Cyren Ltd. (CYRN) 10-Q Quarterly Report May 2019

During the first quarter, Cyren reported quarterly revenues of $9.7 million – an increase of 26% over the first quarter of 2018. Annual recurring revenue from Cyren’s enterprise business finished the quarter at $6.8 million compared to $4.8 million at the end of Q1 2018, representing a 41% annual increase.

“We are pleased with the company’s financial results during the first quarter,” said Lior Samuelson, Chairman of the Board at Cyren. “We experienced continued demand for Cyren’s email security solutions, which translated to solid year-over-year top line growth. More importantly, I feel like we have built a solid foundation for future growth, and look forward to working with Cyren’s next CEO to take the company to new heights.”

Following Cyren’s previously announced CEO transition plan, on April 24, the company announced that Brett Jackson was appointed by Cyren’s Board to serve as the company’s next CEO, who started in the position on May 6. Mr. Jackson will be introduced by Mr. Samuelson on the company’s first quarter financial results conference call on May 15.

First Quarter 2019 Financial Highlights:

Revenues for the first quarter of 2019 were $9.7 million, compared to $7.7 million during the first quarter of 2018, and $9.5 million last quarter.

GAAP net loss for the first quarter of 2019 was $4.6 million, compared to a net loss of $5.2 million in the first quarter of 2018.

GAAP loss per basic and diluted share for the first quarter of 2019 was $0.08, compared to a loss of $0.10 per basic and diluted share for the first quarter of 2018.

Non-GAAP net loss for the first quarter of 2019 was $4.4 million, compared to a Non-GAAP net loss of $4.8 million for the first quarter of 2018.

Non-GAAP loss per basic and diluted share was $0.08 for the first quarter of 2019, compared to a Non-GAAP loss of $0.09 per share in first quarter of 2018.

Operating cash flow during the first quarter of 2019 was negative $1.3 million, compared to operating cash flow of negative $4.2 million during the first quarter of 2018.

Net cash flow for the first quarter of 2019 was negative $5.1 million, compared to negative $5.7 million during the first quarter of 2018.

Cash balance as of March 31, 2019 was $12.4 million, compared to $17.6 million as of December 31, 2018.

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 Business Highlights:

In April, Cyren announced the appointment of Brett Jackson as the company’s new Chief Executive Officer. Mr. Jackson is an experienced, growth-oriented CEO and has led and scaled multiple companies in the security and analytics markets. He was unanimously approved by Cyren’s board of directors.

Cyren was recently honored in the Cybersecurity Excellence Awards, with its cloud-based Cyren EmailSecurity winning a first-place gold award in the email security category against six other finalists. This is the third year in a row that Cyren products have been recognized in the Cybersecurity Excellence Awards.

In January, Cyren announced a partnership with Microsoft to integrate its web security technology directly into Windows Defender Advanced Threat Protection (ATP). The offering is initially being launched in a private preview with a select set of enterprise customers during the second quarter of 2019, with the goal of reaching general availability for all Windows Defender ATP customers later in the year.

Financial Results Conference Call:

The company will host a conference call at 10 a.m. Eastern Time (5 p.m. Israel Time) on Wednesday, May 15, 2019 to discuss first 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://webcasts.eqs.com/cyren20190515.

For those unable to participate in the live conference call, a replay will be available until May 29, 2019. 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 13690390. 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 100% cloud security solutions to protect them against cyber attacks and data loss every day. Powered by the world's largest security cloud, Cyren (NASDAQ: CYRN) delivers fast time-to-protection with award-winning email security, cloud sandboxing and DNS filtering services for business, and threat intelligence solutions for service providers and security vendors like Microsoft, Google and Check Point. 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

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 our CEO transition, 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

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						Three months ended
	March 31						March 31
	2019			2018			2019			2018
	Unaudited			Unaudited			Unaudited			Unaudited

Revenues	$	9,655		$	7,636		$	9,655		$	7,636

Cost of revenues		4,000			3,382			4,000			3,382

Gross profit		5,655			4,254			5,655			4,254

Operating expenses:

Research and development, net		4,177			3,355			4,177			3,355

Sales and marketing		3,856			4,145			3,856			4,145

General and administrative		2,432			2,038			2,432			2,038

Total operating expenses		10,465			9,538			10,465			9,538

Operating loss		(4,810	)		(5,284	)		(4,810	)		(5,284	)

Other income (expense), net		248			(2	)		248			(2	)

Financial expense, net		(53	)		4			(53	)		4

Loss before taxes		(4,615	)		(5,282	)		(4,615	)		(5,282	)

Tax benefit		39			46			39			46

Net loss	$	(4,576	)	$	(5,236	)	$	(4,576	)	$	(5,236	)

Loss per share - basic	$	(0.08	)	$	(0.10	)	$	(0.08	)	$	(0.10	)

Loss per share - diluted	$	(0.08	)	$	(0.10	)	$	(0.08	)	$	(0.10	)

Weighted average number of shares outstanding:
Basic		54,177			53,381			54,177			53,381

Diluted		54,177			53,381			54,177			53,381

CYREN LTD.

RECONCILIATION OF SELECTED GAAP MEASURES TO NON-GAAP MEASURES

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

	Three months ended						Three months ended
	March 31						March 31
	2019			2018			2019			2018
	Unaudited			Unaudited			Unaudited			Unaudited

GAAP gross profit	$	5,655		$	4,254		$	5,655		$	4,254
GAAP gross margin		59	%		56	%		59	%		56	%
Plus:
Stock-based compensation		29			31			29			31
Amortization of intangible assets		839			852			839			852
Non-GAAP gross profit		6,523			5,137			6,523			5,137
Non-GAAP gross margin		68	%		67	%		68	%		67	%

GAAP operating loss		(4,810	)		(5,284	)		(4,810	)		(5,284	)
Plus:
Stock-based compensation		269			323			269			323
Amortization of intangible assets		963			1,009			963			1,009
Capitalization of technology		(742	)		(877	)		(742	)		(877	)
Non-GAAP operating loss		(4,320	)		(4,829	)		(4,320	)		(4,829	)

GAAP net loss		(4,576	)		(5,236	)		(4,576	)		(5,236	)
Plus:
Stock-based compensation expense		269			323			269			323
Intangible amortization expense		963			1,009			963			1,009
Adjustment to earn-out liabilities		-			27			-			27
Amortization of deferred tax assets		(57	)		(64	)		(57	)		(64	)
Gain from an earn-out liability settlement		(256	)		-			(256	)		-
Capitalization of technology		(770	)		(877	)		(770	)		(877	)
Non-GAAP net loss	$	(4,427	)	$	(4,818	)	$	(4,427	)	$	(4,818	)

Numerator for non-GAAP EPS calculation	$	(4,427	)	$	(4,818	)	$	(4,427	)	$	(4,818	)
Non-GAAP net loss per share	$	(0.08	)	$	(0.09	)	$	(0.08	)	$	(0.09	)

GAAP weighted-average shares used to compute net loss per share		54,177			53,381			54,177			53,381

CYREN LTD.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands of U.S. dollars)

	March 31		December 31
	2019		2018
	Unaudited		Audited
Assets
Current Assets:
Cash and cash equivalents	$	12,444	$	17,571
Trade receivables, net		3,024		3,658
Deferred commissions		909		887
Prepaid expenses and other receivables		1,472		778
Total current assets		17,849		22,894

Long-term deferred commissions		1,783		1,880
Lease deposits		812		821
Operating lease right-of-use assets		9,675		-
Severance pay fund		541		503
Property and equipment, net		4,692		4,608
Intangible assets, net		8,554		8,802
Goodwill		20,262		20,519
Total long-term assets		46,319		37,133
Total assets	$	64,168	$	60,027

Liabilities and Shareholders’ Equity
Current Liabilities:
Trade payables	$	1,270	$	1,668
Employees and payroll accruals		3,375		3,959
Accrued expenses and other liabilities		1,343		910
Operating lease liabilities		1,277		-
Earn-out consideration		-		2,926
Deferred revenues		5,498		5,773
Total current liabilities		12,763		15,236

Deferred revenues		3,242		503
Convertible notes		10,000		10,000
Long-term operating lease liabilities		8,724		-
Deferred tax liability		1,045		1,130
Accrued severance pay		677		598
Other liabilities		347		700
Total long-term liabilities		24,035		12,931

Shareholders’ equity		27,370		31,860
Total liabilities and shareholders’ equity	$	64,168	$	60,027

CYREN LTD.

CONDENSED CONSOLIDATED CASH FLOW DATA

(in thousands of U.S. dollars)

	Three months ended						Three months ended
	March 31						March 31
	2019			2018			2019			2018
Cash flows from operating activities:	Unaudited			Unaudited			Unaudited			Audited

Net loss	$	(4,576	)	$	(5,236	)	$	(4,576	)	$	(5,236	)

Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Loss on disposal of property and equipment		1			-			1			-
Depreciation		461			455			461			455
Stock-based compensation		269			323			269			323
Amortization of intangible assets		966			1,009			966			1,009
Amortization of deferred commissions		(332	)		242			(332	)		242
Amortization of operating lease right-of-use assets		351			-			351			-
Interest on convertible notes		140			-			140			-
Other expenses (income) related to the earn-out consideration		(256	)		27			(256	)		27
Deferred taxes, net		(69	)		(47	)		(69	)		(47	)

Changes in assets and liabilities:
Trade receivables		678			587			678			587
Prepaid expenses and other receivables		(738	)		(659	)		(738	)		(659	)
Deferred commissions		407			(359	)		407			(359	)
Change in long-term lease deposits		20			(3	)		20			(3	)
Trade payables		(405	)		(39	)		(405	)		(39	)
Employees and payroll accruals, accrued expenses and other liabilities		(274	)		(252	)		(274	)		(252	)
Deferred revenues		2,463			(509	)		2,463			(509	)
Accrued severance pay, net		41			8			41			8
Operating lease liabilities		(365	)		-			(365	)		-
Other long-term liabilities		(111	)		61			(111	)		61
Net cash provided by (used in) operating activities		(1,329	)		(4,392	)		(1,329	)		(4,392	)

Cash flows from investing activities:

Capitalization of technology, net of grants received		(627	)		(662	)		(627	)		(662	)
Purchase of property and equipment		(544	)		(822	)		(544	)		(822	)
Net cash used in investing activities		(1,171	)		(1,484	)		(1,171	)		(1,484	)

Cash flows from financing activities:

Payment of earnout liability		(2,680	)		-			(2,680	)		-
Proceeds from options exercised		189			19			189			19
Net cash provided by (used in) financing activities		(2,491	)		19			(2,491	)		19
Effect of exchange rate changes on cash		(126	)		36			(126	)		36
Increase (decrease) in cash, cash equivalents and restricted cash		(5,117	)		(5,821	)		(5,117	)		(5,821	)
Cash, cash equivalents and restricted cash at the beginning of the period		18,156			24,228			18,156			24,228
Cash, cash equivalents and restricted cash at the end of the period	$	13,039		$	18,407		$	13,039		$	18,407

Reconciliation of cash, cash equivalents and restricted cash as shown in the consolidated statements of cash flow:
Cash and cash equivalents	$	12,444		$	17,940		$	12,444		$	17,940
Restricted cash included in long-term restricted lease deposits		595			467			595			467

Total cash, cash equivalents and restricted cash	$	13,039		$	18,407		$	13,039		$	18,407

The following information was filed by Cyren Ltd. (CYRN) on Wednesday, May 15, 2019 as an 8K 2.02 statement, which is an earnings press release pertaining to results of operations and financial condition. It may be helpful to assess the quality of management by comparing the information in the press release to the information in the accompanying 10-Q Quarterly Report statement of earnings and operation as management may choose to highlight particular information in the press release.

Please wait while we load the requested 10-Q report or click the link below:

https://last10k.com/sec-filings/report/1084577/000121390019008867/f10q0319_cyrenltd.htm

View differences made from one quarter to another to evaluate Cyren Ltd.'s financial trajectory

Compare SEC Filings Year-over-Year (YoY) and Quarter-over-Quarter (QoQ) — *Sample 10-K Year-over-Year (YoY) Comparison*

Compare this 10-Q Quarterly Report to its predecessor by reading our highlights to see what text and tables were ~~removed~~ , added and changed by Cyren Ltd..

Continue

Assess how Cyren Ltd.'s management team is paid from their Annual Proxy

Cyren Ltd.'s Definitive Proxy Statement (Form DEF 14A) filed after their 2019 10-K Annual Report includes:

Voting Procedures
Board Members
Executive Team
Salaries, Bonuses, Perks
Peers / Competitors

Continue

Rating
Learn More

Filter Sentiment:

All

Positive

Negative

Filter Category:

All

Legal

Revenue

Financial

Other

Filter Subcategory:

All

Product

Expense

Cash Flow

Earnings

Debt

Income

Other

Inside Cyren Ltd.'s 10-Q Quarterly Report:

Legal - Other Highlight
Pursuant to the judgement, the earn-out consideration balance was increased to reflect additional legal expenses and interest expenses covering the period up to December 31, 2016.

Revenue - Product Highlight
The decrease in sales and marketing expense was primarily due to a reduction of overall sales and marketing headcount from 65 employees to 59 employees at the end of the first quarter 2019, as well as a reduction in overall marketing spend related to advertising and industry trade shows.
Financial - Expense Highlight
The increase in operating expenses was primarily due to an increase in employee headcount, captured in cost of revenues and operating expenses, which totaled 272 employees at the end of March 31, 2019, compared to 247 employees at the end of March 31, 2018.
Financial - Expense Highlight
During the period, there was a slight decrease in amortization of capitalized development expenses for the three months ended March 31, 2019 to $0.8 million from $0.9 million during the prior year.
Financial - Cash Flow Highlight
The decrease in working capital during the three months ended March 31, 2019 as compared to the prior year is primarily due to our negative cash flow from operations and lower amounts of capital raised during the fourth quarter of 2018 compared to amounts of capital raised during the fourth quarter of 2017.
Financial - Expense
The increase in G&A; expense...Read more
Financial - Earnings
Over time, we expect that...Read more
Financial - Earnings
Finally, we continue to increase...Read more
Financial - Expense
Our SaaS solutions are easy...Read more
Other - Other
While many businesses are still...Read more
Financial - Expense
Development costs related to internal...Read more
Revenue - Product
The return on our sales...Read more
Financial - Expense
The increase in cost of...Read more
Other - Other
For most of our recent...Read more
Revenue - Product
Our future capital requirements will...Read more
Financial - Expense
Financial expenses, net, increased by...Read more
Financial - Expense
We expect operating expenses to...Read more
Revenue - Product
Revenues increased by $2.0 million...Read more
Other - Other
Accordingly, our Board approved a...Read more
Financial - Debt
This registration statement enabled us...Read more
Financial - Income
Other income (expense), net consists...Read more
Financial - Shares
The Notes have a conversion...Read more
Financial - Expense
We expect our general and...Read more
Financial - Expense
Approximately $0.2 million of the...Read more
Other - Other
These increases were offset by...Read more
Revenue - Product
As this enterprise business grows...Read more
Other - Other
If we are unable to...Read more
Other - Other
We believe these investments are...Read more
Revenue - Product
Nonetheless, we expect to increase...Read more
Financial - Expense
Personnel costs, which consist of...Read more
Financial - Expense
Overall operating expenses increased by...Read more
Financial - Expense
We expect R&D; expenses to...Read more
Financial - Expense
Other costs include third party...Read more
Other - Other
Cyren?s cloud security services are...Read more

Financial Statements, Disclosures and Schedules

Inside this 10-Q Quarterly Report

Material Contracts, Statements, Certifications & more

Cyren Ltd. provided additional information to their SEC Filing as exhibits

Exhibit 31.1: Certification By The Chief Executive Officer Pursuant To Section 302 Of The Sarb

Exhibit 31.2: Certification By The Chief Financial Officer

Exhibit 32.1: Certification Pursuant To 18 U.S.C. Section 1350, As Adopted Pursuant To Section

Ticker: CYRN
CIK: 1084577
Form Type: 10-Q Quarterly Report
Accession Number: 0001213900-19-008867
Submitted to the SEC: Wed May 15 2019 4:58:19 PM EST
Accepted by the SEC: Wed May 15 2019
Period: Sunday, March 31, 2019
Industry: Prepackaged Software