CYREN Ltd. CAPEX surged on 87.5% and Revenue jumped on 16.6%
02/13/2019 • About CYREN Ltd. (
$CYRN) • By InTwits
CYREN Ltd. reported FY2018 financial results today. Here are the key drivers of the company's long term financial model:
- The company operates at negative EBITDA Margin: -37.0%
- CYREN Ltd. motivates its personel by high Stock Based Compensation (SBC): average SBC/Revenue for FY2014-FY2018 was 0.0% while average EBITDA Margin was -18.9% for the sames years
- CYREN Ltd. has low CAPEX intensity: 5 year average CAPEX/Revenue was 5.0%. At the same time it's a lot of higher than industry average of 3.1%.
- CAPEX is quite volatile: $3m in FY2018, $2m in FY2017, $1m in FY2016, $1m in FY2015, $1m in FY2014
- The company has unprofitable business model: ROIC is -43.4%
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
CYREN Ltd.'s Revenue surged on 16.6%. Revenue growth showed acceleration in FY18Q4 - it increased 26.5% YoY. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased slightly on 1.4 pp from 1.1% to 2.5% in 2018. During the last 5 years EBITDA Margin topped in FY2015 at -5.7% and was declining since that time.
Gross Margin decreased slightly on 1.9 pp from 61.4% to 59.5% in FY2018. Gross Margin followed a declining trend at -3.9 pp per annum in FY2014-FY2018. SG&A as a % of Revenue decreased on 5.8 pp from 74.1% to 68.4% in FY2018.
Net Income margin decreased on 3.3 pp from -50.8% to -54.1% in FY2018. During the last 5 years Net Income margin topped in FY2015 at -17.3% and was declining since that time.
Investments (CAPEX, working capital and M&A)
In FY2018 the company had CAPEX/Revenue of 9.2%. CAPEX/Revenue increased on 4.8 pp from 4.4% in FY2015 to 9.2% in FY2018. Average CAPEX/Revenue for the last three years was 6.1%. CAPEX as a % of Revenue followed a growing trend at 1.5 pp per annum in the last 5 years.
Leverage (Debt)
Debt level is -1.4x Net Debt / EBITDA and Debt / EBITDA. Debt jumped while cash dropped on 26.7%.
The company has no short term refinancing risk: short term debt is zero.
Financial and operational results
FY ended 11/30/-0001
CYREN Ltd. ($CYRN) key annual financial indicators| mln. $ | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 31.925 | 27.762 | 30.983 | 30.799 | 35.900 | 16.6% |
| Gross Profit | 23.802 | 19.439 | 20.941 | 18.900 | 21.360 | 13.0% |
| SG&A | 19.849 | 15.044 | 17.459 | 22.837 | 24.545 | 7.5% |
| EBITDA | -4.248 | -1.574 | -1.985 | -8.713 | -13.280 | |
| Net Income | -7.016 | -4.799 | -6.213 | -15.648 | -19.414 | |
Balance Sheet
|
|---|
| Cash | 11.063 | 16.379 | 10.621 | 23.981 | 17.571 | -26.7% |
| Short Term Debt | 4.900 | 4.169 | 0.000 | 0.000 | 0.000 | |
| Long Term Debt | 0.000 | 0.000 | 0.000 | 0.000 | 10.000 | |
Cash flow
|
|---|
| Capex | 0.771 | 1.222 | 0.985 | 1.771 | 3.320 | 87.5% |
Ratios
|
|---|
| Revenue growth | -1.0% | -13.0% | 11.6% | -0.6% | 16.6% | |
| EBITDA growth | 70.5% | -62.9% | 26.1% | 338.9% | 52.4% | |
|
|---|
| Gross Margin | 74.6% | 70.0% | 67.6% | 61.4% | 59.5% | -1.9% |
| EBITDA Margin | -13.3% | -5.7% | -6.4% | -28.3% | -37.0% | -8.7% |
| SG&A, % of revenue | 62.2% | 54.2% | 56.4% | 74.1% | 68.4% | -5.8% |
| Net Income Margin | -22.0% | -17.3% | -20.1% | -50.8% | -54.1% | -3.3% |
| CAPEX, % of revenue | 2.4% | 4.4% | 3.2% | 5.8% | 9.2% | 3.5% |
|
|---|
| ROIC | -20.1% | -11.0% | -16.2% | -34.9% | -43.4% | -8.5% |
| ROE | -23.6% | -14.0% | -18.0% | -39.7% | | |
CYREN Ltd. ($CYRN) key quoterly financial indicators
| mln. $ | FY18Q1 | FY18Q2 | FY18Q3 | FY18Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 8 | 9 | 10 | 10 | | -4.1% | 18.5% | 26.5% | 26.5% |
| EBITDA | -4 | -3 | -3 | -4 | | | | | |
| Net Income | -5 | -4 | -4 | -6 | | | | | |
Balance Sheet
|
|---|
| Cash | 18 | 17 | 14 | 18 | | 32.5% | 43.7% | 36.4% | -26.7% |
| Short Term Debt | 0 | 0 | 0 | 0 | | | | | |
| Long Term Debt | 0 | 0 | 0 | 10 | | -100.0% | -100.0% | -100.0% | |
Ratios
|
|---|
| Gross Margin | 55.7% | 60.5% | 61.6% | 59.5% | | -6.2% | -0.9% | 2.5% | -3.6% |
| EBITDA Margin | -51.4% | -28.6% | -31.8% | -41.4% | | -36.6% | -7.6% | -3.1% | 8.2% |
| Net Income Margin | -70.0% | -47.1% | -46.3% | -58.6% | | -38.3% | -12.7% | 1.7% | 32.4% |
Peers in Systems Software
Below we provide CYREN Ltd. benchmarking against other companies in Systems Software industry for the last 5 years. We show data for the top-5 companies by key financial metric together with the median value for all the companies in the industry.
Top companies by Revenue growth, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Advantego Corp ($ADGO) | | | | | 973.8% |
| Solbright Group Inc ($SBRT) | | | 286.4% | 25.4% | 414.0% |
| Duos Technologies Group Inc ($DUOT) | | 61.0% | -9.8% | -36.4% | 210.2% |
| Dell Technologies Inc. ($DVMT) | | | | | 145.7% |
| Finjan Holdings, Inc. ($FNJN) | | -6.2% | 292.3% | 174.6% | 63.0% |
| |
|---|
| Median (48 companies) | | 20.6% | 14.7% | 16.6% | 20.4% |
|---|
| CYREN Ltd. ($CYRN) | | -13.0% | 11.6% | -0.6% | 16.6% |
Top companies by Gross margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| StrikeForce Technologies Inc ($SFOR) | 97.0% | 96.9% | 98.3% | 95.4% | 94.0% |
| Varonis Systems, Inc. ($VRNS) | 90.2% | 90.6% | 90.5% | 90.4% | 89.8% |
| Check Point Software Technologies Ltd. ($CHKP) | 88.2% | 88.5% | 88.5% | 88.6% | 89.6% |
| Tableau Software, Inc. ($DATA) | 91.0% | 88.7% | 88.0% | 87.1% | 87.7% |
| Attunity Ltd. ($ATTU) | 90.7% | 84.9% | 83.9% | 84.1% | 87.5% |
| |
|---|
| Median (53 companies) | 77.0% | 75.4% | 73.6% | 74.1% | 75.0% |
|---|
| CYREN Ltd. ($CYRN) | 74.6% | 70.0% | 67.6% | 61.4% | 59.5% |
Top companies by EBITDA margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Check Point Software Technologies Ltd. ($CHKP) | 54.3% | 52.4% | 49.8% | 50.7% | 48.8% |
| SolarWinds Corporation ($SWI) | | | -8.0% | 44.0% | 44.8% |
| Finjan Holdings, Inc. ($FNJN) | -192.1% | -295.2% | 2.2% | 30.2% | 42.0% |
| Oracle Corporation ($ORCL) | 46.2% | 43.8% | 40.8% | 40.2% | 40.8% |
| CA Inc. ($CA) | 33.9% | 36.7% | 37.2% | 36.1% | 35.3% |
| |
|---|
| Median (47 companies) | 1.0% | -5.9% | -9.8% | -3.6% | -3.9% |
|---|
| CYREN Ltd. ($CYRN) | -13.3% | -5.7% | -6.4% | -28.3% | -37.0% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| The Rubicon Project, Inc. ($RUBI) | 15.6% | 11.4% | 12.0% | 26.0% | 16.0% |
| ServiceNow, Inc. ($NOW) | 8.0% | 8.7% | 7.6% | 7.8% | 8.6% |
| Qualys, Inc. ($QLYS) | 10.4% | 12.2% | 11.7% | 16.4% | 8.2% |
| Zscaler, Inc. ($ZS) | | 12.5% | 7.8% | 6.5% | 8.0% |
| Marizyme Inc ($MRZM) | | 0.0% | 0.0% | 0.0% | 6.9% |
| |
|---|
| Median (48 companies) | 2.9% | 2.1% | 2.0% | 2.2% | 2.5% |
|---|
| CYREN Ltd. ($CYRN) | 2.4% | 4.4% | 3.2% | 5.8% | 9.2% |
Top companies by ROIC, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Finjan Holdings, Inc. ($FNJN) | -42.6% | -113.5% | 3.4% | 46.6% | 64.1% |
| Fortinet, Inc. ($FTNT) | 9.2% | 2.1% | 5.3% | 15.0% | 28.0% |
| Check Point Software Technologies Ltd. ($CHKP) | 22.2% | 23.7% | 24.7% | 26.8% | 25.5% |
| MAM Software Group, Inc. ($MAMS) | 13.3% | 19.3% | 21.1% | 24.2% | 25.2% |
| Red Hat, Inc. ($RHT) | 15.1% | 14.1% | 14.2% | 16.4% | 22.4% |
| |
|---|
| Median (56 companies) | 0.0% | 0.0% | 0.0% | -2.7% | -0.9% |
|---|
| CYREN Ltd. ($CYRN) | -20.1% | -11.0% | -16.2% | -34.9% | -43.4% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| NXT-ID Inc. ($NXTD) | | | | | 9.7x |
| Symantec Corporation ($SYMC) | -3.2x | -1.5x | -5.0x | 10.0x | 4.7x |
| SolarWinds Corporation ($SWI) | | | | 6.2x | 4.1x |
| Oracle Corporation ($ORCL) | 0.4x | 1.2x | 1.6x | 2.4x | 2.4x |
| ServiceNow, Inc. ($NOW) | | | | 9.0x | 0.9x |
| |
|---|
| Median (23 companies) | -2.4x | -1.4x | -1.2x | -0.6x | -0.4x |
|---|
