipeline and the number of customer orders closed quarter-to-date.”

“As we have mentioned in prior calls, Cyren’s biggest growth opportunity is helping enterprise customers effectively deal with the constant stream of phishing attacks and business email compromise attempts. We believe our Q2 results and exceptional win rate validate the effectiveness and competitive differentiation of Cyren Inbox Security and its ability to quickly solve enterprise customers’ phishing problems. Management will continue to focus on investing in and developing this new, high-growth revenue stream and its potential to drive shareholder value.”

 

Second Quarter 2021 Financial Highlights:

 

· Revenues for the second quarter of 2021 were $7.6 million, compared to $9.2 million during the second quarter of 2020.
· GAAP net loss for the second quarter of 2020 was $5.6 million, compared to a net loss of $4.6 million in the second quarter of 2020.
· GAAP loss per basic and diluted share for the second quarter of 2021 was $0.07, compared to a loss of $0.08 per basic and diluted share for the second quarter of 2020.
· Non-GAAP net loss for the second quarter of 2021 was $4.5 million, compared to a Non-GAAP net loss of $3.8 million for the second quarter of 2020.
· Non-GAAP loss per basic and diluted share was $0.06 for the Q2 2021, compared to a Non-GAAP loss of $0.06 per share in Q2 2020.
· Cash used in operating activities during the second quarter of 2021 was $2.3 million, compared to cash provided by operating activities of $2.5 million during the second quarter of 2020, largely driven by an increase in net loss, a decline in deferred revenue driven by the receipt of a multi-year, multi-million dollar prepayment from one of our largest customers in the first quarter of 2019 and a decline in deferred revenue due to downsells on various customer renewals.
· Net cash flow for the second quarter of 2021 was negative $2.5 million, compared to positive $1.1 million during the second quarter of 2020.
· Cash and cash equivalents balance as of June 30, 2021, was $13.9 million, compared to $9.3 million as of December 31, 2020.

 

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.”

 



Financial Results Conference Call:

The company will host a conference call at 4:30 p.m. a.m. Eastern Time (11:30 p.m. Israel Time) on Monday, August 16, 2021 to discuss second 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://www.webcast-eqs.com/cyren_08162021/en.

 

For those unable to participate in the live conference call, a replay will be available until August 30, 2021. 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 13722129. 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

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
Kenneth Tarpey, CFO
Cyren
+1.703.760.3435
kenneth.tarpey@cyren.com

 

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   CYREN LTD. 

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

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

                 

    Three months ended     Six months ended  
    June 30     June 30  
    2021     2020     2021     2020  
    Unaudited     Unaudited     Unaudited     Unaudited  
 Revenues   $ 7,609     $ 9,181     $ 16,366     $ 18,830  
   Cost of revenues     3,805       3,778       7,600       7,376  
Gross profit     3,804       5,403       8,766       11,454  
Operating expenses:                                
   Research and development, net     4,110       4,151       8,360       7,495  
   Sales and marketing     2,731       3,146       5,369       6,182  
   General and administrative     2,305       2,476       4,465       4,690  
Total operating expenses     9,146       9,773       18,194       18,367  
Operating loss     (5,342 )     (4,370 )     (9,428 )     (6,913 )
  Other income, net     1       2       (17 )     8  
   Financial expenses, net     (287 )     (290 )     (501 )     (521 )
Loss before taxes     (5,628 )     (4,658 )     (9,946 )     (7,426 )
   Tax benefit     40       44       161       61  
Net loss   $ (5,588 )   $ (4,614 )   $ (9,785 )   $ (7,365 )
Loss per share - basic and diluted   $ (0.07 )   $ (0.08 )   $ (0.14 )   $ (0.12 )
Weighted average number of shares outstanding:                                
Basic and Diluted     75,484       60,041       71,996       59,862  

 

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CYREN LTD.

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  
    June 30     June 30  
    2021     2020     2021     2020  
    Unaudited     Unaudited     Unaudited     Unaudited  
                         
GAAP gross profit   $ 3,804     $ 5,403     $ 8,766     $ 11,454  
GAAP gross margin     50 %     59 %     54 %     61 %
Plus:                                
Stock-based compensation expense     83       20       104       64  
Amortization of intangible assets     658       593       1,325       1,024  
Non-GAAP gross profit     4,545       6,016       10,195       12,542  
Non-GAAP gross margin     60 %     66 %     62 %     67 %
                                 
GAAP operating loss     (5,342 )     (4,370 )     (9,428 )     (6,913 )
Plus:                                
Stock-based compensation expense     548       507       1,005       1,152  
Amortization of intangible assets     734       723       1,476       1,283  
Capitalization of technology     (88 )     (389 )     (239 )     (1,602 )
Non-GAAP operating loss     (4,148 )     (3,529 )     (7,186 )     (6,080 )
                                 
GAAP net loss     (5,588 )     (4,614 )     (9,785 )     (7,365 )
Plus:                                
Stock-based compensation expense     548       507       1,005       1,152  
Amortization of intangible assets     734       723       1,476       1,283  
Amortization of deferred tax assets     (55 )     (48 )     (109 )     (96 )
Capitalization of technology     (99 )     (414 )     (262 )     (1,657 )
Non-GAAP net loss   $ (4,460 )   $ (3,846 )   $ (7,675 )   $ (6,683 )
                                 
Numerator for non-GAAP EPS calculation   $ (4,460 )   $ (3,846 )   $ (7,675 )   $ (6,683 )
Non-GAAP net loss per share   $ (0.06 )   $ (0.06 )   $ (0.11 )   $ (0.11 )
                                 
GAAP weighted-average shares used to                                
compute net loss per share     75,484       60,041       71,996       59,862  

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CYREN LTD.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands of U.S. dollars)

       

             
    June 30     December 31  
    2021     2020  
      Unaudited          
                 Assets                
Current Assets:                
Cash and cash equivalents   $ 13,885     $ 9,296  
Trade receivables, net     1,410       960  
Deferred commissions     989       980  
Prepaid expenses and other receivables     1,615       779  
 Total current assets     17,899       12,015  
                 
Long-term deferred commissions     938       1,125  
Long-term lease deposits and prepaids     870       937  
Operating lease right-of-use assets     9,852       10,900  
Severance pay fund     808       745  
Property and equipment, net     3,248       3,948  
Intangible assets, net     6,536       7,797  
Goodwill     21,022       21,476  
 Total long-term assets     43,274       46,928  
Total assets   $ 61,173     $ 58,943  
                 
                 Liabilities and Shareholders’ Equity                
Current Liabilities:                
Trade payables   $ 1,361     $ 799  
Convertible notes     10,000       10,000  
Employees and payroll accruals     3,898       3,813  
Accrued expenses and other liabilities     907       1,420  
Operating lease liabilities     1,782       1,983  
Deferred revenues     6,791       6,934  
 Total current liabilities     24,739       24,949  
                 
Deferred revenues     524       644  
Convertible debentures     8,497       9,248  
Long-term operating lease liabilities     8,894       9,866  
Deferred tax liability     472       655  
Accrued severance pay     902       838  
Other liabilities     527       706  
Total long-term liabilities     19,816       21,957  
                 
Shareholders’ equity     16,618       12,037  
Total liabilities and shareholders’ equity   $ 61,173     $ 58,943  

 

 

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CYREN LTD.

CONDENSED CONSOLIDATED CASH FLOW DATA

(in thousands of U.S. dollars)

               

 

                         
    Three months ended     Six months ended  
    June 30     June 30  
    2021     2020     2021     2020  
Cash flows from operating activities:   Unaudited     Unaudited     Unaudited     Unaudited  
                         
Net loss   $ (5,588 )   $ (4,614 )     (9,785 )   $ (7,365 )
                                 
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:                                
(Gain) / loss on disposal of property and equipment     (1 )     26       17       13  
Depreciation     528       597       1,091       1,215  
Stock-based compensation     548       507       1,005       1,152  
Amortization of intangible assets     733       723       1,475       1,283  
Amortization of deferred commissions     328       452       653       803  
Non-cash operating lease expense     464       534       930       922  
Interest on convertible notes     143       142       285       283  
Interest and amortization of debt issuance costs on Convertible Debentures     167       187       343       211  
Deferred taxes, net     (44 )     (54 )     (168 )     (118 )
                                 
Changes in assets and liabilities:                                
Trade receivables     (682 )     490       (471 )     (162 )
Prepaid expenses and other receivables     (794 )     (57 )     (792 )     (383 )
Deferred commissions     (266 )     (276 )     (474 )     (664 )
Change in long-term lease deposits and prepaids     18       28       20       (86 )
Trade payables     185       (159 )     247       (114 )
Employees and payroll accruals, accrued expenses and other liabilities     (372 )     444       (548 )     (47 )
Deferred revenues     2,592       4,062       (182 )     1,989  
Accrued severance pay, net     23       24       2       1  
Operating lease liabilities     (333 )     (534 )     (1,064 )     (954 )
Other long-term liabilities     6       10       (180 )     163  
Net cash provided by (used in) operating activities     (2,345 )     2,532       (7,596 )     (1,858 )
                                 
Cash flows from investing activities:                                
                                 
Proceeds from sale of property and equipment     3       2       5       4  
Capitalization of technology     (100 )     (588 )     (252 )     (1,589 )
Purchase of property and equipment     (115 )     (880 )     (133 )     (1,438 )
Net cash used in investing activities     (212 )     (1,466 )     (380 )     (3,023 )
                                 
Cash flows from financing activities:                                
                                 
Proceeds from Convertible Debenture, net of debt issuance costs     -         -         -         9,442  
Proceeds from stock issuance, net of costs     -         -         12,588       -    
Net cash provided by financing activities     -         -         12,588       9,442  
Effect of exchange rate changes on cash     8       (7 )     (22 )     (13 )
Increase (decrease) in cash, cash equivalents and restricted cash     (2,549 )     1,059       4,590       4,548  
Cash, cash equivalents and restricted cash at the beginning of the period     17,053       15,616       9,914       12,127  
Cash, cash equivalents and restricted cash at the end of the period   $ 14,504     $ 16,675     $ 14,504     $ 16,675  
                                 
Reconciliation of cash, cash equivalents and restricted cash as shown in the consolidated statements of cash flow:                                
Cash and cash equivalents   $ 13,885     $ 16,103     $ 13,885     $ 16,103  
Restricted cash included in long-term restricted lease deposits     619       572       619       572  
                                 
Total cash, cash equivalents and restricted cash   $ 14,504     $ 16,675     $ 14,504     $ 16,675  

 

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