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Shares plummeted 35% this morning at AIM-listed Corero Network Security as its H1 2025 trading update revealed a company navigating the classic SaaS transition challenge—strong underlying metrics overshadowed by revenue recognition timing effects.
The 25% ARR growth to $21.6m demonstrates healthy demand for Corero's Distributed Denial of Service (DDoS) protection services, particularly their DDoS Protection-as-a-Service (DDPaaS) offering. However, the shift from upfront license sales to recurring revenue models has created a near-term revenue headwind, with H1 2025 revenue declining to $10.9m from $12.2m previously.
Management's FY 2025 revenue guidance of $24.0-25.5m (versus $24.6m in FY 2024) reflects continued pressure from this business model evolution and broader macroeconomic uncertainty affecting enterprise purchasing decisions. The $1.5m EBITDA loss guidance marks a significant swing from 2024's $2.5m profit.
While order intake of $12.5m fell short of the prior year's $14.2m, Q2's 13% year-over-year growth and initial CORE platform wins totalling $1.8m signal improving momentum. The company's debt-free balance sheet provides flexibility, though declining cash reserves ($3.1m versus $7.9m) and discussions for overdraft facilities highlight working capital pressures inherent in a SaaS transition.
Posted by: Marc Hardwick at 08:38
Tags:
saas
security
DDoS
trading update