- Cybersecurity firm Tesserent Limited’s share price has zoomed ~5x YTD driven by high-value strategic acquisitions and surging demand for cybersecurity services.
- On 24 September 2020, Tesserent announced the strategic acquisition of iQ3 by entering into a Share Purchase Agreement.
- Earlier in September, The Company completed the acquisition of Ludus Cybersecurity and Airloom.
- In FY2020, The Company executed its Cyber 360 end-to-end go-to-market strategy and attained its financial targets.
- TNT achieved its A$100 million gross revenue annualised run rate well before December 2020.
Cybersecurity and network services provider Tesserent Limited (ASX:TNT) caters to both Australian and international clients. The Company’s products and services include network perimeter security, secure internet connectivity, data storage services, and internal network security services.
In 2020, Tesserent shares have skyrocketed, moving from A$0.042 on 02 January 2020 to A$0.220 on 30 September 2020. This indicates a massive jump of 423.81% on a YTD basis. TNT has a market cap of A$157.74 million and ~717 million outstanding shares.
Here, we would look at Tesserent’s financial and business performance in FY2020 and the drivers for the impressive TNT share price growth this year.
On 24 September 2020, the Company announced the strategic acquisition of iQ3 by entering into a Share Purchase Deal between both the parties. A Secure Cloud Services company. iQ3 is headquartered in Sydney. The facilities are in Melbourne and Brisbane, and the sales office is in Singapore. iQ3 provides services and solutions that significantly complete Cyber 360 strategy of TNT and is a significant step in the direction to provide a complete end-to-end cyber service.
Through this acquisition, the Company expeditiously achieved its target of A$100 million turnovers on an annualised basis. Thus, demonstrating an upsurge of over 1000% since the Tesserent board got refreshed in January 2020.
By adding iQ3 to the Group, the Company feels that there are significant Cyber 360 up-sell and cross-sell prospects at various levels, including solutions, geographical and client. Tesserent visualises numerous sales chances for iQ3 Secure Cloud Services to current customers of TNT Group. At the same, it could sell core services of the Group to iQ3 customers in Australia and Singapore.
TNT also highlighted the benefits related with ISO-certified Network Operations Centre of iQ3 along with the prevailing ISO-certified Security Operations Centre regarding the delivery of related Cloud, Connectivity along with new Managed Security Services capabilities.
Other than this, the Company noted that there is an instant chance to leverage State and Federal Government relations and competencies within the Group, especially North, Seer, Ludus and iQ3.
Acquisition of Ludus Cybersecurity and Airloom
On 11 September 2020, Tesserent Limited completed the acquisition of Ludus Cybersecurity and Airloom. The announcement related to Airloom was made on 26 August 2020 while Ludus Cybersecurity’s acquisition was announced on 28 August 2020. The acquisitions were effective from the date announcement was made.
Through these purchases, TNT had a gross revenue run rate of ~A$80 million on an annualised monthly basis. The Company announced that it was targeting the A$100 million mark by December.
The future strategic acquisitions of the Company would complement the Cyber 360 strategy of the business by filling product and solution gaps. At the same time, it would add annuity-based income, high-margin, and proprietary IP.
In FY2020, the Company executed its Cyber 360 end-to-end go-to-market strategy and achieved its financial targets. Besides, Tesserent completed several high-value strategic acquisitions during the period. In January 2020, the Company appointed a new Chairman, and since then the Company witnessed impressive growth and accretive deals. Backed by the acquisitions, Tesserent reached A$43.86 million in FY2020 revenue. The Company, in its FY2020 results, confirmed that its annual revenue run rate continued to grow and crossed the A$100 million-mark in September itself. The target was achieved well before the expected month, December.
Further, in 2020, the Company positioned itself as the top ASX-listed cybersecurity firm becoming the largest provider of cybersecurity services in the Canberra market. The growth is primarily linked to the increasing uncertainty stemming from the macro geopolitical conditions.
FY2020 Results at a Glance:
- Revenue from continuing operations increased by a whopping 291%, from A$5.26 million to A$20.58 million.
- Other income also increased from A$107,266 to A$175,510.
- Compared to FY2019, the Company reported massive increase in total expenses. In FY2019, the total expenses of the Company were A$9.75 million, which increased nearly three times to A$29.45 million in FY2020.
- Net loss stood at A$7.85 million.
Cash Flow Highlights
- Net cash used in operating activities: A$2.24 million.
- Net cash used in investing activities: A$11.35 million.
- Net cash provided by financing activities: A$16.94 million.
- Cash and cash equivalents at the end of the year: A$4.35 million
In FY2021, Tesserent’s Board and Management are concentrating on establishing shareholder value by holding its top position in the list of Australia’s listed cybersecurity players. Key goals in FY2021 are as below:
- Deliver the Cyber 360 abilities to a rising number of Australian companies.
- Complete Stage Two acquisitions.
- Combine acquisitions to boost synergy efficiencies & drive organic revenue via cross-sales
- Aim on securing market share in three key markets. These are Government (involving Defence), Critical Infrastructure along with Banking & Finance.
- Drive the acquisition strategy of the Company by completing strategic Phase Two acquisitions.
- Building out high-value recurring annuity revenue flows.
- Increase proprietary intellectual property to drive high-margin product & service offerings.