Sekur Private Data Ltd

Sector/Industry: Technology/Software

Improves Product Features & Implementing New Marketing Strategies

Sekur Private Data offers cybersecurity and internet privacy solutions under the brand Sekur®. Sekur is a paid-email/instant messaging service provider aiming to capture a small share of traditional and free services such as Gmail, Yahoo! Mail and WhatsApp.

Buy

Current Price: C$0.19

Fair Value: C$0.96

Risk*: 4

Sid Rajeev, B.Tech, MBA, CFA Head of Research

Alexis Cabel, B.A.Econ Equity Analyst

Highlights

  • Q2-2022 revenue was $113k, up 29% QoQ, and in line with our estimate. However, EBITDA declined QoQ (-$1.7M to -$2.2M), and was below our expectations, due to significantly higher marketing and software maintenance costs.
  • As a result of the increased marketing budget, subscriber-count increased from 3.3k in May 2022, to 4k currently. We were expecting close to 5k subscribers by this time.   
  • As the company does not provide segmented results, we were unable to determine its customer acquisition cost (CAC). Our discussions with management indicated that their CAC is currently higher than US$200, implying a payback period of 1.5-2.0 years. Management expects to lower CAC to the US$25-US$50 range vs subscription revenue of US$120/year/user.
  • After pursuing various influencer and third-party marketing programs, the company has decided to shift its marketing strategy by using more resellers and distributors, and in-house SEO marketing. Management expects these initiatives to be more effective and cheaper. We are unable to comment on these new initiatives until we see preliminary results. That said, we are expecting a significant decline in marketing expenses in H2-2022.
  • In July 2022, partner, America Movil/Telcel (the largest mobile operator in Mexico with over 75M mobile subscribers), launched SekurMessenger® for its corporate clients.
  • In August 2022, distribution partner Micronet launched Sekur® in Colombia, with plans to launch in Costa Rica, Guatemala, El Salvador, and Nicaragua. The company also intends to partner with resellers in Chile, Peru, Argentina, and Uruguay.
  • Improved functionality by allowing users to make payments in eight currencies. Sekur has also added a “Chat-By-Invite” function for its messenger. We believe this is an attractive feature, as users can invite non-users (by email or SMS) for encrypted and secure communications. At the end of a chat, the initiator of a conversation can terminate and delete traces of that conversation.
  • The NASDAQ-100 Technology Sector Index (NASDAQ: NDXT) is down 26% YTD vs 18% for the S&P 500. As we are expecting the Fed to take a less hawkish stance in Q4, we are expecting a rally in tech stocks. Note that the tech index was up 62% from January 2020 to January 2022, beating the S&P 500’s 47%.
Key Financial Data (C$) YE Dec 3120012022E2023E
Cash8,812,4772,963,8032,963,803
Working Capital9,505,8623,803,3153,803,315
Total Assets3,803,3153,803,3153,803,315
Debt---
Revenue144,881453,000453,000
Net Income453,000-6,224,934-6,224,934
EPS-0.11-0.05-0.03

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