16 August 2019

Corero Network Security plc (AIM: CNS)

("Corero" or the "Company")

Trading update

Corero (AIM: CNS), the AIM listed network security company, provides an update on trading for the six months ended 30 June 2019 and outlook for the full year ending 31 December 2019.

Revenue for the six months ended 30 June 2019 is expected to be approximately $4.2 million (H1 2018: $5.0 million). Revenue in the first half has been impacted by a lower than expected conversion of the Juniper pipeline of opportunities into orders and revenue. However, Corero management expect that based on the strong growth in the pipeline and the number of proof of concepts currently in process, that the Juniper global resale partnership will contribute materially to the second half of the year. In addition, service and support renewals and add-on orders from existing customers have continued to be strong in the first half of the year.

Operating costs* for the six months ended 30 June 2019 are expected to be approximately $5.3 million (H1 2018: $5.3 million). Following the appointment of Michael Connolly as Vice President of Worldwide Sales in June 2019, Corero plans to increase investment in the Company's sales function in the second half of 2019 to deliver on the Company's revenue growth plan.

The EBITDA* loss for the six months ended 30 June 2019 is expected to be approximately $2.0 million (H1 2018: EBITDA* loss $1.4 million).

Cash at bank as at 30 June 2019 was $6.9 million (2018: $9.0 million) and debt was $3.2 million (2018: $4.0 million) resulting in net cash of $3.6 million (2018: $5.0 million).

Corero has made operational progress in the first half of the year and has enjoyed continued high levels of customer satisfaction resulting in strong service and support contract renewals and existing customer follow-on purchases. This, coupled with the clear focus of the new sales leadership to grow the new business and Juniper resale partnership pipeline, gives the Board confidence in the Company's future prospects.

Full year outlook

Management expect revenue for the full year ending 31 December 2019 to be approximately 20% higher than revenue for the prior year (2018: $10.0 million) and anticipate an increased EBITDA* loss for the full year (2018: EBITDA* loss $2.1 million), as a result of the additional Corero direct sales investment in the second half of 2019 of approximately $1.0 million.

Should there be a requirement for additional working capital prior to being cash generative, the Company would undertake a modest fund raise. The Company's Chairman and major shareholder has indicated his support should this be required.

Corero will announce its interim results for the six months ended 30 June 2019 on 25 September 2019.

The information contained within this announcement is deemed to constitute inside information as stipulated under the Market Abuse Regulation (EU) No. 596/2014. Upon the publication of this announcement, this inside information is now considered to be in the public domain. 

* before depreciation, amortisation, financing and unrealised foreign exchange differences on an intercompany loan

Ashley Stephenson, CEO of Corero, commented: 

"Despite the growing pipeline of business being generated through the Juniper partnership, the year has started slower than we expected. Encouragingly we have many trials in process and these are moving forward with success. I am also confident that our investment in our sales function will accelerate the development of our routes to market and therefore underpin Corero's future growth."

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About Corero Network Security

Corero Network Security is a leader in real-time, high-performance DDoS defense solutions. Service providers, hosting providers and digital enterprises rely on Corero's award winning technology to eliminate the DDoS threat to their environment through automatic attack detection and mitigation, coupled with complete network visibility, analytics and reporting. This industry leading technology provides cost effective, scalable protection capabilities against DDoS attacks in the most complex environments while enabling a more cost effective economic model than previously available. For more information, visit www.corero.com