Sep 27, 2017

London-based cyber security firm Defenx saw its interim revenue increase 35% yoy to €3.1m. We calculate around €324k of the additional turnover came from Italian online backup firm Memopal acquired in August 2016, but Defenx also achieved impressive 21% yoy organic growth during H117, driven largely by increased sales activity through two new channel partners. An operating loss of €1.3m, up significantly from an equivalent deficit of €296k in H116, was attributed to deliberate seasonal weighting of marketing expenses in the first half of Defenx’ financial year combined with Memopal acquisition and integration costs. Funded by a £1.52m share placing in October last year, that deal added another dimension to an already strong portfolio of desktop PC, network and smartphone security software leaving Defenx well placed to address growing enterprise data security concerns in the UK and on the continent from its new Italian base. A key driver is ongoing uncertainty regarding the EU General Data Protection Regulation (GDPR) , compliance with which becomes mandatory for all organisations storing and processing significant amounts of data pertaining to EU citizens from May 2018. All indications suggest that few companies will be 100% compliant by that date and a last minute panic may occur. And while the EU has not set mandatory technology requirements, Defenx reports that it and its channel partners are doing well at persuading nervous IT and legal departments that up to date encryption, anti-virus and backup tools will go some way to guarding against data breaches which could lead to fines of up to 4% of their total annual turnover. There could be some short term financial turbulence though as Defenx ups the rate of its expansion. Management warned investors that a move beyond its core SME market into the corporate sphere by collaborating on new product development with Italian security conglomerate BV-Tech could result in an “adverse effect” on revenue and profit in H2.