Pivot to service-based model paying off for Corero

(ShareCast News) - Network security company Corero Network Security announced on Wednesday that it has won five 'as-a-service' subscription-based contracts for its DDoS protection products and technology in the final quarter of 2016, with an aggregate annualised contract value of $0.3m.The AIM-traded firm introduced the 'as-a-service' offering in response to increasing customer interest in subscription-based contracts, as opposed to the purchase of equipment under a traditional perpetual license model.Corero's board said the offering is expected to expand its addressable market, and was proving popular with fast-growing cloud-hosting providers and regional service providers, as they can enter the market more rapidly by offsetting the costs of operating a DDoS protection solution with the monthly revenues derived from selling high-margin security services to their own customers.This sales model, which was introduced in the fourth quarter of 2016, reduces recognised revenue at the time of the initial customer order but increases the contract value and recurring revenues over the life of the deal.Corero added that it also enjoyed an increase in perpetual license model revenue billings in the fourth quarter of 2016."As reported in the interim results announcement in September, we anticipated an increase in customers seeking to utilise Corero's DDoS protection products and technology via an 'as-a-service' subscription-based offering, thereby increasing Corero's addressable market," said CEO Ashley Stephenson."We are pleased with these initial customer wins and see an increasing opportunity to add incremental subscription-based customers in 2017 which will serve to boost our recurring revenue base."An update on trading for the year to 31 December will be provided ahead of the full year results announcement.