CYRN - Earnings call transcript Q2 2020

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

Operator

Greetings and welcome to Cyren's Q2 Earnings Conference Call. At this time, all participants are in listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host Mr. Counsel. General Spindel, Eric ahead. go Please

Eric Spindel

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

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

Chief over on Officer. now Brett. Mike the call, Chief that, call hand Officer; Brett to we I With Jackson have Joining Myshrall Executive Financial me today's will and

Brett Jackson

new making for clearly of call company. endeavor to now which many time-consuming thank span quarters. into Cyren I'd is quarters Eric. time that is everyone two Fully new today. a our areas to Thanks multiple strategy a like strategy of touches join a implementation implementing will our the

much focus, patience it the for, do and we fiscal have and we we on the of work some are time, results year. to first take our will While are deliver track through half to aiming

Before on remind accomplish. let I to of everyone our second what specifics have set comment quarter, me out we

emphasis to our strategy We are with this And our an focused on do as growth creating driving on priority. multiple us enterprise top growing revenues. and avenues new gives

threat We and business providing an intelligence detection vendors have intelligence as market services has on threat historically reprioritized our core MSPs. e-mail providers threat leading This cybersecurity major services well as to OEM business. focused

the will beyond OEM and new We but have into in larger is market, opportunity, we products this been we customers. expand believe enterprise successful market existing a technology creating for market what enterprise very leveraging

of phishing, e-mail the In phishing problem users our addition Microsoft enterprises business expertise the are especially our threat our today. security intelligence platform from e-mail and leveraging to evolving large and XXX address security initiatives, we in detection dominant business e-mail and to growing of

Our that far traditional solution mitigation is enterprises more next-generation product believe e-mail effective with security e-mail we security provides than gateways. phishing

salesforce and threat foremost, our by phishing e-mail the monitoring threats Microsoft both Cyren that product quickly. actionable We completed faced and our first two to step Threat and security more schedule. make enterprises with Security in associated for providing value Inbox operational can support response decisions used for new validation the retooling teams, new intelligence to product implementation. is right on uniquely quarter, the continuous cloud-based researchers, milestones Inbox be enterprise e-mail fit. targets new the inboxes. detection the to products threat incident of service QX in We Security delivered XXX. detailed threat e-mail-borne and Cyren We and quarter and the remediation provides responders is enterprise second our using and first InDepth expanding intelligence customers corporate Cyren combine related automated InDepth strategy business go-to-market Regarding both and by Threat customer strategies. our Cyren's to we initial closed first our product of first achieved our organizations products key of into enterprise market customer orders market. enterprise

enhancements of product my our to hard team to In roadmap I strategy COVID-XX-influenced development express challenges retention. the maximize early environment. have of for customer a and In objectives appreciation enhancing existing addition to our delivered relatively stage enabling R&D customers despite our and thanks QX ensure achievement satisfaction key our work, product are work, quarter, at teams we new the living renewed our continue products. that to products dedication emphasis a we and and have to the value execution. Cyren to Stating our product and on working our deliver a of in obvious, their to

foundational this materially and believe in we previously, results. to in there will is and progress value we time financial a the but are place to more our is grow get to we there, to build and for pieces take appreciate mentioned our We need making will work key I of As the do. some impact are shareholders fully headway but

to quarter our achieving we a basis. go which I on while over rationalize our our and understand structure, review now requires need we growth cost will also investment, Mike, and turn call is regular second financials. we who’ll growth continue through Lastly that to the priority to time

Mike Myshrall

financial I you, quarter good second present our now results. everyone. and XXXX morning, will Thank Brett,

quarterly the Please our more during today usage few transitioned release these non-GAAP on GAAP a and non-operating with table or contract of including contract adjusted reconciliation quarter to Relations XXXX of today's metrics basis, in second threat during X%. $X.X minimum from results. for a I who in earnings customer as issued standards to our press GAAP from posted basis, our as QX in second the on flat $X.X revenue for GAAP XXXX, one that business would items. was been earnings details our and recognition website of will the we release filings decrease earlier the Form results financials terminations non-operating a those Investor financial accounting our that which fee under that to quarter refer in was $X.X on For largest currency the million year-over-year revenue The XX-Q. lower non-GAAP million commitment please discuss recently note to compared the customers of expenses reported well is excludes revenue Please constant approximately present annual quarter our a on On of the an have U.S. section refer of and component. million, is a a a variable XXXX. decrease or intelligence revenue result of certain to

gross goods addition, associated were partially lower non-GAAP in GAAP in QX cost in gross of so of the during sold compared to a XX% XXXX. XX%, roughly basis, a margin as is On same quarter line to revenue. function quarter non-GAAP margins the XXXX. were during largely of and was of In can period and with margins GAAP Security. decline on legacy year Cyren the we Cyren announced Cloud the last And offerings the including second for the attributable our discussed end-of-life platform report, those of Security annual XX-K revenue some revenues lower highlighted period compared be year we during of the products. during to XX% our the reduction XX% XXXX quarter the ago, the with second gross during Web a

was quarter $X.X period On a $X.X basic the with the and Cyren's quarter per same Second in and quarter GAAP line diluted versus the loss loss net basis, translates share On QX of of last $X.X $X.XX million, share diluted during XXXX. the in GAAP a per million to basic to year. share reported compared loss of net basis, both million loss XXXX. per $X.XX second during a net This loss was and share net in was million $X.X per XXXX non-GAAP second QX XXXX. $X.XX second quarter

totaled exclude a non-GAAP refer quarter Cyren's a On down the of from in total from including non-GAAP to expenses the $XX.X basis, measures. effect and second GAAP our of a non-GAAP of assets reconciliation $X.X for decrease for million, million As noncash expenses $XX.X release press year-over-year. number a the X%. stock-based X% decrease of a a quarter of during the million for to quarter XXXX, operating million, GAAP reminder, intangible selected XXXX, capitalization operating table down results QX Please of in technology. $X.X compensation, amortization the totaled items of

Non-GAAP development quarter. released projects future million but the million overall XXXX. to $X.X G&A reported largely during the second initial R&D was schedule second to during decreased On basis, compared notably quarter in therefore of million, the quarter, at down the in quarter year during excludes compared revenue expenses capitalization, expected to with $X.X GAAP $X.X the R&D expense in to XXXX about reason in XXXX lower expense of XXXX. a sales represented quarter ago. quarter of was GAAP XXXX. to to and were is quarters Since in R&D compared expect second have the Threat we of marketing second related the the quarter. which quarter million expense completed, a the to GAAP from marketing R&D XXX those finished Security year-over-year. of revenue for efforts XXXX. and to ago. full-time and million technology to GAAP end during R&D $X.X XXX ahead $X.X consistent expense for been part-time second a new of million in and lower of of from decrease the be $X.X is of for XX% On attributed headcount non-GAAP was for the expense main million $X.X marketing R&D million compared quarter operating to of of the our effect quarter The offerings, the We $X.X with the a than higher million $X.X $X business capitalization during $X.X for of million during $X.X both the XXXX G&A the the half second XX%. period expense sales product was reduction higher Cyren of and R&D which non-GAAP million million expense last expense Overall, efforts compared basis QX $X.X of quarter R&D to expense R&D expense was year. and compared in employees XX% related capitalization the Inbox employees During InDepth The a increasing decrease the is the GAAP our million sales year

operating flow had cash $X.X million of compared the million $X.X operating quarter of During during of we positive second quarter, flow to XXXX. the cash

end several two million also collected we of quarter dollars of in quarter, XXXX the revenue at our our Overall $XX.X balance from the net positive cash During largest increase X customers annual the flow our the $X.X which the of end cash the the --from QX. at $XX.X end million end deferred second quarter and from the for million $X.X helped to from million balance prepayments at of increased million and cash December at increased of $X was million quarter. first to

Our threat expectations three renew renewal of activity quarter. churn periods years. intelligence several one from was threat with the intelligence significant in no second quarter customers with business our to We long-standing during ranging for had line the during

premium another for is year years. a notable pressure been for over that renewed upon account XX customer and pricing has of active renewal While XX% Cyren factor, always at now a one an customer

life. XXXX, During including expiration gross legacy the contracts enterprise which the and renewal renewed the security certain were rates products Cyren strategic portfolio down made keep gross our Web of decision we to to of narrow overall Security end above quarter retention for product end-of-life not rate will was web is wind retention decrease revenue attributable e-mail end the announcing our XX% is focus security in to offerings. these by threat down intelligence included This our security above target quarter, due In both our product efforts of the XXXX. and the during and on that The XX%. to partially cloud which

of all expect will fully quarters contracts expired. this We continue the have until trend over next two these

ongoing results. COVID-XX quarters to We nature Cyren business very second revenue We Brett quarter. not product the revenues do the contributed take impact to signed it two new our during our into on little multiple during to revenues Threat the recognition strategy: believe mentioned, ratable crisis the second quarter We of believe and quarter. released As the second that will new Security for several but impact during the significant the meaningfully product new contracts we related products InDepth. had of our enterprise due offerings the a Inbox the quarter, contracts operations

contracts our more it While in develop business, take customer is to certain sales their many as longer solutions it new business important for is customers marketing need a did as our the downturn and experienced and to of and close teams challenging have ever. for cybersecurity not

and the quarters. business on I it the our We the Q&A. ask related impact the will lines may continue monitor have coming that for situation will open the operator to up to over Jerry? now economic

Operator

have question Please Craig-Hallum. from go a ahead, Thank Bennett, sir. you. [Operator Chad Instructions] We

Chad Bennett

for Thanks my Great. morning, guys. taking questions. Good

Mike Myshrall

morning, Good Chad.

Chad Bennett

maybe can a minimum on changed contract or the customer kind so from a component. growth you the I more flat of a of in forward? Kind to assume somewhat Mike, that least it's with of, qualitatively of there? any change more annual terms of a Brett headwind – that to much go either just – terms So was at give intelligent customer color threat how variable importantly but the fee

Mike Myshrall

Sure.

So customer But contract with revenues our won't are contract They customer. using and five customers see more variable they that that usage the the of first a previously. is a it end services from of seven-figure towards we our the one that than nature year were the necessarily top increasing here. obviously of of that means was

customer the the quarter, expect during would a that overall on minor same that So we customer. full maintain from But year, value. would revenue the we had that second for impact recognition

Chad Bennett

Okay.

So not going headwind fair? to forward. really Is a – that

Mike Myshrall

quarter the full take up two Well or value. it to a may catch to

fee – year a the second rate flat So but quarters contract, below first in the from and of ago. run the it was

Chad Bennett

is then of – maybe partner kind the Microsoft And anything phenomenal Cyren I this Right. you is rate point just is at can guys. of rate take can take of you you're e-mail Brett – in to kind security but products? – And relatively the obviously and for Office in terms that phishing there there? the a of within you base that of your speak just terms new, know and seeing phishing of what of share XXX

Brett Jackson

April referring Cyren XX. to Security you're product the Chad, released Inbox was just

As I Mike your question early our and think QX. answer some would say, met mentioned, I it's too sales mentioned both initial know we've for traction. to got But internal the to we We target precisely.

is will good we But Phishing have question. of real inboxes. respect We very no Microsoft phishing. big is expect penetration with to XXX a problem. been that This market so a There need opportunity. the the our is achieve XXX far market. There's a to has common competition experience customers address million positive Microsoft

more but quarters So into in future as we'll early tell have to get market. the for data broader we you

Chad Bennett

the of Mike. for one us last again mix Mike, the maybe direct probably then standpoint remind can for of a And from kind me, you today? OEM rate run business versus

Mike Myshrall

Yes.

at XX% anticipate the XXXX, business. end and on the So intelligence We we enterprise. faster going still our that were XX% business as grow in It's to year enterprise same. intelligence OEM of business the the roughly than do threat our – the of we're the threat

the little would that bit forward. And Web time. base, that expect has under legacy – did have should of it new so mix the life Security, we revenue and decreased increase some a we Because to Threat moving add we product are products enterprise fall Cyren the end of because products, CIS the enterprise to ARR which over but InDepth

Chad Bennett

Okay.

Brett Jackson

priority more I my Chad, as earlier revenue. enterprise is add, comments, and in drive mentioned to And our would I

strategic revenues. hard – is our more and We'll see were our that maintain our is the is how opportunity to But focus like when predict, enterprise we'd were our OEM two So the there. position but as that recent more enterprise will at market. There's targeted focus. you product it that to may our launches drive in mix enterprise And change and focus. Mike most It said, that's to have change. noted

Chad Bennett

characterize last Security good Inbox direct – and to you're Brett And Threat wins the it. for business. one what the guess for you the ASP deal forward deal low Can you numbers already product how on size Obviously, standpoint, one thus size think about for those a far? of kind just just maybe from seen side on of but kind garnering me. enterprise Got I it's you've InDepth going then products? of some see

Brett Jackson

rather data not of I'd customers. until Yes. A on Chad comment size more that lot depends we on have points.

the picture we'll you how Cyren -- on a we as think see early market probably. further mid-market well Cyren get So, Inbox quarter Inbox get ASP as through get for opportunities want our which larger the And will the bit think, Security, for into too to have enterprise. targeting We're we looks, starting to Security have are see little I at data into we But to as more first to or the third impact tell. so I the our the an looking ASP.

I'd wait Threat expect OEM So, those InDepth on that. our the be Cyren in comment space. ASPs for with solution enterprise, to The we rather consistent to

So around seen seven-figure with those the we've are deals. ACV higher consistent Close ACV could what somewhere to typically be seven-figure space. OEM in deals,

Chad Bennett

I enough. Fair Good. Okay. appreciate...

Brett Jackson

myself. correct Chad, seven six six to have not figures, meant I Sorry. figures. I to figures say

Chad Bennett

it. appreciate Thanks. Got taking you questions. my it. Got I Okay.

Operator

like [Operator gentlemen, Jackson? there Instructions] Ladies for turn are I'd the further back to and no Mr. closing remarks. to Jackson over call questions. Brett

Brett Jackson

your updated We'd of the everyone Cyren. quarters. to future keeping in our progress joining look half to second you on in our for Thank forward thank on interest us you. today and like call We and XXXX

Operator

concludes conference. today's This

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

Cyren (CYRNQ) 12 Aug 202020 Q2 Earnings call transcript