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Cyren Announces Fourth Quarter and Full Year 2020 Financial Results

·13 min read

MCLEAN, VA / ACCESSWIRE / February 22, 2021 / Cyren (NASDAQ:CYRN) today announced its fourth quarter and full year 2020 financial results for the period ending December 31, 2020.

During the fourth quarter, Cyren reported quarterly revenues of $8.4 million, compared to $9.5 million during the fourth quarter of 2019. For the full year ended 2020, revenues were $36.4 million compared to $38.4 million in the prior year. Revenues for the fourth quarter included a one-time reduction of $0.7 million as a result of a multi-year customer contract that was restructured.

The Company's next generation email security product, Cyren Inbox Security, continued to gain traction among enterprises using Microsoft 365, with Q4 revenues increasing 140% over Q3 2020.

"2020 was a year of transition for Cyren as we focused on the execution of a new strategy," said Brett Jackson, CEO of Cyren. "Our teams accomplished our key objectives enhancing our core products, improving customer satisfaction and bringing new product to market. The highlight was the development and launch of our next generation, cloud-based email security product, Cyren Inbox Security. This new product provides Cyren with a significant growth engine into the enterprise market. We plan to continue investing in this opportunity to build market share and grow revenues. We believe that fourth quarter revenue growth is indicative of the potential opportunity we see."

Fourth Quarter and Full Year 2020 Financial Highlights:

  • Revenues for the fourth quarter of 2020 were $8.4 million, compared to $9.5 million during the fourth quarter of 2019. Revenues for the full year were $36.4 million compared to $38.4 million in 2019.

  • GAAP net loss for the fourth quarter of 2020 was $5.0 million, compared to a net loss of $5.3 million in the fourth quarter of 2019. GAAP net loss for the full year ended 2020 was $17.3 million compared to $18.0 million for the full year 2019.

  • GAAP loss per basic and diluted share for the fourth quarter of 2020 was $0.08, compared to a loss of $0.09 per basic and diluted share for the fourth quarter of 2019. GAAP loss per share was $0.29 in 2020 compared to $0.33 in 2019.

  • Non-GAAP net loss for the fourth quarter of 2020 was $4.2 million, compared to a Non-GAAP net loss of $3.3 million for the fourth quarter of 2019. Non-GAAP net loss for the full year 2020 was $13.8 million, a decrease compared to $15.3 million during 2019.

  • Non-GAAP loss per basic and diluted share was $0.07 for the fourth quarter of 2020, compared to a Non-GAAP loss of $0.06 per share in fourth quarter of 2019. Non-GAAP loss per basic and diluted share was $0.23 for 2020 compared to $0.28 per share in 2019.

  • Cash used in operating activities during the fourth quarter of 2020 was $3.0 million, compared to operating cash usage of $4.6 million during the fourth quarter of 2019.

  • Net cash flow for the fourth quarter of 2020 was negative $3.6 million, compared to $2.0 million during the fourth quarter of 2019 when the company raised capital through a rights offering.

  • Cash balance as of December 31, 2020, was $9.3 million, compared to $11.6 million as of December 31, 2019.

For information regarding the non-GAAP financial measures discussed in this release, please see "Use of Non-GAAP Financial Measures" and "Reconciliation of Selected GAAP Measures to Non-GAAP Measures."

Registered Direct Offering:

Subsequent to the end of the quarter, Cyren announced a registered direct offering with a select group of accredited institutional investors for the purchase of 12 million ordinary shares priced at $1.15 per share, generating gross proceeds of $13.8 million and net proceeds of $12.5 million. The transaction was completed on February 16, 2021 and therefore the proceeds of the transaction are not included in the cash balance on the balance sheet as of December 31, 2020.

Financial Results Conference Call:

The company will host a conference call at 4:30 p.m. Eastern Time on Monday, February 22, 2021 to discuss fourth quarter and full year 2020 results.

U.S. Dial-in Number: 1-877-407-0312
Israel Dial-in Number: 1-80-940-6247
International Dial-in Number: 1-201-389-0899

The call will be simultaneously webcast live on the investor relations section of Cyren's website at https://ir.cyren.com, or by using the link: https://www.webcast-eqs.com/cyren20210222/en.

For those unable to participate in the live conference call, a replay will be available until March 8, 2021. To access the replay, the U.S. dial in number is 1-877-660-6853 and the non-U.S. dial in number is 1-201-612-7415. Callers will be prompted for replay conference ID number 13716472. An archived version of the webcast will also be available on the investor relations section of the company's website at https://ir.cyren.com/events.

About Cyren:

More than 1.3 billion users around the world rely on Cyren's cloud security solutions to protect them against cyber-attacks every day. Powered by the world's largest security cloud, Cyren (NASDAQ: CYRN) delivers fast time-to-protection with embedded threat detection, threat intelligence and email security solutions. Learn more at www.cyren.com.

Blog: http://blog.cyren.com
LinkedIn: www.linkedin.com/company/cyren
Twitter: www.twitter.com/CyrenInc

Use of Non-GAAP Financial Measures:

Non-GAAP financial measures consist of GAAP financial measures adjusted to exclude: stock-based compensation expenses, amortization of acquired intangible assets, and deferred taxes related to acquisitions, adjustments to earn-out obligations, and capitalization of technology. The purpose of such adjustments is to give an indication of the company's performance exclusive of non-cash charges and other items that are considered by management to be outside of the company's core operating results. The company's non-GAAP financial measures are not meant to be considered in isolation or as a substitute for comparable GAAP measures, and should be read only in conjunction with the company's consolidated financial statements prepared in accordance with GAAP.

Company management regularly uses supplemental non-GAAP financial measures internally to understand, manage and evaluate the business and make operating decisions.

These non-GAAP measures are among the primary factors management uses in planning for and forecasting future periods. The company believes this adjustment is useful to investors as a measure of the ongoing performance of the business. The company believes these non-GAAP financial measures provide consistent and comparable measures to help investors understand the company's current and future operating cash flow performance. These non-GAAP financial measures may differ materially from the non-GAAP financial measures used by other companies. Reconciliation between results on a GAAP and non-GAAP basis is provided in a table immediately following the Consolidated Statements of Income. The presentation of this non-GAAP financial information is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with GAAP. Management uses both GAAP and non-GAAP measures when evaluating the business internally and therefore felt it important to make these non-GAAP adjustments available to investors.

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. For example, statements in the future tense, and statements including words such as "expect," "plan," "estimate," "anticipate," or "believe" are forward-looking statements. These statements are based on information available at the time of the press release and the company assumes no obligation to update any of them. The statements in this press release are not guarantees of future performance and actual results could differ materially from current expectations as a result of numerous factors, including business conditions and growth or deterioration in the internet security market, technological developments, products offered by competitors, availability of qualified staff, and technological difficulties and resource constraints encountered in developing new products, as well as those risks described in the company's publicly filed reports, which are available through www.sec.gov.

Company Contact

Kenneth Tarpey, CFO
Cyren
+1.703.760.3320

CYREN LTD.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands of U.S. dollars, except per share amounts)

Three months ended

Twelve months ended

December 31

December 31

2020

2019

2020

2019

Unaudited

Unaudited

Unaudited

Unaudited

Revenues

$

8,444

$

9,529

$

36,388

$

38,391

Cost of revenues

3,618

4,056

14,786

15,557

Gross profit

4,826

5,473

21,602

22,834

Operating expenses:

Research and development, net

3,819

3,811

16,083

15,801

Sales and marketing

2,555

3,352

11,678

13,825

General and administrative

2,591

3,563

9,583

10,877

Total operating expenses

8,965

10,726

37,344

40,503

Operating loss

(4,139

)

(5,253

)

(15,742

)

(17,669

)

Other income (expense), net

(4

)

4

5

266

Financial expenses, net

(890

)

(85

)

(1,647

)

(727

)

Loss before taxes

(5,033

)

(5,334

)

(17,384

)

(18,130

)

Tax benefit (provision)

27

(5

)

121

112

Loss

$

(5,006)

$

(5,339)

$

(17,263)

$

(18,018)

Loss per share - basic and diluted

$

(0.08

)

$

(0.09

)

$

(0.29

)

$

(0.33

)

Weighted average number of shares outstanding:

Basic and Diluted

60,994

57,473

60,327

55,167


CYREN LTD.
RECONCILIATION OF SELECTED GAAP MEASURES TO NON-GAAP MEASURES
(in thousands of U.S. dollars, except per share amounts)

Three months ended

Twelve months ended

December 31

December 31

2020

2019

2020

2019

Unaudited

Unaudited

Unaudited

Unaudited

GAAP gross profit

$

4,826

$

5,473

$

21,602

$

22,834

GAAP gross margin

57

%

57

%

59

%

59

%

Plus:

Stock-based compensation expense

20

143

105

241

Amortization of intangible assets

672

888

2,370

3,252

Non-GAAP gross profit

5,518

6,504

24,077

26,327

Non-GAAP gross margin

65

%

68

%

66

%

69

%

GAAP operating loss

(4,139

)

(5,253

)

(15,742

)

(17,669

)

Plus:

Stock-based compensation expense

515

1,358

2,391

2,360

Amortization of intangible assets

752

1,019

2,823

3,755

Expense (Capitalization) of technology

(372

)

(1,230

)

(1,439

)

(3,740

)

Settlement of litigation, net

-

1,078

-

1,078

Non-GAAP operating loss

(3,244

)

(3,028

)

(11,967

)

(14,216

)

GAAP loss

(5,006

)

(5,339

)

(17,263

)

(18,018

)

Plus:

Stock-based compensation expense

515

1,358

2,391

2,360

Amortization of intangible assets

752

1,019

2,823

3,755

Adjustment to earn-out liabilities

-

-

-

-

Amortization of deferred tax assets

(54

)

(129

)

(198

)

(299

)

Gain from an earn-out liability settlement

-

-

-

(256

)

Settlement of litigation, net

-

1,078

-

1,078

Expense (Capitalization) of technology

(380

)

(1,254

)

(1,506

)

(3,881

)

Non-GAAP loss

$

(4,173

)

$

(3,267

)

$

(13,753

)

$

(15,261

)

Numerator for non-GAAP EPS calculation

$

(4,173

)

$

(3,267

)

$

(13,753

)

$

(15,261

)

Non-GAAP loss per share

$

(0.07

)

$

(0.06

)

$

(0.23

)

$

(0.28

)

GAAP weighted-average shares used to

compute loss per share

60,994

57,473

60,327

55,167


CYREN LTD.
CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands of U.S. dollars)

December 31

December 31

2020

2019

Unaudited

Unaudited

Assets

Current Assets:

Cash and cash equivalents

$

9,296

$

11,551

Trade receivables, net

960

2,187

Deferred commissions

980

948

Prepaid expenses and other receivables

779

819

Total current assets

12,015

15,505

Long-term deferred commissions

1,125

1,580

Long-term lease deposits and prepaids

937

767

Operating lease right-of-use assets

10,900

8,695

Severance pay fund

745

659

Property and equipment, net

3,948

4,410

Intangible assets, net

7,797

8,966

Goodwill

21,476

20,246

Total long-term assets

46,928

45,323

Total assets

$

58,943

$

60,828

Liabilities and Shareholders' Equity

Current Liabilities:

Trade payables

$

799

$

1,184

Convertible notes

10,000

-

Employees and payroll accruals

3,813

3,427

Accrued expenses and other liabilities

1,420

1,145

Operating lease liabilities

1,983

1,946

Deferred revenues

6,934

7,208

Total current liabilities

24,949

14,910

Deferred revenues

644

1,956

Convertible notes

-

10,000

Convertible Debentures

9,248

-

Long-term operating lease liabilities

9,866

7,174

Deferred tax liability, net

655

796

Accrued severance pay

838

811

Other liabilities

706

470

Total long-term liabilities

21,957

21,207

Shareholders' equity

12,037

24,711

Total liabilities and shareholders' equity

$

58,943

$

60,828



CYREN LTD.
CONDENSED CONSOLIDATED CASH FLOW DATA
(in thousands of U.S. dollars)

Three months ended

Twelve months ended

December 31

December 31

2020

2019

2020

2019

Cash flows from operating activities:

Unaudited

Unaudited

Unaudited

Unaudited

Loss

$

(5,006

)

$

(5,339

)

(17,263

)

$

(18,018

)

Adjustments to reconcile loss to net cash provided by (used in) operating activities:

(Gain) / loss on disposal of property and equipment

2

(1

)

14

-

Depreciation

540

526

2,349

1,946

Stock-based compensation

515

1,358

2,391

2,360

Amortization of intangible assets

752

1,019

2,823

3,755

Amortization of deferred commissions

336

2,108

1,517

1,199

Amortization of operating lease right-of-use assets

649

280

2,157

1,331

Interest on convertible notes

139

144

575

568

Interest and amortization of debt issuance costs on Convertible Debentures

201

-

601

-

Other income related to the earn-out consideration

-

-

-

(257

)

Deferred taxes, net

(13

)

(140

)

(184

)

(322

)

Changes in assets and liabilities:

Trade receivables

1,425

1,339

1,299

1,535

Prepaid expenses and other receivables

513

436

57

(171

)

Deferred commissions

(195

)

(2,062

)

(1,095

)

(961

)

Change in long-term lease deposits

(27

)

20

(116

)

45

Trade payables

(110

)

(495

)

(399

)

(759

)

Employees and payroll accruals, accrued expenses and other liabilities

239

(843

)

149

(1,028

)

Deferred revenues

(2,890

)

(3,065

)

(1,856

)

2,932

Accrued severance pay, net

(24

)

(15

)

(60

)

58

Operating lease liabilities

(61

)

(171

)

(1,606

)

(1,246

)

Other long-term liabilities

53

277

237

151

Net cash used in operating activities

(2,962

)

(4,624

)

(8,410

)

(6,882

)

Cash flows from investing activities:

Capitalization of technology

(382

)

(1,234

)

(1,482

)

(3,696

)

Proceeds from sale of property and equipment

-

2

6

3

Purchase of property and equipment

(223

)

(211

)

(1,766

)

(1,470

)

Net cash used in investing activities

(605

)

(1,443

)

(3,242

)

(5,163

)

Cash flows from financing activities:

Proceeds from rights offering, net

-

7,967

9,442

7,967

Proceeds from Convertible Debenture, net of debt issuance costs

-

-

-

-

Payment of earn-out liability

-

-

-

(2,680

)

Proceeds from options exercised

-

-

-

743

Net cash provided by financing activities

-

7,967

9,442

6,030

Effect of exchange rate changes on cash

11

110

(3

)

(14

)

Increase (decrease) in cash, cash equivalents and restricted cash

(3,556)

2,010

(2,213)

(6,029)

Cash, cash equivalents and restricted cash at the beginning of the period

13,470

10,117

12,127

18,156

Cash, cash equivalents and restricted cash at the end of the period

$

9,914

$

12,127

$

9,914

$

12,127

Reconciliation of cash, cash equivalents and restricted cash as shown in the consolidated statements of cash flow:

Cash and cash equivalents

$

9,296

$

11,551

$

9,296

$

11,551

Restricted cash included in long-term restricted lease deposits

618

576

618

576

Total cash, cash equivalents and restricted cash

$

9,914

$

12,127

$

9,914

$

12,127

SOURCE: Cyren



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