Debt free with growing margins - we upgrade
For FY23, Corero delivered double digit annualised recurring revenue (‘ARR’) growth; we see this momentum continuing into FY24E and have upgraded our forecasts accordingly.The retirement of all debt, including an inter-company loan, leaves the balance sheet ungeared and clean of FX movements which made reported margins historically volatile.
We see normalised EBITDA margins of 10%+ going forward and potentially rising further. The growth in revenues leaves the stock trading on a forward rating of only 1.8x EV/Sales. This stock has both defensive and growth qualities which should support a higher rating going forward and we reiterate our fair value of 14p price/share.
Corero Network Security is a provider of Distributed Denial of Service (DDoS) defense solutions for Service Providers, Hosting Providers and the On-line Enterprise. Co. develops, markets and sells network security products and services to provide protection from DDoS attacks. Co. sells the SmartWall technology in the form of either an appliance sale and perpetual software license plus annual SecureWatch services, or as-a-service which enables the customer to utilize the technology on a subscription or revenue share basis. Co.'s SecureWatch services include: updates delivered to its appliances in customer networks; and monitoring and support services such as DDoS attack mitigation services.
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