CYRN - Earnings call transcript Q3 2021

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Operator

Welcome, everybody, to Cyren's Third Quarter 2021 Financial Results Conference Call. this call is being broadcast live and can be accessed on the Investor Relations section of the Cyren 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 outlined in the Risk Factors section of our SEC filing, including our annual report on Form 10-K that was filed March 30, 2021. be light should factors. these statements forward-looking considered of in risk Any undertake revise also harbor future. of is not safe as today, obligation the does Please the present and note, in forward-looking any statements outlook we management any the to as during conference we non-GAAP of may company's performance. this about when talking the course the discuss Also call, measures available Relations press Reconciliations the tables in of to are release issued measures we provided the Investor most financial directly on today website. our and the section comparable earnings the GAAP in financial and measures GAAP addition not are of These included for of should to benefit the instead measures. investors in be considered and

Joining me hand over to Tarpey, have Ken our Jackson, on Chief Brett. Financial the our call that, we now Brett Chief Officer. Executive will and call the Officer; With today, I

Brett Jackson

welcome Joe. revenue to by growth exciting, market. the our like Thanks, Cyren on focus continues establishing new today's to in an everyone build revenue I'd to anti-phishing recurring strategy to executing enterprise stream call.

our to report and QX mitigate security to a growth customer opportunity bullish to e-mail that and QX solution over business reinforces Phishing, are are on in fit. remain market transactions market We Cyren XX% product annual problems differentiated ransomware be threats our has threats. increase highly help for the of We for view compromise recurring with year-over-year. accelerate customer CIOs to consistently and feedback continue mind that significant and a of top enterprises, most quarter-ending revenue QX pleased these very and CISOs continued in momentum inbox XX% market Cyren

legacy as reported. churn in due quarters, and declined revenues overall business year-over-year, previously Cyren's While was this prior to downsell occurred our that in QX

believe will revenue key to Cyren of Cyren. be continue future the Security that We growth for driver Inbox

market with that revenue team to quarter, remains goal momentum materially a developing enterprise will on results. each the stream of high-growth in the contribute focused building Our Cyren's

are we will journey previously and multiple trajectory to date. revenue this span is quarters, encouraged have discussed, with a we that the As

differential. I As approach Cyren's highly my phishing is in earlier mentioned comments, to addressing

completely customers unique are here. and different We solution offering a

Cyren's leverages users' importantly, and automated and we phishing automated, automatically threats real-time Inbox continuously compromise business without human monitors business detects need remove detection for approach provide Our in e-mail incident phishing automatically responds e-mail core response. but, Security compromise inboxes, strength intervention. Cyren more also and to the attacks

e-mails identify basis. is to So and phishing investigate time saving longer manually return we simply This and our daily remove attacks, no suspicious The to they our effort into automatically doesn't component solution a the and investment. a translates BEC unique just have security on users. staff as IT of approach real threats, remove and valuable final involve on

and suspicious mentioned, and analyze to leverage we provide intelligence as well we as of BEC human automated As but users response, e-mails. also detection incident and identify help automated phishing

Our unique the win third in, by to supported with our and of win product participated continues XX% the XX%. our rate customers, is In and is we approach won resonate view we quarter, year-to-date our we rate. evaluations customer believe

are we confident our customers. and value provide As the in we last call, in market mentioned earnings product we quarter's fit

XX% quarter. Given an the QX component through channel essential came this, to Security expand our top our business achieving this. the growing Consistent more go-to-market. with priority our channel to results, And is than in Inbox is third our our Cyren of

in customers Kingdom. the the network added partners, quarter, United to our new We the such number earlier our component continue involved announced and said, XX,XXX We the believe that PD to an KnowBeX, layers awareness of is with another Softcat North today Phoenix leading component with defense is first are will important security expand than developing addressing phishing, of awareness customers solutions. phishing and providers providers partnerships security difficult all users capabilities With compromise be training leading and solution solve, provider go-to-market of an awareness our strategy. to and, with cybersecurity business ransomware additional about solution channel partnerships who enterprise's e-mail training multiple and expanding for worldwide. of other that problem. more in and in America Cybersecurity training complementary in Inbox Cyren a security We partner are problems Security offers including like to

in had in customers and requesting anti-phishing solution of engaged no learned also Cyren them we saw platform. As the we platform Security Inbox deployed between many were market, integration value that our but KnowBeX's and KnowBeX the automated

also the have mutual integrated partners combined many solution. a in Additionally, channel saw Cyren before value KnowBeX who and

are So Inbox more that collaborate well our solutions. their map and value and Cyren believe are orchestration, given provide partners security, for to automation as with the there as respective integration this platforms, customers. our collaborate when available the collaborated and integrate with and, other working including make provide today, and may integration and for referred to partnership to platforms, between endpoint we exciting customers to to value customers, integration before sense to a vendors greater Cyren Security road for that are much security SOAR mutual and product believe KnowBeX partnership as This We input, impetus would commonly customers an response and shared opportunities provide particularly solution KnowBeX products. is potential future. is develop integrated It a with market the

to customers partnership our to continue our opportunities can and/or value market will that provide traction. accelerate explore We

XXX enterprises is Cyren also we focused XXX with corporate companies XXX e-mail using users. worldwide with opportunity, by than more very their large approaches, a than are addressing business Inbox direction on Today, XXXX our market Security. Microsoft platform. threats Microsoft phishing and and used million are X we This strategic as As evaluating being more e-mail million compromise among

within and messaging well in said, to platforms SMS continue systems, Microsoft is systems using as phishing that believe messaging collaboration mobile e-mail anti-phishing goal Teams, With leading beyond to and phone achieve other Our Slack to including the the WhatsApp. among problem market as to position XXX. a we like enterprises will expand Zoom;

as vision a And expansion well. to security leading Cyren months, Our the will messaging strategy. platform for coming for developing other over not future is just be systems email be our provider we but

move me threat business. threat this intelligence In business, our Let provide e-mail Threat as providers, the our to of embedded managed service solutions cybersecurity largest world's detection well segment we and as Intelligence legacy leading vendors providers.

satisfaction have Our are customer we on teams maximizing of focused whom OEM customers, relationships our retention many and long-standing with. among

retention churn quarter gross are XX% pleased in downsell. report We with and to the of third minimal

several customers Additionally, in quarter. new added we the

XXXX financials. the I enterprise our build to to the out who Ken turn will continuing the in anti-phishing closing focused Of now call go-to-market will are course, QX momentum now us, is market. third QX on teams and calendar behind through year quarter and over go and

Kenneth Tarpey

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

to which on earnings that XXXX. non-GAAP Form For press today on and XX-Q. to The the $X.X ended legacy respectively. of is under $XXX,XXX those within excludes posted million more and GAAP XX% our to result as $X.X XX% year-over-year QX items, XX% third period reduction quarter metrics by were details Please We for on compared table September third life financial third issued XX% revenue the and third non-GAAP our renewals XXXX in of present several release disclosed were goods recorded contract 'XX. in and at quarter items. non-GAAP XX, margins XXXX, churn the the quarter in primarily GAAP a during refer our to U.S. a of change, basis, Other lower million results, compared this that that of nonoperating is which sold release effect million during same was of and took line the to we months a results. cost Investor of including section enterprise accounting basis, today's XXXX these with discuss were On certain during our earlier filings year compared previously website largest of I earnings please GAAP roughly will Please reduced during decrease gross our Relations note and gross XXXX. nonoperating quarter for The in a the for and adjusted GAAP during XXXX decline financials the was a values XXXX non-GAAP in contract End revenue reconciliation QX for a this were which X margins X GAAP to impact the the business. revenue refer legacy to $X.X on customer. ago. or expenses, quarterly for products QX our XXXX. of our reduction quarter had also revenue XXXX. contributed customer the customer was standards,

gross of in reduction lower revenue. function is So a the margin

loss basis, XXXX to diluted basis, million compared $X.X a quarter XXXX net basic XXXX. during basic to a for $X.XX per Cyren's for a basic was share XXXX of This XXXX. and share per On of share and and XXXX. XXXX. third of net compared per $X.X GAAP loss loss was translates diluted net compared QX per On QX quarter for per to non-GAAP diluted QX and diluted $X.XX during loss loss and $X.X the for Third quarter share QX $X.X was to basic million million third QX $X.XX GAAP $X.XX million a fully XXXX share

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

in release During quarter GAAP million on back from million expense third for adjustment was third quarter $X.X materialized during XXXX R&D projects write approximately reason a R&D the technology the of development XXXX we of older the that off GAAP terminated to includes onetime $XXX,XXX quarter the R&D some decrease recent expense for XXXX. books during to of GAAP is third XXXX, never that nonrecurring main projects. that the dating decided compared the was The quarter, R&D those expense into to QX products. $X.X in of

R&D of products of certain amount a fully expense quarter a in than capitalized third the During lower XXXX launched since launched. quarters are prior we XXXX,

prior As R&D The will than reduces expenses costs these GAAP the capitalization during increase. capitalization decreases, as hence, was a R&D expenses, period quarters. result, higher of expense in

was expense end from was count XXX of end $X.X The which XXXX the Another R&D period million headcount to and part-time a consideration full-time in non-GAAP for effects for decreased On On million related and headcount, Employee QX in and in R&D year at capitalization, costs. decrease the the of down headcount $X.X the quarter XXXX as XXXX of $X.X million million QX XXXX employees, basis, expense million during expense full-time $X.X a million QX resulting in G&A part-time is to from compared compared in non-GAAP of $X.X expenses was $X.X was with the sales the overall GAAP XXXX. QX and the excludes lower lower XXXX. salaries the XXXX expense R&D compared sales third is basis, third to million to G&A quarter to XXX XXXX. consistent $X.X marketing a reduction $X.X million Non-GAAP in QX ago. QX of XXXX. marketing during The to for at million QX operating expense compared and XXXX. year-over-year. compared during $X.X employees was million $X.X the

multimillion of million, During $X.X the in decrease with of flow during was exercise net received The to balance operating negative our the one million to certain until due to shares trade various increase purchase price XX, a $XX.X Overall, XXXX XX, a due largely which a XXXX. On not immediately negative of first XXXX. customers in late at by flow September had customer XX,XXX,XXX customer the million an of cash up flow of XXXX, operating cash XXXX driven agreements to cash in our we warrants on receivable September per issue originally an payment to in of deferred quarter largest million September the accounts a sales XX,XXX,XXX decline $X.X and price prepayment XX, the was by but a down receipt placement an was due renewals. XX, into revenue warrants in of to agreed multiyear, decline of March compared private a QX quarter, of was quarter cash we large share. in purchase terminate securities $X.X deferred loss, offering the revenue XXXX, share third for driven XXXX positive of entered $X.X which at XXXX. XXXX. The and dollar at shares on increase from and net for October was investors, ordinary be million $X.XX and was ordinary sell an early at QX ordinary institutional $X.XX purchase we a exercisable will There per

September We price warrants the to shares, The will exercise price placement offering $X.XX through March million the us We the ordinary connection We XX, to offering of terminate the representing and an for of will to purchase share intend shares equal be capital immediately agent purposes closing to working also the occurred offering. XXX% of the issue indebtedness. net will in proceeds on X% proceeds of $XX.X have ordinary XX, received use the the of agreed from The and number on to of with repayment by warrants offering. gross sold up received and in aggregate placement XXXX. agent XXXX. per exercisable offering XXX,XXX or

we Inbox Cyren Security. released During quarter of second the XXXX,

during to ratable the increase contracts contributed of of nature our quarter, the signed each continue the We material. to due not revenues, but quarter number was the revenue

this a revenues believe to of begin before of offering continue have will impact revenue. new a number on the We meaningful our take it product will to quarters

to The an at a now the with company to Listing time I be will of the to to to price bid compliance below with disclosed, the $X $X. ordinary include status will company company to As minimum continued If bid the rule be extension requirements. XXX-day NASDAQ to ordinary was of announced trading received regain on with notice ask until company's split. stock has can additional on X, with There price for price ordinary shares on the of ordinary any maintain continues of make and shares October trade compliance. NASDAQ The extension the assurance notice noncompliance options until Capital request Capital no shares days. of rule company various the written likely consecutive question-and-answer. regain do requirement. Therefore, company's X, for level that NASDAQ received the for Market. above effect the April if $X the NASDAQ's company's the continued that These regain as the listed Market. lines at continue the Department XXXX, bid the share its compliance remain shares we of written a or X, the NASDAQ's listing minimum requirement. be reverse has the shares regain April no of price share the compliance it Capital On granting share XXXX, price immediate previously will company will closes XX other company the from notification a compliance that now below the per not for NASDAQ operator or ordinary listing any from Qualification Market, NASDAQ is at XX the effecting open consecutive its The and will matter monitor consider days, available closed. options XXXX,

Brett Jackson

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

Operator

today's teleconference. concludes This

You participation, Thank your have for wonderful and lines at may disconnect time. you a this day. your

Cyren (CYRNQ) 16 Nov 212021 Q3 Earnings call transcript