CYRN - Earnings call transcript Q2 2019

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

Eric Spindel

Thank you and welcome to CYREN's Second Quarter 2019 Financial Results Conference Call. This call is being broadcast live and can be accessed on the Investor Relations section of the CYREN's website.

Before we begin, please let me remind you that during the course of this conference call, CYREN's management may make forward-looking statements. These forward-looking statements are based on current expectations that are subject to a number of risks and uncertainties that may cause actual results to differ materially from expectations. These risks are outline in the Risk Factor section of our SEC filings, including our annual report on Form 10-K filed on March 29, 2019. be light should factors. these statements forward-looking considered of in risk Any undertake revise also harbor, future. today as not safe as and obligations outlook does Please a is any note in forward-looking any statements we present management any the to of during conference we non-GAAP of may company’s performance. this about when talking the course the discuss Also all, measures on section release Reconciliations tables in the our to provided issued today are earlier in most Relations directly measures comparable the and website. available earnings of GAAP press Investor financial the These financial for measures. included instead to are and should the GAAP investors measures a benefit be of addition of considered in non Also on today’s we call Mr. have Brett Jackson, Mr. Executive and Officer Chief Myshrall, Mike financial Chief officer.

to that, over the call With like to will I turn now Brett.

Brett Jackson

us XXXX call learning I second establishing establishing were to the sense XXX well Eric. team, And discuss expertise and do, our CYREN's very I'm with impressed and and and largely some much objectives. as results. think good to our opportunities, financial clear quality second business on first getting the possible about our as have more everyone Good quarter for I Thanks, of morning, CEO commitment I quarter to the team while have their CYREN. today days a of priorities as our to of - challenges. spent joined and learning as I CYREN thank my during as much our and joining know you

X% million compared XXXX. terms revenue, In to performance, quarter up finished with of second year-over-year in quarter CYREN which was the $X.X QX

comparison XXXX. with be a to it noted largest Microsoft that we contract should closed date it relatively in is represents growth, given modest quarter this our QX challenging While that the year-over-year significant and is

We revenue now enterprise a number ago. During the customers has from over recurring active XXX,XXX in seats. and CYREN’s the $X.X new of our largest XXX customer now and quarter quarter, a customers approximately million, year annual XX% renewed enterprise enterprise we up is enterprise second approximately added

our the and Intelligence a up This Also indication CYREN standing closed value of expansion long this largest Threat a term to years with threat one for long provides intelligence been its contract the customers. latest during significant an customers. is XX has we of quarter, that CYREN customer sale contract customer

Gartner additional a need for for recently is comprehensive which focuses pipeline We email segment combat they previously threats supplements, a guide which phishing discussed in services detection leveraging new phishing CYREN we by products specific Cloud remediation. exciting called and called for cloud in technologies Email in that well-documented and class, is approach the product enterprise product our new a released to have Security. next-generation industry attacks Security market solutions The our on and Inbox phishing, security most identified and development security anti- new like market is the

from their was market CYREN feel not and needs detection will address and report security adequate primary who Gartner among are this and fit enterprise the customers remediation segment of into receiving we solutions the the Inbox CYREN that squarely in Security vendors phishing identified provider. email our

We've available generally and XXXX. will product second quarter for Security sale customers and the been that with of refine CYREN Inbox expect adopter test offering early currently be to working in the our

is to over this will preview, a Microsoft If Advanced in ATP customers select Windows ATP become Earlier next generally expect we product successful, of This one technology quarters. private two directly Microsoft's available this year, for the enterprise and conducted by being all a the product web integrate into we feedback platform. customers. Microsoft currently security Threat also Protection to CYREN available partnership Defender with announced to Windows Defender

our new Technology we highlights, have Chief Officer Ford, the American Johnson, as Dr. North addition with team of the Dr. VP our Richard as sales. new strengthened out Rounding leadership and our Bruce

Ford and over anti-malware for got researcher threat XX joined where as a of detector years CYREN as Forcepoint, a he's Research. including served advanced IBM and he Scientist variety Chief from of companies

more leader has new built than company. successful years XX market our American cybersecurity experience. brings enterprise multiple He leadership sales of Johnson, and Bruce sales cybersecurity and enterprise security in North sales led teams

focus XXXX. more execution half look initiatives the To next and the I revenue clear few to have occurring of over several end, will in - anticipated that As and forward into our is growth. underway is we the and expect top that growth, second XXXX, XXXX with we priority enable increasing over quarters contribution to that on

in leadership value to to team, our the portfolio strategy, concentrate enhancing to and customers. more our sharpening key our our best offerings more product evaluating to opportunities our adding order provide We're talent product on efforts

products progress We becoming CYREN services are forward and to like world industry. developing Inbox class the quarters. sharing our over the committed relevant player more We a in and to Security coming security look

second the detail. I'll in the that, more over With Mike quarter to to turn go financials through call

Michael Myshrall

I morning and present second quarter Thank financial you, everyone. pleased good am Brett XXXX to results. our

to website. more Please the including that detailed it's issued a non-GAAP full items. refer state for non-operating today's financials in our Accounting we both Investor basis, Please today on adjusted U.S. to please For excludes certain note GAAP results, and I results. a to and section table metrics that earlier GAAP our earnings will or Relations expenses under financial of was which press discuss refer the non-GAAP release release which Standards reconciliation earnings non-operating posted the of our on

year On and was compared up X% GAAP quarterly the to $XX,XXX, revenues flat $X.X XXXX were they reported basis, over revenue were increase quarter. $X.X quarter last rounded million when of the sequential to $X.X of reported for approximately million compared million essentially during the a of quarter second year. an second percent XXXX,

ago. $XX.X which year $XX.X a million second Year to were XX% XXXX. million quarter the to same XX% margins gross have as up for GAAP date, recognized we compared XX% to of is revenue, in compared period midyear in the

recorded accounts quarter for in quarter, which XX% XXXX, the increase during of slight a during non-GAAP XXXX. gross down [Technical On margins were of margins. we to XX% the second gross the expenses compared second Difficulty] less $X.X GAAWP R&D QX capitalized basis million amortization During to

quarter were loss a $X.X during $X.XX to million $X.X GAAP reported second compared of of and XXXX. loss basic per Second million share share quarter diluted or the and per net net loss $X.XX GAAP

mostly increase XX% expense can GAAP in a $X.X operating R&D increase the expenses increase for it compared QX million R&D to to quarter in operating year the $XX.X and during were over of R&D expenses be The from million quarter which when million marginally year last XXXX $X.X $X.X ago revenue. to technology of headcount million increase lower quarter, representing was an down to same a attributed $XX.X to ago. quarter. year compared XXXX marginal revenue this year of is The was compared to capitalization R&D - due GAAP a QX XX% compared of in and million

Sales $X.X in a quarter XXXX. finished revenue. when year expense due and from ago QX to of The $X.X the XX% marketing decrease for and it XX% million is of million period the or represented to to marketing headcount compared sales revenue, down lower

G&A as the expenses as well transition related to period $X.X compensation or second the million G&A finished to in the is legal for XX% additional first during during related that XX% to executive The compared year, quarter. increase the second revenue of the quarter and occurred million higher of a of XXXX, CEO during XXXX. $X.X at expense half

non-GAAP net net was of during second loss per XXXX Overall $X.X a XXX quarter diluted quarter second or the employees end non-GAAP QX XXXX. of company to the end loss CYREN employees of XXX $X.X million diluted headcount to at the and share. million $X.XX basis, XXXX totaled On of XXXX basic basic the at or compared loss quarter a per $X.XX share compared second and

CYREN’s are reconciliation non-cash items, stock of the loss our based intangible refer of excludes included in to of results. non-GAAP table compensation, technology GAAP Please and net more non-GAAP GAAP the of to on results. the effect a including the press which release of in assets capitalization for details amortization number

Intelligence an $X.X payment a compared increase $X.X quarter in during cash During cash is with company's of million million of flow from had cash balance the short This million in the Threat is result second cash the XXXX. positive we the operating quarter, quarter in $X.X on operating flow positive including deferred term operating sheet. we reflected customers, to quarter. of higher the where flow also collected annual in prepayment approximately from our the largest collections customer revenue The

million XXXX. Short $XX.X net Overall, QX in and negative $X.X compared term for XXXX. We finished $X.X began million of the flow the $XX.X of quarter second the also with negative cash in deferred with cash end at revenue at the $XX,XXX totaled $X.X second quarter cash. the was [ph] end quarter quarter compared to million in of million to

long As sheet $XX of excuse we issued XXXX. that XXXX a term the and debt convertible a in form December which we balance on the reminder, in as – of December $XX result maintain is mature notes million which me, in million

quarter, $X.X million the shares. rest $X.X During the roughly million which in of amounted we of in interest second payments and note made first which to on our the the was is semi-annual quarter cash issued

the will Q&A. I to line open the for up operator ask now

Operator

first The Craig-Hallum. question. Please [Operator of Bennett, is you. with Chad the Thank proceed question from coming your Instructions] line

Chad Bennett

I been been is done considering can space there is the you you now that better few haven't today what’s hasn't for the a growth maybe not do what the and capturing capturing do you? guess, Thanks that hear you in. months that what or you're to guys questions. But Brett, now, evaluation the Great. my you of or that company opportunity for you that think by. of ahead think been do good you've maybe kind and priority think participating taking it's top obviously your

Brett Jackson

priority questions by two how do strategy, is touch to both. about growth. elements there involved, clearly and way Well, opportunity growth individual including market I multiple how growth and messaging, The are I product we're we think revenue the try question positioning going to accelerate I to competitiveness on our portfolio, revenue and products, think When et - our of there's your our products, top have our Chad we're revenue think in cetera. strategy, I'll growth

So those we about elements improving think we're looking at all as of growth. revenue

I comes feel When the it at foremost, enthusiastic would say this first the I that see point, opportunity. and to very opportunities about I

anti-phishing I think the in emerging we have market.

with That's It working I've new as our have of early been plays And could be We've adopters a space for offering. exciting to historical that this strengths. very interesting mentioned. one. very refining I a number on think some We CYREN.

still also finally, [Technical opportunities I working of exploring portfolio opportunities. creative two, on for we extensive put then know against the And we those technology and Intelligence bit we more to exploiting leverage assets think Number have technology, we'll looking have opportunities how think probably space. market we're a space. new our Threat can and so we And I these new in focused you Difficulty] identifying other opportunities way in a have leverage the which assets, fairly on

Chad Bennett

then second progress was Great. the that of next of the unleash I GA timing, was in by around of kind see color a this what partnership under year. second half impression give the kind Defender it but And of I the a Microsoft on that can year appreciate been you us you thinking? that or I'm integrated their ATP the maybe to Microsoft guess, off the know Has little release has delayed bit this there. or I or maybe I base. relative product and start of the to we question [ph] update to Windows just half full

Brett Jackson

Sure.

as earlier we couple expect comment, next that to some of enterprise my Microsoft I throughout has largest initiated over mentioned take and that with should And customers. private a place the in their be feedback getting preview we quarters think I of process.

on product after general availability would preview. timing the of that private come Any

and shareholders know in learn that's keep couple view investors we as and in quarters our next So updated is the control. Microsoft's more more. of But we'll will we

Chad Bennett

kind here, But Understood. go ever feedback it's everything see Yes. into your you Brett? of plan kind of

Brett Jackson

we when is we've plan generally recent everything and and them. our we'll monitor most update on continue the - is gotten that have I've share to insights Yes

Chad Bennett

maybe a million? real to the gave clarification last little a hop me faster Okay. metric you $X.X some maybe ARR Mike those, of one I'll speaking the or was off, metrics, I that you one was appreciate. Mike And then for guys quick on were

Michael Myshrall

is million. business Yes. On approximately enterprise ARR $X.X the our

Chad Bennett

that’s And the CSS effectively correct? business

Michael Myshrall

Correct.

Chad Bennett

XX% And up was year-over-year? Okay. that

Michael Myshrall

Yes. correct. That's

Chad Bennett

in - what considering of And what and that maybe and you I mind, opportunity, your mean for that been that it's should wide. mean at to considering has progressing. guys. XXXX? I what question say growth a business Okay. grow The been mean - guess just annually the out pretty maybe the then I space on volatility scale, I'd looking business has I following both - that

Michael Myshrall

growth of volatility last it ARR been had we to year, So in significant you're when has and the right, they has on customers been the some related the more some period. impact there larger growth signed part a

space. we had and started the the with it much relatively second enterprise the business added of term when SME may Brett year. customers enterprise large A this last and ARR the SMB So impact on positive very lot of on subset half of them a more longer more growth plans. customer growth we in small comment a

higher leader revenue business XX% be market, fast year-over-year. space, if And as least the to which to become this were at want XX% would in to as growing want we roughly growth. the we to we even a But achieve is

Chad Bennett

Great.

Brett Jackson

review the initiatives and make we the the roadmap product necessary right improve our strategy, got of ongoing process and sure strategy growth. have to individual we've Chad, key of offerings, think of we is now. that, that So right part an And taken including one think that CCS that's enhancements our are I right as to

Chad Bennett

it. questions. Got for taking my Thanks right. All

Operator

from ahead with question Please B the your question. Dan next The Instructions] Drawbaugh is of with [Operator go line Riley.

Dan Drawbaugh

morning, Thanks taking Good my for guys. questions.

is what the revenue of of threat renewed the sort in So start a that on us that little of rate the contract color towards if what given I'll end Can on that's additional whether provide possible XXXX of quarter. the that customer and now? maybe just under run just they timing contract Intel taking, their annual the more kind they're services expansion - you

Brett Jackson

yes, that, recently renewed So the at you're customer correct of XXXX. that end

scope more end a their of to expanded with of and the use During the users. scope set products, within second include new it include widely for but use quarter we the as not they to customer new larger network could

protect millions to using protecting hundreds users them providing And to technology. our literally so technology basically even users, growth [Technical allow them, we've to that Difficulty] and of of expanded more

itself It seven now have to of years. a both and by contract a for another about range. over in contract. a two the basically spending customer] very one years, is incremental recent XX% expansion one Difficulty] The a top most increases our It's five deal [Technical to for [large figure million dollar three And spent four two that renewed half is and half they

partnership. think it's So we good been a

Dan Drawbaugh

step and, and one looking about to of Helpful how color. of Okay, whichever on Brett at in is most review grow back this know or working bit great. appropriate And business enterprise you Mike, then just of you you a you're kind can for, sort talk of I you're the that. want the a pipeline

or you're one a mostly that of were But customer how it mean is you've to where opportunities is very large couple compared deep ago incremental? at quarters you or pipeline I got this maybe any and that sort large looking

Brett Jackson

revenue is that go growth, always At of market elements of is incremental, are acceptable execution this that pipeline and part back an quality going say sure building of at would one to but the point to big rate. I a mostly making that we Dan, them

think allow will new building sales And help. North place focus America. growth quality so North on be have in in as my pipeline big providing I in the leader, We're I Threat practices some we enterprise, Intelligence. us as we which And new in better more comments to have mentioned as a well America put in pipeline a to track

a EMEA. we've think I strong pipeline got already pretty in

focus we're is - driving that equation we've of know pipeline better that doing on you revenue to got but and sure the growth. part always making more more a So is and

Dan Drawbaugh

sales mentioned looking are slightly lower does cost Okay. feel the year-on-year, you you heads headcount also marketing trying do that strategies mean and now or up if a I standpoint Understood. your you know, product with at re-evaluate go-to-market, you have? to back or you From that you comfortable come

Brett Jackson

make that that And And these product, Difficulty] I'm side, comfortable firm including we we our believer about we've some see the launched. traction the from have sure got think think its we positive time our to results [Technical a got I feel initiatives on plans product Product. when we've in Security Inbox start we newer I'm are. to we've place of some new to like where

Dan Drawbaugh

back for enough. fair step Thanks, the right, taking time. queue. I'll into All guys

Brett Jackson

Thank you, Dan.

Operator

floor time, to Thank turn you. At remarks. Brett the this back I'll for Jackson closing

Brett Jackson

all you Thank today. for joining the call

to As second about a more enthusiastic and quarter my shareholders. opportunity my CYREN Thanks we CEO. committed I'm as and first results to reviewed I'm initial quarter lot. current our very financial and impression value during bringing our customers

Operator

conclude This today's will Thank conference. you.

you lines Thank You for participation. time. may disconnect your your this at

Cyren (CYRNQ) 14 Aug 192019 Q2 Earnings call transcript