- Cybersecurity threats to agencies and corporations are getting sophisticated by the day.
- Victims of ransomware-related cyberattacks including companies and agencies are increasing in number.
- Cyberattacks can damage the reputation and jeopardise the business as usual.
- COVID-19 has forced companies to migrate to the cloud, and staff is working remotely. Large companies have raised their budgets for a secure working environment.
Cybersecurity has been a hot topic in 2020 with a series of cyberattacks across the general public, government agencies and corporations. Such cyberattacks range from ransomware attacks to hacked public websites.
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With a large section of the society working remotely, the possibilities of cybersecurity threats to enterprises have increased significantly. The governments, as well as the corporations, are increasingly seeking a secure environment.
The pandemic has also forced companies to migrate to the cloud. Although cloud migration is better for companies, they are required to spend on cutting-edge cloud cybersecurity to fend off any potential threats.
Moreover, the information technology infrastructure of companies has also undergone modernisation in the wake of the pandemic. These modernisation programs generally include cloud migration and maintaining a secure environment.
Given the increasing corporate budgets for information technology infrastructure modernisation, the cybersecurity and allied industries are gaining traction with revenue streams intensifying.
In light of this, let us discuss two companies listed on the Australian Stock Exchange (ASX) that have been participating in this shift towards enhanced focus on cybersecurity and secure systems.
Tesserent Limited (ASX:TNT)
After reaching lifetime highs last month, TNT shares continue to witness buying pressure. The cybersecurity company also provides perimeter protection, data storage, secure internet connectivity, and internal monitoring and alerts.
Joint Venture Incorporated in NZ
Tesserent recently announced the launch of an equally owned joint venture with Optic Security Group, a New Zealand-based security firm. Optic Security Group is an established firm focused on the convergence of physical and cybersecurity. It has an annual turnover of over $100 million from the ANZ market.
An initial upfront investment is not mandatory in the joint venture. The JV by Tesserent represents the first step towards its expansion into New Zealand’s lucrative cybersecurity market.
Under the JV, Tesserent will provide its Cyber 360 security capabilities to support Optic’s customers. Likewise, the partner’s capability in protecting physical assets would be added to Tesserent’s offerings.
iQ3 Acquisition Completed
Tesserent has also closed the acquisition of iQ3, which is a secure cloud services firm with a $25 million turnover run rate and $3 million in earnings.
The financial performance of iQ3 would be recognised from 1 November 2020. With this acquisition, the company’s gross revenue run rate on an annualised monthly basis is approximately $100 million.
The management continues to expect revenue of over $150 million in FY21, underpinned by organic growth and execution of planned future acquisitions.
Operating Profit of Over $400k in Q1
Late last month, the company provided its first-quarter update for the period ended 30 September 2020.
In Q1, TNT recorded revenue of $15.1 million, up by 42.5% from the previous quarter. The revenue for the quarter included two months of contribution from Seer Security and one month’s revenue from Airloom and Ludus.
For the first time in its history, the company reported positive EBITDA and cash flow in Q4FY20. This profitability metric was further strengthened in Q1FY21 with an operating profit of $405k.
In the previous quarter, the company reported an operating profit of $17k. In the first quarter, TNT achieved positive cash flow from operations of $138k.
On 13 November 2020, TNT traded at $ 0.370, up by 2.777% from the previous close.
Senetas Corporation Limited (ASX:SEN)
Based in Australia, Senetas is a global leader in encryption security solutions. Its high-speed encryptors don’t compromise on speed while ensuring a secure connection. Its encryption solutions used in more than 40 countries are distributed and supported internationally by Thales. Also, Senetas’ encryptors enable the government to facilitate secure data transmission over systems.
Order for Ultra-High Speed 100Gbps Ethernet Encryptor
In September, the company secured the single largest order for its Ultra-High speed 100Gbps Ethernet Encryptor. The gross value of the order stood at approximately US$ 2 million, but net revenue to the company is expected to be lesser.
The encryptor is the CN9000 series, which would be deployed at a data transit of a Middle Eastern Government agency.
The order was secured by the company’s global distributor Thales. CEO Andrew Wilson stated that Australian products are respected outside Australia as well, especially for their defence grade security profile and engineering.
Agreement with Verizon Australia
Senetas executed a supplier agreement with Verizon Australia Pty Limited in September. Under the deal, Verizon will distribute the company’s high assurance encryptors. Verizon would offer these encryptors under its managed security offerings to its Government and enterprise customers.
For over 20 years, Verizon has been servicing the Australian Government departments by providing managed network and security services. It provides services to over 75 state and national government agencies.
Verizon also operates a state-of-the-art Asia-Pacific Advanced Security Operations Centre from Canberra that was opened in 2017.
The Australian Government has been vocal about the cyber threats faced by public agencies in this age. It has been noted that some of these cyberattacks are also state sponsored.
To deal with this scourge, the Government has the 2020 National Cybersecurity Strategy in place.
On 13 November 2020, SEN traded at $ 0.053, up by 0.952% from the previous close.
(Currency in AUD, unless or otherwise noted)