Shearwater Group PLC on Tuesday reported an almost £10 million loss in a ‘challenging’ year for cybersecurity firms, but said its prospects look stronger going forward.

The London-headquartered cybersecurity services provider reported a £9.6 million pretax loss for the year ended March 31, having made a £936,000 profit the year before.

Revenue dropped 26% to £26.7 million from £35.9 million, which Shearwater said was primarily due to contract delays in the fourth quarter.

Adjusted loss before interest, tax, depreciation and amortisation was £201,000 compared with the prior year’s earnings of GBP£4.4 million, and net cash was £4.0 million at March 31, down from £5.6 million at the same time in 2022.

Shearwater’s administrative expenses more than doubled to £12.9 million from £6.4 million, and total operating costs rose 64% to £16.0 million from £9.8 million.

‘The year...was challenging across the cybersecurity industry and Shearwater was not immune to this, said Chief Executive Officer Philip Higgins. ’Whilst we entered the second half of the year with stronger momentum, macroeconomic challenges impacted customers’ investment decisions heavily in the fourth quarter, resulting in customers deferring contract start dates, and in some cases, needing to implement spending freezes.‘

However, Shearwater said its future prospects were looking brighter as market conditions improved, and that trading in the first quarter of its current year was in line with management expectations. It added that its balance sheet remains healthy, and will be further strengthened this year.

‘While it is frustrating that FY23 performance was impacted by external factors beyond our control, we have emerged a more agile, specialised business and better-placed to capitalise on the opportunities ahead,’ Higgins commented. ‘With the threat of cybersecurity ever-increasing for organisations, our best-in-class reputation and all-encompassing offering...provide the board with unwavering confidence in the medium and long-term prospects of the group.’

Also on Tuesday, Shearwater said Chief Financial Officer Paul McFadden has announced his intention to step down from the board. McFadden will remain in place until his successor is appointed.

Shearwater shares were down 5.2% at 46.00 pence on Tuesday afternoon in London.

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