Safe-T Group Reports 137% Increase in Third Quarter 2021 Revenues and 108% Growth in Third Quarter 2021 Gross Profit
11/30/2021 - 08:30 AM
Revenues Reached a Record High of $3.38 Million , Gross Profit Grew to $1.78 Million
HERZLIYA, Israel, Nov. 30, 2021 (GLOBE NEWSWIRE) -- Safe-T Group Ltd. (Nasdaq, TASE: SFET) (“Safe-T” or the “Company”), a global provider of cyber-security and privacy solutions to consumers and enterprises, today announced record financial results for the three and nine-month periods ended September 30, 2021.
Revenues for the three-months ended September 30, 2021 reached a record high of $3,377,000 , an increase of 137% compared to $1,426,000 reported in the three-month period ended September 30, 2020. Third quarter revenues exceeded the Company’s preliminary estimated revenues of $3.2 million . Gross profit for the three- month period ended September 30, 2021 amounted to $1,783,000 , an increase of 108% compared to $859,000 reported in the same period in 2020. The Company’s cash and cash equivalents and short-term investments balances at the end of the quarter were $12,947,000 , down from $19,304,000 reported at the end of the second quarter primarily due to a one-time cash payment of $3,700,000 related to the acquisition of CyberKick Ltd. (“CyberKick”). Shachar Daniel, Chief Executive Officer of Safe-T, said, “We believe that the impressive financial results achieved in the third quarter of 2021 and through the first nine months of the year, reflect the successful execution of our aggressive growth strategy focused on bringing world-class cybersecurity and privacy technology to consumers and enterprises around the world. We are especially pleased by the performance of our consumer and enterprise privacy businesses which have significantly contributed to our growth as it gains sales traction in large geographic markets including the United States and Western Europe.”
Third Quarter of 2021 and Recent Business Developments:
Completed the acquisition of CyberKick, a provider of Software-as-a-Service (SaaS) security and privacy tools for consumers designed to reduce their vulnerability while they are online and prevent and defend against a wide spectrum of cyber threats; The completion of the development of iShield™, an advanced cybersecurity product designed to help consumers as well as small and mid-sized businesses in detecting and defending against dangerous and malicious threats during online browsing activities; The launch of a new enterprise data collection solution, enabling unlimited collection of online, public, web-based data aid in enterprise data analysis and decision making; and Safe-T was named by Quadrant Knowledge Solutions SPARK Matrix ™ analysis “Momentum in our business is accelerating and through our continued commitment to advance our cybersecurity and privacy offerings with improvements such as our data collection service and more recently, our anti-ransomware technology, we intend to further capitalize on the large global growth opportunities created by both the Work-from-Home and Work-from-Anywhere paradigms. As our financial results indicate, we are building a high growth company, with high gross margins. While the company is currently investing in its growth in the short term, over the coming quarters, we believe significant continued growth in revenues will produce higher gross profits needed to support operations. Our outlook for the remainder of 2021 and into early 2022 remains bullish, and we look forward to reporting on our continued progress,” concluded Mr. Daniel.
Financial Results for the Three Months Ended September 30, 2021:
Revenues in Q3.2021 amounted to $3,377,000 (Q3.2020: $1,426,000) . The growth is attributed to the increase in enterprise privacy business revenues and the consolidation of CyberKick’s revenues following the completion of its acquisition on July 4, 2021. Cost of revenues in Q3.2021 totaled $1,594,000 (Q3.2020: $5 67,000). The increase is mainly a result of growth in revenue in the enterprise privacy business which involves higher costs related to internet services providers, as well as the consolidation of CyberKick’s cost of revenues, mainly in traffic acquisition costs for 3rd parties’ products. Research and development expenses in Q3.2021 totaled $1,388,000 (Q3.2020: $655,000) . The increase is attributed to the consolidation of CyberKick’s research and development expenses, as well as to the Company’s salary costs and share-based compensation. Sales and marketing expenses in Q3.2021 totaled $3,109,000 (Q3.2020: $1,114,000) . The increase is primarily attributed to the consolidation of CyberKick’s sales and marketing expenses, primarily in its products advertising costs,as well as to the Company’s salary costs and share-based compensation. General and administrative expenses in Q3.2021 totaled $1,827,000 (Q3.2020: $1,413,000) . The increase is mainly due to higher professional fees, predominantly legal, in connection with intellectual property protection activities. IFRS net loss in Q3.2021 totaled $3,723,000 , or $0.12 1 basic loss per ordinary share (Q3.2020: net loss of $1,292,000 , or $0.08 1 basic loss per ordinary share). The increase in IFRS net loss is a result of the items discussed above. Non-IFRS net loss in Q3.2021 totaled $3,225,000 , or $0.10 1 basic loss per ordinary share (Q3.2020: loss of $1 ,638 ,000, or $0.1 0 1 basic loss per ordinary share). 1 Adjusted retrospectively to reflect a 40:1 reverse share split of the Company’s ordinary shares, which became effective on October 15, 2021.
The following table presents the reconciled effect of the non-cash expenses/income and certain expenses further described below, on the Company’s net loss for the three and nine-month periods ended September 30, 2021, and 2020, and for the year ended December 31, 2020:
For the Nine-Month For the Three-Month For the year Period Ended Period Ended Ended September 30, September 30, December 31, (thousands of U.S. dollars) 2021 2020 2021 2020 2020 Net loss for the period 8,605 2,836 3,723 1,292 7,845 Issuance costs - 156 - - 156 Amortization and impairment of intangible assets and goodwill 983 1,636 425 330 3,781 Share-based compensation 1,401 349 835 309 742 Changes in fair value of Finance liabilities (1,053 ) (3,253 ) (762 ) (985 ) (2,987 ) Total adjustment 1,331 (1,112 ) 498 (346 ) 1,692 Non-IFRS net loss 7,274 3,948 3,225 1,638 6,153
Balance Sheet Highlights :
As of September 30, 2021, shareholders’ equity totaled $27,752,000 , or approximately $0.93 per outstanding ADS as of September 30, 2021, compared to shareholders’ equity of $16,216,000 on December 31, 2020. The increase is mainly due to the February 2021 registered direct offering and warrants exercises, partially offset by the Company’s operating loss during the first nine months of 2021. As of September 30, 2021, the Company’s cash and cash equivalents balance and short-term investments balance aggregated $12,947,000 , compared to $11,017,000 on December 31, 2020. Additional details on the Company’s financials, products and strategy will be available soon on the Company’s website here
Use of Non-IFRS Financial Results
In addition to disclosing financial results calculated in accordance with International Financial Reporting Standards (IFRS), as issued by the International Accounting Standards Board, this press release contains non-IFRS financial measures of net loss for the periods presented that exclude the effect of share-based compensation expenses, amortization of intangible assets, non-cash issuance and acquisition expenses and the revaluation of finance liabilities at fair value. The Company’s management believes the non-IFRS financial information provided in this release is useful to investors’ understanding and assessment of the Company’s ongoing operations. Management also uses both IFRS and non-IFRS information in evaluating and operating its business internally, and as such deemed it important to provide this information to investors. The non-IFRS financial measures disclosed by the Company should not be considered in isolation, or as a substitute for, or superior to, financial measures calculated in accordance with IFRS, and the financial results calculated in accordance with IFRS and reconciliations to those financial statements should be carefully evaluated. Investors are encouraged to review the reconciliations of these non-IFRS measures to their most directly comparable IFRS financial measures provided in the financial statement tables herein.
Third Quarter 2021 Financial Results Conference Call
Mr. Shachar Daniel, Chief Executive Officer, and Mr. Shai Avnit, Chief Financial Officer, will host a conference call today, November 30, 2021, at 09:00 a.m. ET, to discuss the third quarter financial results, followed by a Q&A session.
To attend the conference call, please dial one of the following teleconferencing numbers. Please begin by placing your call five minutes before the conference call commences. If you are unable to connect using the toll-free number, please try the international dial-in number:
Date: Tuesday, November 30, 2021 Time: 09:00 a.m. Eastern time, 06:00 a.m. Pacific time Toll-free dial-in number: 1-877-407-0789 Israel Toll Free: 1 809 406 247 International dial-in number: 1-201-689-8562 Conference ID: 13725024
Participants will be required to state their name and company upon entering the call. If you have any difficulty connecting with the conference call, please contact Michael Glickman on behalf of Safe-T Group at 917-397-2272.
The conference call will be broadcast live and available for replay at https://viavid.webcasts.com/starthere.jsp?ei=1512893&tp_key=d8f6453d78 https://www.safetgroup.com .
A replay of the conference call will be available after 11:30 a.m. Eastern time through December 30, 2021.
Toll-free replay number: 1-844-512-2921 International replay number: 1-412-317-6671 Replay ID: 13725024
About Safe-T® Group Ltd.
Safe-T Group Ltd. (Nasdaq, TASE: SFET) is a global provider of cyber-security and privacy solutions to consumers and enterprises. The Company operates in three distinct segments, tailoring solutions according to specific needs. The segments include, enterprise cyber-security solutions, enterprise privacy solutions, and consumer cyber-security and privacy solutions.
Our cyber-security and privacy solutions for consumers provide a wide security blanket against ransomware, viruses, phishing, and other online threats as well as a powerful, secured and encrypted connection, masking their online activity and keeping them safe from hackers. The solutions are designed for both advanced and basic users, ensuring full protection for all personal and digital information.
ZoneZero® cyber-security solutions for enterprises, designed for cloud, on-premises and hybrid networks, mitigates attacks on enterprises’ business-critical services and sensitive data, while ensuring uninterrupted business continuity. Organizational access use cases, from outside the organization or within, are secured according to the “validate first, access later” philosophy of Safe-T’s zero trust.
Our privacy solutions for enterprises are based on our advanced and secured proxy network, the world’s fastest, enabling our customers to collect data anonymously at any scale from any public sources over the web using a unique hybrid network. Our network is the only one of its kind that is comprised of millions of residential exit points and hundreds of servers located at our ISP partners around the world. The infrastructure is optimally designed to guarantee the privacy, quality, stability, and the speed of the service.
For more information about Safe-T, visit www.safetgroup.com
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995 and other Federal securities laws. Words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,” “estimates” and similar expressions or variations of such words are intended to identify forward-looking statements. For example, Safe-T is using forward-looking statements in this press release when it discusses its outlook for the future, its expectation to capitalize on the opportunities in the market such as Work-from-Home and Work-from-Anywhere paradigms, the expected demand for Safe-T’s products, the expected benefits of its strategy, expected future growth, commitment to advance cybersecurity and privacy offerings with improvements and the expansion in large geographic markets. Because such statements deal with future events and are based on Safe-T’s current expectations, they are subject to various risks and uncertainties and actual results, performance or achievements of Safe-T could differ materially from those described in or implied by the statements in this press release. The forward-looking statements contained or implied in this press release are subject to other risks and uncertainties, including those discussed under the heading “Risk Factors” in Safe-T’s annual report on Form 20-F filed with the Securities and Exchange Commission (“SEC”) on March 22, 2021, and in any subsequent filings with the SEC. Except as otherwise required by law, Safe-T undertakes no obligation to publicly release any revisions to these forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. References and links to websites have been provided as a convenience, and the information contained on such websites is not incorporated by reference into this press release. Safe-T is not responsible for the contents of third-party websites.
INVESTOR RELATIONS CONTACTS:
Steve Gersten, Director of Investor Relationsinvestors@safe-t.com
Michal Efratymichal@efraty.com
Consolidated Statements of Financial Position (In thousands of USD)
September 30, December 31, 2021 2020 2020 (Unaudited) (Audited) Assets Current assets: Cash and cash equivalents 6,899 13,841 11,017 Short-term investments 6,048 - - Trade receivables, net 1,069 676 645 Other receivables 660 839 897 Total current assets 14,676 15,356 12,559 Non-current assets: Long-term restricted deposits 90 83 89 Long-term deposit 67 50 50 Property and equipment, net 127 169 144 Right of use assets 532 419 543 Goodwill 11,698 6,077 5,387 Intangible assets, net 7,441 3,845 4,201 Total non-current assets 19,955 10,643 10,414 Total assets 34,631 25,999 22,973 Liabilities and equity Current liabilities: Trade payables 683 179 274 Other payables 2,519 1,162 1,358 Contract liabilities 341 325 441 Contingent consideration 94 1,000 915 Derivative financial instruments 985 994 1,448 Short-term lease liabilities 371 196 298 Total current liabilities 4,993 3,856 4,734 Non-current liabilities: Long-term contract liabilities 25 39 41 Long-term lease liabilities 273 276 365 Deferred tax liabilities 1,418 856 793 Long-term contingent consideration - - 684 Liability in respect of the Israeli Innovation Authority 170 131 140 Total non-current liabilities 1,886 1,302 2,023 Total liabilities 6,879 5,158 6,757 Equity: Ordinary shares - - - Share premium 90,968 70,574 71,492 Other equity reserves 15,921 15,790 15,256 Accumulated deficit (79,137 ) (65,523 ) (70,532 ) Total equity 27,752 20,841 16,216 Total liabilities and equity 34,631 25,999 22,973
Consolidated Statements of Profit or Loss
(In thousands of USD, except per share amounts)
For the Nine Months For the Three Months For the Year Ended Ended Ended September 30, September 30, December 31, 2021 2020 2021 2020 2020 (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Audited) Revenues 6,508 3,591 3,377 1,426 4,886 Cost of revenues 3,477 1,688 1,594 567 2,499 Gross profit 3,031 1,903 1,783 859 2,387 Research and development expenses 2,871 1,448 1,388 655 2,202 Sales and marketing expenses 5,539 2,895 3,109 1,114 4,215 General and administrative expenses 4,414 2,908 1,827 1,413 4,197 Impairment of goodwill - 800 - - 2,759 Contingent consideration measurement (590 ) 430 (156 ) - 345 Operating expenses 12,234 (8,481 ) 6,168 (3,182 ) (13,718 ) Operating loss (9,203 ) (6,578 ) (4,385 ) (2,323 ) (11,331 ) Finance income, net 445 3,558 585 969 3,240 Tax benefit 153 184 77 62 246 Net income (loss) (8,605 ) (2,836 ) (3,723 ) (1,292 ) (7,845 ) Basic loss per share* (0.32 ) (0.33 ) (0.12 ) (0.08 ) (0.71 ) Diluted loss per share* (0.32 ) (0.62 ) (0.13 ) (0.12 ) (0.84 )
* Adjusted retrospectively to reflect a 40:1 reverse share split of our ordinary shares effective as October 15, 2021
