ASX-listed AUCyber has released an update on its unaudited trading performance for the six months ended 31 December 2024, revealing a challenging financial period amidst a flurry of takeover activity.
The company's results are materially below the Board's expectations, with an underlying earnings before interest, taxes, depreciation, and amortisation loss of $1.6 million on revenues of $12.2 million.
This has led to the Board evaluating opportunities to right size and optimise the company’s cost base, and focus on go to market initiatives to drive new business.
AUCyber’s search for a new chief executive has also been put on hold, while the company awaits the outcome of takeover bids.
The company’s 2QFY25 unaudited revenues of $5.95 million marked a decline of approximately five per cent from 1QFY25 revenues of $6.24 million.
Meanwhile, operating cashflows were negative, at $1.3 million for the quarter ended 31 December 2024, and $2.8 million for the six months ended 31 December 2024.
A further financing cash outflow of $0.5 million for the quarter and $1.0 million for the six months was incurred in respect of property and data centre leases.
AUCyber's free cash flow burn was approximately $1.8 million for the quarter, while customer receipts decreased from $9.1 million in 1QFY25 to $8.7 million in 2QFY25.
However, as at 31 December 2024, the company had cash reserves of $5.0 million and no debt.
The cybersecurity provider attributed its weaker performance partly to seasonality, but also to slower than expected new customer signings, customer churn and/or downsizing of existing contracts.
It also pointed to lower gross margins than expected due to a cost base intended to support higher forecast revenue.
Although the integration of acquired businesses from a four-way merger in March 2024 is largely complete, a recent review highlighted shortcomings in risk management and execution.
The company has been the subject of two takeover bids: one by 5GN Networks which made an unsolicited and unconditional on-market takeover bid on 20 December 2024, offering $0.11 cash per share for 100 per cent of ordinary shares.
Brennan also submitted a non-binding and conditional takeover proposal on 24 December 2024, offering $0.14 cash per share for 100 per cent of ordinary shares.
The AUCyber Board has recommended that shareholders reject the 5GN takeover bid.
Its financial advisor has engaged with select third parties, including Brennan, interested in buying the company. Several interested parties have commenced due diligence.
AUCyber's full 1HFY25 accounts are due for release in late February 2025.
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