Defenx enters into software distribution agreement with partner BV-Tech

Cyber-security software group Defenx announced on Thursday that, further to the software acquisition and investment by BV-Tech announced on 11 April, the company entered into a software distribution contract as part of its strategic partnership with BV-Tech.

The AIM-traded firm confirmed that it, via its subsidiary Memopal Srl, had entered into a software distribution contract with BV-Tech, which was in line with the terms offered to other major Defenx channel partners.

Its board had previously described BV-Tech as a “leading independent corporate IT solutions provider” in Italy, with a particular focus on information security management, fraud prevention and cyber security.

BV-Tech had grown rapidly, reporting revenues of €56m in 2016 and employing more than 600 engineers and IT experts.

Its significant customers included the Lombardy and Veneto regional governments, the Italian Ministry of Justice, Telecom Italia Mobile, American Express, NATO, Leonardo, Bulgari, Eni and Saipem.

Under the software distribution contract, which was for an initial term of three years subject to 180 days notice by either party, the company would offer its product range for sale by BV-Tech on a global, non-exclusive basis.

Pursuant to the contract, BV-Tech would predominantly target large corporate clients, providing Defenx with “accelerated access” to the corporate market.

Invoicing would be on a non-recourse basis, payable on 60 days - shorter than in the non-corporate markets the company currently operated in - which the directors believed would help reduce Defenx's working capital requirements.

The company also updated the market on its trading, with the directors saying they were “pleased” with the year to date, which was in line with management's expectations.

As seen in previous years, Defenx’s business was heavily seasonal with the majority of billings falling towards the end of the year, whereas certain costs, notably marketing contributions, were higher in the first half of the year.

“While the directors believe that the strategic partnership with BV-Tech, notably the software distribution contract announced today, will in time reduce this seasonality, the company's results for 2017 are inevitably dependent on billings in the second half of 2017 and driven predominantly by the existing core business,” the board said in a statement.

The core business, which was focused on the distribution of mobile and PC security software to channel partners, was said to be “maturing”, and new channel partners and products were now starting to support future growth.

Meanwhile, the board said Defenx’s sales and technical teams were making “good progress” with BV-Tech, with whom a “promising pipeline of opportunities” was developing.

As a result, the directors said they remained confident that Defenx's diversification into the corporate market - supported by BV-Tech - would yield “significant” profitable growth over the medium term, and the results for 2017 would remain in line with expectations.

The interim results for the six months to 30 June would be announced in late September.

“I am pleased with our performance so far this year and am excited by the future opportunities available as a result of the strategic partnership with BV-Tech,” said Defenx CEO Andrea Stecconi.

“Through the software distribution contract, Defenx will gain access to BV-Tech's sophisticated sales network and strong client relationships, which represents a major step-change in our ability to reach large corporate customers.

“We can now sell our digital protection solutions to BV-Tech's customers, many of whom have customers of their own that will become users of our products and solutions.”