Corero is a cyber software business that is overlooked by the market, in our view. Huge progress has been made over the last three years bringing the business to operational maturity. The company is predominantly now a recurring revenue business, but this does not seem to be recognised in the current valuation. Corero's technology has been validated with major market leading customers and go-to-market partners.
Group revenues have grown c20% compound between 2018-22A, enabling the business to fully recover its total cost base and report positive EBITDA since FY21A. Corero has repaid all outstanding debt and is now unleveraged. The recent trading update for H1E has confirmed strong trading with revenues growing 20% YoY to $10.6m and net cash on the balance sheet of $6.2m.
Back in 2019 the stock was trading around 5x EV/sales. On just 2x FY22A EV/sales the shares now, the shares look materially undervalued. We will be initiating coverage with forecasts in due course.
