Falanx Group Ltd (LON:FLX), a cyber defence and intelligence service provider working with blue chip and government clients worldwide, has today to announced its audited results for the year-ended 31 March 2017. DirectorsTalk caught up with CEO Stuart Bladen to discuss the strong results.
Period Highlights
· Strong growth across all service lines
· Group Revenue +50% to a record £2.7m
· Cyber Revenues +300% to c.£1m
· Intelligence Revenues +13% to £1.8m
· EBITDA – progress towards profitability as planned
· Debt free after redeeming all loans in October 2016
· Board strengthened with appointment of new CEO and Executive Director Cyber Defence
· Successful Integration of Advanced Security Consulting Ltd acquisition
· Pilot launched in February 2017 for MidGARD – a proprietary monitoring platform
· Awarded UK Government CHECK accreditation
Post Period Highlights
· Oversubscribed placing of £2m of equity in May 2017 to augment future growth
· Acquisition of Cloudified Ltd broadens reach and enhances SME focused offering
Outlook
Falanx continues to see new clients and opportunities in its’ pipeline post the financial year-end. Market conditions remain robust and we view the future with confidence.
· The combination of our own proprietary technology, 360-degree service model and intelligence insights, sets Falanx apart from other smaller security vendors
· Channel partnerships will enable scale-deployment of MidGARD
· Strong sales opportunities for all three trading divisions
Non-Executive Chairman Mike Read, commented: “The market conditions for growth of Cyber Security and Intelligence for the new year are extremely favourable. The Board anticipates Falanx Group will reach breakeven within twelve months, with another period of client acquisition and robust, organic growth. Cyber and political risks continue to dominate our headlines and are highly likely to grow, placing security issues at the forefront of people’s minds. Unaffected by Brexit, the General Data Protection Regulation (GDPR) comes into force in May 2018 and will impact all businesses across the UK and Europe, forcing management to address their security requirements or potentially face fines of up to €20m or 4% of global turnover.”
Falanx Group Ltd CEO, Stuart Bladen, commented: “Falanx has experienced robust revenue increases across all lines of business driven by geopolitical instability, rising cyber-crime, and increasing regulatory requirements such as GDPR, PCI-DSS and the Cyber Essentials programme.”
Whitman Howard analyst says:
Falanx is clearly on the front foot. In 1HFY17 the monthly run-rate for revenues in the Cyber Security division was £54k, in the 2H it was £102k. For FY18 we expect it to rise to a monthly average of £160k as the number of clients increase. As such, we expect the loss before tax of £1.7m for FY17 to be materially reduced to £1.1m in FY18 with Falanx reporting a profit before tax in FY19 of £0.7m. In addition, a recent equity placement to raise £2m strengthens the net cash position.
Strengthened Board. The C-suite has been transformed over the last 12/15 months with the appointment of a Chairman, CEO, Director of Cyber Defence and CFO with the founder and significant shareholder, John Blamire, focusing on corporate development. The Board now has a wealth of cyber-security and software development talent at its disposal.
Falanx has developed its own IP. Falanx has also developed its own low cost proprietary technology – MidGard, representing the latest innovation in advanced threat detection, security incident and event management. This raises the bar and differentiates the service to its target SME market. With MidGARD generating significant interest, it demonstrates further evidence of Falanx’s growing maturity.
Increased demand for outsourced cyber security. SME’s should now accept that at some time they are more than likely to be successfully hacked. Increased ‘attack surfaces’ facilitated by the adoption of Internet of Things and escalating cyber security related costs (compliance, regulation, insurance and staffing) means organisations are looking to outsource their cyber security needs. This trend plays towards Falanx’s strengths and de-risks our forecasts. We expect the shares to perform as the trajectory towards profitability is firmly established.