viewCorero Network Security PLC

Corero's joy at record quarterly intake tempered by implementation delays at some customers

The DDoS mitigation market fundamentals remain strong with a leading technology analyst forecasting double-digit growth and the market to grow to US$1.4bn in 2021

Corero has a market leading SmartWall product portfolio which has been further enhanced for 2018

Cyber-security specialist Corero Network Security PLC (LON:CNS) had some mixed news for shareholders in the run-up to Christmas.

On the plus side, the fourth quarter is expected to be a record one in terms of order intake for its flagship SmartWall product, but on the minus side revenue for the whole of 2017 will be lower than previously expected.

READ: Corero surges after bagging significant contract win with North American ISP

Group revenue for 2017 is now expected to be in the range US$8.5mln to US$9.0mln. It is expected that SmartWall revenue and recurring revenue will show strong growth over the prior year, despite a decline in legacy product revenue to US$0.6mln from US$3.3mln in 2016.

Corero said 2017’s revenue has been affected by delays in world-wide implementation schedules for a large digital enterprise customer win in the third quarter of this year and an existing customer's ongoing deployment. The bulk of the revenue from these two customers is now expected in the first half of 2018.

As a result of the lower-than-expected revenues, the group’s loss before interest, tax, depreciation and amortisation (LBITDA) is now expected to be in the range of US$4.8mln and US$5.3mln, versus LBITDA of US$6.4mln in 2016.

Encouragingly, thanks to the record order intake for Smartwall, the fourth quarter should see the group operating close to break-even, with the final quarter’s loss expected to be in the range of US$0.1mln and US$0.5mln.

SmartWall order intake for the whole of 2017 is expected to be between US$9.3mln and US$9.8mln, with roughly half of this representing recurring revenue in the form of support, services, and distributed denial of service (DDoS) protection as service (DDPaaS) contracts, versus 2016’s order intake of US$6.7mln including recurring revenue order intake of US$2.6mln.

READ: Corero customer renews US$200,000 SmartWall contract for third straight year

Net cash at the end of 2017 is expected to be about US$1.0mln, down from US$2.9mln a year earlier.

Corero is planning to fund its working capital requirements for 2018 via a debt financing that it expects to complete in the first half of 2018.

It is expected that Corero will enter 2018 with a recurring revenue contract base, including support, services and DDPaaS contracts, of about US$5.0mln.

"Corero enters 2018 with confidence following a year of strong growth in SmartWall order intake with proof points of multiple $1.0 million plus customers, a growing catalogue of industry awards and several disruptive contract wins against competitors,” said Ashley Stephenson, the chief executive officer of Corero.

“The group has also expanded its ecosystem of world class partners and introduced an enhanced product portfolio. We are excited about the prospects for the future of the business," he added.

Quick facts: Corero Network Security PLC


Price: 10.61 GBX

Market Cap: £52.5 m

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