Scout Security locks-in landmark partnership, sees significant growth in FY2023
Scout Security expects to continue its strong growth in FY2023 by securing new partnerships and building recurring revenue.
Security-as-a-Service (SaaS) platform provider Scout Security’s (ASX: SCT) financial year ended 30 June 2022 (FY2022) was one of significant operational growth and change and culminated in the recently announced landmark partnership with Fortune 500 company Lumen Technologies (NYSE: LUMN).
The company says this places it in a strong position to continue the momentum throughout FY2023.
The New South Wales-based company was recognised as one of Forbes’ “Best Home Security Companies of 2022” and named “Best for Custom Notifications and Alarms” in 2021 by US News and World Report.
Scout transitioned from a direct-to-consumer business into becoming a white label SaaS platform and product provider, which has boosted not only its recurring revenue, but also leading security, internet service, and telco providers across the globe.
In FY2022, Scout’s monthly recurring revenue (MRR) rose every month through its partnerships with Stanley Black and Decker and Prosegur, along with launching Kinetic Secure Home with Windstream.
Scout’s partnership with Windstream, setting up Kinetic Secure Home (KSH) in September 2021, marked the company’s first major US telco to white label the Scout SaaS platform.
It is expected a recently announced partnership with Fortune 500 company, Lumen will further accelerate Scout’s recurring revenue.
The high level of engagement lead to total annualised recurring revenue from all sources topping $1.3 million before the end of FY2022 and this is expected to continue rising.
Moving forward, Scout hopes to build on its existing relationships and develop a greater pipeline of white label partners.
Capital raising to support scaling efforts
In an attempt to further scale its home security platform rollout through white label partners, Scout executed capital raising through a placement and rights issue earlier this month.
Scout raised $2.3 million all-up across a placement of $930,000 and $1.38 million rights issue.
Lead manager of both the placement and rights issue was Sequoia Corporate Finance.
Scout chief executive officer Ryan McCall said its capital raising will support the company’s next stage of growth.
“We are pleased to have secured the support of new and existing investors through this capital raising,” he said.
“The funds raised will support the company’s next phase of growth as we scale up the rollout of Scout’s security-as-a-service platform and product suite.”
Landmark partnership with Lumen
Scout’s efforts in FY2022 led to a landmark partnership with Lumen that was announced in August.
The United States telco has five million broadband subscribers and generates US$20 billion in annual revenue.
Under the partnership, Scout’s medium term goal is to penetrate 10% of the 5 million subscribers.
The deal involves Scout launching a smart security and control platform under Lumen’s brand in the first half of CY2023.
The resulting solution will incorporate Lumen’s branding with key system integrations that offer universal control and centralised billing.
Lumen will pay US$246,000 (A$357,000) in non-recurring engineering fees to Scout across specified milestones, and this is expected to take will three months.
Scout sees the relationship with Lumen as a stepping-stone to exposing the company’s platform, products and services to as many potential customers as possible.
Mr McCall said bringing on Lumen as a partner would drive adequate growth for the company.
“We welcome Lumen as a partner and look forward to launching their business into the growing smart home market,” he said.
“Lumen’s brand speaks for itself, with over five million broadband subscribers across the USA and a Fortune 500 designation.”
“Lumen’s brand comes with inherent trust and a large, loyal customer base that we believe will drive healthy adoption of smart home services over time.”
FY2022 executive Changes
Underpinning Scout’s growth in FY2022 were several executive changes.
The company’s executive director and co-founder Dan Roberts announcing his resignation from the positions in December 2021. Mr Roberts made the decision to remain with the company in a different capacity, focusing on strategy, product roadmap and design in his new role as executive director and chief product officer.
Scout appointed its non-executive director, Martin Pretty as chairman of the board, who has served as managing director of Equitable Investors in the past and as non-executive director of financial services group Centrepoint Alliance (ASX: CAF) and Spacetalk (ASX: SPA).
Meanwhile, Ryan McCall took over the role of chief executive officer on 3 January 2022.
Mr McCall came to Scout with “14 years of global cross functional experience in consumer technology and in growing teams, revenue, and profitability”.
Finally, in Q4 FY2022, Scout made more executive changes, hiring Kevin Brennan as chief operating officer, Hilari Smith as vice president of accounting, and Kim Clark as company secretary.