Corero Network Security (LSE:CNS) — Interim Results

0:01 Good morning, ladies and gentlemen, and welcome to the CORERO NETWORK SECURITY PLC Interim Results Investor Presentation. Throughout this presentation, investors will be in listen only mode. Questions are encouraged and can be submitted any time via the Q and A tab situated on the right hand corner of your screen. Just click Q and A, scroll to the bottom, type your question and press send. The company may not be in a position to answer every question received during the meeting itself. However, the company will review all questions submitted today and publish responses where it's appropriate to do so. These will be available via your investor.me company dashboard, and you'll be notified once they're ready for your review. I'd also like to remind you this presentation is being recorded. Before we begin, we'd like to submit the following poll. I'd now like to hand you over to Leonel Chiminski, CEO and Neil Pritchard, CFO of CORERO NETWORK SECURITY PLC. Good morning. Good morning. Thank you for spending time with us today. That's really appreciated.

0:52 So we published our first half twenty twenty one results yesterday and would like to take you through this presentation to basically describe what we announced, spend some time with you around the strategy and how we see the market and the outlook. So what I suggest to do is first to go through a company background, speak about the H1 highlights, which we announced, Then Neil will spend some time with you on the financials. We'll go very quickly through the solution, the differentiators and the roadmap, explaining how we stand out versus the competition. We'll describe to you what is our strategy for growth and what is the progress versus that strategy, and then a short wrap up at the end of the presentation. So once again, thank you for spending the time with us.

1:47 So for those who don't know us, CORERO NETWORK SECURITY is a publicly traded company. We are traded on the London Stock Exchange on the end market. We are headquartered in London, but we have offices and operations in Boston and in Edinburgh. We are 100% focused on DDoS mitigation. We are the leader in real time, very high performance, automatic DDoS, and we have an associated, you know, network of well, network management facilities and analytics facilities. The customers we are addressing are mostly the service providers.

2:35 They are the hosting providers. We do lots of data centers and colocation, edge providers like tower companies. We do enterprise mostly through partnerships, and there are few segments where we are very strong like gaming and utilities. Company has been around for twenty three years, but we decided to focus on DDoS only about eight years ago. We have now solutions deployed among thousands of organizations in about 42 countries. And despite the fact that we are very, very customer centric, we invest a lot in R and D. So in the first half of the year 2021, we invested about 21% of our top line in R and D.

3:23 I think that's very important when you're a company of profiling want to stay at the edge of the technology. We have some very interesting partnership with companies like Juniper and GTT, and we'll spend more time around that at a later stage today. We also have some technology partnership with Splunk and with Newstar. I'm sure that most of you, know what DDoS is, but, in in few words, DDoS is when an attacker is sending unwant unwanted, sorry, flood of traffic to either web, a network, or a server in order to slow down those targets or to make them collapse.

4:12 And what we can see on the market is that those attacks are getting more sophisticated in several manners. You have DDoS attackers that are basically using multivectors. They can use the main network. They can also use anything that has an IP address. They're becoming more recurring, and they could be very small but also very big. Just few words about the DDoS market. So the DDoS market, if you look at it as a whole, it's a market that is about $2,700,000,000 It's a market that is growing roughly 14% per year, and it's splitting in three domains. You have the the hardware or appliance solutions, which is the domain where we play. That's about 46%.

5:02 You have software only solutions. That's 28%. And services, that's 25%. If we're trying to take this TAM and look at what is the, serviceable addressable market for us, it's basically in the range of $270,000,000. This is where we've we've looked at what is the segment that or what what are the segments that that are our sweet spot. And this is mostly, as I described, service providers, tier two, tier three, data centers. We've also looked at the geographies where we we are strong and can have access. For instance, we didn't take China in that in that SAM. And we've looked at the profile of customers that we could address. So that is about 270,000,000.

5:48 For you to to get an order of magnitude of what DDoS attacks represent, there's about 28,000 DDoS attacks per day. So that's a lot. Smaller attacks, larger attacks, and that could be very impactful for all customers. That has grown significantly during the COVID period. Last year, for instance, it was up 20%, twenty five percent. So very important to have that in mind. It's also very important to understand why customers are buying DDoS protection solution. I mean, they want to do two things. They want to make sure that they can have a business continuity. So not having their network, web servers, or or websites being slowed down or being attacked and and collapsed. So that's one. So the first one is to assure business continuity.

6:40 The other one is to make sure that they could generate additional revenue by providing DDoS protection to their customers and mostly enterprise customers. So you have lots of service providers that are obviously proposing capacity connectivity to their customers, and they're adding on top of that some DDoS protection so that they can generate incremental revenue. In terms of business model, we have, I would say, four types of solutions. The first one is what we call TDS, which is our smart wall threat defense systems. This is a solution that we're selling direct. That's basically appliances and associated software going from 10 to 100 gig and also addressing cloud.

7:34 We have a solution that we've developed, within the partnership that we have with Juniper, which is basically to add software together with the routers that Juniper sells to their customers and protecting their customers with the DDoS protection solution. We have a solution that we are selling on the cloud together with a partner called NuStar, and then we have a whole range of services that are presale services and post sale services like, you know, deployment, maintenance, support, managed services. In terms of how we approach the market, we approach the market direct. So we have our own sales team with account executives and presales engineers selling directly to customers.

8:24 We have the partnerships that I mentioned with Juniper and GTT and NuStar. So, basically, Juniper is selling our solutions to their customers. GTT is selling their solution to their customers. When they sell connectivity, as I was mentioning, they're adding DDoS protection. So that's something that is a a good way to reach customers that we would not reach direct. And then we have channels, which is composed of agents, composed of distributors, could be local distributors or global distributors, and then a whole range of resellers, mostly local. In terms of customer segments, I already spoke about the segments that we're addressing. In terms of source of revenue in the business model, we are getting revenue from a CapEx model. That's the first part. So we're selling appliances and perpetual license.

9:20 We're getting revenue from services, could be presales, post sales services. We're selling as well DDoS as a service. We're also having a revenue share model. This is what we have, for instance, with GTT. So when GTT is selling DDoS services to their customers, we're we're sharing their revenue, and then we have the term licenses.

9:48 Customers, quite impressive for a company or profile. So we're doing business in about forty two, 43 countries. We are active in all the continents. We are protecting either directly or through our partnership, thousands of organizations, and we acquired many new countries in 2020, roughly nine of them. We also have quite a lot of new potential countries in the pipeline. You see here a representation of few of our customers. Obviously, we have many more than that, but those are names in the several segments that I described. So what's the investment opportunity? So first, we are operating in a large and a high growth market.

10:39 I mentioned a TAM of 2,700,000, a SAM of about 270,000,000 sorry, 2,700,000,000 TAM, 270,000,000 SAM, and the market is growing at 40% per year. There are some trends on the market like IoT and high connectivity, five gs, higher capacities, mesh networks, cloud that are also providing some good opportunities for expansion for the company. We believe in terms of technology that we have the best ratio performance over TCO in the industry. We mitigate, as I said, automatically with a strong which is a strong differentiator, the DDoS attacks in few seconds, and this is faster than any other solution on the market.

11:32 In terms of IP, all is done in house, except what I mentioned about the partnership on the analytics with Splunk, but all the rest is developed in house. And, that's important so that we don't have any significant dependency, versus third parties or royalties to pay. As I said, we are 100% specialized on DDoS. We've been specialized on DDoS for the last eight years, and we've spent roughly $35,000,000 in R and D so far. As I mentioned, we are investing about 20% of our top line in R and D every year. I mentioned the customers base that we have, so very solid ones. Once again, for a company of profile, we have some pretty big logos there.

12:22 Thousands of organization, 40 countries, lots of recurring revenue, about 60%. You saw the numbers around ARR, and it's about 11,200,000, which is which is significant. Our customers are very loyal. They've been buying from us since we started to do business with them. And, obviously, not only we're helping them to protect their network, but as I said, to generate more revenue, which is a real opportunity for for, especially service providers. There's lots of competition among service providers, and everybody is trying to identify new ways of generating revenue, and this is one way to do so. For a company of size, same thing, a very impressive SOC, so service and support for our customers.

13:09 Worldwide presence, we are doing, you know, services, for instance, as far as Australia. We have customers in Australia. We are monitoring the network there. We do presales, post sales services, high level of compatibility with, the the equipment that our customers have. I talked about Juniper, but we are also operating in different environment when people have Cisco, when people have Arista or Huawei technologies. We have mitigated last year just to give you another impactful figure, we've mitigated about 400,000 DDoS attacks in 2020. And then we're global, but we have a very local approach.

13:57 Because we are mostly supplying software, we can very quickly and easily deploy on the field. So when the customer has attacks, when a customer is coming to us and say, I need a solution, we can deploy that very, very quickly. In terms of, way to scale, we have, as I said, some important partnership. On the customer front, we are also adding some channels, and then we have our direct sales force. Our enhanced strategy has been built around growing the top line. I talk about that, at the end of the presentation. And then in terms of manufacturing, we are using a subcontractor for that. So we don't have to have the in house supply constraints.

14:48 We have a good relationship with our supplier with a good planning tool. And then last but not least, and you'd see that when we talk about the financials, we have a very healthy P and L. We have very high growth margins, anywhere between 75% to 85%. There's lots of recurring business, so we can start the new year with already some almost guaranteed revenue, and we are very smart on how we spend the money. We have a very skilled management team with decades of experience either in technology or more precisely in cybersecurity. So very quickly on the highlights, and, I will then hand over to Neil, who will go in more details.

15:41 So we grew order intake by 13%, which is nice, reaching $9,000,000 We did about 8,000,000 last year same period. Revenue has grown 34% to 8,300,000 EBITDA is progressing significantly, and you'll see the details. And then the LR has grown from 8.8% last year to about 11.2% at the end of the first half of this year. We had a number of records that we broke, the best order intake for H1 at 8,900,000, the best revenue, level for H1 at 8,300,000, positive EBITDA, record LRR.

16:27 The number of new customers is very important. We had 20 new customers first half of this year versus eighteen first half of last year, and almost half of that is coming from Juniper. So the partnership, as I said, is very important, is working well, and we're building a lot on that partnership for future growth. We made some good progress on the growth strategy that we've implemented last year, beginning of last year. We continue to invest significantly in sales and marketing, and we continue to invest in R and D to make sure that we're staying at the leading edge of the technology. So that's basically it about the highlights.

17:12 I will now pass and and hand out the floor to Neil, who's gonna take you through the financials. Superb. Thanks very much, Leonel. Good morning, ladies and gentlemen. Thank you very much for attending, and it's good to be here. Just three or four slides from me, really. First of all, just this highlights. I will go into each element of this probably into varying degrees, but certainly in more depth on on the following slides, will break down between p and l, cash flow bridge, and balance sheet as well in in that order. But first, just on the the overall highlights, some of which we've touched on, but just to just to reemphasize and others just to to explain a little bit further. So first of all, as Lina was saying, you know, number of records and certainly for us, order intake or or bookings as we sometimes call it, that's also a record level beyond the record for last half last year as well. So and it's pleasing to see continued development and and improvement on the revenue side, up 34%.

18:21 That's included sort of really expansion across all disclosed revenue streams in terms of how we split that out to the outside world. And each level increasing over and above the previous half there. So very good to see. Very important and really a reflection of underlying trajectory, our annualized recurring revenues, which is the definition is further down there to take at your leisure is that continue to to increase very nicely indeed. As Leon said, up 2,400,000, again, across all elements components of that. So up 27% half on half. The overall net cash, actually, for the position at the half did improve against the previous half.

19:14 That breaks down between a gross cash level of 8,800,000 against 6.2 for the previous half. Net debt was a little bit higher at 3.7 compared to 2.9. There are some randings in the in the round there, but essentially, 1,800,000 some effects as well. But, effectively, 1,800,000 over and above the previous half. And then EBITDA, now that that measure there is really very much just a the if you if you like, the plain vanilla definition that you'd have on EBITDA. And that actually is positive for the first time. There are some influences in in full disclosure that does include a credit on a COVID loan alleviation forgiveness, which I'll come back to.

20:00 Although, does reflect sort of slightly more adverse FX as well. So very pleasing to see the we we have a very a on pandemic. On assets that we own, but we revenue share with GTT. So therefore, that the depreciation that goes to cost of sales, that also improved to a considerable 0.6 as well. So very nice to see that continued improvement. Just going into the P and L in a little bit more detail here. On the revenues, we say that's gone up about 2,100,000 or 34% over the previous period with those revenue record bookings.

20:55 The breakdown there, approximately 40% is around our software and appliances. 23%, I think, was in the in this half was DDoS protection as a service. That's very much providing our service, you know, for hire, a little bit like the Netflix models, I always say. And so and then the rain the range on maintenance and support revenues as well. Now in in terms of the geographical split in the first half, it was around about 70% in North America, and Americas, 14% in EMEA, and pleasing increase, 17% in APAC as well. So those APAC is sort of a newer territory for us historically, as Leonel was talking about, our operations in The UK and US, that has continued to increase. But actually, again, increases in many, many geographies, as Daniel mentioned.

21:53 Overall gross profit improvement, well, that's actually probably at a high. It's at 84% really as as the commentary there refers to. It was about an an x level about 81% in the second half last year. It does compare very favorably to to the prior year of '75. It's really a mix effect rather than rather than anything more pronounced where we have more sales of software only without the associated cost of cost of sales of perhaps some, you know, hardware or or appliance appliance costs if you like within that. That obviously is a, you know, has a has a higher margin in that software only sort of element and, you know, that includes, for example, Juniper sales as well.

22:40 In the second half, what tends to happen is, you know, that there's certainly more more more sales made and and more activity by our customers in the second half, and that tends to also be sometimes at key cleaner pricing. So overall, OpEx, overall, it's actually about 15 higher. The underlying, if you take out depreciation and amortization, have about 1,100,000 in the first half is gives sort of a a 23% increase. Really, that comes back down to our continued investment in sales and marketing, more of which we'll cover in the strategy. So I won't go into too much into that. Some increased central charges as well. But also, yeah, in terms of the it's probably worth still worth import pointing out that depreciation amortization is slightly lower as well to offset against that.

23:36 We have had some benefit within within some lower sort of travel accommodation costs and so on. And then finally, there was an FX cost of exchange gain loss, if you like, of about point two in in the period that compares to a point eight gain in the previous half year. So that's quite an adverse swing. So it was good that we were able to navigate through that as well. Partly to offset against, as you can see, just in terms of the lower down in the p and l, we've got other income. So I mentioned that our US subsidiary, we we took out a COVID alleviation loan in The US last year, last May. And at the end of January, we were fortunate enough to to, as in common with many other companies, have that forgiven. So you'll see that does disappear out of the borrowings number, and it's a credit to the p and l. And that's shown separately here for full disclosure.

24:35 And then finally, the loss loss after taxation level and so on, and and just as with key summary, across all those metrics, all the EBITDA profitability, you know, with those discussions around the other income, but also the FX as well. We have more than halved our loss after taxation, which obviously is on our trajectory to go further down there. And we've had that significant ARR further increase, and we hope to improve on all those metrics and with the operational gearing leading to a disproportionate improvement in profitability as well. Just moving on to the group cash and the group cash flow. It it overall, this is just taking in the top just as a metric just to ex to be perfectly clear here. What we're doing is we're starting off from the gross cash position at the year end to the half year and hence the fall of 1.3. And that's what's obviously then explained through the first half cash flow.

25:41 And so what we then do is talk about, know, how we what happened in that first half in that lower box there. So first of all, we did nevertheless, despite the improved EBITDA, you know, historically best levels, we still at the loss before tax level registers the loss. So we start from that position. We add back the noncash movements, which as you can see there, is about 0.9 for the amortization development costs. Depreciation, 0.4. That's different to the depreciation, so

26:14 in the p and l and the OpEx because as about point two of that is in cash cost of sales and point two is in OpEx. Share based payments there, look, ever so slightly up at just under the point three mark. And then we had that loan forgiveness level. Obviously, when that came in, it was a cash flow inflow, but this is ratios in outflow as an accounting element of that. With the net movement in working capital, that is an outflow of 1.8. Not very much movement on on inventory, about point five on debtors and but on creditors and offset of about 2.3. And and large component of that compares so really the the effect of that is, first of all, creditors or payables in in new parlance is is is really both increased due to increased levels of business activity, same with debt as receivables.

27:13 But also, we did flag in latter part of last year, we took in a significant inflow on one deal and actually the outflow for that for which in terms of payments, the supplies and so forth would be in q one. We flagged that before, and that's what's happened now. It will then normalize from here on in. So we then the next measure is really we did take out some new borrowings at equal or better rates, taking opportunity there with our current provider, having evaluated that. And so that was that was a new 3,000,000 facility of which we've drawn down two on term loan and 1,000,000 undrawn on the revolving credit facility there. And but against that, we have actually repaid the existing loan to to to term into to the arrangements, and that's what you see a couple of blocks over.

28:08 We continue to invest, as Lionel mentioned, in a in a comprehensive way, in an agile way in our solutions. And so that's that's another point nine there. It's investment indeed. That's the cash flow. So that's the that's the measure for those of you to take to add if you want to get to the cash EBITDA. And then CapEx, really a little bit lower than normal, but about 0.2 on other fixed asset spend, not very much else in terms of the other reconciling items at all.

28:41 Finally, just to move on to the balance sheet to give you sort of a and really to just pick out any significant movements there. Our overall intangible capital development, what in terms of what's actually capitalized, So we actually had those naught point nine of additions you just saw on the cash flow, but against that amortization of of 1.1. So in general, our amortization, and that's this is the case also for 2020, tends to more than offset any additions to the balance sheet of any intangibles partly because there was a lot of upfront investment in some of the platforms in terms of cost investment seven or eight years ago when we decided to focus specifically on DDoS.

29:26 So so there isn't a sort of that level of accumulation in the balance sheet that perhaps might be typical of some other early stage technology companies. Probably plant equipment is very, very low even though we've had those that little bit more of those point two of assets. Just to point out that that's more than fully offset by other depreciate fully depreciated assets. So very little movement net movement there. The inventories, no real movement. Overall, trading receivables, as I said, actually increased with the level of business and and a small element on deferred commissions as we do more business. And then on payables, also increase with the levels of business activity and other accrued costs. In overall terms, deferred income has got bigger because, again, that represents more three year new upgrade, add on, and renewals businesses. So, basically, that will increase as as, you know, the level of trading has increased as well.

30:24 And there you see the overall net wrapped up movement in terms of the increase in borrowings and the split is provided there. Overall, net assets are lower than the previous half. But if you take h 02/2020, they're broadly similar to where the h one figures were for the previous year in 2020. H two is always bigger for us. And so that's the sort of level. Overall, gross cash is better by 2.6, and net cash is higher against the, as I say, the previous half as well by 1.1. And with that, I will hand over now back to Lionel. Thank you very much. Thank you, Neil. So the last part of the presentation is going to address the solution and the roadmap.

31:15 We're going to talk to you about how we differentiate versus competitors and then give you an update on our strategy for growth that we've we've implemented since, last year.

31:29 Questions. I will take this occasion to answer to some of the questions that you guys asked while talking about those points. So in terms of solutions, we can do three things. First thing is, as I described, we can sell as a CapEx model, appliances and associated software. This is what we call the TBS solution. We can sell as well through our partnership with Juniper. So adding DDoS protection on top of the the routers functionality that Juniper is providing, that's the TDD. And then through the partnership with NuStar, we can address customers that need a cloud solution together with an on prem solution.

32:19 So that is the different types of solutions that we have. In terms of on prem solution, which is really our sweet spot, we probably have the broadest portfolio of products in the industry, and that comes into several flavors. The first flavor is when you are protecting every single link. So, basically, you put your detectors, and mitigators, in front of the routers to have an always on full protection for each of your links. You can have that's the in line. You can have the data pass approach, which is basically you put your detector or appliance after the router so that you can select the the the customers of of the ones you want to protect versus the ones you don't want to protect.

33:10 There is this edge solution, which is the one that we are offering together with Juniper, where you're providing DDoS protection at the edge of the network on the routers. And then a new product or new solution that we announced a couple months ago, which is basically detect and redirect. So what you guys might be familiar with as scrubbing, which is something that some of our competitors are doing, where basically you decide to mitigate only a portion of, the the traffic. And, basically, you do you do as well, sampling.

33:53 And, basically, the big advantage of that is that you can deploy your solution at the cost effective manner on large networks. In terms of roadmap, as I mentioned, we just introduced this detect and redirect so called ETD scrubbing, scrubbing solution a few months ago. We are looking at trends that are in the global environment around five gs, IoT, edge compute, next generation of connectivity and all the innovation around DDoS. So that's an area where, as I said, we're spending huge amount of time, effort, and money. There there are lots of tracks within the company to make sure that we stay at the leading edge of the technology.

34:44 So how do we differentiate versus competitors? So first, I will highlight the domains where we we have some very strong differentiation. And I will mention you see six of them here, but I will mention the key ones. So clearly, speed of detection and mitigation is one of our key strength. We we detect and mitigate attacks in seconds, three, four, five seconds depending, and that's probably faster than any other solution in the market. Second thing which is very important is that, we are doing that automatically. So it doesn't require in in terms of, you know, manpower that the customers have to deploy, it doesn't require to have an army of people.

35:32 In 95% plus, it all the detection and mitigation is done automatically. And the third one, because of our experience, because of our knowhow, the fact we've been eight years working on on DDoS, we have a very accurate and sophisticated deep packet inspection technology. So that allows us to detect and mitigate not only the big attacks, but also the small attacks. Sometimes people are good at detecting the big attacks, but they are not good at detecting the small ones. We are able to detect the small and the the big one. We have a scalable business model so we can protect our customers, you know, when they have small capacity, but also when they're increasing capacity in a very cost effective manner, and then a world class support.

36:21 So there was a question, about competitors coming from Peter. So that's a question that I'm going to answer by showing this slide. So if you look at CORERO versus our competitors, and obviously, I haven't mentioned the names there, but you see two categories of competitors. You or three categories. You see people that are 100% dedicated on DDoS detection and mitigation. This is our case. So this is why clearly we we we have green boxes there because we we're doing DDoS and only DDoS. The second category are competitors that are doing DDoS and other solutions.

37:07 And the third categories are people that are doing other solutions and they add some DDoS in their solution. So when you ask your your question, Peter D, that's the case of the companies that you you mentioned. So Peter was asking about the differentiators, which I highlighted, the way we stand out versus competition. I think if you if I was to summarize, we're probably the only company which is 100% specialized on DDoS that has the level of performance and the competitive TCO on the market. One thing that I wanted to mention, and I think that basically matches what we see on the market and how we respond to that. If you're looking at the trends in terms of DDoS attacks. So there are more and more, attackers that are attacking the same target several times.

38:03 And it's very important, and this is about 13% increase in those multivector attacks. And it's very important to have an automatic system. Otherwise, you will need, as I said, to have an army of people at the customer site to fight against those DDoS attacks. So that's one. The fact that, 86% of the attacks are, let's say, attacks that are being sent in very short time, so 86% of the attacks are below 10, you need to have something that is extremely precise and quick to mitigate. Because if it takes a long time to detect and mitigate, the attack would have been gone through. Your network would have been slowed down or would collapse before you you you would have been able to detect and mitigate those attacks.

38:52 So the fact that we're doing that in few seconds is extremely important. 97% of the attacks are small attacks in terms of numbers. So it's important to have a very, precise, very sophisticated deep packet inspection technology to address that. And same thing, lots of attacks are being repeated. So the fact that you're automatic, helps you in minimizing your effort in, headcounts in detecting and mitigating those attacks. So that's on the competition. Now I wanted to share with you, where we stand versus our strategy for growth. So as I said, we've been eight years in that domain. For the first seven years, we spent huge amount of time to build a very solid portfolio of solutions, very strong platform that is the base for all our solutions.

39:48 We've been able to establish and develop a very strong base of customers. We have hundreds of customers, very prestigious names, very important logos in all the domains. And then we build some very solid team. What we've implemented beginning of last year in terms of enhanced strategy is really focused around growing the top line. So making sure that we're putting all the efforts, all the money to grow bookings, to grow revenue. And in order to do that, we have implemented, and I'm sure you guys read around that strategy, we have implemented a six pillar strategy, based around the customer first mindset.

40:34 So to increase our international presence, basically replicating what we've been doing in The US and in Europe, which are basically the the largest geographies for us, leveraging on existing partnership with Juniper and with GTT and developing new ones. The high focus or focus on large accounts, major enterprises, Tier 1s operators, some resources and focus around services, selling more services to our customers, presales and post sales, not only because it's high margin, but also it's increasing the stickiness with our customers. Obviously, all of that has been underpinned by a very ambitious demand generation program.

41:24 So we've done lots of campaigns, webinars, either direct or through our partners. And then, as I said, continue to increase in R and D in order to keep, maintain our technology leadership. So let me give you an update on what we achieved in the first half against that six pillar strategy. So increase our international presence. And during the first half, we had some significant wins in Australia, Germany, France. Japan is an interesting one, doing well there. We got some business in China, Brazil, Canada and The US. So we expanded in more geographies or we generated recurring business in existing geographies.

42:12 We've signed new partners in new geographies or in existing geographies. Those could be agents, could be VARs, could be distributors. That's important. We hired more resources, so dedicated full time employees resources in APAC. That's a market that is supposed to be 35% of the worldwide market, so for DDoS protection, so that's an important one. We're going to add more resources there. We've added more resources recently in EMEA. And then when I'm looking at the pipeline, the pipeline is solid, and we have potentially 10 new countries in the pipeline. In terms of partnership, so as you know, the one with Juniper is extremely important.

43:00 Almost half of the business that we grew that we sorry, almost half of the new customers that we got in the first half of the year is coming from Juniper. We're also getting more and more customers with GTT. And we are making good progress in securing new partners. So I will take this occasion to answer to the question that was posed by Andy M. Andy was asking if we're looking to create more partnerships such as Juniper. So basically, the answer is clearly yes. We are looking at having more partnership like Juniper. So first, we're not looking at having a partnership with the competitors of Juniper. I told you that we could deploy our solutions in the Cisco environment, a restyle environment, Huawei environment, but we're not looking at building a partnership strategic partnership with competitors of Juniper. That being said, there are other network equipment suppliers that are not competing with Juniper with whom we have engaged some discussions. So that's one that's one aspect of it. The other aspect of it is around system integrators.

44:10 System integrators are providing a global ecosystem to their customers, including cybersecurity and DDoS protection. So we have engaged discussions with few of them, global ones, and we're making some progress. So just wanted to give you a quick update on that one. Intensify our presence among large accounts. So this is something that we're doing either with a direct approach. But as I said, we're mostly focused on Tier two, Tier three. We're also doing that with Juniper. So as you know, Juniper is present among huge number of very large accounts, Tier 1s. We're doing that as well through our partnership with GTT and some other partners that have access to that. There's been 20 new customers in H1, some important new logos, and we have some pretty exciting logos, new logos potential in the pipeline.

45:11 Very quickly, services, that's important for us, high gross margin, increasing stickiness with our customers. We're looking at expanding the the number of services that we can provide. We are looking at systematizing, so making them more systematic when we are making quotation to our customers. That's important. We've done lots of campaigns around our solutions, the benefits of our solution, either direct or with partners. We have some specific campaigns with Juniper. We have specific campaigns with GTT. We're doing some local campaigns with local VARs or distributors. And we've seen that there was a good uptake on the digital advertising efforts. So that's an area where we're going to spend more money.

46:02 And then in terms of innovation, clearly, as I said many times, we're investing a lot. We launched that ETD solution recently. Just to give you an order of magnitude, this is something that was one of the track that we had in our, you know, technology development tracks. The sales team came to us with a quantified list of opportunities beginning of this year. And within six months, we were able to, introduce develop and introduce the product on the market, which currently, we are running several proof of concept with customers for that product. So it looks like it was the right move to make. So that's basically what I wanted to mention to you.

46:50 So just as a summary, and then we can take few questions. There are lots of questions. We will take those. So first, we have performed nicely last year. You saw the numbers. We are performing as per the expectation this first half of the year. That's important. And we have built the basis for the enhanced strategy beginning of last year that we are now implementing and seeing the fruits. If I'm looking at the future, the outlook, so clearly, I mean, there's a high need. You saw the market size, there's a high need for DDoS, mitigation solutions.

47:36 Because of the COVID environment, it's been increased. People working from home were using more Internet, and then customers were more targeted by attackers. So COVID has created a positive, uptake for us. That being said, we are very, very conscious that there might be some side effect as well of COVID. So around the ability of companies to invest or the time it takes for companies to take decision. For the time being, we're seeing some momentum, but we're monitoring that tightly As we are monitoring what's going on, on the supply chain shortages, you know that there is some constraints on the semiconductors.

48:24 So despite the fact that we have mostly software in our solutions, we also have some appliances. But we have a good relationship with our manufacturer, and we are doing a good exercise in planning what we're to need. So in front of that demand, we have a very solid solution, as I explained. We're making it evolve. We're making it progress. It has a great performance. It has and we're seeing that when we're bidding against competitors. It has a very cost effective efficiency, and that's very important. We are very, very much focused, as I said, around growing the top line, more resources in sales, more customers driven, processes with a starting point being the market and customers.

49:17 So that's all positive. We had, as I said, good performance in 2020, good performance in first half of the year. The pipeline is solid. That's something that we are all monitoring very, very tightly. We have a solid pipeline. So we expect 2021 to be in line with the market expectation and continue to grow. So that's basically it. I just wanted to thank you for your time. We have probably five minutes for questions. So we'll pick few questions. And then if we cannot answer all the questions, feel free to reach out. We'll be happy to spend time with you guys. Lina and Neil, thank you, as I say, for the presentation. The guys can please continue to submit your questions. All questions are submitted today, Lena. You'll be able to review later if we don't get around to them anyway.

50:07 We did have a couple of pre submitted questions. I don't know if you want to touch on those or just go straight into the live ones, and we can review everything a little bit later on on the basis of time. Sure. Sure. Shall I take the first one, Lennell, just on the the revenue growth one? Yeah. Just so so we had a question regarding question said six months on six months revenue growth has been flat. Are you anticipating revenue to remain flat over the remaining six months of this year and into the future, or do you see revenue starting to grow again? So, I mean, as as I've covered, first of all, just just for for purposes of clarity, the h one first half results now, we're just talking about the revenue growth over the over the previous half was 34% increase.

50:58 So I don't know whether you're then talking about the sequential half on half. So so the the second half of last year showed revenue around about 10.7 against 8.3 in the first half. So maybe things are being slightly read into there. But I mean, effectively, CORERO tends to have a higher half two than higher half one. And within the half two, the biggest quarter is kind of Q4. And that's really in line with customer budget years, IT spending budgets in line with their calendar year ends. Obviously, we have historically, you know, a bigger base in The US where they worked calendar years. So no, we don't consequently, don't anticipate revenues being flat in the remaining six months of the year.

51:50 And I wouldn't draw parallels between the trends in H2, H1. They are different. The market guidance for this year is around 21.9% for the full year in terms of revenue. And the current market guidance for 2022 is a further sort of around about 30% growth rate as well in revenue, just to be clear. Good. Thanks, Neil. I will pick the second pre submitted question, which was Internet security is a fast moving technology. Are your product still at the cutting edge of dealing with DDoS attacks? And what action do you take to ensure you will continue to have the best products in the field? So yes, we are at the cutting edge, and we want to remain at the cutting edge. As I investing a lot in in in r and d.

52:40 We are taking as a starting point the the customers and market requirements. That's important. I mean, it's it's an it's an important philosophy to not only develop products because they look good on the paper, but to develop products more because they are needed by the market. So this is this is how we we develop our road map. This is how we develop the the the products. We have several tracks internally to make sure we we capture what is needed on the market. You know, we have, obviously regular discussions with our customers, but we have more formal forums to basically consolidate what is needed on the market. And then, you know, developing products based on priorities, what is demanded the most, what we're to sell the most and the return on investment.

53:28 So that's extremely important. We want to remain. And I think being a company of size and our profile, it's very important to remain at the edge of technology. It's also very important, and I gave you an example on ETD, very important to develop good products and quicker than the others. I think that's one of the key differentiators that we have. We are very flexible, very agile. We we have a very, very solid teams of engineers, product line management, and, you know, that allows us to do things that some of our competitors cannot do. That's the advantage as well of being specialized. So that's the the way I would answer that question. The other part which is important around that, you know, developing products is great, but also you need to make sure that you have a very solid operations team, SOC team to basically maintain that maintain the link with the customers.

54:27 And same thing, I'm very impressed with the teams that we have with the level of support that we're providing to our customers once the product have been, developed, sold, and deployed. I don't know, Neil, if there is one or two questions that you want. There there are lots of questions on the financial side if you want to take one one or two. We still have five minutes to go, and I I will take one one more. Yeah. There there was one regarding, you know, RNS' on on wins and things like that. Yeah. It's fair to say that perhaps we we we need to get a bit a few more out really in the second half. So we'll we'll we'll focus on that. We've had a number of other press releases outside RNS' actually regarding things like ETD that you may not have seen.

55:14 So so we'll take that that feedback on board and look to sort of elevate the communications in the second half. Obviously, that is sometimes dependent on the confidentiality of some customers. Some customers don't necessarily want always to their names be highlighted and so on. So there's no point of discussing that before on on some of these things before before we can go out and disclose too many things. But so that's that one. On the on the EBITDA, there was one around the maybe a couple on the cash EBITDA. So so, I mean, it it it also depends, of course, where your starting point is. I mean, if you said our plain vanilla, as I mentioned earlier, EBITDA of point one, then in terms of the the the actual cash spend, as I mentioned earlier, that was about point nine. So then you'd be at at a minus nought point eight level.

56:13 But if you then took last year's, I think you're more or less at the minus 2,000,000. So you're obviously comparing still a different significant delta between the two, but that that that would be my definition in terms of a cash EBITDA in terms of capitalization, the development costs that I know some people take. Of course, some people also talk about other elements in terms of spend on r as opposed to spend on d. So these things, unfortunately, are never sort of fully fully sort of explained quite by everyone in quite the same way. But I think that's probably the closest plain vanilla definition and adjustment of that that I can give you. There's one question from thanks, Neil. There's one question that I'd like to take coming from Peter D.

57:02 Peter is asking, do many customers change from one DDoS prevention solution to another? It seems like there may be a lot of inertia where corporates stay with an existing solution. Also, are the numbers of corporates without the solution sufficient for your growth over the next few years? So that's a great question. So normally, when you have a large customer, when they they have an incumbent, it's pretty comfortable for them to stay with an existing vendor. And, you know, we we we have competitors that are solid competitors, two main ones, and they have good solutions, and they are well established. So clearly, unless there's a problem and that that happened with with one of them, you know, with one specific customers, normally, they they stay with the solution that they have if if it gives them satisfaction.

57:56 That that being said, you know, operators or service providers are doing two things with DDoS protection solutions. So the first thing is they're protecting their own network. And generally for that, they have an incumbent. But they also provide DDoS protection to their customers, and that's a way for them to generate incremental revenue. There's been many cases where we've been asked by a service provider who has an existing vendor on their network protection. We've been asked to provide a solution for their enterprise customers. So that's that's a case that happens. You also have some some customers that have a multi supplier approach. And then when you think about the system integrators, they are more like open to have several solutions, and we're having discussions with some of them in that respect.

58:49 As far as, is there enough market for us to grow? So clearly, you saw the TAM, you know, 2,700,000,000. You saw the SAM, $270,000,000. The way we've looked at the SAM is we've looked at areas where it was mostly our top two competitors on tier one. So that's not part of the 270,000,000. So the 270,000,000 is all sweet spot. It's areas where the incumbents are are are not in there or are not focused on that, and it's geographies where we we can address. So, I mean, you see when when you're a company that did 17,000,000 last year in revenue with a TAM sorry, with a SAM, serviceable addressable market, that is 270,000,000.

59:39 There's a lot we can grab there. So I think by executing the strategy, by being more customer centric, focused on the top line, there's still some room for growth as you can see. So just wanted to end the to end the the discussion on that one. I know we're running at the end of the I was gonna say, you know, Neil, you're you're literally coming up to to time. So we have got a number of questions that have come through, I'd like to thank all the investors for sending those. Of course, the company will review all questions submitted today, and we'll publish those back out to you and responses where appropriate to do so. Just on that basis, Leon, perhaps I could just ask you for a few final words just to conclude, and then we can redirect the attendees to give you some feedback. Yes, sure. So well, first, thank you, everybody, for attending. It's been a pleasure. We are living in exciting times that have represented challenges but opportunities.

1:00:32 I think we've demonstrated that with our performance in 2020 and first half of twenty twenty one. I think we are implementing the right initiatives to make sure that we grow, we continue to grow, and we continue to grab market share, which important. It is time for all of us and looking forward to the future. That's absolutely fantastic. Leon O'Neill, thanks again for updating investors today. Please could ask investors not to end this session. It should be automatically redirected for your opportunity to provide your feedback in order the management team can better understand your views and expectations. This will only take a few moments to complete. It's greatly valued by the team. On behalf of the management team, CORERO NETWORK SECURITY PLC, thank you for attending today's session. That concludes the presentation. Good morning.

1:01:23 Thank you very much everybody.