Release Date: September 24, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Group revenue increased by 16% year-over-year, driven by new multiyear channel partnerships and significant customer wins.
- Annual recurring revenue (ARR) grew by 12%, indicating strong ongoing demand for Corero's solutions.
- Order intake increased by 10%, demonstrating strong market confidence in Corero's offerings.
- Gross margin remained consistent at 91%, reflecting the company's software-led approach.
- Corero's cash position stands at a record high, with $7.9 million in cash and $2.7 million in free cash flow generated in H1 2024.
Negative Points
- ARR growth was lower compared to H1 last year despite a 10% increase in order intake, attributed to the timing and mix of sales.
- UK revenue was relatively low at $402,000, raising questions about the effectiveness of the sales strategy in that region.
- The company has only 10 outside sales reps covering the entire globe, which may limit its ability to capture market share quickly.
- Dependence on large partners like Akamai for sales growth could pose risks if these partnerships do not perform as expected.
- The geopolitical environment and rising threats could increase operational challenges and require continuous adaptation.
Q & A Highlights
Highlights of Corero Network Security PLC (LSE:CNS, Financial) Earnings Call
Q: Is Corero's recent new business momentum a feature of your new approach to sales and marketing or simply market-driven demand?
A: Carl Herberger, CEO: It's a combination of both. The market for DDoS products is growing due to increased reliance on internet-delivered services and rising threats. Our new sales and marketing strategies are also beginning to outperform the market, showing early signs of success.
Q: Carl, how would you assess your first nine months in the role? And is there more to come for the team?
A: Carl Herberger, CEO: I'm very excited about the transition and the team. We have the right products at the right time and are well-positioned to take market share. There is much more ambition and momentum to come.
Q: Should we expect Corero to continue to sign channel partnerships to further boost its geographic reach? Or is the company's focus more on direct business wins?
A: Carl Herberger, CEO: We will continue to grow both alliance partnerships and channel partnerships. We are also looking to integrate with system integrators and technology vendors, expanding our geographic reach and capabilities.
Q: Why was the ARR growth lower versus H1 last year when order intake was up 10%?
A: Christopher Goulden, CFO: The timing and mix of what we're selling affected ARR growth. More customers have grown their CapEx budgets, leading to more upfront license purchases. However, we expect ARR growth to normalize over the year.
Q: You introduced AI-assisted solutions like the Corero DDoS Intelligence Service. How has customer adoption been so far? And what future enhancements or AI-driven innovations can we expect in your product pipeline?
A: Carl Herberger, CEO: Adoption has been excellent, with 6 to 12 revenue-generating customers in just a few months. We will continue to introduce innovative, high-value solutions that drive momentum into 2025.
Q: Does your software only work with Corero hardware?
A: Carl Herberger, CEO: No, our software is independent of hardware requirements. This flexibility allows customers to switch to our solutions easily without being locked into specific hardware.
Q: How many sales and marketing heads are based in the UK, given the UK revenue in the six months to June 2024 was only $402,000?
A: Carl Herberger, CEO: We have one sales representative focused on the UK and Ireland. However, our alliance partners and installed base in the UK also contribute to our revenue, which may not be fully reflected in the UK-specific figures.
Q: How are the alliance partnerships with companies like Akamai progressing?
A: Carl Herberger, CEO: Our alliance partnerships are healthy and growing. Akamai, in particular, has a large potential due to its size. We are integrating our solutions into their sales cycle, and the pipeline for joint market opportunities is substantial.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
