Belgravia Group chief executive and UXC founder Geoff Lord has taken on the chairman role of struggling ASX-listed cyber security business Tesserent and plans to enact a rapid turnaround.
Mr Lord, whose former IT services business UXC was sold to Computer Sciences Corporation (CSC) for almost $430 million in 2016, has set the ambitious goal of taking the company from $5 million in revenue to a $50 million revenue run rate by June 30.
To achieve this, Mr Lord intends to shake up the company’s management team, cut costs, continue its recent acquisition spree and achieve a positive cashflow.
One of his first cost-cutting initiatives will be to ask board members to go without payment or incentives for the next 12 months. The company has already terminated all external consultancy services.
“There’s quite a detailed [turnaround] program and to be successful we have to implement the program properly,” he said.
“The most tangible showing of my faith [in the business] is the amount of money I’ve put in. We control about 80 million of the shares and own a sizeable portion.”
Mr Lord, who first bought into the company because he recognised that it was underperforming in a field that he finds interesting, is the largest shareholder through Belgravia Group and also owns shares in his own name.
The company went public in early 2016 and was initially focused on providing managed cyber security services, but failed to perform and dropped from its initial public offering price of 20¢ to about 5¢ by the end of 2017.
In 2018, the board conducted a strategic review of the business and former chief executive Keith Glennan moved to the role of chief technology officer and was replaced as CEO by Julian Challingsworth, who previously worked as managing director of The Litmus Group. Mr Glennan has since left the company.
“I think they were victims of the technology bubble,” Mr Lord said. “They thought that providing they were out there, the market would make an assumption about growth and would look after them. But you can’t work that way. You have to work on delivering and letting the share price follow.
If we can get to $50 million in five months, that’s at least a start and from there we can use it as a base to move progressively.
— Geoff Lord, Tesserent chairman
“There was a lot of gross expenditure in the company. But we’ve taken out a few million now, like with the directors not being paid.”
Of the $50 million revenue run rate target, Mr Lord believed Tesserent would be able to generate 25 per cent of the growth needed organically, while the remaining 75 per cent would come through acquisitions.
While he was hopeful that the company would be able to emulate the success of his previous tech firm UXC, he was wary of disclosing too many future plans, saying he had “six fishing lines in the water” trying to hook large deals, but he did not want to “hype” up the market.
“The first thing is to try and achieve the June objectives and we’ll report every few months against those objectives. We’ll go about it sensibly and we won’t do it by trying to hype it,” he said.
“I prefer to see companies deliver and a share price follow as a consequence, rather than in anticipation. That’s why I’m setting specific goals to achieve.”
Mr Lord’s current business, Belgravia Group, is a private business that employs 10,000 people and generates about $500 million in revenue annually. It is focused on health and fitness – owning gyms, swimming schools, and kids dance programs – and is moving into dance schools. It also owns a range of other assets including a corporate clothing manufacturing business and a financial lending business.
Much like Alastair MacGibbon and John Paitaridis’ latest cyber security venture CyberCX, Tesserent’s latest strategy is to buy up small cyber security players and form a larger business with a varied offering. It will be focused on the mid market.
To date, Tesserent has acquired Melbourne-based Splunk partner Rivium for $3.2 million, the security businesses within ASX-listed PS&C Group for $16 million and is waiting on shareholder approval to buy Canberra-based security consulting firm north BDT for $5.3 million.
The company currently has a market capitalisation of only $16 million and a share price of 4.4¢.
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Mr Lord said he would love Tesserent to have a $100 million revenue run rate by the end of 2020, but that would be dependent on whether one of his six fishing lines received a bite.
“If we can get to $50 million in five months, that’s at least a start and from there we can use it as a base to move progressively,” he said.
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