AIM-listed network security provider, Corero Network Security (CNS), continues to battle on following the sale of the profitable part of the erstwhile group, Corero Business Systems (CBS), to Civica last August. Today’s trading update reveals that revenue for the year to the end of December 2013 (including seven months of CBS) is about $16m, while the consolidated EBITDA loss is around $4.6m (2012 loss: $3.1m). We’ll need to wait for the full results to establish how much of the $16m is down to CNS rather than CBS – in 2012 CNS turned over $11m and CBS $9m (see Corero still digging) suggesting a broadly flat revenue performance overall but worsening losses.
On the plus side, there’s some evidence that sales momentum is growing at CNS. Gross billings (customer orders rather than revenue recognition) were 23% higher in the second half of 2013 than in the comparative period in 2012 and the first six months of 2013, at $5.1m. The management team is also pleased with progress on the development of Corero’s next generation product, which is due for launch in Q1 and expected to generate revenue from the second half of 2014. And of course there is cash in the bank from the sale of CBS – net cash was $9.8m at the year-end.
Yet 2014 looks set to be a make-or-break year for Corero. A lot hinges on the success of its next generation product. If that doesn’t go to plan it could well be time for the management to think about ‘stopping digging’ before the 'hole' gets any deeper.