During the first quarter of 2021, Kitchener-Waterloo’s Magnet Forensics saw its annual recurring revenue (ARR) grow by 44 percent year-over-year, rising to $44.2 million USD.
The quarterly results, released Thursday morning, are the company’s first earnings report since going public last month. They concern the three months ending March 31, and do not include the proceeds from Magnet’s initial public offering (IPO). Magnet began trading on the Toronto Stock Exchange (TSX) after the end of Q1 on April 28, under the symbol ‘MAGT.’
“We have the technology, the team and with our recent IPO, the capital, to aggressively pursue this market.”
In Q1, Magnet’s revenue increased 25 percent, growing to $14.7 million compared to the same period during 2020. The company attributed this rise to an increase in software maintenance and support revenue as a result of growth within its customer base. Magnet’s net income also rose to $2.8 million, more than doubling its total from Q1 2020, when it saw profits of $1.2 million.
Founded in 2010, Magnet Forensics develops digital investigation software for forensic professionals. The firm’s tech acquires, analyzes, and shares evidence from computers, smartphones, tablets and IoT-related devices. According to Magnet, its products are used by more 4,000 public and private sector customers in over 90 countries.
In the last quarter, the company gained new customers in each of its public safety and private enterprise markets, including Europe, Asia, and North America, while also expanding its existing accounts with key public and private sector customers. Magnet said these expansion efforts drove its increase in revenue.
“Magnet Forensics won new customers and expanded our existing accounts in Q1 across our public and private sector markets,” said Adam Belsher, Magnet’s CEO. “This delivered topline growth of 25% in the quarter and increased our annual recurring revenue to $44 million for the end of the period.”
In Q1, Magnet’s cash decreased from $21.2 million USD as of the end of 2020 to $16.6 million, which the company attributed to corporate income tax payments. During the last quarter, Magnet released new software products, including AXIOM for public safety organizations, and AXIOM CYBER for private enterprises.
“We have the technology, the team and with our recent IPO, the capital, to aggressively pursue this market,” said Belsher.
Magnet officially closed its initial public offering (IPO) on May 3, raising just over $115 million CAD in gross proceeds, for net proceeds of about $108 million. The company sold nearly 6.8 million subordinate voting shares at a price of $17 per share, including an option exercised in full by the IPO’s underwriters. Magnet said it plans to use the net proceeds to strengthen its balance sheet and give itself the flexibility to fund future growth strategies.
The company initially planned to raise $90 million CAD through the offering but upped its target to $100 million following strong demand from investors. Magnet’s IPO was Waterloo Region’s first in 15 years.
“I’m proud of the team that has gotten Magnet Forensics to this important milestone,” said Belsher following the close of Magnet’s IPO.
“Our customers are seeing significant growth of cybercrime and digital evidence related to their investigations globally,” said Belsher, calling the investment “an acknowledgement of the importance of these challenges,” adding that the fresh funding “provides resources to tackle them more aggressively.”
Last year, Magnet generated nearly $11 million USD in net income on $51 million in revenue. This was a significant increase compared to the nearly $1 million profit the company earned after generating almost $39 million in revenue during 2019, according to Magnet’s final prospectus.
Photo from Magnet Forensics