In 2021, Australian small and medium enterprises (SMEs) accounted for 68% of employment, adding significant value to the economy. However, these small businesses are often dealt from the bottom of the deck when it comes to cybersecurity. A report found that over 40% of cyber attacks target SMEs owing to their relatively poor infrastructure, and it can cost these businesses about $40k to deal with the attack.

That’s where companies like ICT manager services and cyber security provider Hubify (ASX: HFY) have come into the spotlight. The Company reported record unaudited revenue for FY23, expecting to deliver $25.72 million, an increase of 8% on the prior year. Importantly, recurring revenue grew to 82% of total customer revenue on this result, reflecting continued take-up of its managed and professional services.

Hubify Limited CEO, Victor Tsaccounis, said, “The Hubify board and management are incredibly pleased with these results for FY23. Our closing cash position with no debt sees the company in a great position to continue investing in [the] capability to execute our organic growth goals and to explore accretive acquisition opportunities in what is a fragmented market.”

The Company’s underlying EBITDA stands at $4.42 million, up $3.42 million on FY22, after removing restructuring and acquisition costs of $960k. Operational efficiencies on past acquisitions have been fully implemented, and the current cost base provides the operational leverage to continue organic and acquisitive growth within the managed services area.

The result also included the recent contract termination payment of $2.28 million from telecom provider Optus as Hubify bid adieu to the Optus Small Business Program and signed on to the new Optus Enterprise contract. The five-year contract is expected to help rake in $12 million in revenue.

In FY23, Hubify transitioned to become an all-encompassing provider of ICT Managed Services and Cyber Security solutions—a necessary step as it faced flak following Optus’s cyberattack. Some clients shifted cybersecurity solution providers, compelling Hubify to restructure its business for profitability.

It now offers a comprehensive range of products and services, comprising cyber governance, advisory, audit, defence, and remediation. Additionally, the Company closed the year with a significant investment in Internet 2.0, a Military Grade Cyber Security company currently valued at $1.16 million. Internet 2.0 specialises in providing advisory services to the enterprise and government sectors.

The Company’s Managed Service business has been experiencing growth, particularly with the expansion of its offerings to Enterprise customers in areas like Business IT, Cloud services, IT Infrastructure, and, recently, an updated Cyber Security portfolio. These improved product offerings and focused sales efforts have resulted in a growing pipeline of new clients. This is expected to enhance the company’s annual recurring revenue in the Managed Services and Cyber Security divisions.

The Company maintains a positive outlook regarding its organic revenue growth trajectory and its ability to leverage the operational advantages inherent in the Hubify business strategy.

As of the reporting period, Hubify’s Balance Sheet shows a closing cash balance of $5.61 million, increasing from $2.58 million in H1 FY23, with no outstanding bank debt.