Revenue Increases 66% Versus Q2 2020
HERZLIYA, Israel, August 26, 2021 – Safe-T® Group Ltd. (Nasdaq, TASE: SFET), a global provider of cyber-security and privacy solutions to consumers and enterprises, today announced record financial results for the three and six-month periods ended June 30, 2021.
- Revenues for the three-month period ended June 30, 2021, reached a record high, and totaled $1,784,000, an increase of 66% compared to $1,077,000 in the three-month period ended June 30, 2020.
- Revenues for the six-month period ended June 30, 2021, amounted to $3,131,000 (first six months of 2020: $2,165,000).
- The Company’s cash and cash equivalents and short-term investments balances at the end of the quarter were $19,304,000.
Shachar Daniel, Chief Executive Officer of Safe-T Group, said, “The second quarter of 2021 was underlined by significant revenue expansion, culminating in record-breaking year-over-year revenue growth. These accomplishments are the result of our continued investments in making Safe-T Group a world-class cybersecurity and privacy provider. From the increased demand for our privacy platform to growing partnerships for our ZoneZero® solution, it has been a very productive quarter highlighted by the recently announced acquisition of CyberKick. The successful integration of CyberKick during the 3rd quarter, which joins our previous acquisitions, further validates our strategy to acquire innovative technologies and enroll talented entrepreneurs. Based on the great preliminary results we achieved during the first half of the 3rd quarter of 2021 – I believe that we will continue to achieve exponential growth in the coming future”.
“We acquired our privacy platform, NetNut, back in 2019, which generated then, pre-acquisition, around $0.5 million of revenues per quarter. By the end of this year, we believe that this platform will generate between $1.5 million to $2.0 million of revenues per quarter. For us it is significant evidence that we are choosing the right companies and improve them.”
Second Quarter and Recent Business Developments:
- We completed the acquisition of CyberKick Ltd., a consumer-focused cybersecurity company that generated revenue on unaudited basis of approximately $4.2 million in 2020.
- Our ZoneZero® solution was added to the National Aeronautics and Space Administration (NASA) Solution for Enterprise-Wide Procurement contract vehicle (SEWP-V) and received its product registration approval from the U.S. General Services Administration (GSA), increasing the addressable market with sales to federal government agencies and approved contractors.
- We won the coveted “Hot Company in Access Control” and “Best Product in Micro-segmentation” awards at the 9th Annual Global InfoSec Awards during the RSA 2021 Conference.
- We partnered with ELCA Informatique SA, the largest independent IT and cybersecurity consulting firm in Switzerland, opening the resale of the ZoneZero® products and solutions across Switzerland.
- During the quarter, our ZoneZero® solutions were recognized by several leading security and technology analysts including: Gartner’s “Emerging Technologies: Adoption Growth Insights for Zero Trust Network Access” report; highlighted in Forrester’s New Tech: Zero Trust Network Access, Q2 2021 Forrester’s Landscape Overview of 34 Providers report, and named as a 2021 emerging leader in the Zero Trust Network Security market by Quadrant Knowledge Solutions.
- We announced our collaboration with Thales on Zero Trust Access Solutions to address work-from-home (WFH) secure access vulnerabilities.
- We participated at GISEC 2021 in Dubai as a sponsor and exhibitor, showcasing ZoneZero® at the Arab world’s largest cybersecurity event.
“Looking ahead, we expect to continue our strong growth as we invest in our innovative cybersecurity and privacy platform products, targeted at the large enterprise and consumer market segments, as well as to continue our pursuit of potentially lucrative acquisitions that can deliver valuable technology and partnerships and further advance our team with accomplished cybersecurity entrepreneurs. We will continue to invest our cash in a disciplined and efficient manner to ensure we can meet the high demand we are seeing from top tier customers and partners around the globe, which has led the Company to an attractive eight-fold increase in annual revenue run-rate since the second quarter of 2019.”
Mr. Daniel concluded: “Our record second quarter performance demonstrates the positive impact of our investment and growth strategy over the last two years and is now producing strong growth in the third quarter. We remain confident that our strategy, combined with the hypergrowth of the global billion-dollar privacy and security markets, will sustain our further expansion and provide long term value to our shareholders.”
Additional details on the Company’s financials, products and strategy can be found in the Company’s updated presentation.
Financial Results for the Three and Six Months Ended June 30, 2021:
- Total revenues in Q2.2021 amounted to $1,784,000 (Q2.2020: $1,077,000) and $3,131,000 for H1.2021 (H1.2020: $2,165,000). The growth is attributed to the increase in enterprises privacy business revenues generated by our privacy platforms, partially offset by a decrease in the revenues of the SDE product.
- Cost of revenues in Q2.2021 totaled $979,000 (Q2.2020: $570,000), and for H1.2021 totaled $1,883,000 (H1.2020: $1,121,000). The increase is mainly a result of growth in revenue from enterprises privacy business, which involves higher internet services providers costs, and also due to additional staffing on the part of the enterprises privacy and security solutions, resulting in higher salary-related costs.
- Research and development expenses in Q2.2021 totaled $781,000 (Q2.2020: $399,000), and $1,483,000 in H1.2021 (H1.2020: $793,000). The increase is mainly attributed to higher enterprises privacy business development costs due to an extension of the enterprise privacy solutions activity, subcontractors’ costs related to the Zero Trust solutions and share-based compensation.
- Sales and marketing expenses in Q2.2021 totaled $1,308,000 (Q2.2020: $919,000) and $2,430,000 in H1.2021 (H1.2020: $1,781,000). The increase is primarily attributed to higher professional services expenses related to the marketing and sales of the Zero Trust solutions, as well as an increase in share-based compensation.
- General and administrative(G&A) expenses in Q2.2021 totaled $1,487,000 (Q2.2020: $918,000) and $2,587,000 for H1.2021 (H1.2020: $1,495,000). The increase is mainly due to higher professional fees, predominantly legal in connection with intellectual property protection and others, as well as share-based compensation, slightly offset by reduced salary costs attributable to G&A.
- IFRS net loss in Q2.2021 totaled $2,370,000, or $00 basic loss per ordinary share (Q2.2020: net loss of $2,227,000, or $0.01 basic loss per ordinary share).
- IFRS net loss for H1.2021 totaled $4,883,000, or $0.00 basic loss per ordinary share (H1.2020: loss of $1,544,000, or $0.01 basic loss per ordinary share). The main increase in the IFRS net loss other than the items discussed above, is due to $2.3 million of financial income in the first half of 2020 as a result of revaluations of the finance liabilities that reduced the IFRS net loss accordingly.
- Non-IFRS net loss in Q2.2021 totaled $2,114,000, or $00 basic loss per ordinary share (Q2.2020: loss of $1,321,000, or $0.00 basic loss per ordinary share).
- Non-IFRS net loss for H1.2021 was $4,066,000, or $0.00 basic loss per ordinary share (H1.2020: loss of $2,309,000, or $0.01 basic loss per ordinary share). The increase in the non-IFRS net loss is a result of the items discussed above.
The following table presents the reconciled effect of the non-cash expenses/income and certain expenses further described below on the Company’s net loss (profit) for the six- and three-month periods ended June 30, 2021 and 2020, and for the year ended December 31, 2020:
|For the Six-Month|
|For the Three-Month|
|For the year Ended|
|(thousands of U.S. dollars)||2021||2020||2021||2020||2020|
|Net loss for the period||4,883||1,544||2,370||2,227||7,845|
|Issuance and acquisition costs||–||156||–||156||156|
|Amortization and impairment of intangible assets and goodwill||541||1,307||272||253||3,781|
|Finance liabilities at fair value||(289)||(2,269)||(252)||485||(2,987)|
|Non-IFRS net loss||4,066||2,309||2,114||1,321||6,153|
Balance Sheet Highlights:
- As of June 30, 2021, shareholders’ equity totaled $24,833,000, or approximately $0.96 per outstanding ADS as of June 30, 2021, compared to shareholders’ equity of $16,216,000 on December 31, 2020. The increase is due mainly to the February 2021 registered direct offering and warrants exercises, partially offset by the Company’s operating loss during the first six months of 2021.
- As of June 30, 2021, the Company’s cash and cash equivalents balance and short-term investments balance aggregated $19,304,000, compared to $11,017,000 on December 31, 2020.
Use of Non-IFRS Financial Results
In addition to disclosing financial results calculated in accordance with International Financial Reporting Standards (IFRS), as issued by the International Accounting Standards Board, this press release contains non-IFRS financial measures of net loss for the periods presented that exclude the effect of share-based compensation expenses, amortization of intangible assets, non-cash issuance and acquisition expenses and the revaluation of finance liabilities at fair value. The Company’s management believes the non-IFRS financial information provided in this release is useful to investors’ understanding and assessment of the Company’s ongoing operations. Management also uses both IFRS and non-IFRS information in evaluating and operating its business internally, and as such deemed it important to provide this information to investors. The non-IFRS financial measures disclosed by the Company should not be considered in isolation, or as a substitute for, or superior to, financial measures calculated in accordance with IFRS, and the financial results calculated in accordance with IFRS and reconciliations to those financial statements should be carefully evaluated. Investors are encouraged to review the reconciliations of these non-IFRS measures to their most directly comparable IFRS financial measures provided in the financial statement tables herein.
About Version 2 Limited
Version 2 Limited is one of the most dynamic IT companies in Asia. The company develops and distributes IT products for Internet and IP-based networks, including communication systems, Internet software, security, network, and media products. Through an extensive network of channels, point of sales, resellers, and partnership companies, Version 2 Limited offers quality products and services which are highly acclaimed in the market. Its customers cover a wide spectrum which include Global 1000 enterprises, regional listed companies, public utilities, Government, a vast number of successful SMEs, and consumers in various Asian cities.
About Safe-T® Group Ltd.
Safe-T Group Ltd. (Nasdaq, TASE: SFET) is a provider of Zero Trust Access solutions which mitigate attacks on enterprises’ business-critical services and sensitive data, while ensuring uninterrupted business continuity. Safe-T’s cloud and on-premises solutions ensure that an organization’s access use cases, whether into the organization or from the organization out to the internet, are secured according to the “validate first, access later” philosophy of Zero Trust. This means that no one is trusted by default from inside or outside the network, and verification is required from everyone trying to gain access to resources on the network or in the cloud.
Safe-T’s wide range of access solutions reduce organizations’ attack surface and improve their ability to defend against modern cyberthreats. As an additional layer of security, our integrated business-grade global proxy solution cloud service enables smooth and efficient traffic flow, interruption-free service, unlimited concurrent connections, instant scaling and simple integration with our services.
With Safe-T’s patented reverse-access technology and proprietary routing technology, organizations of all size and type can secure their data, services and networks against internal and external threats.