Tesserent eyes growth as post-tax losses shrink

Tesserent eyes growth as post-tax losses shrink

Post-tax losses down 45 per cent from this time last year.

Geoff Lord (Tesserent)

Geoff Lord (Tesserent)

Credit: Tesserent

Tesserent has heralded the first half of the 2022 financial year as “a period of continued growth” with statutory revenue up 72 per cent, year-on-year, to A$43.9 million, as the publicly listed IT security player shrunk its post-tax loss by nearly half.

According to a financial report submitted to the Australian Securities Exchange (ASX), the cyber security provider brought its losses from A$6 million in the first half of FY2020 down by 45 per cent to A$3.3 million over the six months to 31 December. 

These losses include profits generated from its three operating segments, which were formed in August 2021 — Commercial, Federal and New Zealand made A$4 million, A$2.5 million and A$393,000 in post-tax profit, respectively.

The losses also include the costs associated with the acquisitions of TrustGrid and AttackBound, which were purchased in May. Tesserent claimed in the report that these purchases were always going to be generating a loss due to the acquired businesses being start-ups and undertaking software development work in their early stages.

Meanwhile, during the reporting period, the provider also paid a combined A$33 million for Canberra-based IT services firms Pearson Corporation and Claricent, as well as A$13.5 million for cyber security firm Loop Secure.

Tesserent said it incurred "significant upfront non-trading costs" due to the completion of the three acquisitions, which cost the business $1.1 million as a result. However, this was less than the previous period, which saw $2.7 million in acquisition costs.

Regardless, executive chairman Geoff Lord said in a letter to shareholders that the first half of the year “represented a period of continued growth” for the provider, tying up the consolidation of the business it acquired in the last two financial years.

“The management team successfully executed its brand and business unit integration strategy – strengthening Tesserent’s commercial position in the market by enabling the Group to enhance its value proposition to existing and new clients and improve gross margins and net margins reported across the business,” he said.

Normalised statutory earnings before interest, tax, depreciation and amortisation (EBITDA) was also up over the period, rising 102 per cent year-on-year to A$5.6 million.

A point of concern for Tesserent is the current Russian invasion of Ukraine, but the cyber security provider said it is prepared for hypothetical attacks.

“Given the significant events that are occurring in eastern Europe, we are also mindful of the heightened level of cyber security risk that exist for Tesserent clients,” the report said.

“We note that Tesserent has targeted capabilities to address these risk in its Cyber Enhanced Situational Awareness and Response (CESAR) capabilities.”

Looking ahead, Tesserent said it is looking to expand its proprietary intellectual property, focusing further on its three key markets of government and defence, critical infrastructure and financial services.

It also said it plans to integrate acquisitions into its “capability business units” and build out high-value recurring annuity revenue streams through its managed security operations centre (SOC) and managed detection and response (MDR).

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