Safe-T Reports Third Quarter and First Nine Months of 2018 Financial Results
HERZLIYA, Israel, Nov. 21, 2018 /PRNewswire/ -- Safe-T Group Ltd. (NASDAQ: SFET) (TASE: SFET), a leading provider of software-defined access solutions for the hybrid cloud, today announced financial results for the third quarter and nine-month period ended September 30, 2018.
http://mma.prnewswire.com/media/555825/Safe_T_Logo.jpg
Safe-T announced continuing progress and achievements during the first nine months of 2018. During the nine-month period ended September 30, 2018, the Company reported customer bookings totaling $1,363,000 ($432,000 of which are contingent bookings), an increase of approximately 94% compared with $701,000 in the nine-month period ended September 30, 2017 (including contingent bookings of $70,000, of which one booking of $54,000 did not come to fruition).
Company revenues in the nine-month period ended September 30, 2018, totaled $1,003,000, an increase of 39% compared with $719,000 in the nine-month period ended September 30, 2017.
In the third quarter of 2018, the Company reported customer bookings totaling approximately $220,000, a 90% increase compared with $116,000 in the corresponding quarter last year. This amount includes orders totaling $59,000 which are contingent on the completion of successful proof of concept tests by customers or on other commercial terms, compared with contingent bookings of $16,000 in the third quarter of 2017.
Customer bookings are an important performance metric which predicts future revenue. According to the Company's revenue recognition policy, the period from the receipt of payment or booking to the date of recognition can be one to four quarters. As the Company's bookings increase on a quarterly basis, future revenue is expected to increase as well. In addition, the maintenance services provided for most customers are recognized on a proportionate basis over the engagement period of up to five years.
The Company reported revenues of $248,000 in the third quarter of 2018, representing a 32% increase compared with $187,000 in the corresponding quarter last year. The Company ended the quarter with a cash balance of $6,121,000 and non-IFRS loss of $2,022,000.
"During the third quarter, Safe-T made great strides toward our goal of strengthening penetration in the U.S., which is the Company's primary target market. Our successful listing on Nasdaq and subsequent raise of gross amount of $7.3 million represents another stage in our strategy to increase our visibility and market position," said Shachar Daniel, Chief Executive Officer of Safe-T Group Ltd. "As the Company continues to leverage its extensive knowledge and experience to launch innovative technology solutions, we expect to see increased interest and adoptions by government entities and other high-caliber organizations."
Recent Developments:
-- Safe-T Obtains Certification to Sell to American Federal Entities:
Safe-T obtained FIPS PUB 140-2 certification through its subsidiary,
Safe-T USA, enabling the sale of its software-defined access (SDA)
product to American federal entities. The certification, confirmed by
Acumen Security, allows federal agencies to use Safe-T's SDA solution to
secure their data exchanges.
-- Safe-T Announces U.S. Advisory Committee: In an effort to support Safe-T
USA's penetration in the U.S. market, the company formed a U.S. Advisory
Committee comprised of six information security experts. The Committee
will investigate privacy and security challenges, expand contacts in
vertical markets and support the efforts of Safe-T's local U.S. team by
providing insight into trends that will enable continued penetration
into this market.
-- Indiana Office of Technology Implements Software-Defined Access
Solution: Indiana's Office of Technology (IOT) successfully completed
deployment of Safe-T's SDA solution to securely store and share
information. Safe-T's SDA product will provide data protection to dozens
of government agencies in the State of Indiana, both in transit and at
rest.
-- Safe-T Completes Acquisition of CyKick Labs' Intellectual Property:
During the third quarter, Safe-T completed its acquisition of the
intellectual property of CyKick Labs, Ltd. This acquisition is most
notable for CyKick Labs' proprietary technology, Telepath, which will be
integrated into Safe-T's SDA solution. Telepath will provide Safe-T
users with better insights into user and web-based anomalies within
their networks.
Third Quarter 2018 Financial Results
-- Total bookings for the third quarter of 2018 totaled $220,000 (including
contingent bookings of $59,000), compared with $116,000 in the third
quarter of 2017 (including contingent bookings of $16,000).
-- As of September 30, 2018, the order backlog of customers who have not
yet been charged totaled $821,000, compared with an order backlog of
$203,000 as of September 30, 2017. All above mentioned amounts include
contingent bookings.
-- Total revenues for the third quarter of 2018 amounted to $248,000,
compared with $187,000 in the third quarter of 2017. The change is
attributed to increased sales in the Middle East.
-- In the third quarter of 2018, cost of revenues totaled $178,000,
compared with $127,000 in the third quarter of 2017. The increase is
mainly due to an expansion of the Company's support and professional
services team, which resulted in an increase in payroll and related
expenses.
-- In the third quarter of 2018, research and development (R&D) expenses
were $603,000, compared with $444,000 in the third quarter of 2017. The
increase was mainly attributed to expansion of the R&D team and a
resulting increase in payroll and related expenses.
-- In the third quarter of 2018, sales and marketing (S&M) expenses totaled
$1,120,000, compared with $1,155,000 in the third quarter of 2017. The
decrease was primarily attributed to lower share-based payments which
were partially offset by higher payroll and related expenses.
-- In the third quarter of 2018, general and administrative (G&A) expenses
totaled $443,000, compared with $530,000 in the third quarter of 2017.
The decrease was primarily attributed to lower share-based payments
which were partially offset by higher professional expenses.
-- IFRS net loss for the third quarter of 2018 totaled $4,610,000, or $0.12
basic loss per ordinary share, compared with $1,074,000, or $0.05 basic
loss per ordinary share, in the third quarter of 2017.
-- Non-IFRS net loss for the third quarter of 2018 was $2,022,000, or $
0.05 basic loss per ordinary share, compared with $1,660,000, or $0.08
basic loss per ordinary share, in the third quarter of 2017. Non-IFRS
results exclude the effect of share-based payment expenses, derivative
warrants and anti-dilution liability.
Financial Results for the Nine Months Ended September 30, 2018
-- Total revenues for the nine months ended September 30, 2018, were
$1,003,000, compared with $719,000 in the nine months ended September
30, 2017. The increase was attributed to sales in the Middle East and
APAC.
-- Total bookings in the nine months ended September 30, 2018, totaled
$1,363,000 (including contingent bookings of $432,000), compared with
$701,000 in the nine months ended September 30, 2017 (including
contingent bookings of $70,000, of which one booking of $54,000 did not
come to fruition).
-- Cost of revenues in the nine months ended September 30, 2018, totaled
$607,000, compared with $410,000 in the nine months ended September 30,
2017. The increase is mainly due to an expansion of the Company's
support and professional services team, which resulted in an increase in
payroll and related expenses.
-- R&D expenses in the nine months ended September 30, 2018, totaled
$1,637,000, compared with $1,091,000 in the nine months ended September
30, 2017. The increase was mainly attributed to payroll and related
expenses.
-- S&M expenses in the nine months ended September 30, 2018, totaled
$4,269,000, compared with $2,647,000 in the nine months ended September
30, 2017. The increase was attributed to payroll and related expenses,
professional services expenses, and marketing expenses.
-- G&A expenses in the nine months ended September 30, 2018, totaled
$1,370,000, compared with $1,604,000 in the nine months ended September
30, 2017. The change was mainly attributed to a decrease in share-based
payment.
-- IFRS net loss for the nine months ended September 30, 2018, totaled
$8,522,000, or $0.31 basic loss per ordinary share, compared with
$3,620,000, or $0.20 basic loss per ordinary share, for the nine months
ended September 30, 2017.
-- Non-IFRS net loss for the nine months ended September 30, 2018, totaled
$6,416,000, or $0.24 basic loss per ordinary share, compared with
$3,712,000, or $0.21 basic loss per ordinary share, for the nine months
ended September 30, 2017.
The following table presents the reconciled effect of the non-cash expenses/income on the Company's net loss for the nine and three-month periods ended September 30, 2018 and September 30, 2017, and for the year ended December 31, 2017:
Nine-months ended Three-months ended Year ended
September 30, September 30, December 31,
2017 2018 2017 2018 2017
In thousands of USD
Net loss for the period 3,620 8,522 1,074 4,610 5,313
Amortization of intangible 188 201 63 75 251
assets
Share-based payment 1,016 315 396 12 1,318
Finance liabilities at fair value (1,296) 1,590 (1,045) 2,501 (1,981)
Total adjustment (92) 2,106 (586) 2,588 (412)
Non-IFRS net loss 3,712 6,416 1,660 2,022 5,725
Balance Sheet Highlights
-- As of September 30, 2018, cash and cash equivalents totaled $6,121,000,
compared with $3,514,000 on December 31, 2017. The increase in cash and
cash equivalents compared with December 31, 2017 is attributed to
capital raised as part of the private offering in June 2018 and the
public offering in August 2018.
-- As of September 30, 2018, shareholders' equity totaled $3,397,000,
compared with $3,141,000 as of December 31, 2017.
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, the Company's earnings release contains non-IFRS financial measures of net loss for the period that excludes the effect of share-based compensation expenses, the revaluation of other investments and revaluation of derivative warrant and anti-dilution liability. The earnings release also contains non-IFRS financial measures for bookings. Bookings are a non-IFRS financial metric that we define as binding and non-revocable customers purchase orders over a defined period. 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 business internally, and as such deemed it important to provide all 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.
About Safe-T Group Ltd.
Safe-T Group Ltd. (Nasdaq, TASE: SFET), is a leading provider of software-defined access solutions which mitigate attacks on enterprises' business-critical services and sensitive data. Safe-T solves the data access challenge by masking data at the perimeter, keeping information assets safe and limiting access only to authorized and intended entities in hybrid cloud environments. Safe-T enhances operational productivity, efficiency, security, and compliance by protecting organizations from data exfiltration, leakage, malware, ransomware, and fraud. With Safe-T's patented, multi-layer software-defined access, financial services, healthcare, utility companies and governments can secure their data, services, and networks from internal and external data threats.
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 that it expects to see increased interest and adoptions by government entities and other high-caliber organizations and that Telepath will provide Safe-T users with better insights into user and web-based anomalies within their networks. 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 final prospectus filed pursuant to rule 424(b)(4) filed with the Securities and Exchange Commission ("SEC") on August 20, 2018, 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.
Consolidated Statements of Financial Position
---
(In thousands of USD)
---
September 30,
December 31,
2017 2018 2017
(Unaudited) (Unaudited)
(Audited)
Assets
Cash and cash equivalents 5,045 6,121 3,514
Restricted deposits 48 94 93
Trade receivables 318 484 644
Other receivables 278 309
*163
Total current assets 5,689 7,008 4,414
Restricted deposits 14
Property plant and equipment, net 89 150 165
Deferred issuance expenses
*61
Goodwill 523 523 523
Intangible assets 827 872 764
Total non-current assets 1,453 1,545 1,513
Total assets 7,142 8,553 5,927
Liabilities
Trade payables 73 270 178
Other payables 641 726 877
Contract liability 356 411 424
Liability in respect of the Israeli Innovation 92 49 92
Authority
Total current liabilities 1,162 1,456 1,571
Contract liability 60 237 286
Liability in respect of anti-dilution feature 514 692
Liability in respect of compensation feature 3,387
Derivatives financial instruments - warrants 937 237
Liability in respect of the Israeli Innovation 76
Authority
Total non-current liabilities 1,511 3,700 1,215
Total liabilities 2,673 5,423 2,786
Equity
Share Capital
**
**
**
Share premium 28,013 37,893 28,494
Other capital reserve 12,699 11,962 12,583
Accumulated loss (36,243) (46,458) (37,936)
Total equity 4,469 3,397 3,141
Total liabilities and equity 7,142 8,553 5,927
* Reclassified.
** Represents an amount of less than $1 thousand.
Consolidated Statements of Other Comprehensive Loss
---
(In thousands of USD, except per share amounts)
---
For the Nine-Month Period For the Three-Month Period
For the Year
Ended
Ended
Ended
September 30, September 30,
December 31,
2017 2018 2017 2018 2017
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
(Audited)
Revenues 719 1,003
* 187 248 1,096
Cost of revenues 410 607 127 178 583
Gross profit 309 396 60 70 513
Research and development 1,091 1,637 444 603 1,608
expenses, net
Sales and marketing 2,647 4,269 1,155 1,120 4,051
expenses
General and administrative 1,604 1,370 530 443 2,151
expenses
Operating loss (5,033) (6,880) (2,069) (2,096) (7,297)
Finance income 2,351 984 1,230 27 2,959
Finance expense (938) (2,626) (235) (2,541) (975)
Finance income (expense), 1,413 (1,642) 995 (2,514) 1,984
net
Total comprehensive loss (3,620) (8,522) (1,074) (4,610) (5,313)
Basic loss per share (0.20) (0.31) (0.05) (0.12) (0.29)
Diluted loss per share (0.26) (0.33) (0.09) (0.12) (0.29)
* Early application of IFRS 15.
Consolidated Statements of Changes in Equity
---
(In thousands of USD)
---
Other
Share Share capital
Accumulated Total
capital* premium reserve
loss equity
---
For the nine months ended September 30, 2018:
Balance as of December 31, 2017 (Audited) -- 28,494 12,583 (37,936) 3,141
Issuance of ordinary shares, net -- 6,069 6,069
Exercise of anti-dilution feature -- 2,268 2,268
Exercise of options -- 791 (689) 102
Forfeiture of options -- 271 (271)
Share-based payments -- 339 339
Net comprehensive loss for the period -- (8,522) (8,522)
Balance as of September 30, 2018 (unaudited) -- 37,893 11,962 (46,458) 3,397
===
For the three months ended September 30, 2018:
Balance as of June 30, 2018 (Unaudited) -- 31,585 12,156 (41,848) 1,893
Issuance of ordinary shares, net -- 3,835 3,835
Exercise of anti-dilution feature -- 2,268 2,268
Exercise of options --
Forfeiture of options -- 205 (205)
Share-based payments -- 11 11
Net comprehensive loss for the period -- (4,610) (4,610)
---
Balance as of September 30, 2018 (Unaudited) -- 37,893 11,962 (46,458) 3,397
===
* Represents an amount of less than $1 thousand.
CONTACT INVESTOR RELATIONS:
Miri Segal-Scharia, CEO
MS-IR LLC
msegal@ms-ir.com
+1(917)-607-8654
View original content:http://www.prnewswire.com/news-releases/safe-t-reports-third-quarter-and-first-nine-months-of-2018-financial-results-300754140.html
SOURCE Safe-T
