WISeKey announces Q1 2020 cybersecurity/IoT preliminary, unaudited revenue of $4.4 million; expects higher demand for cybersecurity services backed by a solid revenue pipeline of over $250 million for the next 4 years, growing at CAGR of 35%
ZUG, GENEVA – April 30, 2020 – WISeKey International Holding Ltd (“WISeKey”) (SIX: WIHN), a leading global cybersecurity, Blockchain and IoT company, today announced preliminary, unaudited financial and operational results for the first quarter ended March 31, 2020 (all first quarter 2020 figures in this release are unaudited and estimated due to the preliminary nature of the announcement).
During the first quarter of this year, WISeKey generated revenue of $4.4 million and maintained its strong financial position with $16.2 million cash and restricted cash as at the end of Q1 2020.
Carlos Moreira, CEO WISeKey said, “We started 2020 on a very strong note with several new contracts signed in the first two months of the year with drone and battery manufacturing companies, but the global spread of COVID-19 which intensified toward the end of the quarter, resulted in a significant amount of new contracts expected to have been signed before the end of the quarter, to be delayed. Our clients were affected by the COVID-19 pandemic and by restrictions placed on their operations by governments in order to contain the spread of the virus; these restrictions had a far more severe impact on their businesses than initially predicted. As a result, WISeKey’s Q1 2020 global cybersecurity/IoT revenue was below Q1 2019 revenue of $6.1 million. Thus, given the uncertainty associated with the impacts of COVID-19, we expect our full year 2020 revenue to be between $18 million and $26 million.
Mr. Moreira continued, “While the full extent of the impact of this global pandemic remains unknown, we are working hard to adjust to this environment and mitigate consequences, having as a priority, the safety and well-being of our employees. We are working with our network of suppliers to address their production challenges and respond quickly to the current evolving needs of our clients and at the same time we are preparing our operations to handle increased demand for cybersecurity services once this health crisis is resolved.
We anticipate 2020 to be a transitional year as we complete the development of new IoT and semiconductor products and move out of older ones reaching the end of their life. We have ssignificantly expanded our sales force with new recruitments in Q1 2020 in USA and Germany to take advantage of the higher demand for strong security, authentication, brand protection and anti-counterfeiting services as Cybersecurity / IoT becomes more pervasive for segments such as connected devices, connected cars, luxury products, pharmaceuticals and the banking and financial sector.”
WISeKey’s continued growth in the Cybersecurity/IoT market is backed by a solid revenue pipeline of over $250 million for the next 4 years, growing at CAGR of 35%. Future IoT revenue will benefit from:
·Higher revenue from the IoT sector expanding to market and industries such as:
- Bluetooth Low Energy connected devices used in asset management, asset monitoring and healthcare applications, offering a comprehensive portfolio of energy efficient power management, analog, sensors, logic, timing, connectivity, discrete, SoC and custom devices, and benefiting from the previously announced partnership with ON Semiconductor, a leading provider of semiconductor-based solutions.
- Drones and batteries powered devices, with new contracts signed with manufacturing companies in these industries.
- WIFI connected devices and gateways, with new design-IN contracts signed with ODMs specialized in these ecosystems.
- Monetization of the WISeKey Blockchain Platform and related services.
- Higher revenues from the new Anti-Illicit Trade Technology WISeAuthentic now expanding from luxury products to other sectors.
- Untapped potential synergies with global organizations thanks to a several strategic partnerships with SAP, ORACLE, IBM and Microsoft to explore common opportunities in the IoT market, using our combined products to enhance mutual offerings.
- Further development of the WISeKey Foresight platform that will use APIs and keys, generated on VaultIC IoT chipsets, as the basis for Cybersecurity IoT services, to unlock new features of the silicon, what WISeKey calls “Chip as a Service”.
- Investment in our core IoT business with new innovative products and solutions to further reinforce our position as a major player offering secured and trusted Blockchain architectures.
WISeKey’s strong financial position of $16.2 million cash and restricted cash as at the end of Q1 2020, with low convertible debt facilities, puts the company in a resilient position to face the crisis with operational cash reserves for at least 2 years. Additionally, we are taking prompt and decisive actions to manage our costs, capital expenditures and working capital to maintain a positive free cash flow position during the year.
Over the last six weeks, since the COVID 19 crisis started in Europe, we have taken initiatives to minimize risks to our business, develop and adapt new technologies to protect our customers against cyber-attacks and also protect shareholder value. Our senior management team’s experience during the 2000 and 2008 financial crises is proving to be very valuable and reassuring in dealing with the current epidemic crisis.
WISeKey is fully operational and our staff is working from home to maintain the critical infrastructures onsite (data centers, design labs, production centers etc.). While the safety and well-being of our employees and our customers remains our top priority, we recognize the important role we play in providing cybersecurity and identity management protection services during this critical time.
For those employees who are working from home, we have implemented a “teleworking” policy connected by video as well as the usual phone conference calls and the cybersecurity and technology necessary to do so, using the experience WISeKey has in this type of environment. For employees who require office attendance in Geneva, France, Taiwan, Japan, and USA we are taking significant steps to ensure seamless service delivery while safeguarding their health.
A special edition of WISeID is now available as a free download of our WISeID app, to secure interactions of teleworkers around the globe locked-down due to the COVID-19 pandemic, and to help companies reduce information security risks. While this new Coronavirus is a real biological threat, it’s raising awareness in the cybersecurity community due to the increased use of remote connectivity or higher dependence on communication, such as email. Hackers are already profiting from this situation by launching new phishing attacks, pretending to be company managers or government agents, and trying to access computers and hijack corporate systems. In most companies the urgent need to enable teleworkers to keep up with their usual daily activities, has caught the IT infrastructures unprepared and not properly secured. Attackers are well aware of these deficiencies and will profit from it.
The use of PKI and Digital Certificates can help to secure email messages and reduce risks by adding digital signatures that ensure the authenticity of messages and also by enabling encryption of confidential data. WISeKey’s WISeID Identity Platform is available to anyone to obtain a digital certificate and immediately protect their email.
We have put together a team ready to respond to any challenges related to this pandemic and have Business Continuity Plans in place to ensure the continuation of services and in particular the manufacturing of our IoT micro-processors in Taiwan and Thailand.
As a way to show our solidarity all senior staff (CEO, CFO, MD) took a temporary salary reduction of 30% during the crisis. The Board of Directors has also taken a 30% reduction in their compensation. Other WISeKey staff, at the officer level, took temporary salary reductions of various amounts and share compensation. We have also discontinued the share buyback program, announced last year so we conserve our cash for operational needs.
We anticipate a strong demand for our cybersecurity products in 2020 and sustained revenue derived from the increase demand of our technology. It is anticipated that CyberSecurity companies like WISeKey with strong technology-IP assets will recover much faster from the current crisis. Overall, continued adoption of IoT technologies connected to secure clouds, and ultimately 5G, will be tremendous catalysts for security companies given the related risk of adoption.
As a Swiss high-growth IoT company, WISeKey plays a critical role in supporting the country’s 4th Industrial Revolution strategy and it is a valuable asset for the country as it continues to maintain its technology independence and neutrality in the global markets.
The IoT revenue generated by WISeKey should be considered as premium revenue of strategic relevance and value within the Swiss economy. Many organizations that have invested in IoT deployments, have yet to derive any significant revenue from their solutions, as business models are changing from transactional to collaborative, while transactions are evolving from simple one-off payments to complex alternatives of usage-based billing.
WISeKey’s global expansion, particularly in North America, is built on a clear vision and business strategy and driven by unique and comprehensive offerings, able to generate revenue from IoT devices, cybersecurity services, data analysis and, more importantly, our Trusted Ecosystem and Vertical Platforms.
As we move forward, and the IoT becomes the Internet of Everything (IoE), the number of connected devices and objects, all capable of collecting and transmitting data over the internet, are rapidly increasing and the WISeKey Vertical Platform becomes critical to secure these environments.
Consequently, our ability to monetize our solutions, services, Blockchain, AI and the data produced by these connected devices will continue to grow. The total number of IoT connected devices and objects is expected to grow from $6 billion in 2015 to $27 billion in 2025, all of them requiring the type of secure chips and software offered by WISeKey to secure such connections.
Global spending on IoT/IoE technology-based services, is now expected to reach $3 trillion by 2025.
The IoT will live up to its promise only if the connected devices, the data they generate, the business applications that control these devices and the services around them, can be fully secured and trusted.
In today’s environment, where cyberattacks have become more common and increasingly sophisticated, there is an urgent need to fundamentally rethink the Security Stack for the IoT cloud. IoT-enabled services and products will generate vast amounts of data which, when well-analyzed, will be very valuable to government organizations, product manufactures, corporations and end-users.
This revenue model relies on data trust and on IoT Edge Device control.
Users can take advantage of this unique solution in the market by being able remotely and uniquely to identify and control an IoT Edge Device (activation/deactivation/revocation), securely provision (point to point secure update) the IoT Edge Device credentials and secure the messages in motion between Edge Devices and Business Applications.
Among its new product launches, WISeKey has introduced the new NanoSeal Semiconductors product family and architecture for consumer products’ authentication and traceability.
Built around a robust proprietary cryptographic algorithm for data protection and digital signature, a 2kbit long life-secure EEPROM non-volatile memory with multiple independent security areas and contacts or NFC based communication interfaces, this versatile architecture can be attached to any product that needs to be protected and tracked including sports apparel, drone battery packs, e-cigarettes refills, parcels, medicines and high-tech accessories, creating a completely new market for the Company.
The rapid growth of the number of connected IoT devices, as well as people’s dependence on them for personal and business needs, has created opportunities for hackers to alter or manipulate digital footprints. We believe that our integrated products provide the most comprehensive solution to fill these gaps in cybersecurity and data protection.
The core of WISeKey’s Vertical Trusted Platform is based on our Cybersecurity SaaS business, also known as Managed PKI services, and on our Semiconductor chips.
To take advantage of the vast IoT opportunities, WISekey is contemplating new acquisitions of companies with strong serialization ecosystems (RFID and Tags). Such acquisitions will allow WISeKey to further expand the number of connected objects into the WISeKey PKI and IoT platform, integrating the authentication process with the WISeKey Semiconductors tags based on our NanoSeal and VaultIC155 NFC secure element. These tags, when tapped by an NFC enabled phone, allow users to securely authenticate, track, and confirm the identity of the product on a blockchain ledger.
The result will empower brands to increase their cybersecurity and create new, unique consumer engagement opportunities utilizing NFC microchip technology and PKI.
WISeKey (SIX Swiss Exchange: WIHN) is a leading global cybersecurity company currently deploying large scale digital identity ecosystems for people and objects using Blockchain, AI and IoT respecting the Human as the Fulcrum of the Internet. WISeKey Microprocessors Secures the pervasive computing shaping today’s Internet of Everything. WISeKey IoT has an install base of over 1.5 billion microchips in virtually all IoT sectors (connected cars, smart cities, drones, agricultural sensors, anti-counterfeiting, smart lighting, servers, computers, mobile phones, crypto tokens etc.). WISeKey is uniquely positioned to be at the edge of IoT as our semiconductors produce a huge amount of Big Data that, when analyzed with Artificial Intelligence (AI), can help industrial applications to predict the failure of their equipment before it happens.
Our technology is Trusted by the OISTE/WISeKey’s Swiss based cryptographic Root of Trust (“RoT”) provides secure authentication and identification, in both physical and virtual environments, for the Internet of Things, Blockchain and Artificial Intelligence. The WISeKey RoT serves as a common trust anchor to ensure the integrity of online transactions among objects and between objects and people. For more information, visit www.wisekey.com.
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This communication expressly or implicitly contains certain forward-looking statements concerning WISeKey International Holding Ltd and its business. Such statements involve certain known and unknown risks, uncertainties and other factors, which could cause the actual results, financial condition, performance or achievements of WISeKey International Holding Ltd to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. WISeKey International Holding Ltd is providing this communication as of this date and does not undertake to update any forward-looking statements contained herein as a result of new information, future events or otherwise.
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