CYREN Ltd. revenue started to decline in FY2020: decreased 5.2% vs. 6.9% growth a year earliner
02/22/2021 • About CYREN Ltd. (
$CYRN) • By InTwits
CYREN Ltd. reported FY2020 financial results today. Overall the company's long term financial model is characterised by the following facts:
- The company operates at negative EBITDA Margin: -27.4%
- CYREN Ltd. spends a lot for Stock Based Compensation (SBC): average SBC/Revenue for FY2016-FY2020 is 0.0%. Average EBITDA Margin for the same period was -25.4%
- CYREN Ltd. has medium CAPEX intensity: 5 year average CAPEX/Revenue was 5.4%. At the same time it's a lot of higher than industry average of 3.2%.
- CAPEX is quite volatile: $2m in FY2020, $1m in FY2019, $3m in FY2018, $2m in FY2017, $1m in FY2016
- The company has unprofitable business model: ROIC is -46.4%
- It operates with medium-size leverage: Net Debt/EBITDA is 1.8x while industry average is -1.0x
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
CYREN Ltd.'s Revenue decreased on 5.2%. Revenue decline showed acceleration in FY20Q4 - it was 11.4% YoY. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin jumped on 11.5 pp from -13.4% to -1.9% in 2020.
Gross Margin showed almost no change in FY2020. Gross Margin followed a declining trend in FY2016-FY2020. SG&A as a % of Revenue decreased on 5.9 pp from 64.3% to 58.4% in FY2020. During the last 5 years SG&A as a % of Revenue topped in FY2017 at 74.1% and was declining since that time.
Net Income margin decreased slightly on 0.51 pp from -46.9% to -47.4% in FY2020.
Investments (CAPEX, working capital and M&A)
The company's CAPEX/Revenue was 4.9% in FY2020. CAPEX/Revenue decreased slightly on 0.90 pp from 5.8% in FY2017 to 4.9% in FY2020. Average CAPEX/Revenue for the last three years was 6.0%.
Return on investment
The company operates at negative ROIC (-46.4%) and ROE (-94.0%). ROIC decreased on 7.0 pp from -39.4% to -46.4% in FY2020. ROE dropped on 30.3 pp from -63.7% to -94.0% in FY2020.
Leverage (Debt)
Company's Net Debt / EBITDA is 1.8x and Debt / EBITDA is . Net Debt / EBITDA didn't change in FY2020. Debt dropped on 38.0% while cash dropped on 19.5%.
CYREN Ltd. has no short term refinancing risk: cash is higher than short term debt (468.8%).
Financial and operational results
CYREN Ltd. ($CYRN) key annual financial indicators| mln. $ | 2016 | 2017 | 2018 | 2019 | 2020 | 2020/2019 |
|---|
P&L
|
|---|
| Revenue | 30.983 | 30.799 | 35.900 | 38.391 | 36.388 | -5.2% |
| Gross Profit | 20.941 | 18.900 | 21.360 | 22.834 | 21.602 | -5.4% |
| SG&A | 17.459 | 22.837 | 24.545 | 24.702 | 21.261 | -13.9% |
| EBITDA | -1.985 | -8.713 | -13.280 | -9.874 | -9.969 | |
| Net Income | -6.213 | -15.648 | -19.414 | -18.018 | -17.263 | |
Balance Sheet
|
|---|
| Cash | 10.621 | 23.981 | 17.571 | 11.551 | 9.296 | -19.5% |
| Short Term Debt | 0.000 | 0.000 | 0.000 | 1.946 | 1.983 | 1.9% |
| Long Term Debt | 0.000 | 0.000 | 10.000 | 17.174 | 9.866 | -42.6% |
Cash flow
|
|---|
| Capex | 0.985 | 1.771 | 3.320 | 1.470 | 1.766 | 20.1% |
Ratios
|
|---|
| Revenue growth | 11.6% | -0.6% | 16.6% | 6.9% | -5.2% | |
| EBITDA growth | 26.1% | 338.9% | 52.4% | -25.6% | 1.0% | |
|
|---|
| Gross Margin | 67.6% | 61.4% | 59.5% | 59.5% | 59.4% | -0.1% |
| EBITDA Margin | -6.4% | -28.3% | -37.0% | -25.7% | -27.4% | -1.7% |
| SG&A, % of revenue | 56.4% | 74.1% | 68.4% | 64.3% | 58.4% | -5.9% |
| Net Income Margin | -20.1% | -50.8% | -54.1% | -46.9% | -47.4% | -0.5% |
| CAPEX, % of revenue | 3.2% | 5.8% | 9.2% | 3.8% | 4.9% | 1.0% |
|
|---|
| ROIC | -16.2% | -34.9% | -43.4% | -39.4% | -46.4% | -7.0% |
| ROE | -18.0% | -39.7% | | -63.7% | -94.0% | -30.3% |
CYREN Ltd. ($CYRN) key quoterly financial indicators
| mln. $ | FY20Q1 | FY20Q2 | FY20Q3 | FY20Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 10 | 9 | 9 | 8 | | -0.1% | -5.5% | -4.0% | -11.4% |
| EBITDA | -1 | -2 | -3 | -3 | | - | - | - | - |
| Net Income | -3 | -5 | -5 | -5 | | - | - | - | - |
Balance Sheet
|
|---|
| Cash | 15 | 16 | 13 | 9 | | 21.0% | 29.8% | 35.1% | -19.5% |
| Short Term Debt | 2 | 2 | 2 | 2 | | 46.9% | 46.0% | 45.5% | 1.9% |
| Long Term Debt | 30 | 20 | 20 | 10 | | 59.2% | 8.9% | 9.4% | -42.6% |
Ratios
|
|---|
| Gross Margin | 62.7% | 58.8% | 58.4% | 57.2% | | 4.1% | -2.1% | -2.5% | -0.3% |
| EBITDA Margin | -8.1% | -25.2% | -28.5% | -31.3% | | 22.1% | 0.6% | -14.1% | 1.0% |
| Net Income Margin | -28.5% | -50.3% | -53.7% | -59.3% | | 18.9% | -3.2% | -16.5% | -3.3% |
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 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Zscaler, Inc. ($ZS) | - | 56.5% | 51.3% | 59.2% | 42.4% |
| ServiceNow, Inc. ($NOW) | - | 38.0% | 36.0% | 32.6% | 30.6% |
| SailPoint Technologies Holdings, Inc. ($SAIL) | - | 40.5% | 33.8% | 15.9% | 26.6% |
| Rapid7, Inc. ($RPD) | - | 27.6% | 21.5% | 33.9% | 25.9% |
| Tenable Holdings, Inc. ($TENB) | - | 50.9% | 42.4% | 32.6% | 24.2% |
| |
|---|
| Median (23 companies) | 12.9% | 16.6% | 20.4% | 19.4% | 15.1% |
|---|
| CYREN Ltd. ($CYRN) | - | -0.6% | 16.6% | 6.9% | -5.2% |
Top companies by Gross margin, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Check Point Software Technologies Ltd. ($CHKP) | 88.5% | 88.6% | 89.6% | 89.5% | 89.4% |
| Progress Software Corporation ($PRGS) | 83.8% | 82.6% | 83.1% | 81.8% | 86.0% |
| Varonis Systems, Inc. ($VRNS) | 90.5% | 90.4% | 89.8% | 86.2% | 84.9% |
| Vmware, Inc. ($VMW) | 85.2% | - | 85.5% | 83.9% | 83.4% |
| Tenable Holdings, Inc. ($TENB) | 88.6% | 86.4% | 83.9% | 82.8% | 82.4% |
| |
|---|
| Median (23 companies) | 73.6% | 74.1% | 75.0% | 76.6% | 77.8% |
|---|
| CYREN Ltd. ($CYRN) | 67.6% | 61.4% | 59.5% | 59.5% | 59.4% |
Top companies by EBITDA margin, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Check Point Software Technologies Ltd. ($CHKP) | 49.8% | 50.7% | 48.8% | 46.0% | 45.1% |
| Qualys, Inc. ($QLYS) | 23.8% | 25.1% | 28.4% | 36.5% | 40.3% |
| SolarWinds Corporation ($SWI) | -8.0% | 44.0% | 44.8% | 44.7% | 39.8% |
| Progress Software Corporation ($PRGS) | 2.4% | 28.6% | 32.9% | 23.4% | 34.4% |
| Fortinet, Inc. ($FTNT) | 7.2% | 11.1% | 15.9% | 19.8% | 23.9% |
| |
|---|
| Median (23 companies) | -9.8% | -3.6% | -3.9% | 0.2% | 3.0% |
|---|
| CYREN Ltd. ($CYRN) | -6.4% | -28.3% | -37.0% | -25.7% | -27.4% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Zscaler, Inc. ($ZS) | 7.8% | 6.5% | 8.0% | 9.5% | 12.0% |
| ServiceNow, Inc. ($NOW) | 7.6% | 7.8% | 8.6% | 7.7% | 9.3% |
| Qualys, Inc. ($QLYS) | 11.7% | 16.4% | 8.2% | 8.6% | 8.3% |
| Zuora, Inc. ($ZUO) | 3.4% | 3.3% | 2.8% | 5.7% | 7.8% |
| Proofpoint, Inc. ($PFPT) | 9.2% | 9.0% | 4.1% | 4.0% | 6.9% |
| |
|---|
| Median (23 companies) | 2.0% | 2.2% | 2.5% | 3.4% | 2.8% |
|---|
| CYREN Ltd. ($CYRN) | 3.2% | 5.8% | 9.2% | 3.8% | 4.9% |
Top companies by ROIC, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Fortinet, Inc. ($FTNT) | 5.3% | 15.0% | 28.0% | 29.0% | 46.3% |
| Check Point Software Technologies Ltd. ($CHKP) | 24.7% | 26.8% | 25.5% | 24.2% | 25.6% |
| Qualys, Inc. ($QLYS) | 13.7% | 12.3% | 14.3% | 18.7% | 22.0% |
| Vmware, Inc. ($VMW) | 15.9% | - | - | 18.1% | 19.6% |
| Progress Software Corporation ($PRGS) | -4.9% | 13.5% | 18.5% | 7.6% | 16.0% |
| |
|---|
| Median (23 companies) | 0.0% | -2.7% | -0.9% | -6.3% | -6.4% |
|---|
| CYREN Ltd. ($CYRN) | -16.2% | -34.9% | -43.4% | -39.4% | -46.4% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| SolarWinds Corporation ($SWI) | - | 6.2x | 4.1x | 4.4x | 4.1x |
| Proofpoint, Inc. ($PFPT) | - | - | - | -27.4x | 2.5x |
| Progress Software Corporation ($PRGS) | -7.5x | -0.1x | 0.1x | 1.5x | 2.1x |
| Vmware, Inc. ($VMW) | -0.7x | - | -0.8x | 0.3x | 1.5x |
| CyberArk Software Ltd. ($CYBR) | -4.1x | -5.7x | -4.5x | -3.6x | 0.9x |
| |
|---|
| Median (12 companies) | -1.2x | -0.6x | -0.4x | -0.3x | 0.4x |
|---|
