Cipherpoint Ltd (ASX:CPT) is beginning to gain momentum in identified target markets with the June quarter seeing a strong uptick in digital lead generation, despite significant reductions in marketing and advertising spend.
The company, which helps businesses and governments to identify, protect and control access to sensitive information, has been successful in expanding its customer base.
Formerly known as Covata Ltd, the company continues to see strong growth opportunities in the market for enterprise security products in the face of new and high-profile data breaches.
Further, the current pandemic has increased the focus on remote working, collaboration and digital transformation and, in turn, the need for more vigilance around data access and security.
New growth strategy
In July 2020, the company outlined its growth strategy to expand organically by generating greater revenues from new customers and to grow user numbers and revenues from existing customers.
Cipherpoint has also recently entered into co-development agreements to help clients transition their applications confidently to the cloud, with offerings that provide extensive control over and protection of sensitive information.
The company is also looking for acquisitions to drive momentum and these may include the acquisition of IP that will speed up time to market for key functionality or acquisitions of similar-sized businesses that will build greater scale.
It is moving from its old revenue model based on the traditional perpetual software licensing and maintenance and is working towards a subscription-based model in quoting new business and also sees the opportunity to develop consumption-based models for its discovery and classification products.
Bank of Finland has joined the company as an important customer in the European region while partner sales in Asia continue to achieve traction.
Singapore-based partner Total eBiz Solutions (TeBS) has added Singaporean Government agency Tote Board to its portfolio of customers using Cipherpoint’s sensitive data discovery and protection products.
The company received its first purchase order from its US partner MA Polce, a New York-based information technology solutions and managed services provider in August 2020.
MA Polce will deploy the company’s cp.Protect product as an embedded technology offering into their hosted Managed IT services environment.
Cipherpoint has also entered into two co-development agreements with Sydney-based Haventec and Melbourne and Brisbane-based Biarri.
Cipherpoint will use Haventec’s suite of patented technologies (APIs) for securing digital identities and for protecting sensitive data from theft or misuse, to identify and then develop a solution to intensify the security around the encryption keys used to protect sensitive data.
This is to deepen Cipherpoint’s cp.Protect suite of solutions by addressing the performance and functional limitations arising from the bring your own key (BYOK) and hold your own key (HYOK) solutions currently in the market.
Cipherpoint has also enlisted Biarri’s team of mathematicians to evaluate the next-generation data discovery and classification algorithms that can improve Cipherpoint’s cp.Discover suite of solutions.
The focus will be on addressing existing limitations on the ability to read and classify files that do not contain text.
This will cover improving existing OCR tools plus using AI-based image recognition to feed the classification process.
Biarri is a leader in building custom optimisation solutions with powerful mathematical and predictive modelling.
California State University contract renewal
Cipherpoint has also had its contract renewed with California State University (CSU) for its cp.Protect and cp.Discover products plus services.
CSU has been a customer since 2015 and is the largest four-year public university system in the US, with over 47,000 staff and more than 481,000 enrolled students.
CSU has upgraded to Cipherpoint’s new version of cp.Discover and extended its use into their SharePoint online and file server environments.
The contract renewal value is about $51,000 for a further term of 12 months.
Fundraising to accelerate strategic priorities
In August 2020, Cipherpoint launched a partly underwritten non-renounceable entitlement issue of one new share for every two existing shares held by shareholders to raise up to around $2.321 million before costs.
The offer is for eligible shareholders at the record date, with a registered address in Australia and New Zealand, enabling them to subscribe for new shares at an issue price of 4.8 cents each.
The net proceeds of the offer will be used to:
➢ Accelerate key strategic priorities;
➢ Take advantage of data security market tailwinds;
➢ Invest in next-generation technology;
➢ To consider appropriate acquisitions; and
➢ Strengthen the balance sheet
And only a month earlier in July, the company received binding commitments for a placement of 19 million shares at 2.3 cents per share to raise an additional $437,000 following a heavily oversubscribed share purchase plan (SPP).
This placement is being held in response to the oversubscription and interest received from other sophisticated investors seeking an opportunity to invest in the company.
On June 30, 2020, the company closed its $500,000 SPP well oversubscribed following strong support from existing shareholders.
Acceptances totalling $1,264,500 were received - more than two times the maximum subscription of $500,000.
Due to the over-subscriptions, applications were scaled back on a pro-rata basis, with each accepting shareholder receiving about 40% of their SPP application amount, with the balance of application funds to be returned to them.
The funds raised will provide the company with additional capital to allow it to accelerate its cloud development and the integration of its products with the major collaboration platforms in the market, including Microsoft Teams.
The business continues to function seamlessly with most staff in Germany, the US and Sydney working remotely.
Customer prospecting and support activities by way of teleconferencing or web meeting have quickly gained acceptance by the broader market, allowing its staff to continue to work flexibly and safely.