Safe-T Group Ltd. (NASDAQ, TASE: SFET) stocks’ consolidation period was relatively short-lived. In fact, the past few trading sessions have put the company stock firmly into rally territory, with shares adding another 3% to its price on Tuesday to bring YTD gains over 14%. That’s not surprising to those following SFET. Its Q3 financials were more than impressive; they were record-setting. And for those investing from a forward-looking perspective, the better news may be that the momentum generated during the second half of 2022 shows no signs of slowing.
On the contrary, revenues have been growing at an appreciable pace, and with aggressive cost-cutting over the past few quarters, the setup into Q4 and all of 2023 is for the bullish trend to continue.
Strengthening Operational Momentum
It should, noting that SFET is seeing business strengthening across the board. Last month, SFET announced that its wholly-owned subsidiary and enterprise privacy network unit, NetNut, looks better positioned than ever to seize enormous revenue-generating opportunities from current and prospective clients in the price comparison website (PCW) market. That sector presented an estimated $2.8 billion opportunity in 2019, according to a report published by DataINTELO research.
But the better news for SFET, and investors, is that analysts are expecting the market to become a more than $6 billion rev-gen opportunity by 2030. And with an expected CAGR of 8%, each year ahead adds significant and cumulative value to a market where SFET’s assets are exceptionally positioned. In other words, SFET can get much bigger; and that can happen faster than many expect.
Actually, that mission is underway by SFET nurturing multiple revenue streams and taking advantage of its opportunities by offering best-in-class optimization solutions to diverse business segments needing innovative and client-specific cyber-security solutions. Those following company updates know that SFET has been more than just targeting opportunities; they are capturing them.
Momentum Strengthens Into Q4
For example, in Q3, SFET said that NetNut doubled its usage volume and processed over 36 billion customer requests over a comparative monthly period, attributed to the onboarding of several strategic customers that enhanced NetNut’s network ability to process billions of requests compared to prior periods. While current run rates are impressive, additional growth to volume is likely in the queue, resulting from further client acquisitions expected after they become better acquainted with NetNut’s ability to improve price comparison capabilities, provide users with seamless and competitive business analysis, and, most importantly, increase productivity.
Keep in mind that NetNut isn’t the only performing value driver. Revenue contributions from other products in its enterprise privacy solutions, consumer cyber-security and privacy solutions, and enterprise cyber-security solutions segments add to the company’s steepening growth trajectory.
They include cybersecurity and privacy solutions for basic and advanced consumers that provide a substantial security blanket against ransomware, viruses, phishing, and other online threats. It also provides users with a robust, secure, and encrypted connection, masking their online activity and keeping them safe from hackers. A second segment, privacy solutions for enterprises, is powered by the world’s fastest and most highly secured proxy network that enables customers to anonymously collect data at any scale from any public source over the web using a unique hybrid network. In addition, the SFET network comprises both entry and exit points based on its proprietary reflection technology, leveraging the power of hundreds of optimally designed servers located at ISP partners worldwide that help guarantee the service’s privacy, quality, stability, and speed. There’s more contributing to record-setting growth.
A third value-driving asset targets business from clients needing enterprise cybersecurity solutions. This revenue stream is accretive through its global information securities provider, TerraZone Ltd. Designed for cloud, on-premises, and hybrid networks, these tailored solutions mitigate attacks on enterprises’ business-critical services and sensitive data. They also ensure uninterrupted business continuity by protecting data access, storage and exchange breaches, and threats from both within and outside the organization by utilizing a “validate first, access later” philosophy.
Combined, these assets aren’t just targeting diversified opportunities; they are capitalizing on them, delivering growth that less nimble industry giants like Rapid7, Inc. (NASDAQ: RPD), Palo Alto Networks (NASDAQ: PANW), and Cisco (NASDAQ: CSCO) will find hard to keep pace with. Evidence of that is in the quarterly results published.
Nearing Two Years Of Consecutive Quarterly Growth
In Q3, SFET reported impressive growth. In fact, they were record-setting. Specifically, comparative revenues surged by 42% to a record $4,812,000. For the nine-month, or YTD comparison, SFET revenues rose by 109% to $13,610,000, with results for both periods measured exceeding prior guidance. Just as crucial to topline growth is that SFET revenues are falling faster to the bottom line.
Gross profit for the nine months surged by 143% to $7,360,000 over last year’s comparable, and for the three months ending September 30, gross profit scored 47% higher than the previous year’s period to reach $2,627,000. While impressive, SFET enters Q4 showing no signs of slowing. Thus, from a forward-looking perspective, even better results could be in the queue. And when noting the aggressive reductions in non-accretive operating expenses, that bullish expectation is more than likely; it’s probable.
Industry analysts within the sector appear to support that assumption, with two covering SFET modeling for a median 12-month price target of $5.50 – more than 103% higher than current levels. With only about 3.26 million shares outstanding, if SFET confirms in its imminent Q4 report that its growth trend is intact, reaching that target could happen sooner than later.
Trading Ahead Of An Expected Rally
Considering that, trading ahead of Q4 results may be a wise and timely consideration. Remember, SFET has delivered consecutive growth over the past seven quarters. More importantly, they’ve provided evidence of entering 2023 better positioned than ever to keep that winning streak alive. In fact, revenue growth is strengthening across all of its segment channels, highlighted by updates pointing to organic growth and the ability to capitalize on strengthening market positions. That momentum is behind its enterprise privacy business turning profitable and scoring its own record-setting numbers.
That’s not all. Another subsidiary, CyberKick, is performing better than expected, fueling optimism that income from that asset could contribute appreciably more to revenue streams this year. Thus, the most prudent way to appraise SFET is not singularly but instead as a sum of its parts calculation. Appreciating the entirety of assets, including having roughly $8.1 million in cash, which includes $4.3 million raised after Q3, are the tangibles exposing a value and investment proposition worth considering.
Yes, there are big names in the sector, and yes, they offer specific solutions. But what’s different about SFET is that they are nimble, an appreciable difference from large-cap competitors that may find it difficult to quickly reprogram to address cyber-threats that change almost daily. In that sense, being small has its advantages. And while SFET currently meets that description, a growth spurt is certainly not out of the question.
In fact, that’s happening now. Strategic initiatives, formidable assets, a strong balance sheet, and expert management all contribute to SFET’s record revenues and strengthened bottom-line performance. And with historical performance now an enviable precedent, the best news for SFET and its investors is that 2023 performance is expected to be more than better; it should shatter recent records.
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