CYAN: IPO success with cyber security solutions
Germany has a new listed tech company, that proves that a vibrant, growing tech scene can be found not just in Silicon Valley, but also in good old Europe: Cyan (ISIN: DE000A2E4SV8, Ticker: CYR:GY) has been quietly making its way onto the Frankfurt stock exchange today. It could be a top performer in the making.
Security Solutions for Mobile End Devices against the Backdrop of the Facebook Scandal
Cyan, a supplier of intelligent white label IT security solutions mostly to large telcos and their respective retail clients, started trading in the “Scale” segment of the Frankfurt stock exchange today. The listing follows a very successful book-building phase during which 1.38 million new shares (including a so called “greenshoe”) were issued at the upper end of the book-building range at EUR 23.00. All of the stock on offer originates from a capital increase, meaning that the company has accrued around EUR 31.7 million.
The main business areas of the company are mobile security solutions for the end customers of mobile network operators and fixed line internet service providers (MNOs, ISPs), mobile virtual network operators (MVNOs), the insurance and financial services sector and government institutions. Cyan’s solutions are integrated directly into the data centers of these B2B-partners and are therefore easily scalable. The partners do not incur any costs as a result of the integration of cyan products.
Win-Win-Win
The primary attraction for B2B partners: without having to make any investments of their own, they are able to offer their respective end customers first class security solutions and – because they share the proceeds with cyan – also generate additional income streams for themselves. In times of shrinking margins in the core business, supplementary services constitute one of the most important growth areas for telcos and banks. For its part, cyan incurs no costs for customer acquisition because it relies on the existing customer base of its B2B-partners. The end customers also benefit because the direct integration into their existing contract or app means they receive attractively priced, high quality security solutions for their mobile devices. This includes, for example, real-time protection against phishing, malware, viruses, Trojans, as well as against identity theft. In light of the Facebook scandal, consumers are set to put greater priority on securing their mobile devices and the data stored in the wide range of apps they are using, which should profit cyan.
New customers ahead
Right in time for the first trading day, a new, significant partner has been announced: Surf Telecom, the fastest-growing MVNO in Brazil, is the most recent company to partner with cyan. Surf Telecom sells its products through the Brazilian post office and is therefore able to access a market of more than 200 million (!) mobile device users. “We are very proud of this new customer,” said Peter Arnoth. “Currently, worldwide demand for our products is enormous and the only shortage we face has to do with our internal capacities. Some of the funds from the IPO will therefore be dedicated to expanding our sales team, because right now cyan has more inquiries from potential B2B partners than our current team is able to handle.”
Amazing profits – even in the most conservative scenario
The two lead banks of the IPO, Hauck & Aufhaeuser and MainFirst, are expecting an EBIT (earnings before interests and taxes) of approximately EUR 23 million (average of analysts’ expectations). According to our sources though, cyan’s internal budget planning is anticipating an EBIT of rather more than EUR 40 million in 2020. And by 2022/23, cyan itself thinks an EBIT of around EUR 100 million could be potentially achieved. What we are hearing is that analysts considered it simply too good to be true and that is why they included large discounts in their own models. But cyan’s internal figures are not unrealistic at all. Techszene was able to get a look into the sales pipeline: Currently cyan is in advanced negotiations with more than 40 potential new B2B partners. Each partner will bring in revenues in the multiple millions, some of them even in the tens of millions. Thanks to the extremely scalable nature of the business model, new revenue is more or less the same as pretax profit. And we are only talking about potential new partners who are already in the pipeline. Cyan will now be operating at full throttle and will be building up significantly more sales capacity. There are approximately 500 global MNOs and over 1,000 MVNOs who could be acquired as customers. This is not to mention the thousands of banks, insurance companies, fintech companies, and crypto companies which will be interested in protecting their apps against cybercrime.
So, you could say that cyan is one of the very few exceptions where the research studies by the issuing banks can actually be considered a “worst-case scenario”. Once it becomes apparent that even part of the figures that the company is planning internally can be realized, the stock may become a multiplier. And cyan can become an ambassador and beacon for the strength in innovation and technology of the European tech scene.
