Safe-T Group Ltd. (NASDAQ, TASE: SFET) keeps getting bigger, and its stock responded in kind by jumping 8% on Monday. The bullish move gained momentum in the new year, after $SFET announced that its wholly owned subsidiary and enterprise privacy network unit, NetNut, is expanding its presence into the price comparison market, intending to accelerate growth through travel sector customer acquisitions involving price comparison websites (PCW). According to DataINTELO, the global price comparison website market was a $2.8 billion industry in 2019. However, estimating a CAGR of 8% through the end of this decade, that market will surge to over $6 billion. That puts SFET and wholly owned NetNut in the right markets at the right time.
But more than early to an already massive opportunity, NetNut is showing itself as a better optimization solution for clients in the sector. That’s led to explosive growth, evidenced by SFET reporting NetNut has doubled its usage volume within one month and processed over 36 billion customer requests. The sharp spike in volume is attributed to the onboarding of several strategic customers and integrations facilitating NetNut’s network ability to process billions of requests compared to prior periods. Even better, SFET expects more acquisitions as potential clients become better acquainted with NetNut’s ability to improve price comparison capabilities and offer users seamless and competitive business analysis and increased productivity.
And keep this in mind: NetNut’s impressive growth is just one part of the SFET value proposition.
Three Business Segments Contributing To Record Growth
SFET’s three business segments, which include enterprise privacy solutions, consumer cyber-security and privacy solutions, and enterprise cyber-security solutions, are also contributing to the record-setting revenue growth. Its cybersecurity and privacy solutions for both basic and advanced consumers provide a substantial security blanket against ransomware, viruses, phishing, and other online threats. It also provides users with a powerful, secured, and encrypted connection, masking their online activity and keeping them safe from hackers.
Safe-T Group’s privacy solutions for enterprises are powered by the world’s fastest and most highly secured proxy network, enabling customers to anonymously collect data at any scale from any public source over the web using a unique hybrid network. Moreover, the SFET network comprises both exit points based on its proprietary reflection technology and hundreds of servers located at ISP partners worldwide, optimally designed to guarantee the service’s privacy, quality, stability, and speed.
Its third value driver, cybersecurity solutions for enterprises, is available through its reseller, TerraZone Ltd., a global information security provider. These solutions are designed for cloud, on-premises, and hybrid networks and mitigate attacks on enterprises’ business-critical services and sensitive data. More importantly, they ensure uninterrupted business continuity by protecting data access, storage and exchange breaches, and threats from outside the organization or within by utilizing a “validate first, access later” philosophy.
The result of SFET targeting multiple market opportunities: record-setting revenues and bottom-line growth.
Best-Ever Revenues, Consecutive Quarterly Growth
SFET reported record-setting growth in Q3, an achievement that most companies weren’t able to match. Just as important, the momentum behind its growth isn’t losing steam. Revenues for the three months ending September 30, 2022, reached a record $4,812,000, 42% higher than last year. Even more impressive is that on a nine-month comparison, SFET assets combined to deliver a more than 109% increase in comparative revenues to $13,610,000. Both measures exceeded guidance.
Record-setting revenues aren’t the only numbers attracting investors‘ attention. SFET’s bottom line numbers are equally exciting. There, gross profit for the nine months surged by 143% to $7,360,000 over last year’s comparable. For the three months ending September 30, gross profit scored $2,627,000, 47% higher than the previous year’s period. But here’s the better news: aggressive reductions in non-accretive operating expenses should provide a tailwind into Q4, meaning that record-setting performances and consecutive quarterly growth are likely to continue. That presumption is well supported, noting SFET’s privacy solutions for enterprise businesses reached break-even operating results, which helps set the stage for bottom-line expansion in the current and coming quarters.
Analysts agree. The two covering SFET stock have a median 12-month price target of $5.50, more than 120% higher than current levels. Additionally, after completing a 1:10 split that leaves only about 3.26 million shares outstanding post-transaction, confirmation by SFET that its growth trajectory is strengthening – like the news last week – could help fuel an appreciable rally.
Record-Setting Performance Fueled By Innovative Financing
The good news for investors is that the rally could happen sooner than later. SFET’s most recent financials contributed to its aggregating seven consecutive quarters of revenue growth. That achievement is especially impressive knowing that expansion has come despite some of the most turbulent and challenging times of business history, with pandemic-related issues closing economies and disrupting corporate spending. Despite that, SFET navigated its business terrain successfully. It delivered consistent operational progress, financed its operations, and facilitated growth through a non-dilutive credit line from a leading Israeli bank and a strategic revenue-share model financing from an industry expert.
That model is proving beneficial to shareholders and lenders. Much of the non-dilutive funding came through a unique arrangement, with banks and strategic investors buying into SFET’s strengths. Following their own validations, they invest in the purchase of consumers (a future asset being customers), which are expected to deliver a consistent, leveraged, and high return on investment. The company noted that funding through this model allowed SFET to invest $1.2 million in customer acquisition, providing growth for itself and already returning 20% of the investment.
The better news is that with the financing strategy attractive to investors on an ROI basis, SFET has been able to guide that future deals can help facilitate potentially exponential growth to near and long-term revenues. Factoring in that potential, which is supported by data, analysts could be led to increase revenue estimates. If that’s the case, price targets will likely rise in tandem. In other words, with a bullish setup into Q4 and 2023, trading ahead of expectations may be timely.
More Records Expected In Q4 And In 2023
In fact, SFET has provided the evidence to show the company is in its best position ever to grow. After its impressive Q3 financials, SFET continues to give updates highlighting organic growth and the strengthening momentum behind it. That tailwind is strong, too, as demonstrated by its enterprise privacy business turning profitable and scoring three months of record-setting numbers. Following that update, recent news about NetNut, and its CyberKick subsidiary performing better than expected, it’s clear that SFET is firing on all cylinders operationally.
That’s not all. At the end of September, SFET’s cash position totaled about $3.86 million, representing about $0.48 per ADS outstanding. The company noted that its cash balance excluded an additional $4.3 million from its recently secured credit facility and investor’s financing, positioning SFET to capitalize on and maximize strategic initiatives. In other words, from operations to balance sheet, SFET shows no signs of weakness as it nears the closing of its 2022 books, and, more importantly, from an investor’s perspective, is set up for success in 2023.
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