CYRN - Earnings call transcript Q3 2017

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Operator

Good day, and welcome to the Cyren Ltd.

Third Quarter 2017 Results Conference Call. Today’s conference is being recorded. At this time, I would like to turn the conference over to Eric Spindel, Cyren General Counsel. Please go ahead, sir.

Eric Spindel

to financial call results. welcome third discuss and XXXX quarter you our to conference Cyren’s Thank the This can the of be is accessed website. call being on Investor broadcast Relations live and Cyren section

from is obligation not non-GAAP course the Reconciliation does filings, to let report Before conference the April the our and XX-F to conference provided most and should of the as talking during be the the considered management earnings the we of of and are any outlook tables of, forward-looking the expectations. materially these addition statements a are company’s this the about available GAAP investors the outlined management differ when statements Also, Factor Risk of measures. directly for of in discuss me we may Factors. revise we instead statements based financial in call, and to for Cyren’s GAAP actual on that benefit comparable website. begin, release present light in future. today any remind measures measures forward-looking Risk that may measures this undertake performance. not current and These risks that the These Investor forward-looking issued including course Safe today are financial Please our call, should press section in on Relations statements. are during forward-looking to Harbor section of included make in risks subject on in number uncertainties you note cause may be are XX, of of filed on the and SEC These XXXX. results that Any annual considered our please Form also expectations

the statement are offer At not sell offer statement a offer neither SEC, will carefully related tender to transmittal tender planned filed a to planned Finally, today’s to will purchase offer file The the of a tender solicitation/recommendation solicitation is be tender planned materials an expense securities. XXD-X, and be tender with an is the any will a yet the call should Cyren’s for that made to tender offer Schedule purchase, respect offer in to commenced. read to available planned contain before offer securities offer. offer. important tender on the by of offer letter to Those solicitation/recommendation documents Schedule making at nor Warburg an including other references statements planned with be on commenced, stockholders tender and on the tender will time The the statement Cyren decision no Pincus TO information them. and offer

documents charge all me SEC’s Lior. call to today Mike are Officer. offer In With over and of the Officer; call Cyren’s Financial made with to the Mr. on available the the like Chief now be on those addition, hand will Samuelson, With all www.sec.gov. Mr. and Myshrall, SEC at filed materials I no Lior at website tender other will Chairman that, Executive and Chief

Lior Samuelson

the was on cloud our and we third results. business. everyone quarter XXXX call quarter an enterprise to discuss welcome and QX build grow today as Eric Cyren you, Thank to continue for as we outstanding Cyren

Warburg would get on firm strategic the like to we third equity private we’ve focused a about Before results investment investing. into quarter we announcement Pincus, made week I growth the from last to the global refer received

third to These set a private the November we Warburg placement. quarter. Pincus press As funds issued million QX detailed raised included helps release the Cyren in $XX.X our the discuss investment not are this to in approximately backdrop strategic results, in for but X,

tender offer. announced of partially through Cyren’s XX% to diluted a to addition, outstanding its shares intention In up special Pincus Warburg acquire

enterprise XX web, business, and our During the new Cyren Security traction of to the customers third quarter, adding we security. Cloud email, gain over DNS in continue platform to

does our so size grows installed the size base of As customers. our of the too

XX,XXX During professional a a from organization expansion advance quarter, including the active service accounts software protect over attacks well global XXX,XXX day Cyren third we XXX,XXX an email had was with an of and large number zero seats, to using contract malware. a wins with phishing, company employees institution and

of increased to in were over links, blocked XXX% larger that XX,XXX size zero-day and products During all point to account X,XXX improve security. phishing, from easily have XX% opportunities signatures. average taking practically continue to results that malware the X,XXX been by order protection. are like our compared particular These in a their up able these messages many on security GAAP outbreak security quarter. well-known closed, no By at contain phishing would messages The market, but analysis X growth Cyren. to over to messages into think EmailSecurity companies. a with Cyren that in malware. XXX% harmful have tool phishing almost results were like determine over and malicious Ransomware Over were by vendors blocking the integrate utilizing look X.X spam they would quarter by not and have in that I live opportunities that seat XX over email them of out were so-called other indicative closer winning or is They the new and over our emails through email by Cyren detection that cloud eliminate interesting, we emails utilizing day was email almost the a service. emails, their and enterprise generally including protection, illustrate order time-of-click This institution plus pipeline. malware well-known quite serious ran protection, what period to Cyren been or email potential buy security malicious problems malware found This by enterprise was let was we and caught the institution a is today’s email parameter. implementing seat that vendor we’re new the previous security security customers we I’d Cyren’s potentially getting inferior malware through delivered general which contain Cyren messages million its million should dangerous spam already

develop security other hand, the in data, best engines results we is security the our which and we own On what in the believe market.

be management. of in a achieved and leaves of mature on the mobile email Our Cloud web notable to our EmailSecurity of offers their cost outlook cloud. along platform most Cyren are their device. flexible with email best the with plug-ins that integrated and email to results email in email a browser, a policy regulatory was and continues complete This version The web, in DNS enhancements the archive of Security X.X the security. email role-based We industry-leading archiving, recently folder seconds. same self-service, which features. archiving integrate launched with no and number no platform, administrators. brings compliance management, service Cyren archiving access, time-to-protection simplifies the Search administrators archiving with that management and returned retention control support and burden servers The capability ownership addition solution low Cyren requires reduces of or simplifies in can which significantly protection Users the software that cloud. email hardware, Fully requires additional access

mixed. Threat third our results Intelligence were quarter business The in

customers impact year, won North customers. service detailed large and one including during in launched As America’s last service early on expanded we these providers a largest our we two to our one contracts, of dramatically small which the one had Only technology relatively to revenue. call, third quarter, of cloud of a the QX contract largest

second we and this revenue is price to several Cyren that customers previously negative weren’t impact on QX, discussed willing quarter. earlier absorb a during so The year, or launch also to contract begin terminated Intelligence as scheduled from the with unable the will showed during customer But fourth during this Threat revenue contracts increase, to third material quarter. we who recognize

to upside several is an believe Intelligence with have this pipeline Threat business the and in decline there we However, in opportunities offset quarters. future large opportunity the in significant

call, week, of of Pincus. the we outset an at mentioned announced I this As Warburg last investment

As nine Brian from which Cyren. Cyren investment, added the Cary Brian directors directors deal the been are who’ve to Pincus Cary part two of in were both is with to two Chang, We board grows entitled who Davis and board. and of The Directors, the designate Warburg directors. closing to seven welcome to the Board instrumental to

announced commenced. SEC Tender of Securities Offer contained and the the to a with tender the this Pincus. Warburg between In of in terms Upon to will Pincus offer of at shareholders order the XX% file subject offer to Pincus Cyren’s be favor in Cyren complete offer Board is further of both tender offer in on Statement, Warburg the solicitation/recommendation of XXD-X. recommend Offer Warburg review statement Cyren which shares the terms Schedule tendering the of of their resolved the the The its file shares. to Authorities diluted purchase and offer Cyren’s will a agreement to maximum the Directors addition, outstanding to up is when conditions and tender Israeli partially a its will Statement, special increase unable Tender comment in time. in Cyren intention ownership with launch of Cyren

call foreseeable a be successful future. the to for will Mike? results. tender company offer, However, hand completion publicly to financial the Cyren upon of Cyren’s through over to that go third Mike remain it should even the expects now I noted traded quarter

Mike Myshrall

am good and financial review the of you everyone with quarter morning our I Lior, pleased on third to call. XXXX a provide results. you, Thank to

basis, nonoperating GAAP to release of For non-GAAP reconciliation Investor note items. on for a third more financials discuss today’s for revenue the financial of including today, which metrics certain press of the quarter nonoperating and of GAAP which Relations on third refer was quarter. XXXX standards, U.S. section items, refer $X.X excludes $X.X last please a $X.X that GAAP compared we our million million press earlier Please million posted website. our quarter non-GAAP state results. under Please XXXX our accounting to detailed will release the those and we during to issued that results, to I is the

half As on and mostly year were second call, in XXXX. the earlier the in earlier Lior last sequential the and timing still decline Threat new is we described highlighted from terminated ramping of revenues to are on contracts the that Intelligence the contracts that attributed

During The over average seats. included increase our Lior quarter, was over both the over as the bookings and in XXX%. growth XXX% new up several seats, primarily by deals mentioned, value in the X,XXX enterprise business up of quarter, number by order was dollar previous driven previous size, of size over the and quarter, substantially deal third in an over terms large

gross of Many these the over XX% are and early the XX% G&A. contributed the this quarter, deployment enterprise new the $X.X for non-GAAP last revenues not in GAAP of up-sell last material down the business their over slightly were customers relatively expenses sales for GAAP – $X.X up of and XX% third did quarter. million of the quarter marketing quarter During and excuse XXXX as QX GAAP on were ongoing quarter margins compared to to the to remain accounted in million centers and to expenses our quarter. therefore, third but for the have of third during compared bookings. basis, excludes $X.X reported operating third during stages a revenues, impact and $X.X third $X.X last this million quarter. relatively of compared margins XX% and $X totaled constant. and gross quarter. million, quarter sales XXXX last XXXX me, This during cost XX% quarter third during in has $X.X quarter includes R&D million of million million, XXXX quarter quarter. were during to expenses $X.X at XX% maintaining remained GAAP data million R&D, compared from of flat compared the XX% cost of On last XX% and quarter a the

compared at GAAP G&A and the marketing capitalized third during As XX bookings from for in came quarter. the expense quarter million Authority. XXXX projects up to line the with $X.X compares expenses and sales also funding new million quarter people any in and and sales marketing during million third net a quarter. GAAP a and of end increased to totaled the XXXX quarter is to XXXX. of including which from reminder, GAAP last additional R&D $X.X $X.X R&D $X.X third expenses, are commissions any third Innovation in At the net expenses and of of development totaled grant the $X.X of ago. primarily last of headcount headcount quarter third the to in Israeli quarter the third million million capitalized expenses million marketing The $X.X related XX quarter, from increase year compared sales in

third was a to details GAAP quarter XXXX million in Cash of the of the XXXX. $X.X during quarter of and at in The $X.X cash third balance non-GAAP $X.XX was loss for share end million per quarter quarter of loss the release GAAP Net during loss $X.X company’s the quarter. per the Third press a $X.X for in or so diluted the non-GAAP a one-time compared a refer million diluted third basic and activities million to $X.XX of non-GAAP million reconciliation non-GAAP last or of the and per negative XXXX, loss $X.X third number totaled was operating to and items, of Cyren’s $X.XX quarter to or share $X.X $X.X a $X.X for net On million XXXX million loss to $X.X a share basic third of loss $X million $X.XX compared net results. loss quarter. million cash QX of compared year and and compared negative million $X a excludes million in of the per net our the quarter million non-cash Cyren’s and basis, of to used or quarter. compared third negative million non-GAAP net last million flow quarter quarter. to share our more loss $X.X the at ago last second flow net loss please end a of the $XX.X table $X.X on was

of conversion $X.X expressed an at million of on convertible in $X.X amount long-term million. have valued value also which sheet We million, notes embedded balance are as convertible $X.X an the principal with the aggregate feature notes and

brings $X.XX closing that a position placement placement. price priced features over warrants the Warburg of approximately special or issued at cash the $XX we Together, closed million. As with on were had approximately represents shares into approximately to with end November X. with $X.XX Lior XX% no we mentioned, shares XX.X private share. a our net million cash last this QX, share The There per Cyren. other At premium price private we $XX this XX.X in week, approximately Pincus million associated outstanding. the were million conjunction In current transaction,

total with along are shares shares, approximately So there now new outstanding. XX.X million the

and we close continue more QX and into platform adoption accelerate move Cloud to XXXX expand enterprise use As Cyren in Security out and capabilities XXXX, and to invest aggressively we to as we to of sales this customer CCS. add additional R&D marketing the cash

to capital network anticipate to also we out our accommodate as increase capacity. higher our expenditures We build

take revenue a beyond, questions may We have. any targets are our in growth additional in Operator? to that, of the we accelerate revenue quarters. budgets process you ready are and this and XXXX will future for but capital go defining now way expect With to long that

Operator

of Joe first sir. you, Instructions] to go [Operator Craig-Hallum. Fadgen We’ll Thank

Chad Bennett

investment you still then how you marketing more I sales capacity much for cash here is the sales room Thanks related right On as how needs guess, made if much has if that guess, little now grow? give and one sales comment sharpen which Or think to to the and indication Chad what right pencil I and headcount, guys. do for you both kind you your R&D. sales think around the team think maybe a or growing R&D now? And the to using taking of you Hey for do last for an could I and the marketing, – weren’t the question. do guess, Mike that, that that between bit one, new to today.

Lior Samuelson

thanks Well, for the question.

investment that first, think – process know, budget. the I and the of the we you the a building we’re – as so revised just in received

I think what accelerate that we enable this do will initially. to out us set to

enterprise – both our our a solution, have and around and functions mail, serve – of DNS. cyber array to have the know, and coming the also you as protection. This which the we already as big mail – the be offered be is our OEM some part the And customers. will corner, platform So where They we we cloud. sandbox web, customers cloud up web full

So doesn’t in What I not mentioned I Those think And change time-to-market. change. have previous basic that our the will sold. plan been challenges are in nature. is calls, technical

to list so possibly could feature challenges Our as customers. protection quickly we are really can, full basically able our missing out fill the to we a offer cloud to full enterprise featured, just be as

we set – ability I hand to the So go of or of in got and so – basic kind that features think R&D have our sell hand. the we

Mike Myshrall

And second and Joe, question, then capacity. about the sales on sales you asked

to thing remember one XXXX. the in that So of our middle started building sales team out is we

in Austin, XXXX. we office then Texas the So added the office of the and half London, UK second

have of majority for that the a So working salespeople been are us than now. for year less with us

up productive think they current of are few revenues future quarters. team more our than I in increase ramped have they and much quite ago. and a to substantially But bookings sales are in plenty way material a capacity with So quarters we

Chad Bennett

a that. OpEx revenues what guess, expect you I did point, Okay. lot large least a presumably of marketing, OpEx, kind to mean, relative because below. Or that But an of come sequentially probably we come quarter, you because of of yet. look, this do to nice I other kind in the hasn’t had to QX? we things good that this up it’ll bit? pretty had, a and maybe that was down that sales particularly came I bookings-wise, hit I in either goes your in of and so think And anomaly in is higher, bit a the this be live that again QX revenues OpEx deal partially QX, to job bookings guess at like, came explaining through

Lior Samuelson

that expect would on in sales slight and there marketing. quarter-over-quarter incremental be will growth I No, line expense the

have We in quarter. a added people few since third the late more

full include the expenses you saw in the necessarily that so a quarter’s that headcount. quarter And didn’t for third expense

so going And little assume fourth in fair it’s the a I to bit quarter. up think to tick that it’s

Chad Bennett

much will last of a it In is number guess, with dollar much How [indiscernible] basis? revenue you annual press the an if one I release, annual from Or that how a tell Okay. that And seven can expansion then is figure multimillion for a on consumer. me, large you – announced Or that you number? recognize me. either.

Lior Samuelson

Yes.

So than in was the recognition. of one quarter, quarter less revenue it

in about the be So But third annual it an have quarter, $X a year. on didn’t impact. million a it’ll basis, full

Chad Bennett

will That for Okay. now. from be all guys. me Thanks

Lior Samuelson

you. Thank

Operator

it no further Instructions] looks [Operator we like have queue. in And questions

Lior Samuelson

Thank Okay. you.

for thank in you today’s So participating call.

excited quarter of Warburg the to investment we’d like Cyren. very and XXXX. definitely for fourth We and very much. a Have finish forward about We’re Pincus, a strategic strong good day. great you Thank to look that

Operator

We That does conclude our your participation. conference for you thank for today.

Cyren (CYRNQ) 13 Nov 172017 Q3 Earnings call transcript