HUB Cyber Security .(US:HUBC)2024-12-02 15:13Financial Data and Key Metrics Changes - Revenue for the six months ended June 30, 2024, was $15.7 million, a decline of $9.3 million or 37% compared to $25 million for the same period in 2023, primarily due to terminated and less profitable contracts in the professional services business [27][28] - Gross profit margin improved to 9.5% compared to a negative 7.9% for the same period in 2023, reflecting effective management and absence of one-off costs recorded in the first half of 2023 [28] - Total operating expenses for the six months ended June 30, 2024, were $16.5 million, a decline of approximately 90% compared to $57.5 million reported for the same period in 2023 [29] Business Line Data and Key Metrics Changes - The Secure Data Fabric platform is positioned as the primary growth engine, while the legacy professional services and cyber consultancy business provides a stable revenue stream [10][11] - The professional services business has historically delivered margins in the 50% to 20% range, while the Secure Data Fabric is expected to achieve margins in the 80% to 90% range [44] Market Data and Key Metrics Changes - Demand for the Secure Data Fabric product is driven by the explosion of AI-driven data, rising regulatory pressures, and the high cost of maintaining legacy systems [47] - The company is currently working with leading European banks on KYC processes and exploring expansion into other products like transaction monitoring [50] Company Strategy and Development Direction - The company has undergone a strategic evolution, transitioning to focus on high-margin software-driven solutions that align with long-term growth objectives [40] - The management has taken decisive steps to streamline operations, close underperforming businesses, and reduce headcount to focus on core strengths [18][19] Management Comments on Operating Environment and Future Outlook - Management believes that the trusted relationships built over decades with blue-chip clients will be key to driving the Secure Data Fabric business [20] - The company aims to position itself as a fully channel-ready leader poised for scalable growth and market expansion by the close of 2025 [52] Other Important Information - The company has significantly reduced liabilities and improved its balance sheet, creating greater flexibility for strategic investments [19] - Cash flow showed a decrease of $2 million, attributed to a mix of reasons including cash outlay for operating expenses [32] Q&A Session Summary Question: Can you talk about your competitors and the advantages that you have over them? - HUB's Secure Data Fabric can be implemented in just a few months with relatively low deployment and maintenance costs, powered by military-grade cybersecurity [35][36] Question: Can you explain the software versus hardware segment of the business? - HUB has transitioned to focus on high-margin software-driven solutions, moving away from hardware and services [40][41] Question: How do you see the long-term margin profile of the company? - The Secure Data Fabric segment is poised to be the primary growth driver for HUB, with expected margins in the 80% to 90% range [44][45] Question: What are the main drivers behind the demand for HUB's product? - Demand is fueled by the explosion of AI-driven data, rising regulatory pressures, and the high cost of maintaining legacy systems [47] Question: Can you elaborate on HUB's secure data customer base? - HUB is currently working with leading European banks on KYC processes and has a pipeline that includes various industries grappling with large-scale data and regulatory pressures [50][52]