Cyber division back to growth at NCC
Manchester headquartered software and cyber security business NCC Group expects to make profits “ahead of market consensus” of around £31m after “targeted efficiencies” across the business.
Revenues from cyber security have returned to growth after concerns last year that US businesses in particular were cutting their cyber investment.
The statement to the stock market this morning also says cyber security revenues to have returned to growth in the second half of 2024, resulting in small full year decline of c.2.0% but managed services growth has continued to accelerate, increasing by c.36% while Technical Assurance Services has declined by c.23% with the recovery in demand less consistent than expected.
The growth in Escode revenue that appears to have pleased the leadership of the business who have reported the division has delivered seven consecutive quarters of year-on-year growth.
Escode is where codes to software are held in an independent escrow account as a middleman between the customer and the software supplier.
In April 2024 NCC rebranded its software escrow business as Escode, giving it a stronger identity within the business. In June 2021, NCC had acquired Iron Mountain’s Intellectual Property Management (IPM) business, propelling the business in North America.
Activist investor Kelso upped its stake in NCC in April and maintains its view that the business is undervalued and “the sum of the parts of NCC is significantly greater than the current market capitalisation.”
However, while the investor wants ecommerce giant THG to be broken up Kelso’s chief executive John Goold has stopped short of calling for NCC’s break up, but has applauded the group’s focus on its Escode division.
Mike Maddison
Mike Maddison CEO said: “We have delivered a second-half financial performance ahead of our Adjusted Operating Profit expectations and continued to transform the business on many fronts. We remain confident in our ability to create sustainable long-term revenue growth, our financial resilience and continue to improve shareholder value. It is exciting to see Managed Services continue to grow, which is central to our Cyber strategy, and Escode continue to experience consecutive revenue growth alongside its new brand launch early in the year.”
The business held an Escode Capital Markets Event on 25 April 2024.
For the rest of 2024 NCC expects overall revenue to be in the region of c.£100m, generating gross profit margins of c.38%.
