13 July 2022 – London, UK - Crossword Cybersecurity Plc (AIM:CCS, “Crossword”, the “Company” or the “Group”), the cybersecurity solutions company focused on cyber strategy and risk, is pleased to update the market on trading in the six months to 30 June 2022 and the extension and increase of several Convertible Loan Notes issued in December 2019.
In the first half of 2022, Crossword successfully delivered on its strategy to continue building on its organic revenue growth and to acquire outstanding cyber security companies that complement and diversify its revenue base. H1 Revenue of £1.5m was 112% higher than the same period in the prior year (excluding discontinued operations). Within that, organic revenue growth was 53%. In March 2022, Crossword completed the acquisition of threat intelligence company Threat Status Limited, which has now been successfully integrated. Threat Status Limited has two products: Arc (SaaS platform for enterprise-level credential breach intelligence) and Trillion (SaaS protecting users of customer-facing applications from the threat of account takeovers). The acquisition completed the Company’s objective of having five cyber security SaaS products in the product portfolio a year ahead of schedule.
Financial Highlights
· ARR (Annual Recurring Revenue) growth of 48% since 31 December 2021 to £1.97m
o Successful acquisition and integration of companies with strong underlying SaaS and services recurring revenue
o Growth in Consulting vCISO recurring revenue to £1m
· Gross margin improvement in Consulting
· IASME (the National Cyber Security Centre’s Cyber Essentials Partner) began delivering its Maritime Security Certificate using Rizikon, taking the number of certifications delivered by IASME using Rizikon to three
· Expansion of engagement with FTSE 100 client company
· Cross-selling of product and services from acquisitions into client base continues to increase
· Successful completion of the Rizikon pilot with a global aerospace, defence and security company that has over 6,000 suppliers
Operational Highlights
· Successful integration of Threat Status Limited, following its acquisition in March 2022
· On track to achieve 1,000 users of Rizikon by the end of 2022, from 500 at the end of 2021, with the continued growth in the membership body programme
· Launched new integrated Supply Chain Cyber practice in response to client demand and the substantial increase in supply chain cyber threat levels
· Issued report following survey of 200 Chief Information Security Officers “Strategy and collaboration: a better way forward for effective cybersecurity”
· Local Omani team engaging with government agencies to support driving cyber security maturity across the Sultanate of Oman
· Expansion into two new overseas jurisdictions, within one of which Crossword is working with a government institution
Outlook
· Projected revenue growth of circa 75% in 2022, driven by organic growth and already completed acquisitions, in line with market expectations
· Focus on optimisation of cross-sell opportunities is yielding improved results
· Continued focus on acquisition strategy. Early-stage discussions are being held with a number of candidates that are leading to positive conversations currently taking place
· Target of over 1,000 organisations to be using Rizikon to assess over 10,000 suppliers by end of 2022
· Crossword’s full range of cyber security products and services will be used to help companies in the Gulf region improve their cyber security preparedness
· Growing a team in Singapore as part of the continued investment in Nightingale, part of our threat detection and response services, to enable conversion of the pipeline of larger clients, which has been driven by cross-selling
· Taking Identiproof to market together with continuing product development on verifiable credentials technology
· Investment in Sales with the introduction of the MEDDICC (sales qualification methodology) framework
· Decision to invest in the business including expansion into Singapore, and further investment in Sales and Marketing, will result in increased spend of £500,000 which will have a commensurate effect on pre-tax losses.
Convertible Loan Notes
Convertible loan notes to the value of £1.4m that were issued by Crossword in December 2019 and January 2020 are due to expire in December 2022 and January 2023. Loan Note holders of £700,000 have agreed to extend their loan notes for three years until June 2025 and two loan notes holders are increasing their loans by a total of £150,000.
In addition, Tom Ilube, CEO of Crossword intends to extend his £250,000 loan notes on the same terms as the other loan note holders, and a further announcement will be made in due course. By virtue of its size, Mr Ilube’s loan extension would constitute a related party transaction under Rule 13 of the AIM Rules for Companies. The Independent Directors, being the Directors other than Tom Ilube consider, having consulted with the Company’s Nominated Adviser, that the terms of Mr Ilube’s proposed loan note extension are fair and reasonable insofar as the Company’s Shareholders are concerned.
Other than conversion price, the extended and increased loan notes have the same terms as the original loan notes. The conversion price of the revised loan notes is 25.2p, being the closing price on 12 July 2022 of 28p less 10 per cent. Additionally, other potential investors have expressed interest in completing additional convertible loan notes on the same terms and the Company will provide further information as appropriate.
Tom Ilube, CEO of Crossword Cybersecurity Plc, commented: “The excellent integration of recent acquisitions coupled with healthy organic revenue growth drove a greater than 110% rise in revenues in H1 2022. Crossword is progressing well in its strategy of building a diversified revenues company focused on consultancy and products, targeting key in-demand sectors. Crossword’s acquisition strategy is focused on making revenue enhancing acquisitions of quality companies that increase Crossword’s access to larger addressable markets and leverage Crossword’s reputation in the market. Crossword is operating in a sector where spend is not discretionary, in a growing market with increasing demand for cybersecurity, as evidenced by our strong and growing recurring revenues. We see significant opportunities in improving operational efficiency as Crossword’s revenues continue to grow and the cost base can be spread against higher revenues. We look forward to updating shareholders on progress."
The information contained within this announcement is deemed to constitute inside information as stipulated under the retained EU law version of the Market Abuse Regulation (EU) No. 596/2014 (the "UK MAR") which is part of UK law by virtue of the European Union (Withdrawal) Act 2018. The information is disclosed in accordance with the Company's obligations under Article 17 of the UK MAR. Upon the publication of this announcement, this inside information is now considered to be in the public domain.
Contacts
Crossword Cybersecurity plc – Tel: +44 (0) 333 090 2587
Email: info@crosswordcybersecurity.com
Tom Ilube, Chief Executive Officer
Mary Dowd, Chief Financial Officer
Grant Thornton (Nominated Adviser) – Tel: +44 (0) 20 7383 5100
Colin Aaronson / Jamie Barklem / Daphne Zhang / Ciara Donnelly
Hybridan LLP (Broker) – Tel: +44 (0)203 764 2341
Claire Louise Noyce
For media enquiries contact:
Financial PR:
David Hothersall, Kinlan Communications
davidh@kinlan.net – Tel: +44 (0) 207 638 3435
General:
Duncan Gurney, GingerPR
duncan@gingerpr.co.uk – Tel: +44 (0)1932 485 300
About Crossword Cybersecurity plc
Crossword offers a range of cyber security solutions to help companies understand and reduce cyber security risk. We do this through a combination of people and technology, in the form of SaaS and software products, consulting, and managed services. Crossword’s areas of emphasis are cyber security strategy and risk, supply chain cyber, threat detection and response, and digital identity and the aim is to build up a portfolio of cyber security products and services with recurring revenue models in these four areas. We work closely with UK universities and our products and services are often powered by academic research-driven insights. In the area of cybersecurity strategyand risk our consulting services include cyber maturity assessments, industry certifications, and virtual chief information security officer (vCISO) managed services.
Crossword’s end-to-end supply chain cyber standard operating model (SCC SOM) is supported by our best-selling SaaS platform, Rizikon Assurance, along with cost-effective cyber audits, security testing services and complete managed services for supply chain cyber risk management. Threat detection and response services include our Nightingale AI-based network monitoring, Nixer to protect against application layer DDoS attacks, our Trillion and Arc breached credentials tracking platforms, and incident response. Crossword’s work in digital identity is based on the World Wide Web Consortium W3C verifiable credentials standard and our current solution, Identiproof, enables secure digital verification of individuals to prevent fraud.
Crossword serves medium and large clients including FTSE 100, FTSE 250 and S&P listed companies in various sectors, such as defence, insurance, investment and retail banks, private equity, education, technology and manufacturing and has offices in the UK, Poland and Oman. Crossword is traded on the AIM market of the London Stock Exchange.
Visit Crossword at https://www.crosswordcybersecurity.com/