Shearwater expects revenue to tumble by a third in H1

Cybersecurity provider says inorganic growth strategy still underway with a number of prospects in pipeline

AIM-listed Shearwater Group expects turnover to tumble nearly 33 per cent in the first six months of its financial year.

In a trading update, the security provider said it anticipates revenue will come in at £11m for the six months ending 30 September 2020, down 32.5 per cent on the same period last year.

However, EBITDA is expected to remain at £1m, a "considerably improved" margin compared to that of the first half of its last year.

Despite this, the firm says that these results are in line with their expectations and that it benefitted from little exposure to sectors that have been hit hardest by COVID-19. It saw several multimillion-pound renewals and expansions with existing customers, as well as new client wins.

The beginning of its FY21 coincided with the national lockdown which resulted in delayed decision-making from corporate clients and the deferral of some service contracts into the second half of the year.

CEO Phil Higgins stated that the M&A was still on the agenda and that there were a "healthy number" of prospects progressing through the pipeline.

"The robust performance of the group during a period of significant uncertainty points to the strength and breadth of our customer relationships and continued evolution of our offering as we execute on our strategy to become the UK's leading organisational resilience provider," Higgins stated.

"While we have seen some delays in the implementation of service contracts and protracted client corporate decision making, we have secured new customers and expanded our existing relationships, while investing in product development to provide us with a wider portfolio of offerings to take to market in the second half of the year.

"In particular, we believe the opportunity for our SaaS-based Identity and Access Management platform is significant, as access management becomes a key contributor in satisfying both security and regulatory requirements within businesses. We continue to progress our M&A discussions, as we seek to bring in new offerings to the group.

"While we remain cognisant of the ongoing disruption to businesses globally caused by COVID-19, we have entered the second half of the year in a strong position, with an increased order book of contracted revenue, and are excited by the opportunity ahead of us."