Corero Network Security plc

Transcription

1 Corero Network Security plc Results for the year ended 31 December 2013 Ashley Stephenson, CEO Andrew Miller, CFO and COO

2 Contents 1. Introduction 2. Financials 3. SmartWall TDS 4. Summary & Outlook

3 Overview year ended 31-Dec-13 Revenue from continuing operations $10.3m (2012: $11.4m) EBITDA loss $4.5m* (2012: loss $3.1m) Profit for the year $8.2m (2012: loss $5.9m) Sold Corero Business Systems: $15.2m profit Net cash at 31-Dec-13 $9.5m (2012: net debt $1.3m) Repaid $6.2m debt and accrued interest early Operating highlights Appointment of David Ahee as Senior Vice President Global Sales Progress in next generation product development - SmartWall TDS (Threat Defense System) product launched on 3-Feb-14 Developed enhanced reporting platform H order intake $5.1m: increase of 23% over H and H Continued success in retaining customers and winning new business: existing customers renewed contracts and/or upgraded their Corero solutions - 15 customers with orders exceeding $100,000 in H (7 in H and 9 in H1 2013) *including Corero Business Systems sold on 1 August

4 Past, present and future Acquired Top Layer in Mar-11: IPS solution with DDoS defence Corero defined a new security layer First Line of Defense in H Leveraged Corero DDoS defence expertise and technology Success with customer deployments High growth (versus mature / flat IPS market) * Few competitors Revenue flat in 2012 and 2013 DDoS an emerging market Developed sales team in 2013 Future Launched next-gen product SmartWall in Feb Initial targets are service providers and hosting providers SmartWall significantly increases Corero s addressable market * IDC forecast (Mar-13) the DDoS market will grow at 18% pa to $870m in 2017 and Specialised Threat Analysis and Protection market will grow over 40% pa to $1.2bn in

5 Pricing What we do - Stop DDoS attacks & cyber threats Corero goes to market as a First Line of Defense that stops DDoS Attacks and Cyber Threats from entering the customer network 500+ customers across multiple verticals in NA, LATAM, EU, ASIA Patented DDoS defense technology Suite of security products & services Go to market via security distributor/reseller channel $ $ 2014 $ $ $ 2015 SmartWall DDS DDS - DDoS Defense System (Enterprise) 1-10 Gbps performance On premises in-line device Always-on protection appliance SmartWall TDS (Service Provider) n x ~30M pps Security services platform Always-on managed service New 3

6 Where we fit - Security solution landscape Corero stops more attacks and threats than competitors DDoS products Intelligence Cloud Security Service First Line of Defense Firewall NGFW IPS/APT SLB/WAF Service Analytics SIEM Big Data Internet Router C o r e r o IPS/APT SLB/ADC WAF Webroot McAfee Symantec Kaspersky Neustar Prolexic Akamai Arbor Corero Radware Arbor Checkpoint Palo Alto Fortinet Juniper Cisco Sourcefire Fortinet IBM HP F5 FireEye SilverTail Trusteer Acertify ArcSight Splunk Q1 Labs 4

7 Why we do it - Defense-in-depth Corero stops more attacks and threats than competitors DDoS products Intelligence Cloud Security Service First Line of Defense Firewall NGFW IPS/APT SLB/WAF Service Analytics SIEM Big Data Internet Good Traffic Router C o r e r o Good Traffic IPS/APT SLB/ADC WAF Webroot McAfee Symantec Kaspersky 5 Neustar Prolexic (Akamai) Akamai Arbor Corero Radware Arbor Checkpoint Palo Alto Fortinet Juniper Cisco Sourcefire (Cisco) Fortinet IBM HP F5 FireEye Citrix SilverTail (RSA) Trusteer (IBM) Acertify ArcSight(HP) Splunk Q1 Labs(IBM)

8 How we do it Always on protection Undesired Users & Services DDoS Attacks & Competitive Abuse Protocol Violations & AETs Targeted Server Attacks Unwanted Traffic Key Steps of Protection Allow only EXPECTED traffic Block malicious IP Addresses & unwanted geolocations Allow desired ports & services Evaluate AMOUNT of traffic Limit excessive requests & connections Enforce CORRECTNESS of traffic Stop protocol abuse and RFC violations Prevent AETs (advanced evasion techniques) Analyze INTEGRITY of traffic Inspect traffic and block intrusions, buffer overflows, code injections & exploits Restrict Access Limit Rates Enforce Protocols Prevent Intrusions Provide VISIBILITY into unwanted traffic Who is attacking, at what rate, and using what attack vectors? Increase Visibility 6

9 SecureWatch Supporting security services Corero SOC - Security Operations Center Customer/Provider Security Operations Internet IPS SLB Report Delivery Corero 24x7 Monitoring via Corero SOC Liaison with Customer, Partner & Provider WAF Protected Sites 7

10 Our target markets - Service Provider & Enterprise First Line of Defense SmartWall Threat Defense System DDS DDoS Defense System Internet SP Router C o r e r o Protected Critical Infrastructure and Services Corero In the Cloud Service Providers, IT hosting and Cloud Providers On Premises Enterprises Financial Services, e-commerce, Gaming, Education 8

11 Market opportunity for Corero Challenge: DDoS & Cyber Threats Online Enterprises, Service Providers and their customers are increasingly being impacted by DDoS attacks and cyber threats Opportunity: Corero - First Line of Defense Corero is exclusively focused on delivering products and services that provide protection against DDoS attacks and cyber threats for the Enterprise and Service Provider markets With the number, size and coverage of DDoS attacks on the rise, we expect revenue for DDoS prevention solutions to grow in the healthy double digits through Jeff Wilson, principal analyst for security at Infonetics Research. 9

12 Contents 1. Introduction 2. Financials 3. SmartWall TDS 4. Summary & Outlook

13 P&L summary Restated $ 000 $ 000 Revenue 10,268 11,378 Gross profit 6,680 7,971 Gross profit % 65% 70% Operating expenses (12,911) (13,743) EBITDA* loss (6,231) (5,772) Depreciation and amortisation of intangible assets (2,309) (2,399) Loss before financing (8,540) (8,171) Net finance costs (344) (391) Loss before taxation (8,884) (8,562) Taxation Loss for the year from continuing operations (8,513) (8,191) Profit from discontinued operations 1,436 2,302 Profit from sale of discontinued operations 15,244 0 Profit/(loss) for the year 8,167 (5,889) Adjusted loss before tax ** (7,682) (7,405) EBITDA loss including discontinued operations (4,552) (3,105) * before depreciation and amortisation ** excluding amortisation of acquired intangibles Revenue impacted by lower bookings in 2013 of $9.2m (2012: $10.4m) as a result of: First Line of Defense repositioning in H Sales team changes in 2013 Gross margins impacted by: Lower revenue volumes given certain costs are fixed Increase investment in services and support team delivery capabilities Operating expenses: Net of capitalised development costs of $3.8m (2012: $2.4m) Include $0.7m of non-recurring opex associated with SmartWall TDS development (prototypes, test equipment etc) Include unrealised loss on intercompany loan of $0.2k (2012: loss $0.3k) Finance costs primarily interest on $5m loan note repaid early Discontinued operations: CBS contributed profit of $1.4m in period to 1- Aug-13 Profit on sale $15.2m (sale represented a multiple of 2.2x revenue and 8.0x EBITDA) 10

14 Order intake 2013 order intake $9.2m (2012: $10.4m) Transitioned business to First Line of Defense in 2013 New customer material wins: UK infrastructure provider two US energy utilities two South American service providers two US regional banks French insurance group Asian provider of on-line games web hosting company provider of real estate and mortgage portfolio management information services large US city corporation Brazilian state ministerial department Existing customer material orders (upgrades and support contract renewals) leading industrial group Camelot (the UK Lottery operator) two US university colleges Middle East investment services firm global electronics manufacturing services group two multi-national banking groups one of the leading on-line gaming companies leading medical equipment manufacturer City Index leading price comparison web site national air traffic control provider one of the largest newspaper publishers in the US Order intake New contracts (41%) Support & services (36%) Upgrades (24%) Sector analysis Financial Services (22%) Utilities & Energy (12%) ecommerce (11%) Telecom (10%) Public sector (9%) Other (35%) Geographic analysis North America (59%) EMEA (28%) Asia Pacific (8%) ROW (5%) 11

15 Cash flow summary $ 000 $ 000 Profit/(loss) before taxation 7,796 (6,260) Adjustments for: Amort'n of acquired intangible assets 1,202 1,157 Amorti'n of capitalised development costs 511 1,044 Depreciation Finance income (48) (119) Finance expense Profit on disposal of subsidiary (15,244) - Share based payment charge 25 9 Changes in working capital (2,976) (2,035) Net cash from operating activities (7,504) (5,131) Net cash used in investing activities 11,768 (4,213) Net cash from financing activities (424) 6,957 Effects of exchange rates 1, Net increase/(decrease) in cash 4,914 (1,819) Cash and cash equivalents at 1 January 4,861 6,680 Cash and cash equivalents 31 December 9,775 4,861 Investment in IPR Capitalised $3.8m of development costs primarily related to SmartWall TDS (2012: $2.4m) Represents 76% of direct engineering costs (2012: 60%) Share issue in March 2013 raised $6.2m (directors $4.2m) less expenses of $0.3m. Loan advances / repayments Repaid $5m loan note and accrued interest early and $1.8m term loan associated with CBS business Term loan received of $1.9m relates to CBS bank facility put in place prior to the sale of the business PPE purchases comprise: engineering test equipment, SmartWall TDS evaluation units and IT equipment $ 000 $ 000 Cash flows from investing activities Sale proceeds from disposal of subsidiary 17,225 - Purchase of intangible assets (107) (237) Capitalised development expenditure (4,202) (3,174) Purchase of PPE (net of disposals) (1,148) (802) Net cash used in investing activities 11,768 (4,213) Cash flows from financing activities Proceeds from issue of share capital 5,869 6,989 Term loan received 1, Interest received Interest paid (39) (64) Repayment of term loans (8,432) (121) Capital element of finance leases (23) (27) Receipt/(repayment of credit facility 256 (189) Net cash from financing activities (424) 6,957 12

16 Net assets summary Note: 31-Dec-12 comparatives include CBS business (sold on 1-Aug-13) Assets Non-current assets 31-Dec Dec Dec Dec-12 $ 000 $ 000 $ 000 $ 000 Liabilities Current liabilities Goodwill 17,983 18,811 Trade and other payables (2,171) (3,972) Acquired intangible assets 2,635 3,739 Borrowings (256) (182) Capitalised development expenditure 6,121 4,528 Deferred income (3,195) (7,592) Property, plant and equipment 1,343 1,241 (5,622) (11,746) 28,082 28,319 Net current assets/(liabilities) 8,202 (698) Current assets Inventories Non-current liabilities Trade and other receivables 3,720 5,565 Borrowings 0 (5,984) Cash and cash equivalents 9,775 4,861 Deferred income (1,423) (1,146) 13,824 11,048 Deferred taxation (825) (1,196) (2,248) (8,326) Net assets 34,036 19,295 Balance sheet strengthened: Sale of CBS: cash injection of $17m Share issue in March 2013: raised $5.9m Loan repayment: $5m loan note and accrued interest repaid early 13

17 Contents 1. Introduction 2. Financials 3. SmartWall TDS 4. Summary & Outlook

18 Corero product line evolution Problem: Evolving multi-dimensional threat landscape DDoS++: volume, rate, connections, scans, reflections, protocols, payload threats, botnets, exploits, and more. Solution: SmartWall Threat Defense System Service Provider, Hosting/Data Center features - Global policies and advanced reporting Scalability (n x 10G, Load Balancing, Modular Cluster) New Applications: Service Provider, Hosting, Data Center, MSO, CSP Services Infrastructure securing Data Centre, Hosting and Co/Lo Service Delivery offer cloud security solutions to their Enterprise customers - e.g. DDoS Protection, Secure Pipes, Managed Security Services etc. 14

19 SmartWall target market segments Internet Service Providers, Multi-Service Operators (MSOs), Cloud based DDoS mitigation providers Example companies: Colt, Virgin Media, Talk Talk Web hosting companies offering managed, dedicated, and co-location based hosting Example companies: Iomart, TeleCity, Rackspace Companies providing managed security services Example companies: Dell, Accumuli, SecureData 15

20 Enabling managed security services 16

21 SmartWall ecosystem of products Family of Appliances (each 4 x 10G SFP+) Network Threat Defense (DDoS): - competition Arbor, Radware, F5, A10 Application Threat Defense (DPI, SSL): - competition Arbor, Radware Network Forensics (PCAP): - competition Endace (acquired by Emulex), npulse Network Bypass (ZPB, TAP): - competition NetOptics (acquired by Ixia), Gigamon Corero Management Server Single Management View 17

22 What sets us apart? Corero differentiation Better Product - Always On vs. On Demand - Block more threats than the competition Focus on Products for the Enterprise and Service Providers - First Line of Defense (first device to see raw Internet traffic) - Scalability, Performance, Density, Availability - We do not compete with our customers, we enable them to compete Analytics, Monitoring and Visibility - Attack analysis - Real time reporting - 7x24 monitoring and attack mitigation services 18

23 Contents 1. Introduction 2. Financials 3. SmartWall TDS 4. Summary & Outlook

24 Summary Corero goes to market as a First Line of Defense that stops DDoS Attacks and Cyber Threats from entering the customer network Key markets today = Finance, Gaming, SLED, tomorrow all online businesses Enterprise and Service Provider solutions, strategy to enable services Differentiation: Best of breed for scalable, in-line, always-on DDoS protection Go to market via channel of security distributors/resellers and service providers DDS - DDoS Defense System (Enterprise) SmartWall TDS (Service Provider) New 19

25 Strategy Solution Objectives Market endorsement of First Line of Defense Expand software functionality Leadership scalability o Modular HW Appliance o Cloud Virtual Appliance Plan Raise Corero profile Referenceable customers Establish thought leadership Incremental software features (SDN/NFV) Network Integration with Cisco/Juniper VM software deployment model Go To Market Enhance channels o Security Reseller o MSSP o SI o OEM o Federal Expand geographical presence o Selective entry to new geo s Strong sales leadership Sales tools & programs to drive partner sales growth High performing teams, matched to market opportunities Continued strong post sales customer support to drive satisfaction ratings Develop partner ecosystem to a greater degree of productivity Recruit, train and enable partners to deliver new customers 20

26 Outlook Market Drivers - Significant increase in unwanted and malicious traffic DDoS prevention market forecast to more than double in period 2012 to will reach almost $1bn in 2017 (IDC) Specialised Threat Analysis and Protection market forecast to grow over 40% pa from 2012 to will reach $1.2bn in 2017 (IDC) Land Grab - Created an emerging market for a new security layer FLoD deployed in front of corporate firewalls CNS has differentiated FLoD security product and services SmartWall TDS Will drive step change in revenue Increases addressable market to include service providers and hosting providers Sales team progress under David Ahee s leadership Focus on selling existing DDS product to enterprise market Whilst also developing SmartWall opportunities for service providers and hosting providers Strong financial position to execute growth plans Net cash at 31-Dec-13 of $9.5m 21

27 Thank you