The Tesserent (ASX:TNT) share price is sinking 20% on record revenue

The Tesserent (ASX: TNT) share price has dropped 20% today after the company reported its unaudited half-year results. We take a look.

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The Tesserent Ltd (ASX: TNT) share price is tanking today despite the company reporting a significant lift in revenues and earnings during its first half in FY21.

At the time of writing, the Tesserent share price is down 20.6% to 25 cents a share.

High growth not enough for Tesserent share price

Cybersecurity continues to be a focus area for many businesses and the Australian government. As our lives become more reliant and integrated with technology, the importance it has grows. The target on our critical data infrastructure has also expanded over time.

Consequently, many cybersecurity companies have been called into the fray over the last year as the issue becomes more prominent. The Australian Government also released its Cyber Security Strategy 2020, which will see $1.67 billion invested in the sector over 10 years.

The increased awareness of cybersecurity has aided in Tesserent’s year-over-year (YoY) turnover increase of 500% to $36.5 million.

Heading further down the income statement, operational earnings before interest, tax, depreciation, and amortisation (EBITDA) swung to a positive $2.9 million. This compares to the prior year’s $1.7 million loss.

Considering the falling Tesserent share price today, the question is why? A potential inhibitor could be the bottom-line statutory loss before tax. Due to acquisitions and the company’s employee share option plan (ESOP), losses increased to $6.18 million in the half. This a 55% greater loss than 1H FY20.

Acquisitions centre stage for future growth

Tesserent outlined that the second half will benefit from the inclusion of its recent New Zealand acquisition, Lateral Security. In addition, six months of revenue and earnings will fold into the second half from Seer Security, Airloom, Ludus Cybersecurity, and iQ3.

Furthermore, the company stated that all of its FY21 goals remained intact. Some of these include:

  • Focus on capturing market share in three key markets: Government (including Defence), critical infrastructure and banking & finance
  • Continuing to drive the company’s acquisition strategy to expand on Cyber 360 capabilities and increase shareholder value through incremental EPS growth
  • Explore international expansion opportunities with a focus on Australia’s key Five Eyes allies, which consists of the United States, United Kingdom, New Zealand, and Canada.

Importantly, the company’s results are unaudited and could change upon review. Tesserent informed the market that it would relay any changes once solidified.

Taking in today’s losses, the Tesserent share price is still up a whopping 325% in the last year. The cybersecurity company has been riding the wave of enthusiasm for the sector since mid-2020.

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Motley Fool contributor Mitchell Lawler has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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