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| 8-K - CYBERDEFENDER CORP | v208843_8k.htm |
CyberDefender
Corporation Announces Preliminary Full Year
and
Fourth Quarter 2010 GAAP Revenue and Gross Sales
Company
Provides Update on Strategic Growth Initiatives
Los
Angeles – January 20, 2011 – CyberDefender
Corporation (NASDAQ: CYDE) (“CyberDefender”), a provider of Internet
security software, utilities and remote technical support services that work
together to maximize online safety for consumers, today announced preliminary
GAAP revenue and gross sales for the full year and fourth quarter of 2010 and
provided an update on recent milestones and key 2011 growth initiatives,
including the launch of a new state-of-the-art call center, sales channel
expansion, the extension of its media marketing agreement and expansion of its
intellectual property portfolio.
Preliminary
Full Year 2010 and Fourth Quarter 2010 Financial Results:
For the
12 months ended December 31, 2010, CyberDefender expects GAAP revenue of
approximately $44.6 million and gross sales of approximately $61.8 million,
representing growth of 137% and 113% over the 12 months ended December 31, 2009,
respectively. For the three months ended December 31, 2010, CyberDefender
expects GAAP revenue of approximately $13.6 million and gross sales of
approximately $19.0 million, representing growth of 80% and 94% over the fourth
quarter of 2009, respectively. CyberDefender defines gross sales (a non-GAAP
measure) as GAAP revenues before refunds and bad debt and before deferring
revenue for GAAP purposes (see disclosure regarding use of non-GAAP measures and
reconciliation to GAAP below). Previous guidance for the quarter
estimated GAAP revenues in the range of $13.5 million to $15.0 million and gross
sales for the quarter of $20.0 million to $21.5 million. Gross sales in the
fourth quarter were impacted by delayed implementation of the company’s
enterprise-level, SaaS-based IVR and CRM systems. As of December 2010, the new
IVR/CRM platform has been fully implemented.
“Throughout
2010, we achieved substantial top-line growth while making critical strategic
investments in our infrastructure that support our long-term growth objectives.
We now have the flexibility and scalability that will foster our next level of
growth, and have already achieved meaningful top-line improvements since
completing these critical system upgrades,” said CyberDefender Chief Executive
Officer Gary Guseinov.
"Market
demand is strong and our LiveTech business continues to resonate with
consumers," Guseinov continued. "We are actively accelerating our subscriber
base, increasing renewal subscriptions and improving our customer satisfaction
rates. We are still in the early stages of our growth and there remains
tremendous appetite for our products and services. Consumers and businesses are
becoming increasingly aware of the need for our combined antimalware, PC
optimization and remote tech support solutions as stand-alone software and
do-it-yourself support services are no longer sufficient to meet the needs of an
increasingly connected society. We are well poised to address this
market demand and achieve strong growth this year as we execute on our strategic
initiatives that include expanding our distribution channels and diversifying
our robust product offering.”
Opening
of New Los Angeles Call Center and Implementation of Enhanced Technology
Platform:
In
December 2010, CyberDefender opened its new 220 seat call center in its Los
Angeles headquarters to support the continued growth of LiveTech services and
planned software product introductions. The new call center, which currently
handles over 160,000 calls per month, employs an industry-leading technology
platform that integrates SaaS-based interactive voice response (IVR), automatic
call distributor (ACD) and customer relationship management (CRM) technologies.
This technology platform was designed to facilitate increased sales volume and
improve customer interaction, retention and renewals. At full capacity, the
center will be able to accommodate over 600 agents and handle over 1 million
calls per month.
According
to industry research firm Parks & Associates, the market for premium level
remote technical support services over broadband networks is expected to grow
from $800 million in 2010 to $1.7 billion by 2014. The primary drivers of this
anticipated market growth include increasing end-user connectivity and the
increasingly complex technology and support needs of consumers.
With over
500 call center agents, CyberDefender is one of the largest providers of direct
to consumer remote technical support services.
IP
and Product Portfolio Expansion:
In
December 2010, CyberDefender announced the issuance by the U.S. Patent and
Trademark Office of a patent for CyberDefender’s Threat Protection Network
(“TPN”), a key component of CyberDefender’s Argus network platform, a
cloud-based collaborative Internet security network. This patent covers
CyberDefender’s unique threat identification technology, which is the foundation
of its antimalware products, enabling rapid detection and protection against
emerging online threats.
To
augment growth in average revenue per order, customer renewals and customer
retention, CyberDefender expects to broaden its product portfolio with the
introduction of complementary products and services in 2011.
Sales
Channel Expansion:
In the
fourth quarter of 2010, CyberDefender expanded its distribution channels through
a new direct marketing partnership program, which is expected to launch in the
first quarter of 2011. Through this new program, CyberDefender’s products will
be marketed directly to its partners’ customers through revenue sharing
agreements.
Additionally,
CyberDefender plans to introduce its products into the small and medium business
(SMB) market through a concentrated direct marketing effort and partnership
marketing opportunities. SMBs currently account for less than 5% of
CyberDefender’s gross sales, with an average order size more than 10 times a
typical consumer order.
GRM
Marketing Services Agreement Extension and Credit Facility:
During
the quarter, CyberDefender signed two extensions of its media and marketing
services agreement with GR Match, LLC (“GRM”) and affiliate of Guthy-Renker,
LLC., under which GRM manages direct response television and radio
advertising.
In
conjunction with the most recent extension, which extends the agreement through
2013, CyberDefender secured a $5 million revolving credit loan facility from
GRM. This credit facility is expected to provide CyberDefender with greater
flexibility as it continues to invest in growth through the expansion of its
direct response marketing efforts.
Additionally,
together with GRM, CyberDefender expects to introduce its products through
U.S.-based retail channels as well as multiple sales channels in select
international markets in 2011.
Mr.
Guseinov added, “We are continuing to expand our distribution channels with our
new partnership marketing program and the launch of our SMB-focused sales
efforts, as well as our international and domestic retail programs through our
partnership with GRM. These partnerships mark our initial expansion beyond
traditional direct response radio and television channels. We expect this
natural extension of our current model will enable us to increase awareness
among new prospective customers in the SMB market where there remains
considerable opportunity to expand our business. Many vendors in
the antimalware and support markets focus on the consumer or the enterprise, and
lack a viable solution for the largely untapped SMB market segment where we can
further grow our business.”
Non-GAAP
Financial Measures
Gross
sales are a non-GAAP measure that CyberDefender uses in assessing its operating
performance. We define gross sales as total sales before refunds and bad debt
and before deferring revenue for GAAP purposes. We use this non-GAAP financial
measure frequently because we believe it gives a better indication of our
operating performance and the profitability of our marketing initiatives. We
include this non-GAAP financial measure in our earnings announcements in order
to provide transparency to our investors and enable investors to better
understand our operating performance. However, gross sales alone should not be
used to assess our financial performance or to formulate investment
decisions.
The
following is a reconciliation of gross sales to net GAAP revenue for the three
and twelve month periods ended December 31, 2010 and 2009:
|
Non-GAAP Reconciliation
|
3 Months
|
3 Months
|
12 Months
|
12 Months
|
||||||||||||
|
Q4 2010
|
Q4 2009
|
FY2010
|
FY2009
|
|||||||||||||
|
Gross
Sales
|
19,110 | 9,808 | 61,912 | 28,972 | ||||||||||||
|
Less:
Refunds
|
(2,267 | ) | (1,149 | ) | (7,679 | ) | (3,904 | ) | ||||||||
|
Less:
Bad debt
|
(1,914 | ) | - | (3,985 | ) | - | ||||||||||
|
Less:
Change in deferred revenue
|
(1,295 | ) | (1,123 | ) | (4,680 | ) | (6,226 | ) | ||||||||
|
Net
revenue
|
13,633 | 7,536 | 45,569 | 18,842 | ||||||||||||
About
CyberDefender
CyberDefender
is a provider of Internet security software, utilities and remote technical
support services that work together to ensure maximum safety for consumers in a
digital world. The company develops and markets antispyware/antivirus software
and a remote, live technical support service. In addition, CyberDefender offers
identity protection and computer optimization services. With millions of active
users on its cloud based collaborative Internet security network, CyberDefender
leverages the power of community to protect its customers from the rapidly
growing number of new online threats every year. CyberDefender products are
fully compatible with Microsoft Windows® XP, Vista®, and 7 Operating systems.
All products are available at www.cyberdefender.com. Investor relations
information is available at www.cyberdefendercorp.com.
Forward
Looking Statements
Statements
in this public announcement that are not statements of historical or current
fact concerning CyberDefender’s future growth and future business and financial
prospects constitute "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. The forward-looking statements include statements concerning: future
GAAP revenue and future gross sales; future market demand for CyberDefender’s
products and services; the future capacity of the call center; efforts to
increase CyberDefender’s patent portfolio; the launch of the new direct
marketing partnership program; the introduction of products and services into
the SMB market; and the introduction of products through U.S.-based retail
channels and channels in select international markets. Such
forward-looking statements involve known and unknown risks, uncertainties and
other unknown factors that could cause CyberDefender's actual results to be
materially different from the historical results or from any future results
expressed or implied by such forward-looking statements. Factors that could
cause CyberDefender's results to be materially different from the
forward-looking statements include, but are not limited to, whether
CyberDefender will be able to find financing as required and whether
CyberDefender's revenues will eventually exceed its expenses. The
forward-looking statements also are subject generally to other risks and
uncertainties that are described from time to time in CyberDefender's reports
and registration statements filed with the Securities and Exchange Commission,
which are available for review at http://www.sec.gov/.
Contacts
Public
Relations:
The Bohle
Company
Luis
Levy
(310)
785-0515 ext. 204
Luis@bohle.com
Investor
Relations:
The
Piacente Group Kristen McNallyLee Roth(212)
481-2050IR@CyberDefender.comIR
Site:
www.CyberDefenderCorp.com