Magnet Forensics, which develops digital investigation solutions, saw year-over-year (YoY) revenue growth of 35 percent in the first quarter of 2022.
The Kitchener-Waterloo-based company grew its revenue to $19.8 million USD in Q1, a jump compared to the $14.7 million Magnet pulled in during the same period in 2021. However, Magnet also posted a loss of $900,000 in Q1âits second consecutive quarterly drop in net incomeâafter generating net income of $2.8 million in the first quarter of last year.
Magnet grew its revenue to $19.8 million USD in Q1, a jump compared to the same period in 2021.
Magnet attributed this rise in revenue to increased maintenance and support revenue due to growth within the companyâs existing customer base, chalking up its loss to investments in research and development (R&D) and sales and marketing, as well as acquisition-related and restricted share unit expenses.
Magnet also announced earlier this morning that during Q1 it acquired strategic intellectual property (IP) assets from cybersecurity software firm Comae Technologies, which is based in the United Arab Emirates and specializes in incident response and memory analysis. The financial terms of the transaction were not disclosed.
Following the release of this earnings and acquisition news, Magnet, which trades on the TSX as âMAGT,â has seen its share price drop just over five percent from $23.41 at market open to $23.18 at time of publication. Although the companyâs stock has since dropped below its 52-week high of $65.80 last August, Magnet currently trades above its initial public offering (IPO) target, making it one of the few Canadian tech companies that went public last year to do so. Other firms, like Thinkific, Coveo, and Q4 Inc, continue to trade below their initial issue prices.
Founded in 2010, Magnet develops digital investigation software that acquires, analyzes, reports on, and manages evidence from sources, including computers, mobile devices, IoT devices, and cloud services. The companyâs tech is used by over 4,000 public and private sector customers across more than 100 countries to help investigators fight crime, protect assets, and ensure national security. According to Magnet, evidence recovered with its tools has been used to support investigations into cybercrimes, child exploitation, terrorism, human resource disputes, fraud, and IP theft.
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Led by former Waterloo Region police officer Jad Saliba (CTO) and ex-BlackBerry executive Adam Belsher (CEO), Magnetâs backers include former BlackBerry co-CEO Jim Balsillie, who also serves as the companyâs chairman.
According to Magnet, the Comae deal will accelerate its development of memory analysis tech, which it claims plays a âcritical roleâ in recovering evidence from various devices that can be used to piece together what occurred during cyber incidents. Belsher said the move will help Magnet address âa growing needâ for its customers.
As part of this acquisition, Comae founder Matt Suiche will be tasked with leading a memory analysis and incident response R&D team at Magnet, which will focus on continuing to develop Comaeâs memory analysis platform and incorporating its capabilities into Magnetâs existing solutions. According to Magnet, Suicheâs team at Comae will also work closely with Magnet going forward.
Magnet will continue to develop Comaeâs memory analysis platform within the Magnet Idea Labâa company incubator made up of hundreds of investigators and analysts from companies and police agencies.
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Magnet is no stranger to acquisitionsâthe Comae deal marks the companyâs second since its TSX debut in April 2021. Last September, Magnet purchased Colorado-based DME Forensics, which focuses on video and multimedia forensics, for $9 million USD. Magnet has also previously acquired Virginia-based digital evidence case and lab management solution Sentinel Data.
Magnetâs earnings reflect the companyâs push towards increasing its term license revenue relative to its perpetual license revenueâwhich is part of its strategy to boost the amount of contracts and licenses it sells. Since Q1 2021, the company has grown this amount from 29 percent of total revenue to 50 percent at the end of the first quarter.
The company has grown its annual recurring revenue to $66 millionâa 49 percent rise compared to the first quarter of 2021. Magnet said this rise was due to an overall increase in licenses sold and the expanded suite of products it has been selling into its customer base.
Magnetâs 2022 outlook remains unchanged: the company expects to generate revenue of between $91.5 million and $93.5 million, for 30 to 33 percent growth relative to 2021.
Feature image courtesy Magnet Forensics.