Corero Network Security plc Year ended 31 December 2017

Transcription

1 Corero Network Security plc Year ended 31 December

2 Summary Corero Focus: Real-time DDoS detection and mitigation Target market: Service Providers, Cloud Providers and Digital Enterprises Product: SmartWall appliances for 10Gbps and 100Gbps links vntd virtual software appliance Market CyberSecurity DDoS a Hot Market Segment Double digit CAGR forecasts $2bn+ market by 2021 (products and services) Fund raise Equity subscription and placing 4.0m Bank loan 3.0m (including 1.0m to replace existing working capital facility) 4 year term, interest Libor + 7.5% No redemption or early repayment premium Conditional on equity placing Funding to execute the Company s strategy and get to the position of being cash generating Opportunity Demand for DDoS Protection as-a-service growing Corero growth from channel (untapped to date) Corero growth from GTM partners (e.g. Juniper, Cloud DDoS provider) Corero positioned to be # 1 real-time DDoS mitigation solution Corero Value Proposition We eliminate the threat of DDoS cyber-attacks We do this by combining our patented algorithms, more than a decade of cyber-security experience and our threat analytics Our SmartWall product detects and mitigates DDoS attacks in seconds allowing our customers to stay open for business (during an attack) Competitive Environment DDoS Solutions Corero the emerging real-time DDoS mitigation player Complacent incumbent (Arbor) Limited number of other players (Radware, A10) Market consolidation underway (Deepfield > Nokia, Zenedge > Oracle) 2

3 2017 Summary Strong performance of flagship SmartWall product Revenue 43% Recurring revenue 125% (>95% support renewal rate by value) Order intake / bookings 38% Existing customer add-on orders 320% First two $1m+ customers Encouraging early uptake of aas offering (including GTT revenue share) Two large Q deals slipped to H SmartWall revenue growth SmartWall recurring revenue growth * Signed partnerships with global blue chip technology companies to accelerate revenue growth strategy Juniper Networks, McAfee, Gigamon, a Cloud DDoS provider New technology to meet demand Added 100G capacity SmartWall product (100Gbps connectivity starting to be deployed) Launched software only vntd solution (opportunity for OEM licensing and deployment in Cloud environments) *Recurring revenue comprises maintenance, support services and aas recognised revenue Overall revenue flat at $8.5m as contribution from legacy products reduced as expected (2016: $8.8m) EBITDA loss of $5.1m excluding unrealised FX loss of $0.6m (2016: EBITDA loss $6.4m) Net cash $1.4m at 31-Dec-17 3

4 Strategy and Delivery Strategy 2017 Progress Establish SmartWall as the leading solution for realtime DDoS protection New products to address evolving target market requirements Improve SmartWall DDoS defence technology 43% increase in SmartWall revenue 90 SmartWall customers at 31-Dec-17 including first $1m+ customers Launched 100Gbps product (first customer sales in Dec-17) Launched SmartWall virtual software appliance New SmartWall software releases in 2017 with new attack defences Release improved forensics and analytics capabilities Expand routes to market Signed agreements with Juniper, Gigamon, McAfee Resale agreement with Cloud services provider Develop new sales models DDPaaS launched in late 2016 (16 customers at 31-Dec-17) New SmartWall Service Portal (a competitive differentiator) 4

5 SmartWall 2017 Material Wins 2017 material contract wins follow success in 2016 with contract values increasing February 2017 April 2017 May 2017 June 2017 July 2017 September 2017 Digital enterprise Cloud services provider contract win ($1.0m) Largest single customer win to date GTT Communications (NYSE: GTT) selects SmartWall technology for its new DDoS Mitigation service First potentially significant revenue share contract (Tier 1 ISP) Significant follow on order with US-based top 10 hosting provider ($0.5m) Corero s second $1m+ customer (annualised recurring contract value $0.5m) US Federal Government contract win ($0.4m) First federal government contract win US regional service provider contract win ($0.3m) Digital enterprise contract win Initial order $0.2m part of $1m global deployment Number of SmartWall customers Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q We have an increasing number of satisfied customers who are willing to be industry references for the breakthrough levels of automation, security and service that Corero delivers Ashley Stephenson (CEO) October 2017 December 2017 December 2017 First Australian customers with Digital Enterprise customer ($0.2m) and specialist service provider ($0.2m DDPaaS 3 year agreement) North American Service Provider new customer win ($0.3m) First NTD1100 (100Gbps) product wins ($0.4m) with existing US based Service Provider and Cloud/Hosting Provider customers SmartWall public reference customers 5

6 P&L Summary $ 000 $ 000 Revenue 8,531 8,772 Gross profit 6,405 6,701 Gross profit % 75% 76% Operating expenses (12,157) (11,847) EBITDA loss (5,752) (5,146) Depreciation and amortisation of intangible assets (2,938) (3,128) Impairment of goodwill 0 (8,992) Loss before financing (8,690) (17,266) Net finance income/(costs) 1 3 Loss before taxation (8,689) (17,263) Taxation Loss for the year (8,573) (17,178) EBITDA (5,752) (5,146) Unrealised foreign exchange differences on interco loan (627) 1,300 EBITDA excl. unrealised foreign exchange differences on interco loan (5,125) (6,446) Operating expenses $12.2m (2016: $11.8m): Net of R&D costs capitalised $2.2m (2016: $2.5m) Includes unrealised exchange loss on intercompany loan of $0.6m (2016: gain $1.3m) Operating expenses excluding unrealised exchange loss/gain - $11.6m (2016: $13.1m) Depreciation and amortisation comprises: Depreciation $0.5m (2016: $0.6m) Amortisation of R&D capitalised $2.4m (2016: $2.3m) Amortisation of acquired intangibles $0.06m (2016: $0.3m) 6

7 Cash Flow Summary $ 000 $ 000 Loss for year (8,573) (17,178) Adjustments for: Amort'n of acquired intangible assets Impairment of intangible asset 0 8,992 Amort'n of capitalised development costs 2,408 2,252 Depreciation Loss on sale of PPE - 9 Finance income (5) (9) Finance expense 4 6 Taxation (116) (85) Qualifying R&D expenditure tax credit Share based payment charge Changes in working capital (502) (422) Net cash from operating activities (6,044) (5,540) Net cash used in investing activities (2,678) (3,209) Net cash from financing activities 6,996 11,395 Effects of exchange rates 151 (2,412) Net increase/(decrease) in cash (1,575) 234 Cash and cash equivalents at 1 January 2,940 2,706 Cash and cash equivalents 31 December 1,365 2, $ 000 $ 000 Cash flows from investing activities Purchase of intangible assets (10) (32) Capitalised development expenditure (2,171) (2,533) Purchase of PPE (497) (644) Net cash used in investing activities (2,678) (3,209) Cash flows from financing activities Proceeds from issue of share capital 6,995 11,392 Interest received 5 9 Interest paid (4) (6) Net cash from financing activities 6,996 11,395 Cash excludes Apr-18 Equity Fund Raise and Bank Loan Investment in IPR Development costs capitalised $2.2m (2016: $2.5m) Represents 59% of total engineering costs (2016: 51%) 7

8 Net Assets Summary 31-Dec Dec Dec Dec-16 $ 000 $ 000 $ 000 $ 000 Assets Liabilities Non-current assets Current liabilities Goodwill 8,991 8,991 Trade and other payables (1,305) (1,728) Acquired intangible assets Deferred income (2,896) (2,457) Capitalised development expenditure 7,664 7,901 (4,201) (4,185) Property, plant and equipment Trade and other receivables Net current assets 213 1,047 17,538 18,024 Current assets Non-current liabilities Inventories Deferred income (287) (855) Trade and other receivables 2,955 2,227 (287) (855) Cash and cash equivalents 1,365 2,940 4,414 5,232 Net assets 17,464 18,216 Cash $1.4m (2016: $2.9m) Cash excludes Apr-18 Equity Fund Raise and Bank Loan No debt at 31-Dec-17 (2016: $0) 8

9 Strategy and 2018 Focus Strategy Expand routes to market 2018 Focus Generate first $ revenue from GTM partners Extend Juniper relationship Leverage channel (particularly in Europe) to broaden end-user customer reach Grow customer base New SmartWall 100Gbps and vntd sales Develop Digital enterprise market opportunity through targeted system integrator and GTM partner leverage Maintain competitive advantage in real-time DDoS mitigation New DDoS attack defences Additional forensics and analytics capabilities 9

10 What We Do Raw Intern et Revenue-protecting real-time DDoS Mitigation product optimised for service providers and Cloud/hosting providers Available for rapid deployment within the provider s own infrastructure delivering compelling ROI Revenue and reputation-protecting real-time DDoS Mitigation product for digital enterprises Solves for the scalability & accuracy 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 Raw Internet Raw Internet Good Traffic Attack Traffic SmartWall TDS Good Traffic Protected Network 10

11 Focus Markets North American Service Provider European Service Provider Digital Enterprise Technology Partner Hybrid Mitigation Revenue Share Cloud DDoS provider 11

12 SmartWall Threat Defense System Portfolio Corero has the product portfolio to deliver on its goal of being the #1 in realtime DDoS mitigation 1/10/20 Gbps 40/80 Gbps SmartWall Service Portal 160/320 Gbps 1 100Gbps 1Tbps DPDK DPDK DPDK n x 10/20 Gbps NTD120 n x 100 Gbps NTD1100 n x m Gbps vntd & itds 12

13 DDoS Attacks are Increasing Note: statistics based on Corero customers DDoS attack data 13

14 Understanding the Impact of Attacks Availability and Security of Internet services and applications is essential for digital / on-line businesses Downtime or Compromise equates to: Lost revenues and additional operational costs Unhappy customers with increased costs for retention of existing customers and acquisition of new customers Brand and reputation damage with competitive pressure Increasing risk of non-compliance, legal liability and fines e.g. Carphone Warehouse and Talk Talk 14

15 Corero Competitive Advantage 1. Automatic mitigation Goal 99% no customer intervention required 2. Real-time Immediate protection seconds vs. minutes 3. Price Cost effective entry point, leadership price/performance Validation In March 2016*, NSS Labs (world s leading security product testing laboratory) announced first DDoS product test results: SmartWall awarded: Recommended status 4. Scalability Modular and distributed, pay as you grow Only 100Gbps DDoS Mitigation product in 1RU form factor 5. Accuracy Low false positive rates, eliminate collateral damage *Corero is not aware of any NSS Labs plans to run an updated DDoS products test *Corero is leader for combined security effectiveness and TCO 15

16 Outlook Market drivers DDoS attacks growing problem for all DDoS is expected to remain a significant cyber threat DDoS appliance market to increase to $1.4bn in 2021 (up from $0.66bn in 2016) * DDoS protection is being recognized as a key cyber threat by regulators e.g. European NIS Directive, GDPR, US Dept. Commerce and Homeland Security Corero well positioned to be a disrupter Solution validation: 90 SmartWall customers (including leading names in each Corero target market) Technology validation: NSS Labs independent recommendation and referenceable customers (incl. two $1m+ customers) Corero targeting #1 position in real-time DDoS market by end of 2018 DDPaaS model first introduced Q (gained traction in 2017 with 16 customers at 31-Dec-17) Positive outlook Building on 2017 SmartWall growth and strong recurring revenue base Working with strategic go-to-market partners to accelerate success New 100Gbps SmartWall product to capture demand for 100Gbps connectivity New virtual appliance (software) to capture demand for hybrid / Cloud DDoS mitigation deployments Funding secured to execute the Company s strategy and get to the position of being cash generating * IHS Markit Technology research (H DDoS Prevention Appliances Forecast, November 2017) 16

17 Thank you 17