Finjan (NASDAQ:FNJN) released its first quarter results on May 14, 2015 which included information about new strategic initiatives for the company. These initiatives include the development of new mobile security applications to protect consumer data and information and establishing a new cybersecurity consulting service business. The company believes that the cybersecurity sector will be active during 2015. Cybersecurity continues to be a critical business issue impacting the government, corporations and individuals. The numerous high-profile cybersecurity attacks that we saw in 2014, highlighted everywhere from mainstream media to detailed industry reports, affected prominent victims who suffered substantial costs and damages, including lost earnings and negative publicity. Damaging cybersecurity attacks are only expected to increase in the future, by all accounts. Governments and corporations now understand the need to closely examine their cybersecurity vulnerabilities. Sometimes this can be as simple as understanding patch vulnerabilities on networking equipment or having a better understanding of the data that travels through their networks.
This will lead to increased spending on cybersecurity software and hardware, as well as cybersecurity consulting services. Finjan is confident these new initiatives will create positive synergies with our core businesses. As was previously commented by CEO’s during the White House Summit on Cybersecurity and Consumer Protections; it’s not about the incremental costs of equipment but rather the potentially immeasurable expense of recapturing consumer trust after a cyber attack.
Our mobile and consulting ventures represent significant growth opportunities. The initiatives will not have any negative impact on cash flow and will not detract attention away from our current operations. Both mobile security and cybersecurity consulting are areas which are seeing exponential growth.
The company is well positioned to take advantage of growth in these areas due to its competitive position in the cybersecurity sector. Finjan will continue to expand its investments in companies and technologies in these areas both internally at Finjan and through its investments in funds like JVP and the Cyber Strategic Partners which was initiated in November of 2013.
Estimates place spending on mobile security at around $11 billion in 2014 with CAGR growth pegged at 20% for the next six years. Mobile security continues to be a growing area of concern as more people access the Internet through tablets and mobile devices. In early 2014, Internet traffic from mobile and tablet devices exceeded that from PCs for the first time. This represents a seismic shift in how people access the Internet. With growing mobile usage, demand for mobile security applications is increasing on a yearly basis. According to Ernst & Young’s 2014 Global Information Security Survey, 46% of security teams identified mobile technology as their biggest area of increased spending for the next year.
Gartner estimates that the security consulting services market grew from around $14.3 billion in 2013 to $15.3 billion in 2014, with an anticipated growth rate of 8.1% per year. Revenue from cybersecurity firms in North America grew from $6.19 billion in 2013 to $6.66 billion in 2014, an increase of 7.6%. The top 10 firms in this area had around 67% of the total market share. Cybersecurity consultants state that demand is coming from across many different sectors. The high profile security breaches over the past year have increased enterprise demand to fortify and prevent future breaches. We feel that demand for greater monitoring and response capabilities will continue to grow into the future.
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Finjan has budgeted amounts for development of mobile security applications. There are numerous potential submarkets within the sector including secure and informed web browsing, privacy protection, anti-malware/anti-virus for mobile devices, remote tracking and locking software, and encrypted communications and storage, to name a few. The company is pursuing further commitment to its Cybersecurity heritage as part of its growth story moving forward.
Finjan announced a cybersecurity consulting service business during the first quarter. The company anticipates hiring qualified personnel for the new consulting business with plans to launch this year, targeting the third quarter. The cybersecurity consulting business will provide services to enterprise level customers on current and future cybersecurity threats, as well as on prevention of future breaches. Moreover, Finjan’s new services business will focus to educate and advise board level discussions on the ever present risks challenging industry today. Cybersecurity consulting provides a natural addition to our core businesses, as the company’s cybersecurity technologies are currently the state of the art for detecting emerging threats on a real-time behavior based basis.