updated 5/3/2011 7:16:34 AM ET 2011-05-03T11:16:34

LOS ANGELES, May 2, 2011 (GLOBE NEWSWIRE) -- CyberDefender Corporation (Nasdaq:CYDE), a leading provider of remote technical support services and Internet security software and utilities, today announced financial results for the first quarter ended March 31, 2011.

First Quarter 2011 and Recent Highlights

  • GAAP revenue up 62% year-over-year and 13% quarter-over-quarter to a record $15.4 million
  • Gross sales (a non-GAAP measure) up 83% year-over-year and 13% quarter-over-quarter to $21.6 million
  • Gross sales of new LiveTech subscriptions increased 141%, totaling $14.0 million, or 65% of total gross sales, compared with $5.8 million or 49% of gross sales in the year ago period
  • Direct advertising spend (a non-GAAP measure) as a percentage of gross sales declined to 28%, compared with 36% in the first quarter of 2010
  • As of March 31, 2011 CyberDefender had deferred revenue of $18.3 million, up 19% from December 31, 2010
  • Cash flow from operations was $2.8 million for the three months ended March 31, 2011
  • Restructured debt with GR Match, LLC (GRM), an affiliate of Guthy-Renker LLC, to increase financial flexibility
  • Expanded portfolio of software and services with the introduction of a new cloud-based storage and online backup service
  • Enhanced leadership to advance customer retention, renewals and develop best-in-class technician/agent team: Appointed former eHarmony executive Deepa Miglani as VP of Customer Retention, and former Intuit executive Lear Boga, PhD, as Director of Learning and Organizational Development

"This marks our 12th quarter of consecutive top-line growth with gains that are beginning to demonstrate bottom line improvement. As our business mix continues to be weighted toward remote technical support, during the first quarter, our sales were largely fueled by strong demand for our LiveTech services, which accounted for 65% of sales, and of which approximately 57% were multi-year contracts," stated Gary Guseinov, CyberDefender CEO. "We have built a sound infrastructure to support our growing business. As of March 31, 2011, we have more than 800,000 active paid subscriptions. We expect to continue to gain new customers and increase our customer renewals and reactivations, which have increased by 131% during the quarter compared with the same period last year. During the quarter we also reduced our uncollected installment sales by $700,000 sequentially, and completed key corporate objectives that included expanding our call center operations, restructuring our debt to increase our financial flexibility, and launching our cloud-based storage and online backup service. Each of these serve as catalysts to accelerate our top line growth and provide a clear path to profitability."

Results for the Quarter Ended March 31, 2011

GAAP revenue for the first quarter of 2011 grew 62% to $15.4 million, compared to $9.5 million in the same quarter of 2010 and $13.6 million in the fourth quarter of 2010. Gross sales grew 83% to $21.6 million for the first quarter, compared to $11.8 million in the same quarter of 2010 and $19.1 million in the fourth quarter of 2010. The Company defines gross sales (a non-GAAP measure) as GAAP revenues before returns and before deferring revenue for GAAP purposes (the Company's use of non-GAAP measures and reconciliation to GAAP is explained below).

Cost of revenue was $7.1 million for the first quarter of 2011 compared to $3.2 million for the first quarter of 2010 and $7.0 million in the fourth quarter of 2010. The increase from prior year was primarily attributable to increased sales of our remote LiveTech service offerings and the expansion of our call center operations to support the increase in these sales which have been transitioned entirely to CyberDefender managed call centers.

Uncollected installment sales for the first quarter of 2011 were $1.2 million, compared with $0.1 million in the same quarter of 2010 and $1.9 million in fourth quarter of 2010. The year-over-year increase was primarily related to the introduction of CyberDefender's installment-based payment program, EZ Pay, during 2010 and the scaling of the program through the fourth quarter of 2010. The Company expects continued declines in uncollected receivables through infrastructure improvements and programs aimed at improving collections, as evidenced by the $700,000 sequential quarterly decrease in its uncollected installment sales.

Gross profit for the first quarter of 2011 increased 30% to $8.2 million, or 54% of net revenue, compared to $6.3 million, or 67% of net revenue, in the same quarter of 2010 and $6.7 million, or 49% of net revenue in the fourth quarter of 2010. The decrease in overall gross margin from the prior year reflects the Company's transition from its third party call center to its directly managed call center operations. Gross profit as a percentage of revenue is expected to increase over time, as indicated in the sequential improvement from the fourth quarter of 2010, as the Company recognizes deferred revenue from prior quarters, achieves scale in call center sales, and as GAAP revenue growth exceeds that of variable costs.

Operating loss decreased to $5.0 million in the first quarter of 2011 compared with an operating loss of $8.1 million for the same quarter of 2010 and $7.9 million in the previous quarter. This decrease in operating loss from the prior year period was driven by increased sales and decreased operating expense primarily associated with the value of warrants issued for services in the 2010 period. This decrease in operating expense was offset by an increase in actual media spend of $1.8 million and an increase in selling, general and administrative expenses.

Net loss for the first quarter of 2011 was $5.9 million, or $0.22 per share, compared with a net loss of $8.3 million, or $0.32 per share, in the same quarter of 2010, representing a 29% improvement year-over-year. On a sequential quarter basis net loss also improved 29% from $8.4 million, or $0.31 per share.

Cash flow from operations for the first quarter of 2011 was $2.8 million, which was primarily attributable to an increase in accounts payable and accrued expenses due to improved payment terms with vendors, an increase in deferred revenue of $2.9 million, and a reduction of restricted cash related to a merchant processing reserve of $0.8 million.

As of March 31, 2011, CyberDefender had record deferred revenue of $18.3 million and unrestricted cash of $5.9 million, compared with $15.5 million and $2.6 million, respectively, as of December 31, 2010.

2011 Guidance

For the full year 2011, CyberDefender expects gross sales to exceed $100 million, representing growth of at least 61% over 2010. During 2011, the Company expects to secure in excess of 200,000 new LiveTech subscriptions. In addition, the Company anticipates generating positive cash flow from operations for the full year.

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/cancels 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-month periods ended March 31, 2011, December 31, 2010 and March 31, 2010:

 

Non-GAAP

Reconciliation
3 Months 3 Months 3 Months
  Q1 2011 Q4 2010 Q1 2010
Gross Sales 21,597,884 19,109,932 11,813,408
Less: Refunds (2,451,744) (2,267,259) (1,393,058)
Less: Uncollected installment sales (1,208,789)  

(1,914,464)
(102,406)
Less: Change in deferred revenue (2,561,458) (1,295,383) (840,614)
Net revenue 15,375,893 13,632,526 9,477,330

The following is a reconciliation of direct advertising spend (a non-GAAP measure) to GAAP reported media and marketing services expense for the quarters ended March 31, 2011, December 31, 2010 and March 31, 2010:

    3 Months   3 Months   3 Months
    Q1 2011   Q4 2010   Q1 2010
Direct advertising spend   6,055,650   6,635,901   4,279,027
Plus: Non-cash expense   --   327,381   5,489,790
Plus: Indirect expense   569,531   346,659   461,116
GAAP Media & marketing services expense   6,625,181   7,309,941   10,229,933

Conference Call Information

The Company will host a conference call to discuss first quarter 2011 results today, Monday, May 2, 2011 at 1:30 pm PT/4:30 pm ET.

To access the live conference call, dial (877) 407-9210 (toll free) and give the Company name, "CyberDefender." Participants are asked to call the assigned number approximately 10 minutes before the conference call begins. For those unable to participate in the live conference call, a replay of the conference call will be available (starting two hours after the call) by dialing (877) 660-6853 and entering the following account #: 286 and conference ID #: 371740. International callers may access the replay by calling (201) 612-7415 and entering the pass code above.

To listen to the live webcast, logon using the link provided in the events section of the Company's website: www.cyberdefendercorp.com . An instant replay of the conference call will be available over the Internet at the same web address.

About CyberDefender

CyberDefender is a leading provider of remote technical support services as well as Internet security software and utilities. With 8.6 million active users on its cloud-based collaborative Internet security network and more than 800,000 active paid subscriptions, CyberDefender protects its customers from the rapidly growing number of online threats through its suite of security and optimization software as well as its LiveTech subscription-based remote PC repair service. CyberDefender's team of more than 500 highly trained technicians and sales agents provide customers with efficient, round the clock remote PC repair services. The Company develops and markets antispyware/antivirus software, PC optimization software, online backup and identity protection services. By combining remote live technical support and the aforementioned software products, CyberDefender offers a complete Internet security solution to consumers and small businesses.

CyberDefender directly markets its products and services to consumers through television and radio via its MyCleanPC, MaxMySpeed and DoubleMySpeed brands.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, including any statement regarding future growth and profitability, and future revenue targets, constitute "forward-looking statements" under Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The forward looking statements include statements regarding: expected gross sales in fiscal year 2011; the Company's anticipation of generating positive cash flows from operations in fiscal year 2011; and the Company's financial and business performance in fiscal year 2011, including the expected growth of the LiveTech business. The 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 whether CyberDefender will be able to find financing as required and whether CyberDefender's revenues eventually will 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 www.sec.gov .

CYBERDEFENDER CORPORATION
CONDENSED BALANCE SHEETS
(UNAUDITED)
  March 31, December 31,
  2011   2010
ASSETS    
CURRENT ASSETS:    
Cash $ 5,923,410 $ 2,649,061
Restricted cash 2,279,807 3,079,394
Accounts receivable 2,352,833 2,385,920
Deferred financing costs, current 170,511 103,484
Prepaid expenses 303,224 195,258
Deferred charges, current 750,521 1,147,764
     
Total Current Assets 11,780,306 9,560,881
     
PROPERTY AND EQUIPMENT, net 1,723,277 1,742,675
DEFERRED FINANCING COSTS, net of current portion -- 6,377
DEFERRED CHARGES, net of current portion 283,071 402,772
OTHER ASSETS 260,715 269,314
     
Total Assets $ 14,047,369 $ 11,982,019
     
LIABILITIES AND STOCKHOLDERS' DEFICIT    
CURRENT LIABILITIES:    
Accounts payable $ 6,740,623 $ 6,275,896
Accounts payable and accrued expenses – related party 3,955,776 1,447,257
Accrued expenses 1,710,093 1,788,435
Deferred revenue, current 13,178,356 11,342,211
Convertible notes payable – related party, net of discount 8,815,945  --
Capital lease obligations, current 133,819  137,435
     
Total Current Liabilities 34,534,612 20,991,234
     
DEFERRED RENT 686,821 466,920
DEFERRED REVENUE, less current portion 5,141,755 4,116,442
CONVERTIBLE NOTES PAYABLE – RELATED PARTY, net of discount -- 9,825,056
CAPITAL LEASE OBLIGATIONS, less current portion 142,959 168,572
     
Total Liabilities 40,506,147 35,568,224
     
COMMITMENTS AND CONTINGENCIES    
     
STOCKHOLDERS' DEFICIT:    
Preferred stock, par value $0.001; 10,000,000 shares authorized; no shares issued and

outstanding at March 31, 2011 and December 31, 2010, respectively
-- --
Common stock, no par value; 100,000,000 shares authorized; 28,121,933 and 27,327,702

shares issued and outstanding at March 31, 2011 and December 31, 2010, respectively
28,122 27,328
Additional paid-in capital 63,988,949 60,926,037
Accumulated deficit (90,475,849) (84,539,570)
     
Total Stockholders' Deficit (26,458,778) (23,586,205)
     
Total Liabilities and Stockholders' Deficit $ 14,047,369 $ 11,982,019
 
CYBERDEFENDER CORPORATION
CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
       
  For the Three Months Ended
  March 31, December 31, March 31,
  2011 2010 2010
REVENUE:      
Services $ 10,010,778 $ 8,511,051 $ 3,785,748
Software and other 5,365,115 5,121,475 5,691,582
 Total Net Revenue 15,375,893 13,632,526 9,477,330
COST OF REVENUE:      
Services 6,826,460 6,694,524 2,931,839
Software and other 303,059 283,749 223,211
 Total Cost of Revenue 7,129,519 6,978,273 3,155,050
       
GROSS PROFIT 8,246,374 6,654,253 6,322,280
       
OPERATING EXPENSES:      
Media and marketing services 6,269,850 7,014,364 4,662,834
Media and marketing services – related party 355,332 552,214 5,567,097
Product development 1,113,537 1,487,988 752,127
Selling, general and administrative 5,376,724 5,409,597 3,426,956
Depreciation and amortization 91,853 109,048 20,242
Total Operating Expenses 13,207,296 14,573,211 14,429,256
       
LOSS FROM OPERATIONS (4,960,922) (7,918,958) (8,106,976)
       
OTHER INCOME/(EXPENSE):      
Interest expense – related party (867,623) (318,611) --
Interest expense, net (5,017) (154,043) (219,169)
Loss on securities modifications (102,717) -- --
Total Other Expense, net (975,357) (472,654) (219,169)
       
NET LOSS $ (5,936,279) $ (8,391,612) $ (8,326,145)
       
Basic and fully diluted net loss per share $ (0.22) $ (0.31) $ (0.32)
       
Weighted Average Shares Outstanding:      
Basic and fully diluted 27,600,342 27,179,858 25,758,260
CONTACT:  Public Relations:
          The Bohle Company
          Luis Levy
          (310) 785-0515 ext. 204
          PR@CyberDefender.com

          Investor Relations:
          The Piacente Group 
          Brandi Floberg
          Lee Roth
          (212) 481-2050
          IR@CyberDefender.com
          IR Site: www.CyberDefenderCorp.com

© Copyright 2012, GlobeNewswire, Inc. All Rights Reserved

Discuss:

Discussion comments

,

Most active discussions

  1. votes comments
  2. votes comments
  3. votes comments
  4. votes comments

Data: Latest rates in the US

Home equity rates View rates in your area
Home equity type Today +/- Chart
$30K HELOC FICO 5.03%
$30K home equity loan FICO 5.68%
$75K home equity loan FICO 4.87%
Credit card rates View more rates
Card type Today +/- Last Week
Low Interest Cards 13.42%
13.42%
Cash Back Cards 17.94%
17.94%
Rewards Cards 17.15%
17.15%
Source: Bankrate.com