Cyan Seeks Funding in SDN Squeeze
Cyan has gotten a lot of credit for being an early mover in the SDN market, but the company is still waiting for its big SDN payday. It's looking more and more like that payday won't come until next year, so the vendor is seeking financing and cutting costs.
Cyan Inc. officials alluded to both efforts during the company's third-quarter earnings call Thursday. CFO Jeff Ross said the firm is looking at a number of options for raising the sum -- "between $5 million and $10 million" -- that it needs to run its business, while also working on cutting 12% to 15% from its quarterly expense run rate of about $21.5 million.
Company officials said little else on the call about the efforts, and declined to describe the nature of Cyan's financing options when contacted by Light Reading. Analysts have speculated that the additional funding would likely be in the form of debt financing. In an email to Light Reading, a company spokeswoman said the cost reduction efforts included a small headcount reduction.
Cyan saw a sequential revenue uptick in the third quarter, to $26.6 million, but it was still down from $37.7 million for the same quarter last year.
The fourth quarter is not looking good either, as Cyan acknowledged it is being affected by some of the same carrier capex doldrums as several other vendors. Ross said fourth-quarter revenue is expected to be in the range of $24 million to $26 million. (See Cyan Q3 Revenue Falls Year Over Year.)
Cyan CEO Mark Floyd said on the call, "We really thought decisions were going to be made in the back half of 2014. Now it looks like it's the first half of 2015. It is taking a little bit more time [for carriers] to make those decisions." Floyd added that part of the long buildup has to do with the fact that some carriers tried to develop SDN projects internally before deciding to seek help.
Still, Cyan's products continue to be increasingly popular in service provider trials. The company now has 15 trials ongoing, including six evaluations at Tier 1 carriers. It also recently announced the capability for its Blue Planet software to orchestrate routers from Cisco Systems Inc. (Nasdaq: CSCO) and Juniper Networks Inc. (NYSE: JNPR). But it needs some of those evaluations and other positive news to start converting into cash. (See Cisco, Juniper Land on Cyan's Blue Planet.)
Floyd -- echoing a tone many vendors have taken, in anticipation that softer spending in the second half of this year will give way to brighter days ahead -- said, "I'm bullish about 2015."
— Dan O'Shea, Managing Editor, Light Reading