CYRN - Earnings call transcript Q4 2017

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Operator

Good day, ladies and gentlemen, and thank you for standing by. Welcome to the Cyren Ltd. Fourth Quarter and Full Year 2017 Financial 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. sir. ahead, go Please

Eric Spindel

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

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

Lior Samuelson

and we to Cyren’s fourth you, everyone on results. today XXXX the Thank and call full-year welcome Eric, discuss as quarter

During expertise the ago. This the Cyren fourth significant the share. will invested per one quarter million approximately milestone business completed outstanding price from Warburg XXX% a share a $X.XX owns now $XX.X the quarter, equity and tender per for upsell Pincus investors. growth investment the benefit also Warburg most fourth a Cyren the constitutes year at quarter Cyren in XX% Pincus offer of fourth of the of over Company. Cyren. of $X.XX of a our and shares price note positive finished with up new a and world’s bookings in on capital enterprise of prominent, at

full-year, the enterprise over XXX% up bookings XXXX. For were

Cyren’s the email the web we quarter, solutions. and added around using new enterprise full-year momentum continued we XXX we fourth security year in the earlier experienced During for customers that the or security

of large very last in seats XXX,XXX email organizations As in some thousands of of earnings accounts. on we these tens of include discussed with wins customers two call, excess large XXXX

and XX% revenue. enterprise of during year, of accounted enterprise total compared revenue the Cyren to XX% around bookings XXXX For bookings only represented was XX% total for

that attack troubling outbreaks penetrated these XXXX all the lesser the reasons Most one when phishing security. in continued the growth originated is earlier main business, in of from businesses reported but ransomware the became WannaCry was ransomware threat detection industry Bad enterprise due Rabbit of the seeing Cyren sizes. of from to vendor for the quarter. the year security a and and during attacks protection to equally outbreaks the fourth traditional number superior Petya One appliance demand year is

malware our time and of to Cyren’s first and each blocked to in variants to Cyren detected real demonstrated ability repeatedly platform without first cloud be of protect. a security detect Fortunately, these customer single infection. report

the we or administrators and Cloud the policy improved very capabilities of security hardware During the email received the cost Several Cyren of of is simplifies same regulatory dramatically retention simplifies archiving, using in added been management Security control has XXXX, well email total integrated we customers Most capability email requires by cloud. It of leaves management. complete compliance and email are Cyren’s platform. archiving Cyren ownership. low offers archiving email and servers our the software, fully customers. archiving with feature protection no and added and management, which newly Cyren with the recently, in

We will throughout roll the on to out capabilities continue CCS additional platform XXXX.

the demonstrates as their posture additional stickiness single sandboxing. functionality cloud or fourth number simplify During their operations of we as saw consuming the such strategic well strength protection Cyren of customers Cyren’s a DNS solution shows more security solutions CCS of web the add as solutions to protection, also and need to cutting as We enterprise cloud. initially us quarter, by a from and such number come who back to or improve security on vendors, the feel purchased customers of email enterprise the their the down

security to enterprise States. a customers As represents of distribution and which Cyren numerous of opportunity during the multiple expansion number were and as and XX% in great services selected Europe reseller of such customers new consuming for is Daisy services searching spent services. monitored in example the lot the IT, Most partners a Europe announced who and CARVIR end XXXX, less Throughout over solutions, beyond. the United web leading CARVIR solutions vendors leader Wi-Fi an quarter and based fourth DNS deployment, for its added the cloud managed One security provider of partnered we a CARVIR, to cyber solutions telecom in Cyren Cyren’s and XXXX, a the addition of provider company of time than solution, global and with with IT service using thousands of platform base. XXXX and web and can XXX security. Group, Cyren enterprise particularly UK’s Daisy security and a security CWS of alternative technology After deliver security customers. recently, based web added CES to we the MSP managed partners bring a Cyren’s appliance customer to cloud in and our lengthy evaluation for email channel.

several the Rackspace, early and providers cloud one we proven customer company intelligence Cloudmark to for managed service service the vendor we its intelligence this a major North services by through and experienced Cyren Cloudmark, and with Rackspace superior of dramatically technology respected and pain In anti-spam, Cyren’s successfully successful most and for the protection in MSPs many account, Cyren and a during have encouraged customers. known launched Proofpoint owned outbound ability provide improve the especially incumbent We’re to malware now providers. quarter, and by In America’s was and we point business, new partnership. threat attacks block success threat to its for fourth detect largest displaced service care. phishing

to as honored selected vendor. their cloud security We Rackspace are preferred by be

who turnover decline was in the intelligence some from services. threat the on unwilling previous accept were increases we factor from year-over-year earlier were to price business. customers in several contributing to enable experienced calls, detailed This revenues we’ve intelligence threat and in for year, the the As accounts Cyren

to experienced However, contracts the customers customers, during of XXXX. Cyren’s renewed which rebound one decline that the the including our I quarter along in and through slight new results. we should Rackspace now fourth quarter, from over expanded ensure financial Mike? several we go with hand Mike will largest to revenues like call XXXX

Mike Myshrall

Thank financial and results. quarter our you provide to and full-year Lior, a good pleased review am you, of XXXX morning. I fourth with

detailed refer issued we the our is to release website. Relations of more which please For results, Investor today, section earlier posted earnings on the

standards, million consistent revenue the $X.X in and state of our and results. decline please of non-operating Please fourth today’s previous non-operating full in to metrics mostly recognition under last expenses, As discuss financials discussed the The the the which will is in of our press was the XXXX of including to a basis, accounting XXXX and terminated GAAP contracts release GAAP that compared always, items. year is we threat the and quarter during non-GAAP intelligence attributed to we contracts. refer those revenue reconciliation million note what on fourth non-GAAP quarters quarter. $X.X with for earlier financial to two U.S. I certain a revenue quarter timing for million that exclude new GAAP $X.X were from that

fourth was and were major $X.X share in we in $X.XX of net positive Fourth in $X.X loss contracts, quarter. and threat a new GAAP loss the per $X.X factors were several of or that transaction quarter and There share per the with loss Warburg million impact will net of the related for $X.XX quarters. or a contributed continue revenue Rackspace During a to quarter and last quarter, revenues customers the diluted that XXXX net we both recognition including or compared the two increase share GAAP million $X.XX to quarter Pincus. loss loss on per to basic future expect to have a began these on of million intelligence

offer Warburg Cyren. priced Pincus As private ownership placement we Subsequent Pincus Cyren a roughly XXth, when approximately we in in million, to Warburg $XX.X completed previously private announced, quarter $X.XX at a the representing per for special which on ownership fourth launched their to increased during placement, tender December the completed XX% XX%. share, to

for during Cyren, the result, a which as for control a this event fourth defined transaction change Company costs non-cash As the quarter. triggered certain was accounting of

GAAP This to G&A stock had items the in impact in quarter, which compensation accelerated of R&D press change during translates is line further expense basis, this quarter. sales, portion had employee $X.X impact additional income which release. the sales an to of marketing, statement line the to outstanding, during First, illustrated into of our stock-based compensation on these in in stock-based the GAAP line approximately owned makes GAAP million the for a expense items each on previous one-time immediate non-GAAP vesting which periods. control On the and and compare the a triggered table expense a of one-time of cost difficult significant a it reconciliation options

change XXXX The additional due March due original share, per convertible control, fair $X.XX of the note quarter loss to cash of placement The the not On triggered were of did $X.XX the Cyren’s also approximately financial the and year-end. quarter. expense net into to non-GAAP in notes change $X.X expense a accounting X.X share of basis, subsequent converted a was net net a and value of change during QX loss an is financial XXXX private the the loss and This to of non-GAAP issued is share $X.X notes conversion loss non-GAAP that quarter. of quarter. to compared a one-time in have $X.X non-cash the was diluted per purely during per million fourth expense million but prior million million during or XXXX. shares basic of price financial last expense million $X.X and control Second, were approximately impact million a $X.XX $X.X

For to number XXXX, compared excludes share, non-GAAP of or Cyren’s $XX.X items. the per and basic a net diluted per million was loss loss or one-time XXXX. full-year diluted net the full-year $X.XX Cyren’s $X.X share $X.XX of for million and non-cash basic non-GAAP and

during the in the million please during to more of for the So, to million the fourth GAAP quarter. refer reconciliation press non-GAAP used of table quarter and was $X.X the details release $X.X compared last $X.X on in quarter Cash results. XXXX operating fourth activities our flow million to

cash quarter, placement. in million received $XX of the we private net associated During the expenses with approximately

in invested an Company’s fourth was network $XX expenditures million The cash the million to approximately at technology end which at million million last of end the invested QX and and million capitalized. the capital $X.X XXXX in $XX.X also additional $X.X We developments $X compared and were balance of in quarter our quarter.

longer carries aggregate million, had our thoroughly and As have therefore into I Company $X.X convertible an which previously any value been debt notes converted of on principal the sheet. no balance the earlier, described equity

shares conversion as private shares along that shares the convertible approximately issued of As end QX, of now an approximately on had call, million million the million we total XX.X last the we additional we X.X the XX.X of new approximately shares At are part shares, million were notes. the outstanding. with XX.X through the reported outstanding placement, issued

the approximately of earnings there were purposes XX of calculation, our quarter. For shares the per average million during outstanding share the weighted

business. fourth in quarter dramatic During and we the saw throughout XXXX, a our improvement enterprise

grew of year-over-year. average XXX% renew of at around rate also bookings XXX% Renewal over fourth so order the have new upsell average were As taking and new in XXXX approximately the of rates higher up products XX% in terms customers Lior mentioned, enterprise how users the of business a value. the XX% first customer and steady year, and Between terms for services. of been in dollar XXX% the quarter XXXX, at additional or contracts by and do their and quarter

by We these are encouraged trends.

the employees of This of XX at people XXXX. compared at end sales XXX For a total at the finished XXX end total year, the headcount people to and marketing compared XX employees included of XXXX. in to

our XXXX, of to with to order marketing in in strategically in sales. capital focused increase into expect rate growth roadmap R&D, additional the Moving sales deploy we forward accelerate enterprise investment and product and

improved continue all customers. improvements and performance to We expenditures our also network expect additional for we XXXX as our global make of through capital over

to great of want to Protection effort which are with the operator new world their in a time May. scheduled personal close With Europe to to XXXX not we and is in comply compliant encourage infrastructure, that the investing customers protected. effect current look ensuring requirements I data to the those assure processes that companies to and And GDPR, intend at are line is ensure like we security the web also the known needs, security, procedures a and into feel very General Data we for deal take up may and take of address our progress fully Finally, seriously. around to Europe with in email as our that vendors privacy ask take Regulation, We their beyond. that all Q&A. and their archiving open email needs who would security fully Cyren their We for in that, our

Operator

will Instructions] to with go Fadgen Craig-Hallum. [Operator And Joe

Joe Fadgen

Thanks Chad. for taking here I’m question. guys. the Hey, for

we kind the Was of First a modeling. kind margin lower housekeeping. what’s the that of quarters or profit just that infrastructure, of cause lower down gross have like several than and looks been is than past just it’s It dipped for in investing been buildout that?

Mike Myshrall

That’s Yes. correct.

the the As in in invested as network. had some the during second of I mentioned we XXXX CapEx we call, half additional

quarter, bit the additional margin. see fourth brought happening And a the of so, we little expense gross in has which down the

I the much revenues grown think, of wouldn’t little more, have as a if an impact bit in the had then quarter. it

Joe Fadgen

Right.

that over but in know guess, are would and I -- that a -- QX we done and is you done tick to in there mean, still see so, And investment I there? I we be -- expect you don’t that of QX, or probably it lot is XX% guide, more should up back certainly

Mike Myshrall

We of network. still XXXX throughout our investing improvement part an are as to

out But, for activities. strategic We’re where some very investments, additional adding capacity growth. additional I rolling related we’re also we’re mentioned as GDPR some making

And of lot side so, on investment operational there is a the the activity business. of

next the that see So, infrastructure. couple you’ll our expect of in I investment continued over would quarters,

Joe Fadgen

well as the on then, the intelligence And color threat good as Okay. some enterprise.

about for as you through concerns know now, worry so are we the speak? there far two at quarter go Are that that delayed? of we and any a like about or customer churn, kind You of bulk that the far have we of customer of the any to anything lives as the mostly -- churn more like Are or lives, -- things some delayed are like least delayed as rough through go been now. the as talking should

Lior Samuelson

There positive like be of of and I surprises. think I -- would looks I think turnover it’s we’re we there the -- can might I most think some say, what we from see, that kind are over. had the

least the some think we We the or not future that in the would get see. on I can intelligence things business hit, that see foreseeable positive not So, at threat don’t horizon.

Joe Fadgen

standpoint, XX% then me. for a And thinking appreciate year. bookings never update revenue -- from business. we Okay. of I I last on an the is XXXX, plus a guess, Could what’s rev business? one that that even mind can of you a about getting business? get for that in but base the now, in mean, I enterprise but as for XX% of I it kind ballpark don’t you XX%, that growth of again, expect the would I kind be guide, case just that is know, XX%? start

Lior Samuelson

all is, of As enterprise where saying the earlier, focus been business of both marketing we from a side we’ve and and is product along, sales perspective. said our standpoint the lot a from a

fully the the we two And So, of expect road, part think happen. expect become it future, we’re And -- that it years we the a and tell fully can’t to the grow. much. we’re I that’s what we in feature I how set I We that in think you clearly to building I of process dominant down will really business. believe plan out have. that will all exactly so to that’s maybe And seeing what the the that’s three and before and grow.

Operator

to Wallace Capital. Will Instructions] Mike Pine [Operator with go White next

Mike Wallace

See, and I get Warburg you and to your they have that before perspective bring came how of a the little to want what Pincus money of invested? investment, that they the didn’t going on outside bit just to about Cyren obviously are

Lior Samuelson

several in basically that the to I look extremely we months, said, in were to a as -- I the said Company. which Well, and expertise. discussion them deciding we’ve filing when they chose from forward we us. had they we And excited are course, as resulted gaining with over and think their partner of we to company think there invest we’re with And -- happy

investments sector, many the in tech they have successful As including you including security. know, many,

learn. to can things think, can we’re us they teach I I So, think, -- willing and we few a

Mike Wallace

or that did you the start? to did approach would how -- them how you conversation or they Did approach

Lior Samuelson

We met We met I RSA that’s and recall. we if conference. met if go people these them. -- to at conference, think we recall, RSA them at so, I them conferences I where first think I

Mike Wallace

have they And seat, right? that a one-board Okay. is

Lior Samuelson

seats. they two far, members. now, so -- board they two have board have They Right have

Mike Wallace

And savvy in then, are investors security could you -- they of space. very I investments the and have know, lot

they on -- specifics and some a So, give before bit color could Cyren that what can that? us on and maybe you of more have what didn’t to little you bring

Lior Samuelson

people very as we And on We don’t expertise. I early, very smart have details. to experienced, board. two forward I more any look have the benefitting from their said

Mike Myshrall

Cyren have and about are space the They the about I with of technology. at -- the Cyren’s think companies they things other looked they one security in product them excited that was happy have offerings. seen

Mike Wallace

bringing help along, to And are they too, some relationships process? the with sales

Lior Samuelson

so Board exactly. I’m develop sure not I’m you just joined they will in the just as know, things sure -- recently. future, the but they

So, have information on further I any don’t that.

Mike Wallace

right. But, All could appreciate on that. Maybe I we you. thank Okay. talk offline that.

Lior Samuelson

Welcome.

Operator

or [Operator it closing I remarks. in today’s like any for no we questions to this back would further appears Instructions] time. over queue additional at it to have And turn speakers

Lior Samuelson

us showing Well, thank you’re in much updated very the future we for And keeping on you quarters. in you look today progress for our interest Cyren. to joining the and forward

very you thank much. nice day. Have So, a

Operator

that conference. Thank participation. your for And today’s concludes you

now disconnect. may You

Cyren (CYRNQ) 14 Feb 182017 Q4 Earnings call transcript