WHK signs up client for 5th year
Sticky customers are what we want to see…
We’ve been Invested in WHK for more than 5 years now, and we’re hoping this is the first of many green shoots for the company.
Today, our cybersecurity Investment, WhiteHawk (ASX: WHK) announced the 5th year renewal of its Federal Cyber Risk Radar contract with an unnamed US government client.
The contract, first signed in 2020, is now valued at USD $700K with options for additional services.
(Source)
As is often the case with WHK, the company cannot disclose the name of its client for security reasons.
WHK’s capabilities also involve the most on trend investment theme right now, AI…
As we pointed out in our most recent note:
“WHK’s AI based cyber security tech has been quietly developed over the last 6 years AND is already in use by US federal government departments, US defence contractors, Fortune 500 companies...
On annual recurring revenue contracts.”
Read more about WHK in our note below:
New investor interest in WHK’s Artificial Intelligence for Cyber Security Tech
How does today’s news impact our WHK Investment Memo?
Objective #1: More Contracts, follow through
WHK management has proven they can sign contracts and partnerships with top tier large organisations, but so far new deals have taken a long time to get signed. We want to see the effort of the last few years in building the pipeline come to fruition, with WHK delivering the following:
- At least one contract worth more than $1.5M annually
- Increase the contract size of an existing contract
- Win a new large organisation contract
Source: 18 December 2023 WHK Investment Memo
Today’s renewal advances WHK towards our #1 Objective for WHK.
Cybersecurity continues to be a strong thematic
In the 2024 Australian CEO survey, “Cyber risk” was classified as the number one thing keeping CEOs awake at night.
The rate and frequency of cyber attacks is increasing, and we expect that large organisations will be allocating more resources to cyber protection.
Source: 18 December 2023 WHK Investment Memo
Cybersecurity remains a strong macro theme as the frequency and sophistication of cyber threats continue rising.
While the recent Crowdstrike incident was not deemed a cybersecurity incident - it did highlight the fragility of the world’s online systems.
We expect that businesses and governments will continue allocating more resources to proactively identify and mitigate vendor risks.
We think WHK's specialised risk monitoring platform positions it well to capitalise on this spending trend.
What is our investment plan?
We have been holding WHK for a few years now, increasing our position on multiple occasions since we announced it to our Portfolio in May 2019.
While it has been a disappointing journey over the last two years, we believe WHK can finally turn things around, and deliver a re-rate on one or more large long term contracts and follow through with increased sales from its large pipeline.
Our plan is to increase our position if WHK do another equity capital raise, “averaging down” on our Entry Price, and we will look to top slice if WHK can deliver a re-rate from these lows.
Source: 18 December 2023 WHK Investment Memo
Our investment plan hasn’t worked yet, but we’re hopeful some contracts from WHK are around the corner.
We put ~$200k into the 2.25c placement in February of this year, hoping a string of material contracts from WHK can rerate the share price.
What’s next for WHK?
- Continued conversion of the US$22M sales pipeline into contracted revenue in WHK’s primary market - the US
- Securing further contracts with large Australian enterprises to build scale
The company has proven it can land major clients.
We will be looking for WHK to convert more of its pipeline into material, long-term contracts that drive sustainable revenue growth.
