Falanx Group Ltd (LON:FLX), the AIM listed provider of cyber security services, has provided an update on its results for the year ended 31 March 2022 and the first quarter’s trading to 30 June 2022.
Results for the Year Ended 31 March 2022 (continuing operations)
Revenues are expected to be c.£3.5m (2021: £3.1m) representing organic growth of c.14%, mainly arising from improved professional services revenues. The Company moved to a new cyber security monitoring platform (Triarii) during the year and this, combined with higher services utilisation, has increased the gross margin to c.40% (2021: c.32%). The Group expects to record a reduced adjusted EBITDA loss than in the previous year, despite having commenced an investment programme in the expansion of the cyber business following the disposal of the Assynt strategic intelligence divisions. The audit is very largely complete, no issues have been raised, and the audited results are expected to be announced in the middle of September 2022.
The Group has been trading in line with management expectation since the start of the current financial year. Significant planned investment has taken place in the cyber division, particularly around sales and marketing expansion and product innovation. As a result of this, the business has established a far greater pipeline than in previous years. The pipeline is not only much larger in terms of financial value but also has a high level of advanced prospects and, most notably, the bulk of the pipeline now comprises recurring revenue opportunities for cyber security monitoring, including Triarii based on Microsoft Sentinel. Falanx continues to grow its channel business and has brought on dedicated resources to expand channel coverage. This investment has proved effective with new partners such as ESET, where opportunities have already been established for providing cyber security monitoring services to their MDR and EDR clients, as well as a much higher level of activity with longer standing partners.
New products have been launched for Continuous Vulnerability Scanning (CVS) and Retained Incident Response (R-IR) and these are expected to contribute to recurring revenues. These complement the previously launched Falanx: Cyber Exposure Level (f: CEL) tool which has been adopted by existing clients as well as creating a separate revenue opportunity with new customers.
Balance Sheet Position
At 30 June 2022, the Group had cash balances of £2.7m which were in line with budget. The Group has a normal working capital profile, HMRC legacy support around Covid-19 has been paid down save for a very small scheduled amount. The Board expects these cash balances to be sufficient for its organic growth plans.
Mike Read, CEO of Falanx, commented:
“We are very pleased with the Group’s performance over the past few months which is benefiting from the focus on growing a pure play cyber security business. The recent investments in sales, marketing and new products has created a considerable pipeline of new business which is more significant than at any time in the Group’s history. With a healthy balance sheet, we are able to focus on future growth and we are optimistic about outlook of the business.”