Cyber security specialist Corero Network Security PLC (LON:CNS) is feeling the growing pains that come with commercialising a breakthrough technology.
Demand for its award-winning SmartWall TDS real-time defence against distributed denial of service (DDoS) is through the roof (revenues are up 125% year-on-year) as it has landed ‘significant’ orders both in Europe and the US.
However, it also warned revenues for the full-year would be “notably below market expectations”.
There were two reasons for this. First, it said some of the large opportunities it has identified are taking longer to close than originally anticipated.
“The opportunities are still real and we are making progress,” chief executive Ashley Stephenson told Proactive Investors.
The second issue is of the accounting variety. Many clients are deploying the firm’s solutions on a subscription basis ‘as a service’, rather than paying up-front.
This sales model reduces recognised revenue at the time of the customer order, but increases the contract value over the life of the deal.
“This is a long tern benefit, but can also result in a short term reduction in revenue recognition,” the CEO added.
Results for six months ended June, showed total revenues were up 20% at US$4.8mln, the operating loss fell US$1mln to US$2.5mln, while the average customer contract value shot up to US$218,000 from US$141,000. The company is sitting on US$8.7mln of cash.
“It has been a competitive first-half, but we have continued to announce new customers. The average deal size has increased and we have some exciting names joining the stable of Corero customers,” Stephenson told Proactive.
These included top-tier US and European internet service providers and an unnamed mobile phone firm.
The shares fell 7p to 13p.
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