Corero Network Regulatory News (CNS)

6 November 2014

Corero Network Security plc

("Corero" or the "Company")

Trading update

Corero Network Security plc (AIM: CNS), a leading provider of security solutions for defending against DDoS (Distributed Denial of Service) attacks and cyber threats, provides an update on trading for the year ending 31 December 2014.

As reported in its interim results announcement, Corero is seeing an acceleration in the shift for enterprises looking to their Internet service providers and cloud data centre providers for delivery of DDoS protection. In the first half of 2014, and following a two year investment plan, the Company launched its new family of SmartWall Threat Defense System ("SmartWall") products to enable it to address the growing service provider market demand for DDoS solutions.

Corero is pleased to report a flagship SmartWall order in October by a leading on-line gaming company (the Company's largest DDoS defence deployment to date), alongside multiple other SmartWall orders in recent months and a growing number of SmartWall Proof of Concept customer trials in progress. The Board are highly encouraged by this and the validation that it provides of SmartWall, for which contract values are typically higher than for its previous generation product.

2014 was planned to be a year of transition for Corero with the second half of 2014 focused on the commercialization, marketing and sales of SmartWall. The Company is pleased that the market dynamics are shifting in its favour, but the shift away from the previous generation product is occurring faster than expected. Consequently, the Company expects that results for this year will reflect this shift and to be below market expectations with revenues of approximately $9.0 million, and loss before interest, tax, depreciation and amortisation to be approximately $7.0 million. Looking forward, Corero is confident in the outlook for SmartWall and is focusing its development efforts on market driven features and SmartWall sales in priority target geographies and markets. As it enters the next phase of its strategy, and to fund its ongoing SmartWall product development and sales and marketing activities, the Company intends to secure further financing support before the year end and the Company's major shareholder is fully supportive of this.

DDoS attacks continue to be a widely used cyber weapon against government and corporate targets, with the media covering almost on a daily basis reports of cyber attacks and the significant impact these cause. DDoS attacks can be costly in terms of lost revenues, brand damage, customer satisfaction and security operations. The DDoS mitigation market is forecast to increase 66% in the period to 2018 and exceed $1.5 billion, according to Infonetics Research. This market growth is being driven by not only an increase in DDoS attacks but also the growth in cloud computing. Frost & Sullivan forecast an increase of over 80% in the European data centre colocation market in the period 2013 to 2018 (to reach $5.3 billion) and almost 150% growth in the managed hosting market (to reach $4.9 billion) in the same period.

Ashley Stephenson, CEO commented:

"The introduction of our new SmartWall family of products and services is well timed to meet the growing demand for DDoS protection particularly in the frequently attacked Service Provider and Hosting Provider markets. The continuing move to the Cloud, whilst impacting the growth of the previous generation product, and a heightened awareness of the importance of cybersecurity defences should be solid drivers of growth for Corero in 2015.

SmartWall deployments today are protecting customers from frequent DDoS attacks and providing real time network forensics to assure customers that their operations and online presence are secured against these threats. These successful installations give the Company confidence that SmartWall is a market leading solution and that the strategic transition to SmartWall will drive revenue growth."

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About Corero Network Security

Corero Network Security, an organization's First Line of Defense® against DDoS (Distributed Denial of Service) attacks and cyber threats, is a pioneer in global network security. Corero products and services provide online enterprises, service providers, hosting providers, and Managed Security Service Providers with an additional layer of security capable of inspecting Internet traffic and enforcing real-time access and monitoring policies designed to match the needs of the protected business. Corero technology enhances any defense-in-depth security architecture with a scalable, flexible and responsive defence against DDoS attacks and cyber threats before they reach the targeted IT infrastructure allowing online services to perform as intended. For more information, visit www.corero.com.