Cyren Ltd.
Q3 2015 Earnings Call Transcript

Published: 11 Nov 2015

[Operator:]

Good day everyone and welcome to the CYREN Third Quarter 2015 Earnings Conference Call. Today’s conference is being recorded. At this time, I’d like to turn the conference over to today’s host Mr. Brad Nelson, KCSA Strategic Communications. Please go ahead, sir.

[Brad Nelson:]

Thank you and welcome to our conference call to discuss CYREN’s third quarter 2015 financial results. 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 filings, including our prospectus filed on August 12, 2015. Any forward-looking statements should be considered in light of these factors. Please also note as a Safe Harbor, any outlook we present is as of today and management does not undertake any obligation to revise any forward looking statements in the future. Also during the course of this conference call, we may discuss non-GAAP measures when talking about the company’s performance. Reconciliations to the most directly comparable GAAP financial measures are provided in the tables in the earnings press release issued today and available on the Investor Relations section of our website. These financial measures are included for the benefit of investors and should be considered in addition to and not instead of GAAP measures. With me on the call today are Mr. Lior Samuelson, CYREN’s Chairman and Chief Executive Officer and Mr. Mike Myshrall, Chief Financial Officer. With that, I would now like to hand the call over to Lior.

[Lior Samuelson:]

Thank you, Brad, and thank you for joining me today as we discuss CYREN’s 2015 third quarter results and provide an operational and business update. In the past few months we’ve made incredible progress and our March to become one of the leading providers with then cyber security solutions. The marketplace is beginning to recognize the superiority of our reconcile this network detection engines and cloud infrastructure. To provide some perspective booking this quarter were up 300% sequentially with CWS. Our largest quarter to date and a strong leading indicator of the trajectory of the business. Today I will like to provide you an update in three main areas, one, CYREN WebSecurity, two technology and innovation and three, OEM embedded business. During the quarter, we signed seven new CWS customers including two major contracts that are projected to generate more revenue than all of our previous deals combined. One of these deals was the result of a [bake off] between [indiscernible] and another major provider of cloud based security, while the other despite as a high profile incumbent security vendor, this demonstrates the superiority of our platform and detection capabilities which are based on the industry's most sophisticated, automated detection engines and on the world’s largest database of security threat. Our CWS clients now include enterprises, managed security providers and large Wi-Fi operators. Our most recent CWS win is with European Wi-Fi hotspot operator [indiscernible] Holding which recently deployed CWS across its European network of over 2,300 Wi-Fi hotspots located in 20 countries and supporting 17 million authenticated users. [Indiscernible] hotspots on behalf of a diverse portfolio of companies such as McDonald’s, KFC, Burger King and Volkswagen among others. This is a second major deal we’ve announced for an access point provider. Back in July we signed agreement with UK based Wi-Fi SPARK, which we believe provides a big opportunity for card based protection. The deal also demonstrates the demand for two of the key enhancement we introduced in the first quarter, DNS security enforcement and regional data sovereignty. With CWS sovereignty capabilities European customers can be assured that their company's security data remains in compliance with EU privacy laws. A capability that sets us apart from the rest of the industry in the area of user data privacy. Our CWS pipeline is larger than ever and continues to grow at an increasing rate. Now I’m moving on to technology in innovation. During the third quarter we continue to invest heavily in R&D and innovation. We are making significant progress and enhancing our current product and developing additional features and services. I would like to mention a few key development. Our Cyber Threat Protection service is in data during the fourth quarter and will be generally available doing the first quarter of 2016. Our [indiscernible] will also be released in Q1 2016; these ground breaking services can be used in conjunction with our CWS service or on a standalone basis. We believe that these services provide the most comprehensive and effective cloud based advance Cyber Protection. We also developed a new and extremely advanced management platform for our SaaS cloud offering. This new platform will enable us to introduce new services and features, at a much more rapid rate and improves the long-term efficiency and stability of our platform. We continue to sell components of our cyber and [indiscernible] portfolio including our [indiscernible] detection solution. In fact in a [bake off] of one of the largest and most well-known technology companies in the world are advanced malware detection outperformance of that of the perceived leading publicly traded cyber security company in detecting and preventing zero hour attacks in advance malware. Now moving on to the embedded business. During the third quarter our embedded business turned the quarter from a revenue perspective, we expect this business to at a minimum maintain its current revenue run rate with potential upside opportunity. During the quarter we won significant mobile anti-malware contracts and a new email SDK and email security SaaS contract. As an example, we closed a multi-year six figure email SaaS deal with a Fortune 100 international media and entertainment company and expanded our email security contract with one of the largest software vendors in the world. Our embedded business continues to be very profitable and to generate the largest security through a database in the business. We’re excited about the company’s performance as we head into the last few months of the year. The message we’ve been sending about CWS is really beginning to resonate with the market driving increased customer wins and adoption. With a strong balance sheet, and the ability to continue to deploy resource into marketing and development, we are confident that CYREN will continues to drive new customer wins and sales growth. With that I’d like to hand the call over to Mike to further elaborate on the results. Mike?

[Mike Myshrall:]

Thank you, Lior and good morning everyone. I will now provide you with a summary of our third quarter 2015 results. For the more detailed results, please refer to the press release we issued earlier today which is posted on our website. In addition please note that we compile our financials under U.S. GAAP including non-operating expenses. In order to better analyze our business performance. I will also discuss certain financial metrics on a non-GAAP basis, which excludes those non-operating items. You can refer to today’s press release for a full reconciliation of our GAAP and non-GAAP results. GAAP revenue for the third quarter of 2015 was up $0.2 million to $6.9 million compared to $6.7 million in the second quarter of 2015 and $7.8 million a year ago. Non-GAAP revenues for the third quarter totaled $7.0 million compared with $6.8 million last quarter and $7.8 million during the third quarter of 2014. During the quarter we saw our largest revenue recognition to date in CYREN WebSecurity. As we described on previous calls, the reduction in embedded OEM revenue when comparing year-over-year is related to the decline in euro along with several customer agreements that were not renewed during late 2014 and early 2015. The increase in revenue during the third quarter consistent with the guidance that we provided on the last call. [What] we expect quarterly revenues for the embedded OEM business have stabilized in the $6.5 million to $7.5 million for the foreseeable future. Our GAAP gross margin for the quarter was 69% compared with 69% for the previous quarter and 74% for the third quarter of 2014. Non-GAAP gross margin for the quarter was 72% compared with 72% during the previous quarter and 77% a year ago. The reduction in gross margins is primarily due to the reduced revenue compared to the same period a year ago while the cost of revenue primarily datacenter remains relatively stable. GAAP operating expenses for the third quarter were $6.2 million, compared to $5.2 million this last quarter and $6.2 million in the third quarter of 2014. GAAP operating expenses are comprised of three components. R&D expenses, sales and marketing expenses and G&A expenses. Net R&D expense is up sequentially from $1.8 million to $2.2 million into a lower offset credit from the Office of Chief Scientist in Israel as well as capitalization of some R&D project. Details of the technology capitalization adjustment are included in the GAAP to non-GAAP reconciliation table in our earnings release. Sales and marketing expense for the quarter was down sequentially and on a year-over-year basis to $2.1 million for the quarter. G&A expense for the quarter totaled $1.9 million, compared to $1.3 million last quarter and $1.6 million a year ago. The sequential increase in G&A expense is partially driven by the one-time settlement agreement included in our Q2 numbers along with an increase during the quarter in bad debt expenses of $0.3 million. Settlement agreements are also adjusted from non-GAAP expenses as explained in the non-GAAP reconciliation of the earnings release. Non-GAAP operating expenses for the quarter were $6.3 million compared with $6.0 million last quarter and $6.4 million a year ago. Third quarter GAAP net loss was $1.3 million or a loss of $0.04 per basic and diluted share compared to a loss of $0.7 million or a loss of $0.02 per basic and diluted share in the third quarter of 2014. Our second quarter non-GAAP net loss was $1.3 million or a loss of $0.04 per basic and diluted share compared to a non-GAAP net loss of $0.7 million or $0.02 per diluted share in the third quarter of 2014. The reconciliation between GAAP and non-GAAP net income is included in our press release. Now turning to the balance sheet. Our cash balance at the end of the quarter stood at $18.7 million compared to $7.9 million as of June 30, 2015. Operating cash flow for the third quarter was $0.6 million, up from $0.3 million in the second quarter and an increase compared to operating cash usage of $0.1 million during the third quarter of 2014. Net cash burn for the quarter excluding capital raise activities and repayment of the credit line was approximately $0.7 million. The cash division as of September 30th is include the proceeds raised from the public share offering of $7.7 million that closed August 17th, which yielded approximately $11.5 million of additional cash after expenses. During the quarter, we also made the final earned out payment related to the 2012 acquisition of risk and pay down our credit line facility approximately $0.3 million. As of September 30th, the balance on the line of credit due to $4.0 million. During the third quarter, we began to make incremental investments in sales, marketing, R&D and capital expenditures. These investments are consistent with our objective discuss during our capital raised roadshow in order to accelerate the rollout of our CYREN WebSecurity and Cyber Threat Protection solution. We would expense that quarterly operating expenses will increase marginally over the next several quarters, but we expect to see significant return on investment beginning in 2016. At this point, I’d like to turn the call back to Lior for closing remarks.

[Lior Samuelson:]

Thank you, Mike. Our recent CWS and cyber component traction together with our success in R&D increases our confidence that CYREN will emerge as one of the key players in the new security industry landscape. We look forward to updating you on our progress next quarter and beyond. With that I would like to open up the lines for Q&A.

[Operator:]

Thank you, sir. [Operator Instructions] And we will take our first question from Chad Bennett with Craig Hallum.

[Chad Bennett:]

So a couple of questions for me. Appears to be a very good quarter for CWS, new wins and bookings in the quarter. On the two major contracts, can you give us any idea of size wise, how big those deals are. And then maybe from a revenue rev standpoint when we start to see in contributions from those deals?

[Mike Myshrall:]

Thanks Chad. So the two largest CWS deals were good sized for us, certainly our biggest ever. We still consider them six figure deals although one of them has the opportunity to perhaps become a seven figure deal over the life of the contract. The contract range from one year to three years, for the revenue recognition related to those will actually start to occur over the next several quarters, but will be baked in over the next two to three years.

[Chad Bennett:]

Okay. And then by six figure deals you mean, six figure annually or six figures over three years?

[Mike Myshrall:]

So six figures annually and have the opportunity to perhaps reach seven figures over three years.

[Chad Bennett:]

Okay. And are you seeing on the CWS side -- you mentioned, displacing an incumbent in one of the deals and then a bake-off against, a well-known cloud security provider in the other, can you just talk about kind of the puts and takes and kind of how you convinced these customers to go with you guys with a relatively new solution in this market versus kind of more established and better known players?

[Mike Myshrall:]

Yes, so let me answered in two ways. So I think in one case, so we’re talking about sort of what we call the traditional incumbent, I think that we are beginning to have success in convincing and showing customers the superiority of our solution and primarily our detection, our capability. So in addition to the fact that people are beginning to recognize that the cloud has some natural advantages as it applies to mobile, ease of use, and transparency, in addition to cost of ownership, I think that we can also show them that given that the odd detection is real time, is extremely robust, it's based on an amazing amount of data, people can see that by deploying our solution there, their long-term interest security interest to better serve. So it's fundamentally just a better solution. When we deal with other cloud solution providers, I also think that what we’re able to show customers is that we are superior in detection. And I think -- and that's really what I think sets us apart in the market today with other cloud providers although there aren't that many of them.

[Chad Bennett:]

Okay. Great and then last one from me. Mike are there any significant OEM renewals in the current quarter? I mean you guys sound -- you talked about turning the corner here on that business and at least stabilizing it if not growing, if there are any significant OEM renewals can you talk about the ability to potentially grow that business next year?

[Mike Myshrall:]

Sure. So we have a couple in the current quarter that are large customers, Check Point, and Google among them and we expect them to continue to use our services both our long standing customers and there is an opportunity to grow each of those accounts.

[Chad Bennett:]

All right and then last one from me. Any -- it should be quick, Mike -- the FX headwinds -- were they anything of note in the quarter, what was the impact if any?

[Mike Myshrall:]

So on a quarter-over-quarter basis, it had a relatively little impact, the average exchange rate on euro was about $1.12, but on a year-over-year basis that compared to about a $1.32 in the third quarter of 2014, so it's down roughly 15% year-over-year. But when comparing quarter-over-quarter it did not have a significant impact.

[Chad Bennett:]

Okay. But still year-over-year was decent right?

[Mike Myshrall:]

Absolutely. Yes. It impacted us approximately $500,000 to $600,000 on a year-over-year basis in the quarter.

[Operator:]

[Operator Instructions] We will take our next question from Lisa Thompson with Zacks Investment Research.

[Lisa Thompson:]

Hi good afternoon, good evening whatever. Let`s just go quick start with the revenue line, last quarter you said that your base business, the OEM base business was $6.5 to $7.5 million range and you reported a $7 million a quarter. So what is that say about the base OEM business, do you still think that's the range and what do we look to see next quarter as the new business kicks in?

[Mike Myshrall:]

So, yes we still believe $6.5 to $7.5 million range is accurate on a quarterly basis. We would anticipate depending on what happens with the euro, we would anticipate a potential for slight incremental growth and quarter-over-quarter basis. But in any given quarter, there is always an opportunity for some fluctuation within that range.

[Lisa Thompson:]

Okay. So when you say quarter-over-quarter, you mean year-over-year?

[Mike Myshrall:]

No, I mean relative to the third quarter, I think the fourth quarter…

[Lisa Thompson:]

Sequentially.

[Mike Myshrall:]

Yes, sequentially.

[Lisa Thompson:]

Okay. Is there any help of it being up year-over-year?

[Mike Myshrall:]

I wouldn’t be planning for that at this stage. Although, there is always opportunity for upside supply as the quarter proceeds.

[Lisa Thompson:]

Okay. And right now what is your share count now?

[Mike Myshrall:]

We are at $39.1 million.

[Lisa Thompson:]

$39.1 million, okay. And I saw that you’re bookings were up now for two quarters in a row. Is that something sustainable?

[Mike Myshrall:]

On the CWS side, we believe it’s sustainable. I think the trajectory that we’re seeing is continuing, our pipeline is very robust with new opportunities, we’re continuing to add people on the sale side, who can expand our sales of the CWS platform. And so we would anticipate that bookings in the CWS business are going to continue to grow.

[Lisa Thompson:]

Great, sounds good. Could you just maybe elaborate a little bit about the product enhancements that you introduced in this quarter? What does that get you versus the competition and are you where you want to be versus the competition or is there more features that need to be added?

[Mike Myshrall:]

Well, so you always need to add more features and enhance your product, I mean we’re not a static industry, we will continue to do so. I think the two things that we’ve enter, I mean so one thing that we did is we basically enhanced or [stat] platform and this really more of a future looking enhancement we did, it took us quite a long time to do it. But fundamentally, we prepared our platform so then when we have new features, we can build on for lack of better words very quickly. And so we can set our self for enhancements in the product in the future. So we have a modern and probably is good as they come in the industry. So that’s one of the things we did, the other thing we did is of course we have, what we call the UK, the European Data Sovereignty and privacy, which I think not too many U.S. centers comply with that. So we worked very hard to do that, because it’s becoming as you know data privacy is becoming a very important issue and there is a court decision in Europe right now. So we did that and then of course in the first quarter we announced this based that DNS and we’re beginning to see some really nice traction in the DNS. We have a long list of features, so we’re going to add in the next three quarters. As we said earlier, we’ve got this two elements, two large elements of our cyber solutions. Our data right now, one is what we call the large IP reputation database and also our Sandbox Array in the cloud are very robust reporting modules coming out this quarter as well. So we have a very long list of features and technology enhancements, they are in the pipeline, they’re coming out. And just for your information today our engineering team, fundamentally we are a new version of our product that comes out every month, so every month we have a new version of our products.

[Operator:]

[Operator Instructions] We will take our next question from Scott [indiscernible] Partners.

[Unidentified Analyst:]

Hi guys. I think you may have just highlighted a couple of the new features. But in the competitive as you out there looking the way with competitors, what are the key enhancements or what are the two or three things that you have to have [S&P], is it reporting, is it IP. Which thing really are you missing right now to be more competitive?

[Mike Myshrall:]

Well, I think you’re asking a very large and very good question. This is a very large industry with lots of solutions. I think we are in pretty good shape right now in order to be able to, I mean we do have a very good product, it’s very robust. And I think that as the industry kind of moves forward and matures a little bit, I think what we'll determine or distinguish the winners and losers will be their ability to detect. And can you prevent the tax, can you detect, can you do that. And I think this is where, I think we distinguish our self. We have extraordinary well developed prevention and detection algorithms and detection engine. I think what we are doing is that we are making sure that in the long run we have all features, it may be reporting and other things that will make it easier for us and easier for customers from small businesses to large enterprise to consume our solution.

[Unidentified Analyst:]

Okay. And is there, [in Europe] is there an item to a certain extent I assume, people are using potentially different solutions with a whole idea either integrating or being the key -- the key solution is, I would think that either the dashboard or whatever that thing is that people look at every day that it seems to be where you can create the most value or at least get the most value as opposed as just being one of the input to someone else’s dashboard?

[Mike Myshrall:]

Well, we have our own dashboard, in fact one of the things that we built is the fact that we can supply a dashboard to let`s say a managed security provider and they indeed can manage the service that way. So I think we [Technical difficulty] dashboard, we will continue to enhance it and we will have -- as we say we will have a very robust and very good looking if user friendly, reporting system that will feed into our dashboard.

[Operator:]

And at this time, I’m showing no additional questions are coming over the phone lines. [Operator Instructions] We will take our next question from George [indiscernible] with MKH Management.

[Unidentified Analyst:]

Can you talk a little bit about your go to market strategy, about how much of it is sort of direct sales, how much of it is with distribution and where you see that evolving in the next 12 months?

[Mike Myshrall:]

So I think we have on the CWS side of the business, which is what I assume you are referring to, I think a lot of [what I’ll refer] right now, I would say is basically direct, we are using our own sales force, we’re also using an outsourced firm or firms to help us in lead generation. So fundamentally right now, our focus is to go direct, we are not ignoring the indirect channel. I think that we do have quite a few agreements with the indirect channel and we have provided some of the indirect channel with contracts that we have actually originated and sold as you may kind of prime the pump and kind of see bring them all those with us, so right now the focus is on selling direct. My expectation is that is we mature in the next maybe three or four quarters that we will see more involvement from the indirect channel. Although I will say that one of the contracts that we signed is really is amount of security provider that as you may want to think about it is a very large indirect channel.

[Unidentified Analyst:]

Yes, what would the indirect channel look like? I mean it's a fairly diversified group of companies like managed service providers like you mentioned. Does it include sort of distribution [inwards or SIs] or Telco company, what are we talking about?

[Mike Myshrall:]

I think that -- I think it's going to be basically sort of large distributors, we have got a few -- we have contracts there. There will be managed security providers. I think we are extremely well suited to sell to the managed security providers and I also think that we are -- and we’re beginning of the target some of the small Telcos.

[Unidentified Analyst:]

The small what?

[Mike Myshrall:]

I think that we’ve made in the last quarter and this coming quarter, I think we’re moving along and up the food chain slowly but we want to make sure that as I said we can walk before we run, but it looks pretty good.

[Unidentified Analyst:]

And some of product or feature perspective whether they were sold direct or indirect, is there any -- does that make any difference?

[Mike Myshrall:]

I think that we do have a little advantage, or maybe a big advantage over some other people in the market, because we developed an ability to white label our product, so if you are a managed security provider, and you would like to sell CWS under your own brand name you can do that and we can provide that, we can provide you with all the management tools including a special [indiscernible] that we built that will allow you to white label the product and manage your customers that way. So that’s a feature that I think is somewhat different than what other providers in the market have, but I think from a general feature list that we’re developing, I mean we’re pursuing fundamentally, basically the same calendar.

[Unidentified Analyst:]

Okay, great. And then just one quick question on the OEM business. Is there a fair amount of churn, I mean that their customers leaving and a new customers coming in? Within a fairly sort of stable group of customer, I think at one point I remember, you [indiscernible] customers. Just wondering how stable is it with there a lot of movement within the customer based?

[Michael Myshrall:]

So there is a little bit of churn, primarily what we see happening instead our largest customers are getting larger and some of our smallest customers are going away, there are getting consumed by other companies through acquisitions or in some cases they’re changing their business models and dropping our services. The 150 number is a roughly accurate number. In our lifetime I would say that we’ve signed probably between 200 and 250 OEM agreements in total. But in any given quarter, there is approximately 150 or so that are active and generating revenue. So that’s a good rough estimate.

[Operator:]

And we will take our next question from Reuben Gaz with Opus Fund. Please proceed.

[Reuben Gaz:]

Thank you. As you’re focusing on CWS, you have two services one is web security and one is email security. So in your booking and in your current offering, it’s usually -- your customers make decision to buy both of them, or one of them is more dominant than others?

[Lior Samuelson:]

So it’s true, on our SaaS platform, we have basically the CYREN WebSecurity, we also have an email SaaS service. Our major focus today in the business, where we’re spending a lot of our development and marketing in sales dollars is primarily on the CYREN WebSecurity. We do continue to sell the email SaaS product that we have, but the investment in the email SaaS business is quite a bit lower. Because the fundamental fact is that the email SaaS is not necessarily a growing market, it has a lot of competition in it, it has a lot of big players, Microsoft 365, Gmail, other players and the price per seat is relatively low, as opposed to CWS, which is a fast growing market with a lot of room for innovation with a much, much higher price per seat. So while we’re not ignoring email SaaS and in fact we had a couple of very nice wins this quarter, we’re focusing more on CYREN WebSecurity.

[Reuben Gaz:]

Got it, thank you. And you have certain features and intellectual growth of the development. Is there like as of [indiscernible]. How your IP will be protected?

[Lior Samuelson:]

Well, so let me say two things. So we have quite a few patterns in the company. We also have on the malware side of the business, we may have one of the most expensive [prior art] in the world. And so I think so from that end, I think we’re doing very, very well. Also I want to point out that, if you look at as an example CWS, the barriers to entry in CWS are quite high for a company to decide today or any company regardless the size to begin to sell cloud-based WebSecurity, is very, very difficult. Because number one you need a cloud infrastructure which is not easy to build; two, you need a management tools to manage the cloud infrastructure. And then you have to have a variety of detection engines and tools in order to be able to provide the service, you need to have a large proxy, which can in the cloud. So if you open your laptop in Tokyo or Paris or wherever you maybe in New York, you can be recognize where you are and we can manage the traffic. So in addition to having patent, we also need to the barriers to entry from a technological and financial standpoint are extremely high. That’s why you don’t see too many people playing in the cloud web security business.

[Reuben Gaz:]

Got it. And then are some cloud providers for the email security and you made it very clear that it’s not your major focus. One of them [indiscernible] going public in that and they are focused on the cloud email security. So somebody like then essentially would be interested to add to their product offerings like web security, they do have now infrastructure, cloud infrastructure which as you mentioned is one of their [inventory], so product makers have complementary nature, but [indiscernible] cloud infrastructure [for both of them].

[Lior Samuelson:]

It could be, I mean in fact, we know the company very well happens to be a client of ours. I think the answer is yes, I think these are -- I mean theoretically, potential partnerships for us, I would like to say thought that if you have an email cloud infrastructure is somewhat different than having a cloud infrastructure that can do WebSecurity.

[Unidentified Analyst:]

And that client of yours in CWS?

[Lior Samuelson:]

No, the client of ours in one of our in detection engine.

[Unidentified Analyst:]

Okay. And my last question, I’m sorry. I think it was mentioned once that you have [indiscernible] that doubled your revenues in 2016?

[Lior Samuelson:]

No, not 2016, I mean our aim is to do that in 2017.

[Unidentified Analyst:]

In 2017 and currently CWS revenues is like hundreds of thousands of dollars in this trend because you mentioned the total revenue is close to $7 million and your OEM revenue is between $6.5 and $7 million which means that it is $200,000 right?

[Mike Myshrall:]

That's correct, our CWS revenues still accounts for less than 10% of our overall revenue.

[Unidentified Analyst:]

Okay. so it should really grow exponentially to double in three year, even your OEM is very declining for this amount of revenues to grow $7 million of total quarter we need to ramp-up the [indiscernible] but it's something much more than [indiscernible] between now and next year?

[Mike Myshrall:]

Yes, but you have to keep in mind as well, when you are comparing the two businesses that the average selling price in our traditional embedded OEM business is typically between $0.25 and a $1 per user per year and CWS business we’re looking at between $10 and $30 per user per year and as we release additional features later this year including the Cyber Threat Protection, we are potentially looking at revenues between $20 and $60 per user per year. So it's a two orders of magnitude greater than what we are currently getting on a per user basis in the CWS business and that's why we think that opportunity for growth is so much greater.

[Operator:]

It appears there are no further questions at this time. I’d like to turn the conference back over to your presenters for any additional or closing remarks.

[Lior Samuelson:]

We appreciate you joining us today. And we look forward to updating you next quarter. Thank you.

[Operator:]

And ladies and gentlemen that does conclude today’s conference. I’d like to thank everyone for their participation. You may now disconnect.