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Tesserent (ASX:TNT) - Co CEO, Julian Challingsworth - The Market Herald
Co CEO, Julian Challingsworth
Source: Finance News Network
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  • Cybersecurity firm Tesserent (TNT) has reported a strong quarter of growth, in which it met and exceeded its financial objectives
  • The company posted almost $11 million in revenue for the June quarter, up 32 per cent on the prior period
  • The company is also seeing a number of locked-in, multi-year contracts bearing fruit, with over $11 million in annual recurring revenues
  • Tesserent also reports the June quarter marked a special milestone — the first time the company has reported both positive EBITDA and cashflow
  • A new $15 million debt facility has also been secured, replacing the previous $5 million arrangement, to fund phase one acquisitions
  • The acquisitions will further enlarge Tesserent's footprint, adding diversity to its products and operational synergies within the business
  • Tesserent is trading 15.4 per cent higher today at 22.5 cents per share

Cybersecurity firm Tesserent (TNT) has reported a strong quarter of growth, in which it met or exceeded its financial objectives.

Record revenue

Tesserent posted almost $11 million in revenue for the June quarter, up 32 per cent from the prior period.

The company's revenue goal of a $40 million annual run rate was handily exceeded by almost 10 per cent. A recent acquisition has pushed this figure up over $50 million, and with further acquisitions yet to be completed there's still more in the pipeline.

The company is also seeing a number of locked-in, multi-year contracts bearing fruit, with over $11 million in annual recurring revenues from its Managed Security and Security Operations Centre services.

Tesserent also reports the June quarter marked a special milestone — the first time the company has reported both positive earnings before interest, tax, depreciation and amortisation (EBITDA) and cashflow.

While the final EBITDA of $17,700 is modest at best, when weighed up with the company's advancing revenues and acquisitions, it marks a hugely positive step. Tesserent is anticipating this will only grow through the 2021 financial year.

Once adjusted for acquisition costs, the company is also reporting cashflow positivity through June, and also expects this trend to continue through 2021.

Looking forward

The company finished the June quarter with $4.34 million cash in the bank and a positive earnings outlook.

A new $15 million debt facility has also been secured to replace the company's previous $5 million arrangement, on renegotiated, more favourable terms. The money will be drawn down as necessary to support the ongoing first phase of acquisitions.

With the final acquisitions nearing completion, and the previous additions of Rivium, Pure Security, north Security|Digital, and Seer Security all showing signs of bearing fruit, Tesserent is well placed to continue its rapid growth and newfound profitability.

As the phase one acquisitions near completion, Tesserent will concentrate on the next steps of its growth strategy.

The integration of the recent acquisitions to capitalise on operational synergies and streamline sales and deliveries will underpin the company's earnings growth.

The company will then focus on capturing further market share in three key sectors: government (including defence), critical infrastructure and banking & finance.

While the strategy may seem bold, Tesserent's performance through the June quarter seems to indicate the company is up for the challenge.

If acquisitions and growth can continue at a sustainable pace, the company seems well set on its way to cementing its place as the number one end-to-end, pure cybersecurity firm on the ASX.

Tesserent is trading 15.4 per cent higher today at 22.5 cents per share as at 12:15 pm AEST.

TNT by the numbers
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