Company Presentation cyan AG - 1Q 2020 - Investor Relations
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Company Presentation cyan AG – 1Q 2020
Group highlights
▪ cyan is a leading European cybersecurity provider that caters to Mobile
Network Operators and Internet Service Providers (MNOs & ISPs), Mobile
Virtual Network Operators (MVNOs), insurers and banks
▪ cyan offers its seamless, holistic cybersecurity solutions via a white-label
B2B2C approach to its clients’ large end-customer base, allowing them to
generate additional revenues and differentiate themselves from their
competition
▪ cyan is the only cybersecurity provider servicing mobile endpoints with net-
integrated solutions supplemented with a broad range of features for
endpoint as well as fixed line and IoT protection
▪ cyan has a broad blue-chip client portfolio and has won significant
contracts with MNOs such as Orange or Deutsche Telecom and financial
services companies such as Wirecard and Aon, which will support
This is cyan. significant growth in the near-to-mid-term
▪ cyan targets €75m with an EBITDA margin of 50% in 2021
© cyan Digital Security 2020 2
Management
Peter Arnoth Markus Cserna Michael Sieghart
CEO CTO CFO
▪ CEO of cyan AG ▪ CTO of cyan AG ▪ CFO of cyan AG
▪ CEO of cyan Security Group ▪ CTO of cyan Security Group ▪ Partner and CFO, Petrus Advisers
(2011 - today) (2011 - today) (2010 - 2017)
▪ Member of the Board E-Plus Mobilfunk ▪ Founder and CTO of cyan Networks Software ▪ Member of the Board, Wiener Privatbank SE
(2006 - 2007) (2006 - today) (2013 - 2014)
▪ Member of the Board T-Mobile Austria ▪ CEO of cyan Research & Development ▪ Managing Director, Deutsche Bank AG
(1998 - 2006) (2006 - 2014) (1997 - 2009)
© cyan Digital Security 2020 3
Mobile phone usage
Use of mobile phones for sensitive business
Mobile end-user activity (%)
Over 5.1bn people worldwide...
...use a mobile phone. More than half of the world’s internet Using online Online Online
payment systems shopping banking
connections are established via smartphone
51% 49%
46% 44%
40%
36%
33%
27%
Number of unique mobile subscribers worldwide grows daily 23%
The number of mobile subscribers is expected to rise to 5.8bn
by 2025
2016A 2018A 2020E 2016A 2018A 2020E 2016A 2018A 2020E
Active connections increase with a CAGR of 6% globally As consumers conduct increasingly sensitive business on smartphones,
The use of SIM cards worldwide will expand to 9.2bn (34.4bn cybersecurity awareness and demand is growing
incl. IoT) by 2025
Smartphone penetration is growing globally (e.g. 90% for US expected to in
2025), providing tailwinds for the mobile cybersecurity market
Source: GSMA, GlobalData
© cyan Digital Security 2020 4
Potential cyberthreats
Total mobile malware
Cryptomining
Pop-up web browser in m detections1)
120
Harmful Content Financial Services Fraud
Violence and pornography Scam
100
E-Commerce Communication
80
Phishing 60
Identity Theft
Phishing e-mails
Credit card theft
40
Social Media Control of
Alarm Systems
20
Digital Content
Clickjacking 0
Ransomware Malicious code in
Data encryption hidden buttons 2016 2017 2018
Malware
Worms, trojans, viruses
(1) Global detections of malware such as backdoors, crypto-mining, fake apps, banking trojans etc.
© cyan Digital Security 2020 5
Total addressable market: 2.5bn customers
10 Breakdown of total addressable market
8
4.1
6
in bn
9.2 1.3
4
1.3
5.1
2
2.5
0
1)
Total SIM cards Machine2machine, IoT Unique global subscribers Unlikely customers Total addressable market
Source: GSMA, GlobalData
(1) Accounts for feature phones, very low-income countries and customers in China, Russia and Israel
© cyan Digital Security 2020 6
Cybersecurity market segmentation
cyan‘s concentration on cybersecurity for the mass-market
Types of clients Types of devices Types of deployment
Consumers Smartphones OnNet Security
People owning personal devices Mobile phones with operating One click solution provided by MNOs/MVNOs/ISPs to their
used to connect to the internet not systems (mostly iOS & Android) end customers or small businesses. Integrated within the
controlled by an employer capable of running downloaded existing MNOs/MVNOs/ISPs infrastructure; works via:
applications • DNS: technique of blocking access to certain web-sites (IP
addresses) that are determined to be harmful
SMEs PCs • DPI: form of packet filtering that locates, identifies, classifies,
Consisting of organizations with Personal desktop computers, reroutes or blocks packets with specific data or code
Unique market positioning
Traditional endpoint
Scalability
DNS technology
solution providers
✓ Easy to roll-out
DNS technology
✓ Suitable for mass market
✓ Resource effective solution
✓ Future (5G ready) proven
✓ DoH/DoT ready
✓ Device and OS independent
DPI technology
Machine & capex intensive
DPI technology
DPI compromises user experience
More and more encrypted data limit
reliability
5G will lead to capacity problems
Standalone app-based solutions
OnNet only OnNet + endpoint Device and OS dependent
(seamless approach)
Requires installation, configuration &
Revenue generation
frequent updates
Note: DoT: DNS-over-TLS; DoH: DNS-over-HTTPS; DNS: Domain Name System; DPI: Deep Package Inspection Typically low penetration
© cyan Digital Security 2020 8
OnNet Security expected to significantly outgrow the Endpoint
Security market
Endpoint Security1) Total mobile security market in 2023E MNO OnNet Security2)
€m €m
Endpoint
protection
28% 4,463
€6,209m MNO on-net
72%
+639%
+83% 1,746
955
604
Significant additional growth potential in the
endpoint market from selling endpoint protection
on top of OnNet security solution (bundling)
2018A 2023E 2018A 2023E
USP: seamless security by cyan
Source: Globally leading market and strategy consultancy
(1) For smartphones only;
(2) For smartphones and PCs (cannot be separated logically)
© cyan Digital Security 2020 9
Technological advantage
Active sourcing Continuous data flow Artificial intelligence Cooperation
Sourcing via live analysis with ~200 cyan is using (anonymized) meta data Cooperation with
Own patented AI algorithms
virtual data centers distributed around of its clients’ end-customers: >1,000bn additional security sources
complemented by human manpower
the world data requests monthly and partners
25 proven methods of (Big Data) analysis with more than 10 years of development & experience
Security filter database
Implemented through a highly scalable and
performance efficient DNS approach
# >300m entries +1.5m entries p.m. Continuous updates Self-reinforcing
World-leading update frequency of 4 More users generate more data,
Ensuring the high quality of the Constantly evolving database to
hours, aiming to add real-time updates strengthening the database and
cybersecurity solution account for new threats
soon improving the protection
© cyan Digital Security 2020 10cyan‘s seamless security – makes customers always protected
Seamless coverage in On- and OffNet circumstances regardless of the consumer’s network connection
On Carrier’s Network Central Customer Interface Off Carrier’s Network
Network Integrated Protection Device Integrated Protection
DNS network-based security as basic protection in Device based security as extension of the end-
the operator’s network directly customer experience on all devices away from
the operator’s network
Carrier’s Network Public WIFIs
Home Router Home WIFIs
Line ID / Mobile Kids - Network Mobile - Client Kids - Client
For every device; Customers get the full
every target group set of Wi-FI security
and every OS
One common steering and
Customer get the full
No downloads monitoring for all use set of device security
necessary Desktop - cases: OnNet, OffNet (i.e. anti-virus, identity
(Endpoint) and Child Device –
Network Client check, etc.)
Default setup with Protection
updates of filter Extended range for
data base at least Android / special
six times a day features for iOS
© cyan Digital Security 2020 11Products and solutions for our clients
Cybersecurity MVNE
Network Operators Security Endpoint Security BSS/OSS
Selected
clients
Clean Pipe DNS OnNet Security Endpoint & Child Protection BSS/OSS
▪ Target industries: MNOs/MVNOs ▪ Target industries: Insurers, Fin-tech, ▪ Target industries: MVNE platforms,
▪ Target industries: MNOs/MVNOs/ISPs
Products
▪ Optimized data traffic banks, retailers MVNOs
▪ Fully network-integrated cybersecurity
▪ Blocking of harmful and illegal content for ▪ App-based security solution to detect ▪ Convergent lightweight BSS/OSS
▪ Personalized security and content filtering cyberthreats and bad content on device solutions
the whole subscriber base
▪ Protection against harmful content on the ▪ Outstanding additional features: Identity ▪ MVNE services include billing, network
▪ Increased performance, better user
web within the operator’s network check, website check, risk module, etc. integration, provisioning, touchpoints, etc.
experience (faster loading of pages)
▪ Opportunity to generate additional
▪ MVNOs: Reduction of data- purchase
Advantages
revenue by offering cybersecurity as a ▪ One-stop solution for MVNOs and smaller
costs creating positive EBITDA effect ▪ One-click solution
value-added service MNO B-brands
▪ MNOs: Lower network load allows to ▪ White-labelled B2B2C model
▪ No separate mobile app required1) ▪ High scalability through cloud based
defer scheduled capex creating a positive ▪ High scalability
▪ cyan’s partners' security layer is supple- services
cash flow effect
mented with device integrated checks
10%
Revenue
2023E
share
25%
65%
(1) Integrated into operator’s app; end-customer has access to cyan’s solutions after he/she
© cyan Digital Security 2020 12
(automatically) updates the operator’s appClean Pipe DNS
Clean Pipe DNS in a nutshell Product snapshot
End-customer USPs Provider USPs ▪ Network-integrated content filter solution designed for MNO and
MVNO data traffic optimization
Better user ▪ Blocks harmful and illegal content such as phishing, malware and
experience More satisfied trackers and reduces the amount of data used
(blocking of customers
unwanted ads) ▪ MVNO benefit: Lower data traffic allows for cost savings and
thereby creates a positive EBITDA effect
▪ MNO benefit: Lower & resource-friendly (peak) data traffic allows
No app or any other Cover whole end- to defer capital expenditures, creating a positive cash flow effect
installation required customer base
▪ Not user-specific: After being integrated, all users are subject to
Clean Pipe DNS regardless of subscription
▪ The product is marketed directly to network operators and is not
Clean Pipe EBITDA effect for visible to the end-customer
Privacy assured DNS MVNOs
▪ Clean Pipe DNS constitutes an entry product for cyan’s OnNet
Security & Endpoint solutions
Shorter loading Minimal integration
times points
© cyan Digital Security 2020 13OnNet Security
OnNet Security in a nutshell Product snapshot
USPs to clients and end-customers ▪ End-customers fully protected when surfing on mobile devices
using their MNOs or MVNOs network
No downloads ▪ cyan installs its solution at the client’s network centers and
Fully network integrated solution maintains the product during the life of the contract
▪ After integration, OnNet Security can be readily dispensed to all
end-customers based on different go-to-market approaches
White-label
Fully branded in look-and-feel of network
▪ As a “white-label” product, OnNet Security is provided under the
operator
client’s look-and-feel. Under regular operations, there is little to no
contact between the end-customer and cyan
Compatibility
Responsive design for every device & OS ▪ cyan’s security filter database ensures that OnNet Security’s
(incl. Android, iOS, Windows) protection is always up-to-date (the database is updated at least
six times a day)
Real-time protection
End-customer is redirected to blocking
screen
+
Add-ons
Push messages, individual warnings and
monthly reports on requests
(1) Exemplary price charged by MNO to end-customer © cyan Digital Security 2020 14Endpoint Protection
Endpoint Protection in a nutshell Product snapshot
▪ Endpoint Protection is a premium cybersecurity solution typically
offered alongside OnNet Security
▪ Unlike OnNet Security, Endpoint Protection also protects the end-
customer when surfing in Wi-Fi
▪ Endpoint Protection is introduced to the mobile device as part of
an update of the operator’s existing app
▪ cyan integrates the security solution into the client’s app via a
Software Development Kit (SDK)
▪ Endpoint Protection particularly targets end-customers who are
more cybersecurity-aware and have higher security demands
▪ Endpoint Protection contains additional services incl. anti-virus
protection for app, malware scans, website checking or identity
+
Ready-set-go Premium security
Integration of security module in Additional security features protection features
existing client app compared to OnNet Security
White-label Comprehensive
Fully branded in look-and-feel of Protection includes Wi-Fi networks
client as well as mobile networks
(1) Exemplary price charged by MNO to end-customer which includes OnNet Security and Endpoint features
© cyan Digital Security 2020 15BSS/OSS
BSS/OSS services in a nutshell Product snapshot
▪ cyan is covering all relevant BSS and large parts of OSS
applications used by MVNOs providing a one-stop telco offering
BEST MVNO BEST MVNE 1▪ Front ends: Functions such as campaign and sales channel
MVNO SOLUTION VENDOR ENABLER OF MVNOs
2014-2015 2016 management facilitate the sales process for MVNOs and help to
acquire end-customers
cyan BSS/OSS platform
2▪ Product management: Covers product lifecycle management,
Security as the overarching element combined with:
product performance management and product catalog
management
1 Front ends
3▪ CRM: Includes a wide range of CRM functions such as customer
2 Product management information management, order management and customer self
management
3 CRM EAI
5 Billing 4▪ OSS: Service performance management and resource activation,
4 OSS guaranteeing the smooth flow of day-to-day business
5▪ Billing: Functions such as invoicing and receivables management
6 ESS 7 contribute to the reduction of back office costs
6▪ ESS: In addition to its BSS/OSS functions, cyan’s platform
includes several ESS functionalities such as asset management
and data analytics
7▪ EAI: Ensures proper functioning and connection of the platform
End-customers
Note: BSS = Business Support Systems; OSS = Operations Support Systems; CRM = Customer Relationship Management; EAI = Enterprise Application Integration; ESS = Enterprise Service Systems
© cyan Digital Security 2020 16Segment strategy and pipeline status
Segmentation
Network Operators Security Endpoint Security BSS/OSS
▪ In the last couple of months, several new ▪ Increasingly important segment for cyan on
Description / Strategy
employees were hired in this focus segment a stand-alone basis as new business
propositions arise (insurers, fin-techs, etc.) ▪ Clear positioning of cyan in the BSS/OSS
▪ In Nov-19, cyan hired its new segment sales segment plus active communication of
director from a direct competitor ▪ In Jan-20, cyan hired its new segment sales strategy to customers and direct market
director from a direct competitor in the
▪ Mission: Position cyan in the global niche ▪ Concentrate on new sales strategy (five
Endpoint space
“Telco value-added-services” with seamless stars)
cybersecurity products and take advantage ▪ Focus on endpoint products for insurance
of current window of opportunity and payment providers
Close to signing; 4 (2)1) Close to signing; 3 (2) Close to signing; 3 (1) NDA; 1 (3)1)
NDA; 8 (3) NDA; 4 (4)
(vs. last update)1)
Pipeline status
Total Total
Total MNO Endpoint BSS/OSS
leads: 33 leads: 23 leads: 15
PoC; 3 (2)
PoC; 6 (3)
RfP / RfQ; 18 (4)
RfP / RfQ; 10 (2)1) RfP / RfQ; 11 (1)
(1) Compared to last update of sales pipeline (3Q19); valid for all figures presented in brackets
© cyan Digital Security 2020 17Roadmap 2020
2020
Q1 Q2 Q3 Q4
Focus on markets with established presence (especially Europe and Latin America)
Start of intensive sales push for US / Canada
Set-up and roll-out ORANGE in France & other affiliates (European countries first, African countries second)
Further roll-out based on existing contracts / sign new contracts with full lead pipeline
Launch and expand to new countries / markets with & &
Product launch: Endpoint Insurance
Product launch: Seamless Security
Product launch: Endpoint product
Communication with all stakeholders
© cyan Digital Security 2020 18Defined Orange roll-out & next steps
2019 2020 2021 2022
MVP 1 MVP 2 IoT MVNO
▪ Orange France gets network ▪ Orange Group roll-out in Europe ▪ OnNet Security protection for IoT ▪ OnNet Security protection for
security & endpoint B2B devices MVNOs within the Orange network
▪ Orange France roll-out of B2C
▪ Orange Europe gets Orange protect products ▪ Endpoint Protection for IoT ▪ Significant increase of addressable
and Orange protect+ for B2C user base
▪ Launch of additional Orange
countries
© cyan Digital Security 2020 19Shareholder structure
Management Alexander Schütz
7.9% 14.7%
Apeiron Ltd
13.3%
Total number of
shares outstanding:
9,774,538
Tansanit St.
10.3%
Free float
53.8%
Note: Based on shares held by individual investors at cyan’s AGM in July 2019
© cyan Digital Security 2020 20Overview of first nine months group financials
Key highlights Key financials
▪ Group overall income of €7.9m for H1 2019 (vs. H1 2018: €2.2m; growth of Earnings Figures Q1-Q3 2019 Q3 2019
268%) and €11.9m1) for the first nine months Total earnings1 in TEUR 11,910 3,978
EBITDA in TEUR (2,312) (1,277)
▪ EBITDA was impacted by restructuring and integration of i-new incl. sale of EBITDA margin in % - 22 % - 35 %
office building in Mattersburg, relocation to offices in Vienna and Sopron, new EBIT in TEUR (6,552) (2,732)
set-up of management in Latin America as well as several personnel EBIT margin in % - 61 % - 75 %
measures Consolidated profits in TEUR (6,522) (2,555)
Earnings per share in EUR (0.67) (0.26)
▪ Successful completion of capital increase, strengthening cyan’s balance
sheet by €25m Cash Flow Figures Q1-Q3 2019 Q3 2019
Operating cash flow in TEUR (4,131) (1,185)
▪ Integration of Orange France on plan and first revenues were already
Investment cash flow in TEUR (2,746) (2,738)
generated in late 2019 in form of a milestone payment Financing cash flow in TEUR 15,391 13,287
▪ Roll-out in other Orange countries is being prepared; Orange marketing Balance Sheet Figures 30/09/2019 31/12/2018
budget has been allocated
Assets total in TEUR 87,516 81,694
▪ In November, cyan could close a substantial agreement with ACN Group Equity in TEUR 70,603 50,578
selling 60m MVNO/Security licenses Net debt2 in TEUR (10,428) 9,759
▪ Important progress in ongoing projects with Aon, Wirecard, Telecom Key Operating Figures 30/09/2019 30/06/2019
Argentina and many others Number of staff 126 121
Theoretically addressable market3 in mio. 50 50
▪ Further contracts with significant revenue impact were already signed in Q4
(1) Consisting of sales revenues of EUR 10.7 million plus other revenues EUR 1.2 million
(2) Particularly, due to capital increase in July 2019 now net cash position
(3) Existing contractual relationship, under which technical integration has already commenced
© cyan Digital Security 2020 21© cyan Digital Security 2020
Disclaimer This presentation (the “Presentation”) has been produced for discussion purposes only. The Presentation is not a securities prospectus and the information contained therein does not constitute or form a part of any offer or solicitation to purchase or subscribe for securities in the United States, Australia, Canada, or Japan or in any other jurisdiction in which such offer or sale would be unlawful. The securities referred to in the presentation have not been, and will not be, registered under the U.S. Securities Act of 1933, as amended, or under any applicable securities laws of any state, province, territory, county or jurisdiction of the United States, Australia, Canada, or Japan. Accordingly, unless an exemption under relevant securities laws is applicable, any such securities may not be offered, sold, exercised, transferred, delivered or distributed, directly or indirectly, in or into the United States, Australia, Canada, or Japan or any other jurisdiction if to do so would constitute a violation of the relevant laws of, or require registration of such securities in, the relevant jurisdiction. The information contained in this presentation does not constitute investment advice. The Presentation is being made only to, and is only directed at, persons to whom it may lawfully be communicated (“relevant persons”). Any person who is not a relevant person should not act or rely on this presentation or any of its contents. This presentation does not constitute or form part of any offer or invitation to sell, or any solicitation of any offer to purchase any shares or other securities in cyan AG (the "Company"), nor shall it or any part of it or the fact of its distribution form the basis of, or be relied on in connection with, any contract or commitment or investment decisions relating thereto, nor does it constitute a recommendation regarding the shares and other securities of the Company. The information herein pertaining to the company and its investments is fully confidential. Please do not publish or disclose it to any third party other than your attorneys, advisers, and others under binding confidentiality obligations without the express prior written consent of cyan. The presentation does not constitute any legal advice. This must be done individually, taking into account the circumstances of the individual case. The unaudited historical financial information and numbers of the company contained herein are preliminary and subject to adjustments and modifications. All aspects of the Presentation must be considered in the context of more fulsome and independently-obtained information that may be required for any decision regarding the Presentation’s subject matter. Any recipient of the Presentation should determine, in consultation with its own legal, tax, regulatory, accounting and other pertinent advisors, all economic risks and merits, as well as legal, tax, regulator and accounting characteristics and consequences, of any transaction as it pertains to them. Past performance presented in the presentation should not be taken as an indication or guarantee of future performance, and no representation or warranty, express or implied, is provided in relation to any aspect of the Presentation. The Company accepts no responsibility for, and expressly disclaims all liabilities relating to, any loss, whether direct or indirect, or any other kind of damage resulting from reliance upon or use of information contained in the Presentation. Certain statements included or incorporated by reference within this presentation may constitute “forward-looking statements” in respect of the Company’s operations, performance, prospects and/or financial condition. By their nature, forward-looking statements involve a number of risks, uncertainties and assumptions and actual results or events may differ materially from those expressed or implied by those statements. Hence, there is a considerable risk that investors face the risk to lose all their money they invest in the company. Accordingly, no assurance can be given that any particular expectation will be met and reliance should not be placed on any forward-looking statement. Nothing in this presentation should be construed as a profit forecast. All forward-looking statements relating to the Presentation are qualified in their entirety by this cautionary statement. The Presentation is to be construed as of the date of its creation and is subject to change at any time without notice. No party makes any representation, whether express or implied, with respect to the completeness or accuracy of the Presentation, or for the fitness of the information in the Presentation for any purpose. No party shall have any obligation to update any information contained in the Presentation at any time. Nothing in this Presentation shall be construed by any party as a binding or legally enforceable commitment, contract or offer to contract with respect to its subject matter. The Presentation neither imposes any obligation, nor grants any rights with respect to, any service or transaction referenced in the Presentation, nor does it impose on any party a duty or obligation to conclude any such agreement or commitment. Any person receiving the Presentation is deemed to have accepted these legal notices and that such notices shall apply even if the Presentation in any way is shown to be erroneous, incomplete or based upon incorrect or incomplete facts, interpretations or assessments or assumptions, irrespective of any responsibility of the Company. To the extent permitted by law, all legal considerations arising from this Presentation shall be governed by the Law of Germany. Icons made by Smashicons from www.flaticon.com is licensed by CC 3.0 BY © cyan Digital Security 2020
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