Full year results for the year ended 31 December 2018

Transcription

1 Full year results for the year ended 31 December 2018 April

2 What We Do Raw Intern et Real-time DDoS Mitigation product optimised for Service Providers and Cloud/Hosting Providers Available for rapid deployment within provider s own infrastructure delivering compelling ROI Revenue and reputation-protecting for Digital Enterprises Solves scalability & response time demands of both the provider and digital enterprise businesses Unlike competing technologies which mitigate attacks in circa 20 minutes, SmartWall can mitigate attacks in seconds Internet Raw Internet Good Traffic Attack Traffic SmartWall TDS Good Traffic Protected Network 2

3 2018 Highlights SmartWall revenue growth and costs controls delivered significantly reduced EBITDA loss of $2.1 million SmartWall revenue up 23.1% Recurring revenue 51.1% of total revenue (2017: 47.1%) Operating costs down 13.3% Revenue and EBITDA loss impacted by longer time required to rampup go-to-market partners and secure contracts Successful fund raise in April 2018 Continued high levels of customer delight Services renewal rate remained very strong at 98.5% (2017: 97.5%) Signed Juniper Networks resale partnership Global agreement to resell SmartWall TDD software and services Juniper $2.0m equity investment in October 2018 Juniper actively engaged with prospects and trials Partnership enabled with SKU s, sales and support training, marketing collateral Equity raise at 5.75p of $5.4m (net of expenses) Term bank loan of $4.1m drawn down in May 2018 SmartWall revenue growth $2.1 million EBITDA* loss significantly reduced (2017: $5.0 m) $10.0 million revenue (2017: $8.5m) comprising almost entirely SmartWall $4.4 million net cash (2017: $1.4m) comprising cash $8.0m and debt $3.6m $2.0 million equity investment from Juniper Networks * before depreciation (but including DDPaaS asset depreciation charged to cost of sales), amortisation, financing, tax and unrealised foreign exchange differences on an intercompany loan 3

4 Juniper Networks Resale Partnership Transformational global resale partnership with market-leading multinational In September 2018, signed a non-exclusive, multi-year agreement Significant endorsement of Corero s SmartWall technology and market opportunity Partnership extends scalability and automation of DDoS protection to unprecedented price-performance levels Headquartered in the US Industry leader in automated, scalable and secure networks 2018 reported revenue of $4.6 billion c.50% of SmartWall deployments to-date are with customers who have deployed Juniper networking solutions In October 2018, secured a $2.0 million equity investment from Juniper Post period-end announced first resale through partnership Global Cloud hosting provider customer win follows a successful trial Significant milestone in development of this go-to-market channel Culmination of extensive joint engagement with Juniper sales training, support training, SKU s on Juniper price list, marketing collateral n x 10 Tbps Growing pipeline of opportunities and customer trials developing through this partnership 4

5 2018 Strategy and Delivery Corero made good progress against the 2018 strategic objectives Strategy Expand routes to market 2018 Progress Signed global resale partnership with Juniper Networks Partnership enabled with SKU s, sales and support training Corero and Juniper actively engaged in prospects and customer trials Strong pipeline of Juniper customer resale opportunities developing Grow customer base New customer acquisition to be accelerated: Continued demand for the SmartWall solution (over 100 SmartWall customers Over $1.5 million order intake for SmartWall 100Gbps product in 2018 (2017: $0.4 million from initial orders following product release in December 2017) 53% growth in sales order intake from Digital Enterprise customers Maintain competitive advantage Delivered two new major SmartWall software releases to customers Developed SmartWall Threat Defense Director ( TDD ) product for the Juniper global resale partnership: Market leading software solution for DDoS mitigation for large Tbps scale networks Fully integrated 100Gbps DDoS Appliance SmartWall NTD1100 Market leading solution for migration to 100Gpbs 5

6 P&L Summary Restated 12 months 12 months $ 000 $ 000 Revenue 9,951 8,531 Gross profit 7,763 6,405 Gross profit % 78% 75.1% Operating expenses (9,427) (11,993) EBITDA loss (1,664) (5,588) Dep'n and amortisation of intangible assets (3,300) (2,938) Loss before financing (4,964) (8,526) Net finance costs (259) 1 Loss before taxation (5,223) (8,525) Taxation Loss for the period (5,223) (8,409) EBITDA (1,664) (5,588) Unrealised foreign exchange differences on interco loan 425 (627) EBITDA excl. unrealised foreign exchange differences on interco loan (2,089) (4,961) 2018 revenue comprises almost entirely SmartWall revenue Follow-on orders from existing customers $4.4m (2017: $2.8m) Average new customer order intake value increased: perpetual license sale $275k (2017: $250k) and DDPaaS $55k pa (2017: $40k pa) Revenue from DDPaaS contracts increased 150% to $0.8m (2017: $0.3m) Gross margins strong (software/services offering) Operating expenses closely managed and: Net of R&D costs capitalised $1.7m (2017: $2.2m) Includes unrealized exchange gain on intercompany loan of $0.4m (2017: loss $0.6m) Depreciation and amortisation comprises: Depreciation and amortization of acquired intangibles $0.4m (2017: $0.5m) Amortisation of R&D capitalised $2.9m (2017: $2.4m) Management focused on Delivering revenue growth Being EBITDA positive and cash generative by the end of 2019 Note: 2017 restated for IFRS 15 (Revenue from Contracts with Customers) 6

7 Cash Flow Summary Restated 12 months 12 months $ 000 $ 000 Loss (5,223) (8,409) Adjustments for: Amort'n of acquired intangible assets Amort'n of capitalised development costs 2,918 2,408 Depreciation Finance income (9) (5) Finance expense Taxation 0 (116) Qualifying R&D expenditure tax credit Share based payment charge Changes in working capital (308) (666) Net cash used in operating activities (1,826) (6,044) Net cash used in investing activities (2,160) (2,678) Net cash generated from financing activities 11,008 6,996 Effects of exchange rates (361) 151 Net increase/(decrease) in cash 6,661 (1,575) Opening cash and cash equivalents 1,365 2,940 Closing cash and cash equivalents 8,026 1,365 Investment in IPR 12 months 12 months $ 000 $ 000 Cash flows from investing activities Purchase of intangible assets 0 (10) Capitalised development expenditure (1,701) (2,171) Purchase of PPE (459) (497) Net cash used in investing activities (2,160) (2,678) Cash flows from financing activities Net proceeds from issue of share capital 7,283 6,995 Net proceeds from loan 3,938 0 Interest received 9 5 Interest paid (222) (4) Net cash from financing activities 11,008 6,996 Development costs capitalised $1.7m (2017: $2.2m) Represents 67% of total engineering costs (2017: 59%) 7

8 Net Assets Summary Restated Restated 31-Dec Dec Dec Dec-17 $ 000 $ 000 $ 000 $ 000 Assets Liabilities Non-current assets Current liabilities Goodwill 8,991 8,991 Trade and other payables (1,799) (1,305) Acquired intangible assets Deferred income (2,034) (1,702) Capitalised development expenditure 6,447 7,664 Borrowings (849) 0 Property, plant and equipment (4,682) (3,007) Trade and other receivables ,290 17,538 Net current assets 6, Current assets Inventories Non-current liabilities Trade and other receivables 2,977 1,925 Trade and other payables (134) 0 Cash and cash equivalents 8,026 1,365 Deferred income (846) (287) 11,128 3,384 Borrowings (2,757) 0 (3,737) (287) Cash $8.0m (2017: $1.4m) Successful equity fund raise in April 2018 of $5.4m (after expenses) and $2.0m Juniper investment in October 2018 Borrowings $3.6m (2017: $0) principle terms: Secured term loan (4-year term), GBP denominated ( 3.0m), drawn down in May-18 Net assets 18,999 17,628 Quarterly repayments commencing 31-Mar-19; quarterly repayments increase from 150k on 31-Mar-19 to 310k 31-Mar22 (loan repaid in full by 31-Mar-22) No early repayment penalties or redemption premium Interest payable quarterly in arrears (3-month GBP Libor plus 7.5%) Covenants: revenue and cash consumption covenants, tested quarterly and monthly respectively 8

9 2019 Strategy Strategy Scaling the business towards profitability Focus Three-pronged go-to-market focus: Direct sales: sales team focused on the SmartWall target market to leverage success to date Indirect sales: channel partner proposition leveraging Juniper relationship Partner sales: close engagement with go-to-market partners such as Juniper and GTT Communications and development of further go-to-market partner relationships Investment in sales and marketing to drive growth Sales investment to support new customer growth plans Marketing spend focused on new customer sales lead generation Maintain competitive advantage Incremental product enhancements, maintaining R&D investment New DDoS attack defences New Machine Learning and Artificial Intelligence capabilities 9

10 Corero s 2018 Full Year DDoS Trends The number of DDoS attacks continues to grow Highlights: Low volume, sub-saturating attacks continue to dominate (98% less than 10Gbps) The average number of attacks per customer is up 16% year-on-year Attacks over 10Gbps have doubled Attacks are becoming shorter in duration (81% under 10 minutes) Attacks more sophisticated 29% increase in use of multivector attacks One in five victims are attacked again within 24 hours of an initial attack. Note: statistics from Corero Full Year 2018 DDoS Trends Report 10

11 Continued DDoS Mitigation Demand DDoS attacks continues to grow in size and frequency in 2019 The number of networks, services and solutions requiring DDoS protection will increase in 2019 Cloud (vnf) 5G Edge Compute IoT These opportunities demand real-time, automatic, and low-latency DDoS protection This is the design point of the SmartWall Threat Defense family (TDS/TDD) 11

12 SmartWall Portfolio Product portfolio underpins goal of being the #1 in real-time DDoS protection SmartWall NTD120/280 SmartWall NTD1100 SmartWall vntd (Virtual Appliance) SmartWall TDD (Virtual Appliance) 10/20 Gbps Up to 80 Gbps 1 100Gbps n x 10 or 20Gbps n x 100 Gbps n x m Gbps n x 10 Tbps SmartWall Service Portal 12

13 Corero SecureWatch Analytics DDoS Monitoring for Transit / Peering / Edge / DC ( The DDoS Brain ) Real-time and historical Attack Analytics Powered by Splunk for Big Data and ML add-ons Alerting / Reporting / Action Automation via RestAPI Open Integration for NOC/SOC 13

14 We apply our competitive advantages 14

15 Outlook Market drivers DDoS attacks growing problem for all DDoS is expected to remain a significant cyber threat Demand driven by adaption of faster 100Gbps links, 5G rollouts, ever expanding attack surface with IoT DDoS appliance market to increase to $1.45bn in 2022 (up from $0.9bn in 2017) * Corero well-positioned to be a market leader Solution validation: 100+ SmartWall customers (including leading names in each Corero target market) Technology validation: Juniper Networks resale partnership Management focused on delivering revenue growth, EBITDA positive and cash generative in 2019 Executing on a growing pipeline including opportunities arising from the Juniper resale partnership Leveraging the demand for Corero 100Gbps SmartWall technology from the adoption of faster and more economic 100Gbps links Funding secured to execute the Company s strategy * IHS Markit Technology research (DDoS Prevention Appliances Forecast, November 2018) 15

16 Thank you 16