Cyren Announces Second Quarter 2021 Financial Results

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

MCLEAN, VA / ACCESSWIRE / 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

 
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 
                 
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 
                 
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 
         
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 
                 

SOURCE: Cyren Ltd



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