Cyan Reports Record Second Quarter 2013 Results

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Cyan Reports Record Second Quarter 2013 Results

                   - Year-over-year revenue grows 37 percent to a record $31.7 million

                   - Blue Planet SDN platform adoption accelerates; over 85 customers now deployed

                   - Gross margin expands to 43.4 percent

PETALUMA, Calif.--(BUSINESS WIRE)-- Cyan (NYS: CYNI) today announced financial results for its second quarter ended June 30, 2013.

Revenue for the second quarter of 2013 grew 37 percent year-over-year to a record $31.7 million, up from $23.1 million in the second quarter of 2012, and up 20 percent from $26.3 million for the previous quarter. Net loss for the quarter was $9.1 million, or $0.33 per share, compared to a net loss of $1.5 million, or $0.59 per share, in the same period last year and a net loss of $9.4 million, or $3.61 per share, for the first quarter of 2013.

On a non-GAAP basis, Cyan's net loss for the second quarter was $6.6 million, or $0.24 per share, compared to a net loss of $0.8 million, or $0.30 per share for the same period last year and a net loss of $6.3 million, or $2.43 per share, for the quarter ended March 31, 2013. The non-GAAP net loss for the second quarters of 2013 and 2012 and the first quarter of 2013 exclude stock-based compensation expense and costs associated with the change in the fair value of preferred stock warrants. Effective upon its initial public offering (IPO) in May 2013, the company's preferred stock warrants became exercisable for common stock and will no longer be marked to market.

The non-GAAP net loss per share for the second quarter of 2013 was based upon 27.4 million weighted average shares outstanding. In connection with its IPO, the company issued 8.9 million shares of common stock and 34.7 million shares of preferred stock converted into common stock. Cyan ended the second quarter with 46.3 million shares of common stock outstanding.

"For the second quarter, Cyan delivered record revenue and gross margin while continuing to make investments to capitalize on our large and growing addressable market," said Mark Floyd, Cyan's chairman and chief executive officer. "Our Blue Planet software-defined network (SDN) platform is a key differentiator and continued to gain momentum, with over 85 customers implementing this innovative technology since its launch last December. We continued to make significant strides in our international expansion, increasing our presence to 13 countries outside of North America and increasing our international partnership base. During the second quarter, we successfully completed our IPO and ended the quarter with over $92 million in cash and cash equivalents."

Floyd continued, "Key drivers for the future include further geographic expansion, penetration into verticals beyond the carrier market, and the broadening of our footprint within existing accounts as well as with new customers. In addition, we see large opportunities among content providers and data center operators and in the second quarter, we received initial revenues from one of the world's largest Internet franchises. Going forward, we will continue to invest in engineering, sales and marketing to strengthen our competitive position and benefit from the widespread and fundamental transition in how networks are architected, orchestrated and managed."

Outlook for the Third Quarter, 2013

Please refer to the Forward-Looking Statements section below for cautionary notes.

For the third quarter of 2013, Cyan currently expects revenue to be in the range of $36 million to $38 million. GAAP net loss is expected to be between $8.6 million and $10.0 million, or a net loss per share of $0.19 to $0.22. On a non-GAAP basis, Cyan currently expects its net loss to range between $6.7 million and $8.1 million, or a net loss per share of $0.14 to $0.17 based on an estimated 46.3 million weighted average shares outstanding.

Recent Highlights

  • Cyan expanded its Blue Planet SDN platform to include Planet Inventory, a multi-vendor network asset management application.
  • Cyan formed Blue Orbit, an ecosystem of SDN and network functions virtualization (NFV) providers dedicated to delivering interoperable SDN and NFV solutions.
  • Cyan demonstrated a live, multi-vendor SDN application (in cooperation with Blue Orbit partners) at Interop Tokyo in June to illustrate how network operators can offer their customers the ability to dynamically spin up data center virtual machines, along with virtualized network resources, via standard APIs or a web portal.
  • Cyan appointed accomplished marketing professional Joe Cumello as chief marketing officer of Cyan to oversee all aspects of Cyan's product marketing and global brand development.

Conference Call

Cyan will host a conference call for analysts and investors to discuss its second quarter 2013 results and outlook for its third quarter of 2013 today at 2:00 p.m. Pacific time/5:00 p.m. Eastern time. To access the live call, please dial 1-800-762-8779 (US or Canada) or 1-480-629-9645 (international) and use the password: Cyan. A telephonic replay of the call will be available from approximately two hours after the call until 11:59 pm on August 20, 2013, and can be accessed by dialing 1-800-406-7325 or 1-303-590-3030 and entering passcode 4629860. A live audio webcast of the conference call also will be available from the Investors section of the company's website, Following the webcast, an archived version will be available on the website for approximately 90 days.

Use of Non-GAAP Financial Information

To supplement our financial results presented in accordance with Generally Accepted Accounting Principles (GAAP), this press release and the accompanying tables contain certain non-GAAP financial measures, including non-GAAP operating expenses, non-GAAP operating margin, non-GAAP net loss, and non-GAAP gross margin. We use this information in managing our business and believe the non-GAAP data are helpful in understanding our past financial performance and future results. For reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures, please see the section of the accompanying tables titled, "Condensed Consolidated Reconciliation of GAAP to Non-GAAP Results." Our non-GAAP financial measures are not meant to be considered in isolation or as a substitute for comparable GAAP measures and should be read in conjunction with our consolidated financial statements prepared in accordance with GAAP.

Forward-Looking Statements

This press release contains forward-looking statements, including but not limited to statements relating to Cyan's expected future financial results and performance, which are subject to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based upon management's current expectations and involve a number of risks and uncertainties. Actual results and timing of events could differ materially from those expressed or implied by such forward-looking statements. The risks and uncertainties that could cause our results to differ materially from those expressed or implied by such forward-looking statements include: fluctuations in demand for our products and services, particularly as it relates to large sales to existing and new customers; fluctuations in the price for our products and services; the adoption rate of our products, particularly our Blue Planet solution; our ability to compete in our industry; and other risks and uncertainties related to our business. All forward-looking statements in this press release are based on information available to us as of the date hereof, and we undertake no obligation to revise or update these forward-looking statements in light of new information or future events, other than as required by law. Results reported herein should not be considered as an indication of future performance.

About Cyan

Cyan enables network transformation. The company's software-defined network (SDN) solutions deliver orchestration, visualization, and scale to networks that, until now, have been static and hardware driven. Serving carriers, enterprises, governments, and data center operators globally, Cyan's open platforms provide multi-vendor control and visibility to network operators, making service delivery more efficient and profitable. Cyan solutions include Blue Planet SDN software, Z-Series packet-optical transport platforms, and Cyan Pro professional services. For more information, please visit or follow Cyan on Twitter at

Cyan, Inc.

GAAP Condensed Consolidated Statements of Operations

(In thousands, except per share amounts)


Three months ended June 30, Six months ended June 30,
  2013           2012     2013           2012  
Revenue $ 31,686 $ 23,069 $ 58,005 $ 37,256
Cost of revenue   17,936     13,456     33,338     21,923  
Gross profit 13,750 9,613 24,667 15,333
Operating expenses:
Research and development 8,158 3,864 15,397 7,416
Sales and marketing 10,821 5,607 18,838 10,381
General and administrative   3,095     1,236     5,958     2,146  
Total operating expenses 22,074 10,707 40,193 19,943
Loss from operations (8,324 ) (1,094 ) (15,526 ) (4,610 )
Interest expense (136 ) (262 ) (20 )
Other income (expense), net   (607 )   (374 )   (2,608 )   (730 )
Total other income (expense), net   (743 )   (374 )   (2,870 )   (750 )
Loss before provision for income taxes (9,067 ) (1,468 ) (18,396 ) (5,360 )
Provision for income taxes   21     9     42     17  
Net loss $ (9,088 ) $ (1,477 ) $ (18,438 ) $ (5,377 )
Basic and diluted net loss per share $ (0.33 ) $ (0.59 ) $ (1.22 ) $ (2.17 )
Weighted-average number of shares used in computing basic and diluted net loss per share   27,425     2,512     15,077     2,476  

Cyan, Inc.

Condensed Consolidated Balance Sheets

(In thousands)


June 30, December 31,
  2013     2012  
Current assets:
Cash and cash equivalents $ 92,921 $ 20,221
Accounts receivable, net 23,362 19,200
Inventories 13,035 14,049
Deferred costs 11,050 8,228
Prepaid expenses and other   964     930  
Total current assets 141,332 62,628
Property and equipment, net 9,280 6,485
Other assets   54     1,676  
Total assets $ 150,666   $ 70,789  
Liabilities, redeemable convertible preferred stock, and stockholders' equity (deficit)
Current liabilities:
Accounts payable $ 16,102 $ 11,842
Accrued liabilities 9,172 7,379
Revolving loan 7,563
Term Loan 795
Deferred revenue 21,107 15,597
Preferred stock warrant liability 6,254
Other liabilities   181     74  
Total current liabilities 47,357 48,709
Term loan 4,205 5,000
Deferred revenue 2,115 1,820
Deferred rent   220     182  
Total liabilities 53,897 55,711
Redeemable convertible preferred stock 98,133
Stockholders' equity (deficit):
Common stock and additional paid-in capital 201,742 3,514
Accumulated other comprehensive loss 16 (19 )
Accumulated deficit   (104,989 )   (86,550 )
Total stockholders' equity (deficit)   96,769     (83,055 )
Total liabilities, redeemable convertible preferred stock, and stockholders' equity (deficit) $ 150,666   $ 70,789  
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Cyan, Inc.

Condensed Consolidated Statements of Cash Flows

(In thousands)


Six months ended June, 30
  2013           2012  
Operating activities
Net loss $ (18,438 ) $ (5,377 )
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization 1,226 827
Stock-based compensation 2,902 597
Change in fair value for warrants 2,602 742
Changes in operating assets and liabilities: