Cyber security services provider Shearwater Group (LON: SWG) is growing rapidly on the back of increased demand for cyber security. New contracts worth £25m were won in the fourth quarter of the year.
In the year to March 2022, Shearwater revenues increased from £31.8m to £35.9m. Two customers account for more than two-thirds of those revenues. The overall growth was held back by a decline in software sales, while the products are re-engineered so that they are part of one integrated platform. The main growth was in security solutions. US revenues grew 26% to £1.5m.
Shearwater moved from breakeven to an underlying pre-tax profit of £900,000. Higher depreciation and amortisation charges mean that pre-tax profit is expected to fall to £500,000 this year, although EBITDA should be higher. Historically, there tend to be upgrades later in the financial year.
There are already £14m of revenues secured for this year, which is 37% of the forecast of £37.7m. There is potential for software contracts, although there may be more SaaS-based revenues meaning that it will take time for these revenues to build up.
There are increasing numbers of cyber attacks and they can be highly costly to corporates. This is making them more aware of the requirement for good cyber security services and software to be in place.
