BrandShield Systems plc (AIM: BRSD), a leading provider of cybersecurity solutions from brand protection to online threat hunting, is pleased to provide the following trading update for the year ended 31 December 2020 ("the "period"). The figures provided are based on a consolidation with BrandShield Limited following completion of the Reverse Takeover Transaction on 1 December 2020.
· 71% increase in Annual Recurring Revenue2 to $3.278m1 (FY19: $1.92m)
· 85% increase in new business ARR to $1.76m1 (FY19 $0.95m)
· 47% increase in revenue to $2.60m1 (FY19: $1.77m)
· Cash of $3.06m1 at period end
· Successful reverse takeover of BrandShield Limited
· Contract signed with Bristol Myers Squibb in December 2020
· Contract signed with The Pharmaceutical Security Institute in November 2020
· Cutting edge Image Recognition and OCR technologies developed (launched in January 2021)
· 23% increase in headcount to 32 (FY19:26) with more sales staff to be recruited in 2021 to achieve aggressive ARR growth targets
· Board confident in long-term growth opportunity for BrandShield
1. All financials based on unaudited figures to 31 December 2020
2. Annual Recurring Revenue is a non GAAP measure and a company specific measure
BrandShield has been focused, and continues to focus, on driving the growth of its annual recurring revenue ("ARR") run-rate figure as more clients are on-boarded and existing clients expand the range and depth of services to which they subscribe. ARR increased from $1.915 million at the end of 2019 to $3.278 million (unaudited) as at 31 December 2020, a growth rate of 71%.
The Board supports the drive to increase ARR through the expeditious use of cash resources in targeted marketing and an increase in headcount, particularly in the sales and marketing functions. The early part of 2021 has seen continued strong growth in ARR, with new business signed being significantly ahead of January 2020. Given the normal weighting of ARR growth being focused in H2, this is an encouraging trend, albeit over a limited period of reference. The onset of the pandemic coincided with the development of highly automated and online focused marketing systems within BrandShield. As a result of this combination of circumstances, BrandShield saw a compression of sales cycles across the spectrum of client sizes.
The revenues of BrandShield Limited in 2020 grew by 47%, from $1.77 million in 2019 to $2.6 million1 and the Company ended the period with available cash reserves of $3.06 million1.
The period was dominated by the successful reverse takeover Transaction of BrandShield Limited, which involved 100% of the share capital of BrandShield Limited being acquired by the Company and the Company being re-named BrandShield Systems Plc (previously Two Shields Investments Plc). The Company ceased to be classed by AIM as an AIM investing company and is now a trading company entirely focused on the development of BrandShield Limited as a global provider of its brand protection and online threat hunting solution to some of the world's leading companies across a broad range of sectors. The new board reflects that emphasis, with the Company taking on five new directors: three executive directors from BrandShield Limited, and two new non-executive directors.
The new board continues to seek opportunities to divest the remaining legacy assets within the enlarged Group where opportunities arise.
Headcount in BrandShield Limited increased from 26 at the 2019 year end to 29 at 31 December 2020. This will increase further throughout 2021 as the Company seeks to achieve aggressive ARR growth targets. The Board remains acutely aware of the need to align its key employees' remuneration packages with those of the interests of our shareholders. As stated in the Group's admission document dated 11 November 2020, the Company is seeking to implement a Long Term Incentive Plan for the key revenue driving employees that achieves that alignment in the near future.
BrandShield Limited performed very strongly throughout the global Coronavirus pandemic, benefitting from the unprecedented rise in eCommerce and the associated increase in online, fraudulent activity targeted at brands and their customers. The value of new business in ARR terms was $1.76 million, an increase of 85% from 2019. The churn in terms of ARR during 2020 stood at $0.40 million, mostly from clients that suffered from economic stress due to the pandemic, especially in the travel and leisure sectors which is to be expected. However, these customers losses were offset by a large growth in new clients. A notable client win was Bristol Myers Squibb, which reflects the continuing importance of the United States as the Company's strongest geographical market. BrandShield Limited will seek to continue the strong uptake of US clients through the establishment of a permanent presence there and has recently incorporated BrandShield Inc., a wholly owned US subsidiary.
Following the period end we launched image recognition and optical character recognition ("OCR") to our arsenal of already market-leading technologies to further enhance the Company's ability to identify and neutralise actual and potential threats on eCommerce marketplaces to some of the leading global companies in the world.
Yoav Keren, CEO of BrandShield, commented:
"The explosion of online commerce through 2020 cannot be understated. eCommerce, as a percentage of total commerce in the US, has increased from 14% in Q2 2019 to over 20% in Q2 2020. This trend is here to stay and the associated increase of fraudulent activity, targeting this phenomenon, is being recognised by brands across the globe as a clear and present danger to their reputation, customer service resources and bottom line.
Companies are rapidly recognising that, in the same way that internal system protections are now viewed as indispensable, brand protection and online threat hunting that occur external to their company's perimeter are "must have" capabilities. We believe the BrandShield system is ideally placed to capitalise on this going forwards. I am delighted with the strong growth in our ARR over 2020, building on the trend of previous years.
The impact of our recent admission to trading on AIM is already being seen in terms of credibility amongst potential clients; the associated fund-raising has also provided a strong platform for continued growth through marketing globally. The Company is focused on ARR growth through the next two years to capitalise on macro trends and views this as a very strong expansion period. The Board will outline our growth plans for 2021 and beyond in more detail with the publication of our full year accounts, expected to be announced in May 2021."