CYRN - Earnings call transcript Q4 2020

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Operator

Greetings and welcome to Cyren's Q3 Earnings 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] Please note, this conference is being recorded. I'd now the turn the conference over to your host Eric Spindel. you. Thank

begin. may You

Eric Spindel

Relations welcome results fourth is conference can the live, and site. Cyren year being and XXXX it Investor on accessed financial call. be of to you, the quarter Web Cyren's full broadcast section Thank This call

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

years who is today's will former call Officer; from Officer moving Financial Ken Officer me that, Myshrall, Chief of the Cyren's with to and XX end Cyren’s Mike the have Executive now Brett Chief the Cyren and company. at we Jackson, the Brett. new Financial Joining on With after hand call Tarpey, Chief off week I

Brett Jackson

Thanks, will was the XXXX of for Cyren a our The and our quarter second legacy email the the of operational year progress business Inbox discuss enterprise, the detection joining streamlined transition having achieved down security continued thank XXXX products as momentum goals and enable targeting results. generation revitalized next in exited core half year our our serve services that We our new to new like I'd wound well QX a we growth. Eric. the primary for call to to our to us with strategy We brought solution. Security, SMB in Cyren offerings, gained everyone market valuable threat was organization. fourth executed today XXXX. highlight cloud-based and key

bypassing continues a As billion the is in we this capabilities XXX based phishing with an opportunity be for email email product. market new evasive organizations, our used measures platform product on a opportunity past size market our we and of engine $X calls, In Microsoft dominant security addressable and enterprises the is to secure top Cyren's of this the problem the and gateways. globally total have by estimated opinion, security market. existing IT like growth see mentioned as

quarter market in CIS. our the and this sales the this penetrating investment plan second market full was share. continue on and ramping revenues to majority Given with QX our of marketing we focusing market, building

phishing Security global announced New to purchased to We our enterprise of ability this and and the visibility weeks rolling automated suspicious for customer wanted us. its product global users to of transaction that detection, emails. more the as the XX% scan Cyren QX across phishing, few from remediation increased XXX%. mitigate report well believe users we the XX,XXX Group security than that response operation Inbox across of transactions ahead while help quarter as out in is incidents, grew A attacks center revenues of Sika lie operations. ago, opportunities Sika's representative

announced also Inbox customers evaluate for the is a Security available which Marketplace, We in our Cyren review we provide convenient raise awareness way and Microsoft believe will product. that Microsoft Azure and to

reaction While to in competitive and rate. lifecycle, we proposition, be our encouraged by the it days product continue still differentiation our our early is win to very value customer

from intelligence of providers are growing to detection majority vendors core intelligence we We focused business and world's email and revenues services threat and leading our against on come our detection the help email protect enterprise threat threat provide borne While data our business. threats. Inbox Security, largest cybersecurity the our to Cyren with embeddable

During a one several product. with our contract figure the quarter, expansion we new closed of renewal large transactions, and year multi including OEM customers additional seven for existing

gross deliver strong had in quarter to customers approximately large to value Our and team continuing of is our focused retention XX%. the on we

we announce by with integrated security. Palo SOAR will customers most threat recently in our Networks Cortex harmonize XX% simplify security industry's and of is teams in will Alto's enterprises Cortex enterprise. across which of depth is Palo the pleased XSOAR in the with a enterprise a enable threat automation and the XSOAR join response X,XXX discover comprehensive consume Additionally, Cortex platform. and partnership the Cyren We've security orchestration and Networks, an industry Fortune marketplace, threat of ecosystem, Palo orchestration, to enterprise also one to intelligence. in XX% global are Cyren's operations XXX Alto leaders threat cloud leading used depth security the platform, security to solution which Alto intelligence

identifying forward and additional will reduce profile. XXXX, streamline As to our to we operations and financial opportunities look pursuing in prioritize we costs improve

during joined will contributor his of major Tarpey to moving the improve CFO the Finally, as forward quarter and years fourth end tenure served leveraging and has us as over Ken career. the and Cyren his next Cyren with public is here, previously wish Cyren's been for our best turn step work year call knowledge for announced, Ken at the scale been February. as Mike financial Myshrall on review to in of effective be to we He's experienced February new Mike from XX seven. company proven revenues. and profile our a we will XXXX who a full and Mike, his as now look CFO X. very will I CFO, we him financials.

Mike Myshrall

fourth good and quarter to am Brett, present financial full you, Thank and Cyren's results. I XXXX year afternoon. pleased

$XX.X those of quarter of GAAP $X.X non-GAAP basis, which excludes our to including site. was items. detailed today are and the non-GAAP were table our on is to fourth refer a GAAP reported For of during results XXXX. press closed release or expenses which please with February today after XXXX. a X-K for the and quarter Investor The earnings $XX.X market present to compared million released year more XXXX line our was earnings posted XXXX section I of million, results filed will results, U.S. form on Web the refer metrics accounting were non-operating revenue adjusted for the the results. the we revenues financial full note preliminary today's shortly non-operating certain to in in year for compared that on GAAP to million Full under million, on Please our issued reconciliation $X.X XX. standards, discuss that Relations release fourth that Please financials

were the calls, revenues in on and discussed retired XXXX year, we of we legacy new year expected this SMB decline the a from from Cyren a As loss products introduced products to offset such, focus as was until discontinued as transition impact revenue products on prior new number products. for order of enterprise to

As who a entered loyal fourth previously, Brett non-recurring quarter from who This in quarter-over-quarter. increased customer. The was reduction also quarter year their saw a contract the a and $X.X for mentioned multi-year not was the remains recognition amended into Revenue CIS agreement to the could customer for included a that XXXX, company related traction as good obligations. of Cyren five restructured. we contractual million customer XXX% fourth contract fulfill was a in revenue one-time single

this $X.XX of year XXXX and and fourth were will full of gross margins year during XX% for million quarter the unchanged Fourth ago. and loss to a the On margins quarter to non-GAAP remained XX%. do be fourth during issue margins basis, XXXX. of expect $X.X GAAP XX% quarters. quarter basic share, GAAP XXXX, XXXX. was fourth we loss that diluted compared a And margins GAAP the net future share gross per GAAP quarter not gross or So were an at to gross QX contract the during for XX% per loss net fourth year $X.XX the full were for compared in compared XX% a XX% GAAP to $X million, compared quarter XX%

$X.X this per a million, loss For revenue during decrease This versus fourth GAAP or the to million, totaled operating for in $X during share million of due to in and $XX.X G&A XXXX. XX% expense expenses representing quarter in $X The of from $XX expense or and revenue. million a was QX million, loss quarter quarter $X.XX full Quarter down $X.X declined of $X.X million expenses to expenses to XXXX quarter, during and million, last during the sales in net net expense Overall, the of XXXX, of was down of year, million, and revenue operating million, for was operating $X.XX diluted a when compared during per from XX% $X.X representing R&D basic million, million R&D $X.X was for million from QX decrease share GAAP revenue, expense decrease XX%. of marketing the from year-over-year or is XX% GAAP XX% fourth $X.X XXXX. year. XXXX. XXXX. a of $XX.X Sales was marketing in decrease the expense. translated decrease to compared it $XX.X revenue, XX% the same revenue, of for the XX% quarter quarter

a to XX XX% basic XXX of compared Cyren's of from net during increased XXXX. share net $X.X Total was the the to For loss in or XXX XXXX, QX sales a XXXX quarter million, of On non-GAAP the to of million and end diluted per expense in XXXX. loss fourth company $X.X $X.XX share, revenue of basis, employees, XX% was decreased to and fourth R&D to compared the non-GAAP and of compared in quarter loss down full a of XXXX, was to compared during headcount per G&A $X.XX of the from end revenue XX% XXXX. marketing year, XX% and XX% at revenue at expense

table non-GAAP non-GAAP non-cash per or excludes a loss share of Cyren's $X.XX in net year, net number per loss to or Cyren's decreased compared million share, to full XX% the $XX.X $XX.X For $X.XX million, XXXX. the items, our assets and reconciliation in to amortization on intangible of including the to details of for Please effects of GAAP technology. the stock-based of non-GAAP compensation, press release results. capitalization refer more

We of product we an February cash at XX cash $XX.X During quarter per million the the additional before will translates to $X expenses. million we usage of the of quarter $X.X Net Inbox activities cash offering an new quarter experienced quarter, XX, flow closed of operating usage excluding for negative $X.XX fourth million end primary offerings XXXX. proceeds focus of after financing shares, cash was Cyren and during operating compared gross be million general year year-over-year. versus million priced with negative million expenses. ago, million improvement The to million share working finished $X Subsequent accelerating of cash $X.X the growth cash proceeds XX% end the This $XX.X of equity with compared into corporate for the on XXXX. Security. $XX.X year and an of as in at such used million on a purposes, our in for capital to the offering $X.X

order efforts more Brett we costs underway our mentioned, in line our reduction with additional As revenues. in to expense bring have for

virtual to entirely operations For working most employees environment without operating during home. transitioned we from example, XXXX an almost

phase can tech very to help operations the personal expire non-renewal company open As and including reducing a at find Cyren is XXXX. enjoyed call is part cost CFO earnings I've Cyren's into note, transition Brett reduction hands I over who past the the as It a of my office fortunate will anticipate leases of Ken expenses, that, serving going overall our With Cyren On office believe good as seven to quarterly I over the scale month. CFO and for financial in last of next improve pleasure period now in its up plan U.S. has to this which this the lines Q&A. end working ask the very been Tarpey, two years. were seasoned operator in the Ken with growth. strategy, Cyren further of my company We of forward. to we company with the our leave

Operator

this Our Nick conducting Instructions] be Craig-Hallum. from At of session. question [Operator time, a Mattiacci is will we first question-and-answer

Nick Mattiacci

This throughout cyber the how Bennett. want the guys. to is Nick attacks, taking dramatic questions, a start Mattiacci resulted a fanatic I Thanks and of I'm We've heard particularly kind in with for for in security has Chad pandemic phishing. space increase about in email question. my pretty

spoke recognize guys? But this you Now, for little this what customers bit. this about a you and demand extent does guys critical are driving issue seeing you to

Brett Jackson

the for certainly certainly, the on that pandemic, has phishing the we research lot in pandemic, Thanks Microsoft I threat. cases, based not XXX a with the and market of that most it's to analysis And environments worse. working knew, question, prior made an think major And virtual was annoyance. a of

demand the that driven environments. prior pandemic. And work because was has of So pandemic demand there to the increased virtual existing only

still or data we whether help looking opportunity there's we've about with their got strongly not, for customers across that So the are feel enterprises. evasive pandemic phishing good

Nick Mattiacci

Got it.

I where seats you things guys of of end the the a target these year. the an throughout? an year of you CIS on active users think give drove on idea you ended quarter, for us in by update how set have XXX,XXX Could terms and maybe last

Brett Jackson

in this XX% we point that well. to good strong feel we some We've transactions pipeline laid call. saw growth. we projection from in our increase to and a mentioned, at not on achieving objective in previous about But And QX. the are [seat] we we with share transactions good QX as Well, QX a ready got [ph] size our out as

on expectations. internal growth we're So the path meeting and seat our of right terms in

Nick Mattiacci

Alto And that the same your begin that on Palo then kind of now thoughts marketplaces that? Azure about you and exists and could opportunity in maybe note, on expand the

Brett Jackson

the marketplace both our products give think that Azure visibility we enterprise. I the opportunities and the have into Well, marketplace, Alto with Palo

Cyren's As calls, you do the past the that our large inside refocused was away are business of through And target from traditional it's -- sort about on visibility from growing remember, we may remember enterprises. And all That enterprise market. getting evaluate offering, frankly. great we'll purchase for But channel it enterprise offering also and relationships are of enterprise customers sales for to our force exposed partners. these us ways and customers through two get easier marketplaces to product examples make to our and our SMB.

Nick Mattiacci

Okay. Can about kind actually me think you key at QX item other QX revenue? course, if growth, a with that thinking of of revenues? and any become revenue you framework but push CIS don't I for see about kind a that I help overall growing is rapid should sequential rate of -- then, quarter-over-quarter,

Mike Myshrall

the as mentioned, one-time So we by to a were revenue. QX impacted non-recurring adjustment revenues

of will revenue revenue we still QX So over anticipate do is the QX that growing number. a component rebound CIS revenue. overall

over QX. to have rebound a it it's but so be And quarterly significant don't anticipate impact going that a revenues, overall QX will on we

Brett Jackson

echo Inbox QX year. two has third Just in last our been now what into quarters, to where QX, quarter. Security its Mike the market We're mentioned, it's

very we're in of much new this still product. phase ramping So the

enterprise biggest in growth will see be be will we we be will So as growth believe we And encouraged will But our it plays come opportunity. we've the -- contribution contribution not there. where not space. as a revenue again, QX. by time mentioned, revenue its its material, into the And we are opportunity material there

So we're a it's still excited product. about that and new opportunity

So it's quarters. the over course multiple a journey of

Nick Mattiacci

And it get at just what the it's of for on what company. kind excited call, what And last join of is kind the be he I if to on one most him take this then, he of Ken, will want about? first is aspects business to year maybe Cyren, his motivated one the

Ken Tarpey

and known loss is understand to deal a Okay. a investors And for with Sure. was track the of and up long-term record to Hi, opportunity offering very a my meet company monetary the catching forward company CIS. bit this great obviously, last company's with the the further. Ken. to I've what that had what's me with company great for to phishing From Nice look of you, company customer set base. the a standpoint, a in financial my the and little intriguing, to in about the value

that the and I team with capture me the of to with of another dealt just and for have of the it opportunity. help with types had all right get various dealt ingredients So engaged Brett to with companies company, before, a number to try collective public time

Operator

it not time, we this At appears have questions. further do any

Brett Jackson

Cyren's I on coming Okay. the We'd for the on quarters. over forward updated joining everyone you look like us today. progress to keeping to call Thanks. thank

Operator

conference and time. your this at Thank you today's concludes disconnect This lines your participation. may you for

Cyren (CYRNQ) 23 Feb 212020 Q4 Earnings call transcript