REG - Corero Network Sec. - Final Results
25/04/2023 07:00
For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20230425:nRSY2866Xa&default-theme=true
RNS Number : 2866X Corero Network Security PLC 25 April 2023
25 April 2023
Corero Network Security plc (AIM: CNS)
("Corero," the "Company" or the "Group")
Audited results for the year-ended 31 December 2022
Corero Network Security plc (AIM: CNS), a leading provider of Distributed
Denial of Service (DDoS) protection solutions, announces its audited results
for the year ended 31 December 2022 ("FY 2022").
Financial Highlights:
· Revenues of $20.1 million (2021: $20.9 million)
· Annualised Recurring Revenues(1) ("ARR") up 13% to $14.4 million
(2022: $12.8 million)
· Order intake up 13% year-on-year to $23.9 million (2021: $21.2
million)
· Gross margins of 87% (2021: 85%)
· EBITDA(2) profit of $2.6 million (2021: profit of $4.0 million)
· Profit before taxation of $0.4 million (2021: profit before taxation
of $1.4 million)
· Earnings and diluted earnings per share of 0.1 cents (2021: earnings
per share of 0.3 cents)
· Net cash(3) at 31 December 2022 of $4.4 million (2021: $8.4 million)
Operational Highlights:
Corero delivered solid operational progress across 2022 underpinned by both
product development and, sales and marketing activities supported by a renewed
customer centric approach.
· Added 32 new customers during the year
· Exceptional customer support contract renewal rate of 98%
· Extended the Juniper Networks partnership to include the PTX router
product line
· Expanded reach and business with GTT Communications
Outlook
The demand for DDoS protection is expected to remain strong through 2023, with
attacks becoming increasingly sophisticated while at the same time the DDoS
attack surface is expanding. With the number of recorded attacks on the rise
and shifts in attackers' motives and goals, organisations will need to ensure
they have robust DDoS defences in place.
The key focus for Corero in 2023 is to grow our sales pipeline and revenue.
The Board is confident that with the operational management team in place, our
market-leading SmartWall® solutions and SecureWatch® services, the
investment in 2022 in sales and marketing initiatives to build a stronger
go-to-market organisation and demand generation targeted to our defined Ideal
Customer Profile ("ICP"), the Company is now well placed to expand its market
coverage and increase sales of SmartWall solutions to new customers. As
announced by the Company on 13 April 2023, Q1 2023 has already seen
significant orders from both new and existing customers.
The Board remains encouraged by the 2022 increase in new order intake,
existing customer expansion and increase in ARR, all achieved against a
challenging macro-economic backdrop in the second half of 2022.
Jens Montanana, Executive Chairman of Corero, commented:
"The Company delivered a credible performance across FY 2022. Our industry was
impacted by multiple macro-economic factors and supply chain constraints
during 2022. The Company delivered growth in order intake and ARR, and
reported another year of EBITDA profit with similar revenues to 2021.
"We are focussing on more specific areas of our addressable market and
targeting our sales and marketing initiatives accordingly to drive revenue
growth in 2023 and beyond."
(1) Defined as the normalised annualised recurring revenue and includes
recurring revenues from contract values of annual support, software
subscription and from DDoS Protection-as-a-Service contracts
( 2) Defined as Earnings before Interest, Taxation, Depreciation and
Amortisation
(3) Defined as cash at bank less debt
The information contained within this announcement was deemed to constitute
inside information as stipulated under the Market Abuse Regulation (EU) No.
596/2014, as amended by regulation 11 of the Market Abuse (Amendment) (EU
Exit) Regulations 2019/310, prior to release of this announcement. Upon the
publication of this announcement, this inside information is now considered to
be in the public domain.
Enquiries:
Corero Network Security plc
Jens Montanana, Executive Chairman Tel: +44(0) 20 7390 0230
Phil Richards, Chief Financial Officer
Canaccord Genuity Limited Tel: +44(0) 20 7523 8000
(Nominated Adviser and Broker)
Simon Bridges / Andrew Potts / Harry Rees
Vigo Consulting Tel: +44(0) 20 7390 0230
Jeremy Garcia / Kendall Hill
corero@vigoconsulting.com (mailto:corero@vigoconsulting.com)
About Corero Network Security
Corero Network Security is a leading provider of Distributed Denial of
Service (DDoS) protection solutions. We are specialists in automatic
detection and mitigation solutions, that include network visibility,
analytics, and reporting tools. Corero's technology provides scalable
protection capabilities against both external DDoS attackers and
internal DDoS threats, in even the most complex edge and subscriber
environments, ensuring internet service availability and uptime. Corero's key
operational centers are in Marlborough, Massachusetts, USA, and Edinburgh,
UK, with the Company's headquarters in London, UK. The Company is listed on
the London Stock Exchange's AIM market under the ticker CNS. For more
information, visit www.corero.com (http://www.corero.com/) .
EXECUTIVE CHAIRMAN'S STRATEGIC UPDATE, FINANCIAL AND OPERATIONAL REVIEW
Introduction
The Company delivered a credible performance across FY 2022. The financial
performance was adversely impacted by broader macro-economic factors and as a
consequence, the Company saw sales cycles across the business lengthen in the
second half of the year which impacted revenues. Nevertheless, the Company
delivered growth in order intake, and ARR and reported another year of EBITDA
profit.
The underlying health of the business remains robust with order intake, which
reflects revenues recognised over the lifetime of each of the contracts, up
13% year-on-year to $23.9 million (2021: $21.2 million). Encouragingly, new
customer order intake increased 38% over the prior year. This, coupled with an
exceptional customer support contract renewal rate of 98% (2021: 96%),
demonstrates the strength and quality of Corero's market-leading solutions,
supported by continued investment in product development.
Annualised Recurring Revenues(1) ("ARR") increased 13% to $14.4 million as at
1 January 2023 (ARR at 1 January 2022: $12.8 million), driven by strong demand
for Corero's subscription-based and DDoS Protection as-a-service ("DDPaaS")
products, which increase revenue visibility for the Company going forward.
During the final quarter of the year, Corero secured several important
customer wins for its SmartWall® DDoS protection solutions including
additional purchases from existing customers and a significant multi-year
support renewal for an existing customer. These wins will benefit revenues
across FY 2023 and subsequent years.
The Board of Directors believes that Corero has a built a strong operational
team and platform, alongside a sales and marketing strategy capable of
generating sustainable growth in the medium term, underpinned by:
· Large and high growth addressable market;
· Market leading proprietary technology with global customer service
capability;
· Better alignment of the product offering to the Ideal Customer
Profile ("ICP");
· Continued investment in sales and channel resources;
· Scalable and recurring revenue model with strong gross margins; and
· Strong base of existing customers and strategic partnerships.
Strategic progress
The Company made operational advances in 2022 with product development and,
sales and marketing activities driven by a customer centric approach. We
continued to make strategic progress in key areas including:
• Increasing our customer base: during 2022 we added 32 new
customers.
• Growing strategic alliances: extended the Juniper partnership to
include the PTX router product line and expanded our reach and business with
GTT.
• Better monetising our existing services and introducing new
services: we continue to enhance the protection and network security
visibility for our customers.
• Amplifying our demand generation programmes: increased on-line
advertising and marketing campaigns including webinars and thought leadership
speaking opportunities.
• Continuing to increase our technological innovation leadership: we
have invested $35 million over 10 years in our market leading SmartWall
solutions enabling our customers to have the most advanced DDoS protection,
including $1.7 million in 2022 to continue to enhance our product and
competitiveness.
Financial summary
The Group generated revenues of $20.1 million in 2022 (2021: $20.9 million),
with total operating expenses before share-based payments of $16.5 million
(2021: $16.1 million) with continued investment in sales, marketing and
R&D.
• Operating expenses net of capitalised R&D costs and before
depreciation and amortisation of intangible assets and before share-based
payments were $14.5 million (2021: $13.9 million). Capitalised R&D costs
were $1.7 million (2021: $1.8 million).
• Operating expenses include a foreign exchange gain of $1.4 million
(2021: foreign exchange gain of $0.2 million).
• Depreciation and amortisation of intangible assets decreased
during the year to $1.9 million (2021: $2.2 million).
The Company delivered a second successive EBITDA(2) profit of $2.6 million
(2021: profit $4.0 million), and Adjusted EBITDA(3) profit of $1.7 million
(2021: profit $3.3 million).
In addition, Corero achieved profit before taxation of $0.4 million (2021:
profit before taxation of $1.4 million) including amortisation of capitalised
R&D costs of $1.7 million (2021: $1.9 million). Profit after taxation was
$0.6 million (2021: profit after taxation of $1.5 million), following a UK
R&D tax credit of $0.2 million (2021: $0.1 million). The reported earnings
per share was therefore 0.1 cents (2021: earnings per share 0.3 cents).
Corero held net cash(4) of $4.4 million at 31 December 2022 (31 December 2021:
$8.4 million), comprising:
• Cash at bank of $5.6 million as at 31 December 2022 (2021: $11.2
million); and
• Debt of $1.2 million (2021: $2.8 million).
(1) Defined as the normalised annualised recurring revenue and includes
recurring revenues from contract values of annual support, software
subscription and from DDoS Protection-as-a-Service contracts
( 2) Defined as Earnings before Interest, Taxation, Depreciation and
Amortisation
(3) Defined as Earnings before Interest, Taxation, Depreciation and
Amortisation excluding unrealised gains/(losses) on an intercompany loan and
PPPL forgiveness
(4) Defined as cash at bank less debt
DDoS market dynamics
DDoS attacks continue to be prevalent as a means of cyber-attack, as
camouflage for ransomware attacks and even with Ransom driven attacks.
The global DDoS protection market was worth $3.9 billion in 2022 and is
expected to reach $7.3 billion by 2027 at a CAGR of 13.2%. Corero operates
within a significant segment of this overall market and estimates that the
total addressable market exceeds $1.5bn for its SmartWall solutions.
The DDoS mitigation marketplace continues to grow apace as a result of the
global acceleration of digitisation and the growing need for Service Providers
to deliver uncompromised network access for enterprises to ensure business
continuity. This is set to continue with the ongoing proliferation of IoT
devices, the roll-out of 5G networks and the increase in cloud services.
Board changes
Subsequent to the year-end, Lionel Chmilewsky resigned from the Board on 28
February 2023. Jens Montanana assumed the role of Executive Chairman with
effect from 15 February 2023, and Andrew Miller was appointed Interim Chief
Operating Officer with effect from 1 March 2023.
The Board is currently reviewing the process and timeframe for appointing a
new Chief Executive Officer.
Outlook
The demand for DDoS protection is expected to remain strong through 2023, with
attacks becoming increasingly sophisticated while at the same time the DDoS
attack surface is expanding. With the number of recorded attacks on the rise
and shifts in attackers' motives and goals, organisations will need to
ensure they have robust DDoS defences in place.
The key focus for Corero across 2023 is to grow our sales pipeline and
revenue. The Board is confident that with the operational management team in
place, our market-leading SmartWall® solutions and SecureWatch® services,
the investment in 2022 in sales and marketing initiatives to build a stronger
go-to-market organisation and demand generation targeted to our defined ICP,
the Company is now well placed to expand its market coverage and increase
sales of SmartWall solutions to new customers. As announced by the Company on
13 April 2023, Q1 2023 has already seen significant orders from both new and
existing customers.
The Board remains encouraged by the 2022 increase in new order intake,
existing customer expansion and ARR, all achieved against a challenging
macro-economic backdrop in the second half of 2022.
Jens Montanana
Executive Chairman
25 April 2023
Consolidated Income Statement
for the year ended 31 December 2022
Year ended 31 December Year ended 31 December
2022 2021
Continuing operations $'000 $'000
Revenue 20,121 20,895
Cost of sales (2,576) (3,112)
Gross profit 17,545 17,783
Operating expenses (16,869) (16,642)
Consisting of:
Operating expenses before depreciation and amortisation (14,926) (14,450)
Depreciation and amortisation of intangible assets (1,943) (2,192)
Operating profit 676 1,141
Other income - 637
Finance income 7 1
Finance costs (279) (406)
Profit before taxation 404 1,373
Taxation credit 150 149
Profit after taxation 554 1,522
Profit after taxation attributable to equity owners of the parent 554 1,522
Basic and diluted earnings per share
Cents Cents
Basic earnings per share 0.1 0.3
Diluted earnings per share 0.1 0.3
EBITDA
2,619 3,970
Adjusted EBITDA - for unrealised foreign exchange differences on intercompany 1,658 3,246
loan and PPPL forgiveness in 2021
Consolidated Statement of Comprehensive Income
for the year ended 31 December 2022
Year ended 31 December Year ended 31 December
2022 2021
$'000 $'000
Profit for the year 554 1,522
Other comprehensive (expense)/income:
Items reclassified subsequently to profit or loss upon derecognition:
Foreign exchange differences (1,087) (122)
Other comprehensive expense for the period net of taxation attributable to the (1,087) (122)
equity owners of the parent
Total comprehensive (expense)/income for the year attributable to the equity (533) 1,400
owners of the parent
Consolidated Statement of Financial Position
as at 31 December 2022
As at 31 December As at 31 December
2022 2021
$'000 $'000
Assets
Non-current assets
Goodwill 8,991 8,991
Acquired intangible assets 2 4
Capitalised development expenditure 4,500 4,528
Property, plant and equipment - owned assets 604 796
Leased right of use assets 62 145
Trade and other receivables 1,571 859
15,730 15,323
Current assets
Inventories 164 57
Trade and other receivables 5,294 3,206
Cash and cash equivalents 5,646 11,201
11,104 14,464
Total assets 26,834 29,787
Liabilities
Current Liabilities
Trade and other payables (3,956) (4,068)
Lease liabilities (78) (94)
Deferred income (3,323) (4,677)
Borrowings (971) (1,421)
(8,328) (10,260)
Net current assets 2,776 4,204
Non-current liabilities
Trade and other payables (100) (143)
Lease liabilities - (78)
Deferred income (2,285) (2,147)
Borrowings (237) (1,356)
(2,622) (3,724)
Net assets 15,884 15,803
Capital and reserves attributable to the equity owners of the parent
Share capital 6,980 6,914
Share premium 82,284 82,122
Capital redemption reserve 7,051 7,051
Share options reserve 1,777 1,490
Foreign exchange translation reserve (2,593) (1,506)
Accumulated profit and loss reserve (79,615) (80,268)
Total shareholders' equity 15,884 15,803
Consolidated Statement of Cash Flows
for the year ended 31 December 2022
Year ended 31 December Year ended 31 December
2022 2021
Operating activities $'000 $'000
Profit before taxation for the year 404 1,373
Adjustments for movements:
Amortisation of acquired intangible assets 2 5
Amortisation of capitalised development expenditure 1,732 1,872
Depreciation - owned assets 497 604
Depreciation - leased assets 82 93
Finance income (7) (1)
Finance expense 268 388
Finance lease interest costs 11 18
Share based payments expense 386 522
Paycheck Protection Program Loan forgiveness - (637)
Cash generated from/(used) in operating activities before movement in working 3,375 4,237
capital
Movement in working capital:
(Increase)/decrease in inventories and sales evaluation assets (26) 175
(Increase)/decrease in trade and other receivables (3,867) 223
Decrease in trade and other payables (1,361) (1,999)
Net movement in working capital (5,254) (1,601)
Cash (used in)/generated from operating activities (1,879) 2,636
Taxation received 150 149
Net cash (used in)/generated from operating activities (1,729) 2,785
Cash flows from investing activities
Investment in development expenditure (1,704) (1,754)
Purchase of property, plant and equipment (420) (421)
Net cash used in investing activities (2,124) (2,175)
Cash flows from financing activities
Net proceeds from issue of ordinary share capital 228 -
Proceeds from borrowings - 2,683
Finance income 7 1
Finance expense (158) (238)
Repayments of borrowings (1,364) (1,738)
Lease liability payments (104) (103)
Net cash (used in)/generated from financing activities (1,391) 605
(Decrease)/increase in cash and cash equivalents (5,244) 1,215
Effects of exchange rates on cash and cash equivalents (311) (154)
Cash and cash equivalents at 1 January 11,201 10,140
Cash and cash equivalents at 31 December 5,646 11,201
Consolidated Statement of Changes in Equity
for the year ended 31 December 2022
Share capital Share premium Capital redemption reserve Share options reserve Foreign exchange translation reserve Accumulated profit and loss reserve Total attributable to equity owners of the parent
$'000 $'000 $'000 $'000 $'000 $'000 $'000
1 January 2021 6,914 82,122 7,051 968 (1,384) (81,790) 13,881
Profit for the year - - - - - 1,522 1,522
Other comprehensive income - - - - (122) - (122)
Total comprehensive expense for the year - - - - (122) 1,522 1,400
Contributions by and distributions to owners
Share based payments - - - 522 - - 522
Total contributions by and distributions to owners - - - 522 - - 522
31 December 2021 and 1 January 2022 6,914 82,122 7,051 1,490 (1,506) (80,268) 15,803
Profit for the year - - - - - 554 554
Other comprehensive expense - - - - (1,087) - (1,087)
Total comprehensive income for the year - - - - (1,087) 554 (533)
Contributions by and distributions to owners
Issue of share capital - exercise of options 66 162 - - - - 228
Fully exercised share options - - - (99) - 99 -
Share based payments - - - 386 - - 386
Total contributions by and distributions to owners 66 162 - 287 - 99 614
31 December 2022 6,980 82,284 7,051 1,777 (2,593) (79,615) 15,884
1. General Information
This results announcement is presented in US Dollars ("$") rounded to the
nearest $'000 unless otherwise stated which represents the presentation
currency of the Group. The average $-GBP sterling ("GBP") exchange rates used
for the conversion of the Consolidated Income Statement for the year ended 31
December 2022 were between 1.20-1.36 (2021: 1.33-1.41). The closing $-GBP
exchange rate used for the conversion of the Group's assets and liabilities at
31 December 2022 was 1.21 (2021: 1.35).
This results announcement has been prepared in accordance with international
accounting standards in conformity with the requirements of the Companies Act
2006. The "requirements of the Companies Act 2006" here means accounts being
prepared in accordance with "international accounting standards" as defined in
section 474(1) of that Act, as it applied immediately before Implementation
Period (IP) completion day (end of transition period), including where the
Company also makes use of standards which have been adopted for use within the
United Kingdom in accordance with regulation 1(5) of the International
Accounting Standards and European Public Limited Liability Company (Amendment
etc.) (EU Exit) Regulations 2019. The consolidated financial statements have
been prepared under the historical cost convention.
The financial statements have been prepared on a going concern basis.
The Directors have prepared detailed income statement, balance sheet and cash
flow projections for the period to 30 April 2024 ("going concern assessment
period"). The cash flow projections have been subjected to sensitivity
analysis of the revenue, cost and combined revenue and cost levels which
demonstrate that the Group and Company will maintain a positive cash balance
through the going concern assessment period. As part of the sensitivity
analysis, the Directors have noted that should the forecasted revenues not be
achieved, mitigating actions can be taken to address any cash flow concerns.
These actions include the utilisation of the undrawn revolving credit facility
of £1 million, deferral of capital expenditure, reduction in marketing and
other variable expenditure alongside a hiring freeze. In addition, the
projections confirm that the bank loan covenants will be met during the going
concern assessment period.
The Directors are also not aware of any significant matters in the remainder
of calendar 2024 that occur outside the going concern period that could
reasonably possibly impact the going concern conclusion.
The Directors have also considered the geo-political environment, including
rising inflation in some of our key markets and the conflict in Ukraine, and
whilst the impact on the Group is currently deemed minimal, the Directors
remain vigilant and ready to implement mitigation action in the event of a
downturn in demand or an impact on operations.
On this basis, the Directors have therefore concluded that it is appropriate
to prepare the financial statements on a going concern basis.
The financial information set out above does not constitute the Company's
Annual Report and Accounts for the year ended 31 December 2022. The Annual
Report and Accounts for 2021 have been delivered to the Registrar of Companies
and those for 2022 will be delivered shortly. The auditor's report for the
Company's 2022 Annual Report and Accounts was unqualified and did not contain
an emphasis of matter paragraph nor any statement under Section 498 of the
Companies Act 2006.
Whilst the financial information included in this results announcement has
been prepared in accordance with UK adopted international accounting standards
in conformity with the requirements of the Companies Act 2006, this
announcement does not itself contain sufficient information to comply with UK
adopted international accounting standards.
The Annual Report and Accounts for the year ended 31 December 2022 are
available on the Company's website www.corero.com (http://www.corero.com/)
/who-we-are/investor-relations.
The information in this results announcement was approved by the Board on 24
April 2023.
2. Segment reporting and revenue
The Group is managed according to one business unit, Corero Network Security,
which makes up the Group's reportable operating segment. This business unit
forms the basis on which the Group reports its primary segment information to
the Board, which management consider to be the Chief Operating Decision maker
for the purposes of IFRS 8 Operating Segments.
The Group's revenues from external customers are divided into the following
geographies:
2022 2021
$'000 $'000
The Americas 14,695 16,042
EMEA 4,388 2,778
APAC 1,038 2,075
Total 20,121 20,895
Revenues from external customers are identified by invoicing systems and
adjusted to take into account the difference between invoiced amounts and
deferred revenue adjustments as required by IFRS accounting standards.
The revenue is analysed for each revenue category as:
2022 2021
$'000 $'000
Software licence and appliance revenue 8,107 10,337
DDoS Protection-as-a-Service revenue 4,854 4,025
Maintenance and support services revenue 7,160 6,533
Total 20,121 20,895
The revenue is analysed by timing of delivery of goods or services as:
2022 2021
$'000 $'000
Point-in-time delivery 8,107 10,337
Over time 12,014 10,558
Total 20,121 20,895
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
or visit
www.rns.com (http://www.rns.com/)
.
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
. END FR NKQBBOBKDFQBRecent news on Corero Network Security
See all newsRCS - Corero Network Sec. - Corero Appoints Edison Group
AnnouncementREG - Corero Network Sec. - Director/PDMR Shareholding
AnnouncementRCS - Corero Network Sec. - Corero Expands TechEnabler Partnership
AnnouncementREG - Corero Network Sec. - Final Results
AnnouncementREG - Corero Network Sec. - Corero and Juniper Networks Expand Agreement
Announcement