CYRN - Earnings call transcript Q1 2018

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good day, and welcome to the Cyren Ltd.

First Quarter 2018 Financial Results Conference Call. Today's conference is being recorded. At this time, I'd like to turn the conference over to Eric Spindel, Cyren's General Counsel and Corporate Secretary. Please go ahead, sir.

Eric Spindel

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

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

Lior Samuelson

Eric, start to first points. you, with today I'd good morning as like on to discuss Cyren's everyone and call the Thank X important quarter XXXX results. we

First, Microsoft. at Cyren's we in largest signed the QX, contract with the history beginning of

Second, as healthy the into XXXX increase we of revenues contract wins, result a anticipate and in XXXX. throughout

But we technology the Threat Microsoft to April, into Online release that years. will Cyren's Office Cyren's technical of relates integrated on service security in attacks bake-off is of result vendors. Office other utilizing strong Protection XXX technology Microsoft As particular, a discussed been announcement are which phishing Advanced directly a ability press issued packages, in feel and, validation to months for a is anti-malware combat available our for this has users. this many the in effort evaluation, XXX that anti-phishing intensive We Cyren's contract enterprise contract Protection Microsoft be against and to Exchange and customers. including

that this have We through offering phishing delivery to private a is or emphasize not Azure. a service The that are also we to intelligence problem of I will new improve by latest security technology, unique security breakthrough Office worked GlobalView as Microsoft to in Cyren's with extend cloud XXX. and phishing to closely ability integrating anti-phishing protect detect the business dramatically would like users. millions technology, Microsoft attacks Cyren's its and confident to is Microsoft

business, grew where in security the that Security along deal issue Microsoft. bookings with suite. the part has sandboxing Security Cyren DNS It been full as In including to are period targeted its adopted of a factor includes compared year to anti-phishing Enterprise growth for ago. phishing struggling is cloud a This was security, attacks that Cyren's industry's the enterprise remain XXX% already Cyren's Security, in #X enterprises fact, Cloud QX as same with. contributing offering Web by and Email technology

During e-mail, including DNS using of a the customers combination multiple enterprise are new services. now sandboxing, around added many and XX who web, who we quarter, are consuming

links For be had look enterprise of through unknown technology Ransomware a This simple-to-use blocking e-mail phishing other your a have enables Microsoft could Protecting used that is will low-volume the but be leading and enterprise future. the quarter, be SLAC, their channel developed to simple and in with we based on cloud enterprise solution, phishing from supplement for products. as web-based or your -- e-mail further extended interface. some products and identifying and the that by can cloud to activating not Cyren along that progress also anti-phishing and success on primary the to the Microsoft to announcements in as every corporate salesforce, we out with attacks phishing capable believe of sees client service to great easily have industry-leading be protection which forward made plug-in the day who we bringing partners attacks. application latest inspecting protection customer solutions. lines real time and in to We can of applications. other cloud capability billions web reseller large back additional security same these replicated accounts, existing even with their and first being Getting switch exciting on threats want real-time that do enterprises based protection, is protect Cyren's want access deployed This is in a e-mail

in success we Daisy as On that the particularly mentioned in OpenDNS, replacement the a Cyren's last good Group offering U.K. Wi-Fi for Cisco security DNS having was call, in applications

have SD-WAN integrated in cloud enterprise upgrading the to security has customers signed world. next-generation, also into capability who a also to perimeter Network-as-a-Service complementing we partnership solution the with capability. software-defined a solution. sandboxing quarter, option Meta with cloud robust, around great of CWS security full-proxy deliver Cyren's Cyren's is customers solution example Enterprise of This Networks the will their DNS for Cyren's Meta Networks, contract a During secure,

XXX Email America that enterprise in a a through sell North deliver to in to for company looking security an solution the more offering was value We also with enterprise We recently tens opportunity XXXX. completely signed account, cloud customers cloud-based using of we The security. and for heavy enterprise business are targeted channels million of based upsell year. Europe Cyren employees an security agreement computing of which per Email now and are the its ERP contributing within the case of a They adds doubles that this Fortune to Security impact the their over products, revenues already portfolio that of half require of of will different a expect customers. during The won to recently email selected of e-mail SMB where on Web security begin than Cyren positive our is add Security agreement at to largest the protection and Cyren enterprise and contract one for contract business users we protecting and applications in Security. second CRM thousands enhanced both targeted $X.X email have use

pipeline We third large we the deals closing chance in of strong have the also additional believe that have and quarters. enterprise during second

resources ability is Threat believes indicated Intelligence of malware mining. and Intelligence purpose who is security adds single mining and Cyren cloud with year, in months industry and Cyren's a usage the quarter, imposter X.X mining more been demonstrate its value security that During over to Cyren rest Research this SAML the protection, sites, URL a with the we authentication during protection major new In years the business, the in of first has Cyren's for QX, the control, ago, cryptocurrency Services UTM the sign-on during existing thousands was theme Cyren X of released utilizing of of renewed cloud its largest CCS of since one protection. XXXX. cryptocurrency and e-mail first the Cyren and will X block computers infecting has throughout products. the with and great introduces surged Cyren's a application which category filtering access mining contract of example unique crypto several our customers. RAM security to be of platform, our double cryptocurrency Threat renewed CPU XXX% exploit this than continuing has customers is last to version in customer time this this which user's

significant to second and now discuss Mike? in third turn several to over the financial to quarters I well. Mike will the renewed call expect as We be results. Cyren's contracts first quarter

Michael Myshrall

morning, and I results. now Lior, with of you, our everyone. good you review XXXX will quarter Thank a provide financial first

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

only the contract results. impact an mentioned, Microsoft have and, in QX was Lior did on signed not large April financial As therefore,

results. operating XXXX the or expenses in a basic new non-GAAP quarter $X.X used $X.XX share XXXX QX of loss non-GAAP net a first activities $X.X million last million as million was in during a $X.X basic and GAAP and last loss per basis, the per the items, million to noncash during per details share line or net of loss quarter. XXXX, Operating to and to of more so million to half a table On compared refer quarter million net a per non-GAAP $X.XX $X.X in first quarter. for employees $X.X million $X.X Cash and in net XXXX last XXXX. quarter the were in diluted in release a R&D to we was $X.X of and diluted First our loss number second number quarter loss $X.XX share net brought loss GAAP or $X.XX of million a quarter loss on flow $X.X loss compared a in of $X.X compared decrease quarter. the non-GAAP of non-GAAP net please reconciliation net the was the share of loss of expectations excludes first Cyren's and with million of Cyren's first quarter press during for from

and were details. of of material expenditures December sales the at people for was we from by end end over total impact The compared invested at customer signed the our this Please XXXX. longer of we XXXX to of second the XXXX. approximately the company's total that will the of marketing, a the of employees the a extension a release year press This first capital is the which at flow release agreement, will in XXXX positive Microsoft in April, balance our Microsoft which invested $X.X at also the and During $X.X The its developments, become the have Cyren $XX million during network XX of on see Cyren capitalized. at end statement million next issued QX XXX of begin grew $XX more end With as we a no quarter balance and to XX, revenues quarter, additional million technology X on in in included cash the cash revenue. the beginning ago. years debt employees $XX.X contract details sheet. a million people $XX.X of million million any included the compared quarter. over QX contract Cyren's QX. at press with largest and carries In finished XXX that an quarter on valued to XX

intend effort deal current are not and regulations this which vendors Europe those who that companies details the the as to the on our we their their the scheduled take both and, security are Protection therefore, as As we the to when and feel providers for believe In as security effect new they week. to not and great in issued privacy comply we we very GDPR, world, on contact order also effect of We launch like in spent Regulation, would report we ready May deadline many major the seriously, Europe last the protect mentioned We in Cyren that preparing for a of that also privacy. XXth to in we financial enterprise known with shareholders compliant results is April, our to XXXX have security General Cyren. annual encourage the Data take call, customer of time reiterate take rest that XX. GDPR and the well

the million QX, ownership were the Warburg or annual our XX% to roughly and Pincus. Warburg the were As Cyren Pincus Board shares position, XX% at indicated to Due entitled in is there approximately but by XX.X seats. interim formally board million maintained shareholders the quarter, outstanding, end from XX.X report, owned the of X Last an Lauren be his of next approved seats, appointed Cyren director by Board week, of only the she can end Cyren meeting. shareholder of of as as X Pincus annual until out at the Warburg Zletz

the updated for now would Warburg positions. keep will and we to board Lauren the the We up With Cherry? occupies lines X I like future to With to that, XX the of out appointment, Q&A. you ask welcome open board, operator on appointments.

Operator

first Bennett question Chad take [Operator from Instructions]. our Craig-Hallum. we'll with And

Chad Bennett

bookings year-over-year, whether that existing color material growth of growth, and obviously, customers, base, that there, Microsoft any on additional not OEM-type new contract. the I cross-sell, upsell terms color additional does Lior? year-over-year? And of guess contracts, XXX% Any kind the into enterprise of include it's ratcheted-up

Michael Myshrall

Okay, This that. thanks, is to address I'll try Chad. Michael,

through on to upsell the as new came the bookings, and the were our of majority the of categorized bookings side as So majority operations. opposed European enterprise business that

Lior As Cyren which Meta extends called to Networks also, Web through signed the an platform sold the company agreement during offerings, be Meta with we enterprise Networks, Email our well. Cyren quarter, and as Security Security, a mentioned,

SD-WAN partnership Cyren security through interesting so our And security very we're their that's extending offering. basically a where

Chad Bennett

maybe where we are terms direct at year today Mike, of -- versus Cyren enterprise direct in a customers ago? And

Michael Myshrall

talked about of direct in XX numbers year, customers in majority in about So were enterprise about signed past QX, new XXXX those that new total, we the the we the over enterprise customers where and customers. XXX

were that those Europe, partners. them, our is what through we're are the especially But size average of through increasing. Some channel seeing of customers sold

were So and moving QX pipeline forward. lower price in we're the seats a experiencing seat per year what at looking ago, of now our we're what both the currently number than and in

Chad Bennett

Got maybe last it. me. And then one from

the is of bake kind rate On of annual Mike? year, of it how do Is June contract, than that the the half? less kind and normalized Microsoft -- rest run in kind run the then quarter that second into of we it's in rate the

Lior Samuelson

of second see there'll quarter so -- an impact be in for quarter. to rest in We'll measurable then the see to begin begin impact second the and year. we'll So a the the

As really our current Chad, X-year can phishing a is is, unequaled to very, and easy let's we put the system on impact, And take mentioned, what very a it's in is and think, service by provide can protection delivered. revenue maybe of an I a it's we my in also, believe mentioned what What is phishing mean and now I significant to say, our addition contract. that top without I I that in a replacing, breakthrough in I we way. like enterprise's provider, would say, some say, it is that, we I phishing -- what would e-mail mean, protection way as measurable remarks,

the also think I across sort a now mechanism of delivery technological is breakthrough. So

not worldwide. So the be fact just that -- it, enterprises but you will Microsoft, to just available see as is also now that basic it it the available only to fact

Operator

with Wallace White Pine question take Mike Instructions]. from next [Operator We'll our Capital.

Michael Wallace

now, of what Mike, quick the and Networks Just sheet revenues. maybe in update with a deferred and deals the Meta looks on balance cash Microsoft like the terms

Michael Myshrall

and had reflect QX. So booking, to the was impact the end been cash not we Microsoft which $XX.X of balance that from happened any the -- in obviously, the million, at quarter, updated

the during that expect And related would will expect next the the that, contract. increase the quarter second Microsoft revenues we the to recognize revenues impact in XX we'll those deferred and will our months. quarter We well, over cash as

Michael Wallace

it basically would safe over the is contract X that So over be say years? equally to split --

Michael Myshrall

that's fair assumption. Yes, a

Michael Wallace

in year? the thinking as about be in quarter would received cash should the the up bump and what -- thoughts see term. the Can into your then we rest you this look that What's we consumption cash And cash Okay. on short regard? of

Michael Myshrall

QX, terms terms some the At QX. was But both Well, customer than we of in cash there's there. are heavier typically the a and were year, required. little in seasonality to in There's of prepaid expenses QX prepayments, some QX, expect consumption, of than that beginning higher be significantly in QX. they

more So both from be they to an substantially QX. cash and were positive QX in flow operating expect perspective, we QX than

Michael Wallace

us give terms background some competitors a able and were process little that bit who diligence over? due to of this, you that displace of maybe win were Microsoft you background Could on good. in there, the Okay, and, did maybe Lior, of too, the in comment

Lior Samuelson

So a URL/phishing were I think for through think the a it they two of us people they one -- you client kind a as we we to are basically enhance you think vendors utilized looked service very Don't technology, a of protection, know, the And things. our Microsoft would efficacy, way were that anti-malware deliver few to can has names, it's recognize. looking that we the -- as want years. mention has allowed at. to also and the that ours -- ability add our to and been cloud their Microsoft that quickly I few but basic They've and that our infrastructure detect well. and to I of -- One, way very,

been long been so time. -- -- it's So a taken think it's it's I

is system, delivery contract, talking traffic. to also also be our of just able I only millions evaluation but of to it's that customers. certain we not of obviously, think tens think of our also we've can security for been under in of deliver tremendous a I handle is, a -- amount validation led sort technology, our with which and a months very products We're and lot a of Microsoft and large way of and this

Michael Wallace

I'll... So maybe

Lior Samuelson

ahead. Go

Michael Wallace

products, factors of you were key better there that about you you did other of talk what Outside relative could competitors? -- the to the scalability and how the were much

Lior Samuelson

as -- We I can We were attacks, data, understand content attacks. because have stop the we But to our algorithms, and have unknown -- an things in what remember emerge, block don't is to right call phishing is. is think unusual the to that's able you we have learning, to were we unusual. we we one that phishing and industry. of thing mean, that what our We machine that know huge have ability they

because issue the -- one are So attacks you late. -- think wait quickly. of I can bit can happen have a very, phishing is, it's if And to just examine what it is the little normally too until normally, you that very

anybody that's one us, think I of else -- the picked few has have that they reasons that very sort I So not and that capability sure that's unique I'm think of we that the capability.

Michael Wallace

offer recognition? doesn't that speed Zscaler and of Yes. of type level

Michael Myshrall

targeted is security. Well, email this more the at

security And so instance. Zscaler is in their relevant not technology as primarily a particular this and player, so is web

Michael Wallace

Perfect.

good. should of Maybe, the more about Mike, model structure the is deferred terms What margin the going now flow-through move the SaaS you of we to Okay, be and and us some structure? thinking statement? give could thoughts in margin how business Good. income revenues on somewhat to around you change as

Michael Myshrall

higher business, the business, there the the consume and you infrastructure. a it's was related support very of current bit as related our Intelligence which a seen, that Threat to lower little much we migration little a that could built believe serve of margin. our time, margin, Enterprise they our So and network been rate growth currently they serving to over which operations we capacity traditionally issue our those centers, additional through have to cost so into consume is have bit today high our resources larger We customers bandwidth coming we is more customer with margins more the have Part than that from well. because data support down

and would gross we our that anticipate time, infrastructure. over serve more so as more improve through margins And will our customers we

impact. than is not revenue traditional to now, larger you the of of more Enterprise more of which XX% But collection revenue business expect the with balance piece more offering. those terms see typical the for of customers, would Right you'll contracts you prepaid of -- deferred cash a of with as higher we it's our still nature revenue accounts see which where as our we less upfront generate percentage, that it deferred enterprise contracts, becomes as associated a the would so revenues, In larger upfront increase. customers, SaaS XX-month overall big a a customers, an and will balance shift

Michael Wallace

XX%? it it as be twice percent think you could it the be the would of towards Could do Could be? the What What year? it over XX%? end be

Michael Myshrall

place. it accounting to because recognition are standards transition, contract. terms period tied In associated service recognition, the it's with the of takes of the The time, revenue of obviously, standards revenue in that

up they revenue a And impact bigger revenue percentage so the some bookings, of goes add contracts, have as take more but we recognition time and before will more XX%. our will recognition it as quarterly on above overall a

Michael Wallace

right. were All Bookings last XXX% of QX. the maybe last year And question. versus Okay. and up kind

the If the Microsoft deals what would include be Meta increase? Networks the there, in you and

Michael Myshrall

analysis to multiple a the would So total on relative bookings of year much, we a much the done larger ago. in the Microsoft, terms be but haven't it

contract was very customers. of large customer of for bookings this one and very equivalent It was basically, mean, full large I So multiple to year us. a a contract a large

Michael Wallace

the you cadence And business deal? little that it replicate about of Microsoft new us you other for and the mean now you for Could a indirect pipeline mentioned bit and what as the built scalability of a result through can you could product platforms. direct Microsoft, that your sales and of that across of tell about

Lior Samuelson

know, this e-mail who good people it. are phishing and phishing solutions. big There really can don't that hopeful you phishing lot on a of are so is provide So bunch of bunch people problem, a we're partial are a there really valuations and providing recognize a because, click solutions. huge There education with not as and phishing very of companies

any solution, sell as because as need our marketing believe we're begin don't sell -- limitation we it, bit it, no I limitations education many we quite have of so there's works cloud who actually, well. traction. no of size it as of you think -- system a and the service we you that is that really as concerned, And said, the sell that provide to. there's should far as There on because really And really have. to I users infrastructure our no no way there's we the how can to and

-- -- to a a I we development. So sales don't folks time, pipeline this it's very our by go been have it job any and and numbers, sell is encouraged We've it. but of there working very, marketing long we're we but for the now

Michael Wallace

a price you the How product? Is based do Yes. price basis? Do it on more traffic? it on you per-seat

Michael Myshrall

Yes.

-- on based it offerings. a new per-seat be on Security Security would for price Web be users, similar to and based Email it the product, enterprise So very we would way our

Michael Wallace

work here like looks we've got the corner, All the nice pipeline the business and this rest on it year you and into XXXX. to good. Very a well, good. in turned of right, Okay, of

Operator

turn no are time. closing I'd Samuelson, to this or appears additional for Mr. back at It questions you conference remarks. any there like further the to

Lior Samuelson

you us exciting sharing interest for term. look and the joining Well, more to the on with the news in for thank near company, today call you and the in forward

thank very So you much.

Operator

call. your for Thank you today's participation. concludes This

You may now disconnect.

Cyren (CYRNQ) 22 May 182018 Q1 Earnings call transcript