Safe-T Group Inc. (NASDAQ:SFET) grabbed investors’ attention with their fiscal 2021 Revenue Guidance announcement. The company estimates revenues to show over 170% Growth in Q4 and over 100% for the year.
The over $10 million in projected revenues would represent a very low price to sales ratio of 2.5, which points to a significant upside for SFET stock. When the actual year-end numbers are released we will be able to consider the P/E ratio against other companies in their industry to see just how undervalued SFET may be.
Looking at recent financial reports from SFET, their operating losses have been trending downward. The company also averages a 77% renewal rate on their licenses which is why revenue continues to increase at such a rapid pace. These two factors could signal impressive earnings.
Shachar Daniel, Chief Executive Officer of SFET commented on the record growth, “Since we started our journey on Nasdaq 3 years ago, we have successfully grown our annual revenues from $1.4 million to over $10 million, a significant accomplishment. Looking into 2022, we expect strong topline growth driven by an expanded solutions portfolio and our further penetration of the global consumer and enterprise markets by the Safe-T brand.”
HOW SFET CREATES REVENUE
SFET boasts over 6,000 customers through 600 partners worldwide, with their solutions being used by blue-chip companies like Philips (NASDAQ: PHG), eBay (NASDAQ: EBAY), and Check Point (NASDAQ: CHKP). It operates in three distinct cybersecurity segments:
- Cyber-Security Solutions
- Enterprise Privacy Solutions
- Consumer Cyber-Security and Privacy Solutions
Safe-T has created several revenue streams from their multiple product lines in the aforementioned segments, driving revenue in two ways:
PERPETUAL LICENSES: these include annual recurring fees from Safe-T’s customers with one to three years of maintenance and support services. Customers pay for updates and upgrades providing a consistent revenue stream. On average, the renewal rate for maintenance and support contracts was approximately 77% through 2018 and 2019.
SUBSCRIBED LICENSES: Annual support subscriptions – which last one to three years on average are another way SFET drives revenue.
SFET MARKET OPPORTUNITY
We know SFET stock could benefit from their growing revenues, will the market support continued growth?
The short answer is yes.
The cybersecurity market is expanding rapidly. A staggering 66% of small and medium-sized US businesses had at least one cyber attack and 60% of those went out of business within six months of falling victim to these data breaches or hacks according to Cybersecurity Ventures. As the need for secure data increases while more businesses increase their reliance on cloud-based solutions.
Two cybersecurity market segments, in particular, represent a major portion of SFET’s market opportunity; Zero Trust Security ‘ZTNA’ and Internet Protocol Proxy Network ‘IPPN’ Serviceable Obtainable Market.
The global Zero Trust Security ‘ZTNA’ Market Size is projected to grow from S19.6 billion in 2020 to $51.6 billion by 2026, recording a compound annual growth rate (CAGR) of 17.4% from 2020 to 2026, according to Markets and Markets. SFET’s ZoneZero® is competing for market share in this growing segment (read more on the advantages SFET has in this market in the next section).
According to Frost & Sullivan, the total IPPN Serviceable Obtainable Market (SOM) was valued at $76.3 million in 2018 and is expected to grow at a CAGR of 16.8% through 2025, hitting $259.7 million. Safe-T’s Enterprise Privacy Solutions act as an Internet Protocol Proxy Network (IPPN) for their business customers.
For some perspective on these two higher than average projected CAGR’s, in the last 5 years, there are only 10 major industries that recorded CAGRs higher than 15%.
ABOUT SFET’s DISTRIBUTION CHANNELS
Another massive market opportunity for SFET includes the $92 billion government IT Sector. Philemon Security, Safe-T’s lead distributor in North America, is increasing marketing efforts for ZoneZero aimed at potential opportunities in the government IT sector.
Philemon Security is one of the company’s most recent activity data partnerships. Safe-T has numerous well-known distributors located across North America and Europe helping the company gain clientele globally. Partnerships and distributors include Fujitsu, Accenture, Edvance, Data Group IT, and, most recently, ELCA Informatique SA to bring its ZTNA Solutions to the Swiss market.
SFET’s ZoneZero® ZTNA SOLUTION
The company’s ZoneZero® zero-trust cyber-security solution for enterprises is designed for cloud, on-premises and hybrid networks. Safe-T’s philosophy is “validate first, access later.”
SFET’s wholly-owned subsidiary, Safe-T Data A.R Ltd. which sells ZoneZero®, has been recognized as a Representative Vendor in Gartner’s December 2021 report titled, “Market Guide for User Authentication”
LOOKING AHEAD
SFET’s YE financials for fiscal 2021 will be released on or before March 31st, 2022 according to today’s press, some investors may not even be aware of what’s coming if they only look at filings giving readers a good head start on their due diligence.
Put SFET on your Watchlist today.
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