- The equity report noted CISO’s triple-digit Q4 growth in several areas
- “We expect Cerberus to build on its momentum in making headway into larger enterprise customers,” report observes
- Cybersecurity talent shortage landscape could be “highly favorable” to Cerberus
A recent Cantor Fitzgerald equity research report is high on CISO Global (NASDAQ: CISO), formerly Cerberus Cyber Sentinel Corp., a leading provider of global cybersecurity and compliance. Noting that the company is strategically positioned to fill the cybersecurity talent shortage gap, Cantor Research gave CISO an overweight rating and a $2 price target (https://nnw.fm/EP1WX).
“Reiterate overweight and moderating our 12-month price target from $5 to $2 due to volatile trading condition; however, growth fundamentals intact,” the report stated. “We believe the modest multiple is justified or even undervalues CISO given its leadership position at scale in the cybersecurity services space, hyper-growth revenue acceleration, a large and expanding TAM, a favorable macro tailwind on continued talent shortages and an improving financial profile.”
The equity report noted CISO’s significant Q4 growth, including revenue of $14.7 million, up 150.3% year-over-year, ahead of Cantor’s estimate of $13.2 million; security managed services growth of 161.8% year-over-year to $12.4 million at a margin of 61.8%; and growth of professional services totaling 102.6% year-over-year to $2.3 million at a margin of 83.2%.
“Cerberus historically bills customers on a monthly basis; however, the company has been selling larger multiyear enterprise contracts in 2022, resulting in a significant acceleration in deferred revenue,” Cantor reported. “We expect Cerberus to build on its momentum in making headway into larger enterprise customers, and therefore, we anticipate deferred revenue balance to build going forward. Free cash flow was at -$2.8 million, strongly ahead of our estimate at -$5.9 million, driven by a more efficient operating margin of -64.5% (vs. our estimate of -67.8%) on the heels of better cost-optimization measures.”
Cantor also noted that the cybersecurity talent shortage landscape could be “highly favorable” to Cerberus. “Management has pointed out 62% of chief information security officers (‘CISOs’) are expecting to face talent shortfall over the next five years and 95% of CISOs don’t believe the skills shortage gap has improved at all over the last couple of years,” the report observed. “The combination of these industry factors is driving a favorable recurring revenue of 62% on a TTM basis and a new logo retention rate of over 90%.
“Cerberus Cyber Sentinel Corporation is in the process of changing its company’s name to CISO Global Inc. as part of its rebranding effort to better align with its mission to ‘bring cybersecurity professionals together on a global basis,’” Cantor continued. “In summary, we believe team CISO has completed its first year as a public company in a positive note despite the challenging macro environment and volatile trading conditions repeatedly experienced by larger public traded peers, and we envision the growth momentum will carry through into 2023E.”
In addition, the report provided an overview of CISO’s financial metrics/KPIs; acquisitions strategy, including the company’s January 2023 agreement to acquire RAN Security, a secured managed services firm based in Buenos Aires, Argentina; and its healthy deals pipeline as further explanation of the high rating. The report also mentioned the appointment of Kyle Young, recently the company’s director of operations, to interim COO and noted the competitive cybersecurity landscape as part of its thorough review of CISO Global.
CISO is gaining recognition as a leading provider of global cybersecurity and compliance as it rapidly expands by acquiring world-class cybersecurity, secured-managed services and compliance companies. These acquisitions bring top-tier talent to the CISO table, enabling the company to utilize the latest technology to create innovative solutions to protect the most demanding businesses and government organizations, mitigating continuing and emerging security threats and compliance obligations.
For more information, visit the company’s website at www.CISO.inc.
NOTE TO INVESTORS: The latest news and updates relating to CISO are available in the company’s newsroom at https://ibn.fm/CISO
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