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CY4GATE S.p.A. Earnings Release 2024
6295_rns_2024-11-13_8a7a092c-ab04-43bf-b884-533725057e52.pdf
Earnings Release
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Cy4Gate 9M 2024 Financial Results
November 13, 2024
AGENDA
- ➢ 9M 2024 Financials
- ➢ Strategy & Outlook
EMANUELE GALTIERI MARCO LATINI
CEO & General Manager CFO & Investor Relations Manager
The results of the first 9 months of 2024 confirm the soundness of the CY4Gate Group with the improvement of all economic indicators compared to 9M 2023; seasonality of turnover - historically concentrated in the last quarter of the year - is still relevant partially offset by XTN and DARS (RCS group Company) sales
The Value of Production compared to 30 September 2023 grows by around 6% thanks to the defence sector, the cyber intelligence sector to support law enforcement in Italy, and the excellent performance of the newly acquired XTN. This growth offset the lack of revenues related to foreign orders in the Forensic Intelligence sector, affected by the uncertainty of the international geopolitical scenario
The Group continues to pursue its strategy to deseasonalize the business, also thanks to the creation of an important backlog with the closing of significant contracts in terms of amount and profitability, with multi-year duration. Guidance 2024 confirmed.
9M 2024 Key Data
▪ Revenues +5.8% compared to the first nine months of 2023, thanks to Defence and national Forensic Intelligence sectors, as well as the excellent performance of the newly acquired XTN Cognitive Security
▪ R&D Costs +85% compared to the comparative period taking account of the exposure of RCS's R&D costs from end of 2023.
Revenues¹ (€ mln) R&D (€ mln) EBITDA Adj. (€ mln)
▪ EBITDA Adjusted at €3.6 million – margins increased by 12% but still affected by lower revenues in foreign Forensic Intelligence
9M 2024 Revenues Breakdown
By business line By geographical area
9M 2024 People Investment
Total personnel increased in the first nine months of 2024 by a total of 37 resources:
- Increase of 25 resources related to the XTN acquisition that will strengthen the cybersecurity line
- Increase of 88 resources in engineering and commercial & staff compared to 76 exits
9M 2024 Profit & Loss
| € mln | 1 9M 2024 |
9M 2023 |
|---|---|---|
| Operating Revenues | 45.4 | 43.6 |
| Other Operating Revenues |
2.2 | 1.3 |
| Total Revenues | 47.5 | 44.9 |
| Services, Procurement & other operating costs |
20.1 | 19.3 |
| Personnel Costs | 23.8 | 22.4 |
| Costs | 43.9 | 41.7 |
| EBITDA Adjusted | 3.6 | 3.2 |
| D&A [including leasing costs] |
(11.4) | (9.6) |
| EBIT Adjusted | (7.8) | (6.3) |
| D&A [related to PPA] | (3.4) | (3.4) |
| EBIT | (11.1) | (9.7) |
| Financial Income (Expenses) |
(1.8) | (1.0) |
| One off costs | (0.2) | (2.4) |
| EBT | (13.2) | (13.2) |
9M 2024 Asset & Liabilities
| € mln | 9M 2024 | FY 2023 |
|---|---|---|
| Fixed assets | 96.8 | 87.9 |
| Inventory | 1.5 | 0.8 |
| Contract assets (liabilities) | 6.1 | 3.1 |
| Trade receivables | 49.4 | 53.7 |
| Trade payables | (11.1) | (14.4) |
| Trade Working Capital | 45.9 | 43.1 |
| Other assets (liabilities) |
(13.0) | (6.3) |
| Net Working Capital | 32.9 | 36.8 |
| Net Capital Invested | 129.7 | 124.8 |
| Cash and cash equivalents | 8.3 | 17.6 |
| Financial assets | 3.4 | 1.4 |
| Financial Liabilities | (43.1) | (28.8) |
| Lease liabilities | (3.8) | (3.8) |
| Net Financial Position | (35.2) | (13.6) |
| Put option liability | (4.4) | (5.7) |
| Book value of treasury shares in portfolio | (3.2) | (1.6) |
| Net Financial Position Adjusted | (27.5) | (6.3) |
| Shareholders' Equity | (94.5) | (111.1) |
| Sources | (129.7) | (124.8) |
Our growth Strategy: Market
Cy4Gate Group portfolio – cyber intelligence & cyber security products - perfectly fits with the following 3 fast growing markets, both in Italy and abroad:
Defence
Security & Law Enforcement
- Increasing internal and external security threats and undergoing military network-centric modernization;
- Market CAGR 8% predicted to grow to 1350B\$ in 2030 from 750B\$ (2022).
- Digital crime via digital/electronic devices is LEAs biggest challenge; AI is a key enabler;
- Market is globally growing at 9% CAGR up to 2028;
- Need for cases management, track evidences, data gathering and correlation, creation of reports.
- Double digit growth for digital transformation market (around 20% CAGR to 2027);
- Cyber security market is underpenetrated in terms of for SMEs, targets of massive attacks.
Products involved
- Decision Intelligence & AI (Quipo) for C2 platforms
- ▪Cyber security products and services bundle (RTA, Diateam, CTI, customization services)
- Decision Intelligence & AI (Quipo & Mito) for data gathering and correlation ▪Forensic Intelligence suite
- Decision Intelligence & AI (Quipo)
▪Cyber security products and services bundle (RTA, Diateam, CTI, Pronto Cyber, Services) for a 360° capabilities coverage
Our growth Strategy: Actions
2024 2025-2026
Defence
Security & Law Enforcement
Corporate
European Defence Contractors ▪ Penetrate new geographies through Cyber Academy and Cyber Labs
▪ Strengthen industrial partneships with Tier-1 Italian and
- Increase direct domestic and international market penetration leveraging mother company network
- Consolidate the Italian market, focusing on more relevant P.P.O. districts whilst decreasing exposure on less profitable Offices
- Maintain commercial advantage while mitigating need for relevant investments through selected partnership with specialized boutique firms
- Increase market penetration of newly developed tactical devices in Italy and abroad
- Shift from products to capabilities offering to improve competitiveness (cyber security platform)
- Complement sales force efforts through new effective channel partnerships (Attiva, Innovery)
- Enlarge domestic market penetration in big/medium size corporation through a reinforced and well seasoned sales team
- Pursue up-selling and cross-selling opportunities in new corporate segments (banking, automotive, luxury, travel) thanks to XTN acquisition
- Capture EU funds (NATO, EDA, ESA) for R&D in the cyber also through industrial partnership
- Take part to international consortia or JVs for pluriannual defence programs
- Progressively gain relevant shares and presence in the more stable European region
- Ensure consistent growth in the Spanish market leveraging on our pluriannual presence in the Country (Dars), to create Cy4 second domestic market for revenues after Italy.
- Expand business to new geographies in E.U. partnering with foreign channels and fostering development of an international sales team
- Push on inorganic growth via M&A
Opportunities
- The strategy will be a key enabler to:
- ✓ intercept growing Defence market needs, characterized by global relevant investments, huge size and pluri-annual contracts, enabling quick creation of backlog, thus supporting Corporate sales in seasonality risks reduction
- ✓ further consolidate leadership position in Italy (notwithstanding sector justice reform) and boost growth primarily in E.U.
- ✓ expand Corporate market presence to support creation of recurring stream of regular revenues throughout the year, accelerating the process of seasonality mitigation
Expected Revenues 2024
| PIPELINE | CONVERSION RATE | TOTAL | |
|---|---|---|---|
| TOTAL | ~122 €M | ~11% | ~13-15 €M |
| BACKLOG | RECURRING | TOTAL | |
|---|---|---|---|
| TOTAL | ~38 €M | ~31-34 €M | ~69-72 €M |
Headquarter Via Coponia, 8 00131 Rome - Italy
CFO & Investor Relations Manager Marco Latini [email protected] Investor Relations Advisor CDR Communication