Tesserent Limited (ASX:TNT) Managing Director Keith Glennan talks about the company's cyber security offering, its move into the small- to mid-sized business (SMB) segment and regulatory tailwinds for better security around customer data.
Rachael Jones: Hello I'm Rachel Jones for the Finance News Network, joining me today from Tesserent is Managing Director, Keith Glennan. Keith, welcome back.
Keith Glennan: Thanks Rachael.
Rachel Jones: First up could you start by giving us an introduction to your company?
Keith Glennan: Tesserent is a managed security company, that means we use our propriety software to protect our customers networks. We make sure that they're digital assets are protected on the inside, we make sure that there's not malicious traffic coming in from the outside. We help our customers enforce their policies around what their staff are able to do and not able to do. How they interact with their partners, and we know from the statistics from last year, from 2017, is the worst year on record for cyber security breaches. So we know this is costing companies huge amounts of money, the government has put this on the radar with recent legislation changes. So this is a really important time for the security industry, we think we're really well placed to take advantage of the opportunity.
Rachael Jones: Now to your offering, what do you provide?
Keith Glennan: We provide a suite of security services, which we manage for our customers. That's a really important piece, there's a lot of technology on the market but there's a general understanding as well that there's no silver bullet in this regards. As a result the bad guys are changing their tactics on a daily basis, the reason they do that is that when we plug one hole, they find another. It's a game of whack a mole, and there's a lot at stake. So we deliver a range of services to filter email, to filter web traffic, to enforce policy. Other sorts of policy rules. We provide monitoring inside our customers networks, that's a really important thing, we have really core technology that we own. We own our own IP, we also have partnerships with some of the really big 800 pound gorillas in the security space. So we have 24 by seven visibility on what's happening going in and out of our customers networks, in terms of threats. We're able to respond very rapidly and work through with them if there are any issues and rectify them as soon as they appear.
Rachael Jones: How do your services differ from other providers?
Keith Glennan: We're all about delivering an integrated service, which is a combination of our intellectual property, which we install, we manage, we configure and we monitor, and we patch. Most of our competitors will rely on a third party off the shelf product, they'll go and buy a product, from a credible vendor. But they are somewhat of a hostage to what that vendor is able to deliver, and many of our customers are looking for much more customized, much more fine grain solutions. Because we own our own intellectual property, because we have a team of people that build it, monitor it and manage it and it's within the same group. We're able to provide a level of service we think nobody else is able to provide.
Rachael Jones: Thanks Keith. Now to your move into small to medium sized business segments, what can you tell me about the size of the market?
Keith Glennan: Well it's a pretty big market, in Australia we know there are round about two million SMB's, and that's a part of the market that the security industry historically has not been very interested in targeting. There's really been a pyramid and I think every security vendor, and it's probably true of every vendor in every business, wants to have their slide of lighthouse customers, where you can say here are the household brand names that are our customers. That provides great credibility, but there are a lot of big players who are scratching their head trying to work out how to do this. Some of them have told us they are unable to match our offering at our price. That's obviously great opportunity for us that we're trying to capitalistic on at the moment.
Rachael Jones: What can you tell me about the Cyberbiz offering?
Keith Glennan: So the Cyberbiz offering is a really interesting product, this is a packaging of our enterprise grade security technology. This is the same technology we use for protecting household brand, global corporations. We've packaged that technology in a way that it can be easily consumed by small to medium businesses. What they need is a service, they need great technology, which we've got, but they need that service element. We've perfected the delivery of that service in very large customers, in medium size customers and we've now packaged it in a way that can be consumed by the small to medium market as well.
Rachael Jones: What can you tell me about your partnerships?
Keith Glennan: We've signed some really strong partnerships already, so the difference with the Cyberbiz model is that it's a channel based model. So historically our large corporate and our government customers have been direct sales. We have corporate sales people who engage in quite often long sales cycles to close those deals. They're big budget deals, these are companies that are spending six figures, sometimes these are seven figure deals. But our partners are the ones who are best placed to get access to the small to medium market.
Rachael Jones: Now to a more general question, legislation is in place now for companies to provide more robust cyber security. What does this mean at the minimum?
Keith Glennan: It's unfortunate that the legislation has had to be brought in. It’s unfortunate the government has had to bring in a stick, rather than a carrot, but that's where we've landed. So in February the Data Breach Notification Bill went live, that's an amendment to the Privacy Act. That really stipulates that all the businesses that are covered under the Privacy Act need to take cyber security a lot more seriously. The corporates understand this, and they've understood it for a long while. The small to medium part of the market needs a little bit of a push to educate themselves, and that's why a Cyberbiz offering is, I think it's really well placed at the moment.
Rachael Jones: Last question Keith, what can investors look forward to in the terms of news flow over the next quarter and beyond?
Keith Glennan: Look we've certainly got a really good pipeline of opportunities at the moment, and there are some really solid deals that we're working on. Some really great opportunities, and our business is a balance. We have in the order of six million dollars a year of underlying annuity revenue, that comes from blue chip customers who have engaged us over multi year terms. So the business has a very stable platform, and look we're pretty excited about where the business is going to go. I think we know for the last, certainly for the last 12 months we've been head down. I think it's fair to say we've taken a very engineering approach to the market, we don't get ahead of ourselves, we've built some really solid technology and we're now in that process of rolling it out to what's a very large market. We're really excited about what we're going to see over the next three to six months.
Rachael Jones: Excellent, Keith Glennan, thanks for the update.
Keith Glennan: Thanks Rachel.