CYRN - Earnings call transcript Q3 2019

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Operator

Greetings and welcome to the Cyren Limited’s Third Quarter 2019 Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host, Eric Spindel. ahead. go Please

Eric Spindel

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

cause a you uncertainties on Before course results during are current actual management make expectations of me forward-looking that These to Cyren’s the forward-looking call, that that statements. materially we number conference statements differ let and from begin, may please may of remind risks this are to subject based expectations.

the are outlined Form Factors risks XX, SEC these should These our on in factors. filings, filed our in XXXX. on Risk Report considered section statements forward-looking of be Annual of Any March including light XX-K risk

any Harbor, when non-GAAP outlook does of statements the Safe a this we and is in during call, of revise as discuss the note, undertake the we also not measures any as company’s management course performance. talking conference obligation about today any to forward-looking Also, present future. Please may

the financial the directly and addition Relations press in earnings be financial tables GAAP and the included most are and website. to comparable measures investors instead considered the provided issued our These on measures. of not are the in section today available benefit Investor of GAAP measures for release in to should Reconciliations of

Officer. Brett Mr. Officer; Joining Mike have Chief today’s Jackson, Chief Executive me Financial we call, on and Mr. Myshrall,

the now I that, to hand would over With Brett. call

Brett Jackson

quarter Eric. results. joining today Thanks, us to discuss thank and XXXX our third Hello, everyone for you

enterprise and growth, enable call, highlighted top in is clear especially market. drive to aggressive I last more quarter’s revenue our As the in the priority

are focus opportunities our our opportunities identified sharpened initiatives. strategy growth and to key on provide To several accomplish this, we’ve these executing best

Let me a at strategy level. high review our

our our as will First, core it company, going security e-mail this focus clear me a be and is strength forward. that to is

the expanding OEM large our reinvigorating our a goal growing of and with are business We services into traditional enterprise threat intelligence market.

billions services transactions of intelligence which company, of intelligence More our of customers threat the enable threat of XX% our use security the are foundation technology. our constitute e-mail cases. generate daily use than detection OEM our majority Cyren’s and ARR our in threat

impressive Point think Google, a and customers like the an and addressable have for set we OEM Check large there and Microsoft We opportunity is further penetration. of market

intelligence the Beyond the threat enterprise are there new to and enterprise our business create market, OEM opportunities revenue stream. expand market, two valuable a into

past into ATP. earnings our First, have calls, Service Defender Filtering as Web Microsoft in previously mentioned integrated we

enterprise with Defender in ATP is Microsoft customers currently expected general QX certain XXXX. availability in with private preview

and to still While we forward and worked will there have customers expected, are ATP trial the out, details as filtering web opportunity service. Cyren’s this Defender purchase partnership moves enterprise

opportunity, the centers, have enterprises we through we target In operation Defender sales directly our value intelligence would could security believe offerings provide who to our addition to threat force. which

We several will this validate opportunity months. over the next

targeted in threat and to Office new offering, at hard leveraging market services, been e-mail providing the customers gateway, team working security our beyond prior the with a to Moving intelligence Inbox Cyren based has XXX cloud been bring which calls. our our market has enterprise our discussed Security experience

provide focus detection offering and cloud phishing gateway the protection security new as which It beyond e-mail to a for security e-mail security exciting play Gartner that like of new users products refers is includes independent. provide both This emerging e-mail and layer market in gateway XXX segment will that supplements, specific Office an remediation. and on will threats

over early the with adopter months expect availability customers working have past general several and XXXX. in QX We been of

XXX augment to opportunities capabilities. product or Office Security, will Inbox there the for complement we think to Beyond security additional native be Cyren

follow popularity over messaging the and platforms messaging users. extend services threats While Cyren will e-mail. ambitions multiple will Longer-term, large believe also and we is Office in growing, beyond has to the XXX grow its other inevitably to market security time,

$X.X year-over-year. revenues third reported performance, million were our flat quarter our to Turning of

While our several the growth will more is working and lack growth over of believe strategy trajectory. and disappointing, much next quarters the execution deliver focused a this we aggressive to are address ARR we

now to who third turn will the quarter go I’ll through the financials. over call Mike

Michael Myshrall

Brett to third as you, Thank and joining financial those present of the results. that you on I our XXXX hello call us quarter

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

that we Accounting non-GAAP non-operating refer certain release Standards, in which metrics US a discuss a GAAP the for under that those results. to or full including will reconciliation on adjusted expenses, note, basis, to of Please table state today’s GAAP Please financial I excludes our our non-operating non-GAAP earnings financials and items.

GAAP million of $X.X slightly of above levels decrease a XXXX flat revenue year-over-year million XXXX was been QX million would rounded. $X.X constant when to third On for of $X.X X%. quarter third were compared quarter the revenues during currency basis, reported QX have of XXXX, essentially the a

Year-to-date $XX.X revenue, million million is of the three to compared first for X% XXXX. $XX.X which revenues quarters were in up

is While than new weaker and third upsell anticipated driven we disappointed are and with bookings in quarter year-to-date. quarter primarily revenue, this the by

product initiatives see revenue second of the growth XXXX. to expect and impact We during from positive strategy our half new

investment slightly third during our prior in of margins as datacenters declined quarter support and groups, for the as GAAP additional compared result global our compared were the XX% the XX% QX expense XXXX. network year. to operations continued in well to a Gross and as gross margins

basis, XX% compared non-GAAP margins were a gross during quarter third XX% to the XXXX. On of

per to a million $X.XX per compared loss net quarter and loss $X.X share GAAP was $X.X third share GAAP during the of XXXX. basic quarter Third loss of $X.XX or net diluted and million

$X R&D The due GAAP in operating in decrease and million, quarter sales to marketing down QX is the totaled decrease $XX.X GAAP million for and expenses XXXX. a decrease a in from expenses operating expenses. expenses during year-over-year

expense revenue. to higher QX during was efforts. when as is to our of of million $X.X expense million of $X.X technology it R&D XX% attributed development representing capitalization revenue, XXXX QX XXXX was XX% of R&D largely new in R&D result compared product to decrease this quarter, a compared The

marketing $X and the down year. million million, revenue for representing was $X.X XX% expense XX% of of last quarter from quarter same revenue, during the or Sales

As American new so the is decrease on result these sales leader call, the mentioned of when a Brett the strategy, in quarter North our during brought market last and third we optimizing go-to the efforts.

was compared of legal for matters revenue Report. The expense expense Annual G&A or in the XX-K our of increase $X.X quarter with revenue finished XX% XXXX. for that G&A the former $X.X or the million million quarter ongoing to at third of during expenses in XX% related is to disclosed vendor

net of basis, net or was $X.X basic XXXX and and On quarter $X.XX compared third during QX a $X.X loss per of non-GAAP share a $X.XX Cyren’s to share million loss a non-GAAP per million XXXX. loss diluted

of Cyren’s stock-based non-GAAP and results. effective compensation, intangible net capitalization including loss the of excludes a of which included non-cash amortization GAAP in assets number the are technology, items,

on of results. Please refer to to the table non-GAAP more in the our for reconciliation press GAAP details release

we the the compared operating million of quarter, had third $X.X million $X.X XXXX. usage operating of during of cash During to quarter usage cash

$XX.X of $X.X million million third quarter began burn during quarter million and Overall cash. with with We in third million quarter compared $X.X to $X.X the XXXX. the cash finished for in net the the quarter was cash

of offering. we opportunity was the premium at of The the $X.XX share equal the quarter, September in Rights third day September the Cyren’s XX% announcement subscription prior XXth. to a to a to an offering current record closing Offering gave participate and the During set was as all announced price of price to on the shareholders XXth shareholders

offering Warburg and Cyren’s basic to Pincus, rights largest pro offering. exercised purchase exercised of also oversubscription rights in the the shareholder, of a million for total share a the X.X subscription rata shares

the gross are QX $X not be The balance reflected therefore cash in but balance Rights included from as in December Offering November and offering of proceeds closed on sheet, Xth the will the million XXst. the

Offering, Rights and the shares Cyren’s now Cyren approximately outstanding Pincus of result million Warburg a outstanding XX.X of has approximately XX.X% owns shares. As

concludes will Kevin? open I Q&A. the for to That the prepared our operator lines now up ask remarks.

Operator

Van question FBR. from conducting coming session. Instructions] you. Horn We’ll be Riley first B. Thank now Our is question-and-answer from a today Chris [Operator

Your line live. now is

Chris Van Horn

morning, Good my for call. taking everyone. you Thank

Michael Myshrall

Hi, How’re Chris. doing? good morning, you

Chris Van Horn

comment into have visibility of kind Good. sort XXXX, seeing on around and into maybe I you’re the of any wondering commentary pipeline of quarter what you if you fourth there? could was kind the and what

Brett Jackson

leader as we’re got – reported, early he both we in sales in Chris, and quarter And visibility focused good July think have are sales recently we’ve preparing the I previously of EMEA, American our leader on new APAC’s a for XXXX. we’ve very our pipeline. North hired and

grow importantly, support working the our are do our very our we XXXX expectations. pipeline, is sales More hard to must of teams one things to which

Chris Van Horn

sales that think do how OpEx the think kind either at do commentary R&D can have on your or got you Okay, more that? that you sort now, needed you out, front, And then spending support do side of any staffing or it. that the around of pipeline, you on of kind playing see is the team that

Brett Jackson

the we going efficiency our the we’re that increased plan, OpEx to from will at team. hold on current we’re as is on – moment, finalize Yeah, view we our our we’re and and XXXX line focus productivity

Chris Van Horn

cited I you you the Rights provide side? the any Can cited think user a it. detail on there got Okay, Offering, of in capital kind on which proceeds. of kind more then working And you capital as

Michael Myshrall

$X.X balance million cash basis, sheet. basically half expand in balance We the proceeds in the cash extend the cash million quarter-over-quarter quarterly $X are XXXX. bank. through and runway to cash about so helps business finished XXXX the the we So, help it need still the worth of a on true-up burning the we our second And quarter provide the on

Chris Van Horn

a have cited you in Okay, to prepared at of take opportunities, then are you me. the will markets, that displacement there perspective. lot landscape, new those your is general those function of new will, do you share outside opportunities the to happen In get When of last of or into kind competitive you’ll space for kind got end some a And to interesting for opportunities? a it. look from those if what remarks, you core

Brett Jackson

our I emerging is bring product we market the expect which in Well think we to mentioned have quarter, we biggest opportunity an the market. that is, the Security new that second Inbox new

market. is players in market, in have a but that are participating a of position that landscape. there a new establish think number we established an to opportunity are So no competitive we There

business. new to that and competitive – that do couple Defender as we we displacement a a at think of more our other we think opportunities else, it around more headroom where typical a but look without in are traditional the that. its initiatives another pressure. initiative is and ATP, think there intelligence threat the is with is than lot mentioned anything think Microsoft I That I situation we probably opportunity that And is of market,

Chris Van Horn

that color time this all for Thanks and I it. appreciate got Okay, the morning.

Brett Jackson

Chris. Thanks,

Operator

So from our next Craig-Hallum. coming Bennett today Chad from is question

Your live. line is now

Nick Mattiacci

Hi, Mattiacci this is Nick on Chad Bennett. for

had on So for your that that quarter a this focus first growth going Brett, question stated forward. revenue you quarter a just – main we is last

So where outlook to after another how or is the your at quarter where you conviction joined change now? from you’re company,

Brett Jackson

Nick. change, real No

the I initiatives are and sales on several months said know be get execution, to bookings in will and the we’re quarters identified I that’s which us on of growth. that help the focused benefit, focused first And teams opportunities deliver what the we’re that process we’ve indicators but think set and new several of execution been growth will We we’ll opportunities working early right of marketing and think unfold track grow on. couple to around company. those the could and be trying to our we take a all product and on

Nick Mattiacci

on those just when updates from any could And Okay. or and then receiving Security the Defender feedback us early the you you’re Inbox – feedback ATP some product? partnership give

Brett Jackson

that had So I to has the who’ve some capability, been days feedback looked customers it’s limited some very say at and early the we’ve enterprise but our positive. of exposure would

interesting us more I by out very revenue. think and details drive we engaged we’ve the out again, need for we’re point customers opportunity see there enterprise for work enterprise think to it’s initiative to what very I so a very, another Cyren, still to need but a we encouraged with But hear.

Nick Mattiacci

with Awesome. And us? I didn’t you for then finally see be Would your for share that enterprise able number the quarter. me, ARR to

Michael Myshrall

Yeah.

don’t finished So we ARR. the quarters. the quarter, end enterprise the but is rate, over $X I roughly growth at million, with which about million quarter up the ARR of is prior the the have in quarter-over-quarter $X

Nick Mattiacci

Thank you. That’s for all me.

Michael Myshrall

you. Thank

Operator

question-and-answer comments. over our to of back end the to reached We’ve you. Thank for I’d turn like session. management further any or floor the closing

Brett Jackson

the updated progress Thank next coming over us to you today. look Cyren’s quarters. all for I forward keeping joining you on

Operator

does today’s Thank conclude you. That teleconference.

a have and today. time this at for your day. lines wonderful your We disconnect may You you participation thank

Cyren (CYRNQ) 13 Nov 192019 Q3 Earnings call transcript