Sector Spotlight: UK Cyber Security Stocks (RTOP.L, DARK.L, SWG.L, GRC.L)

September 28 01:08 2023

Cybersecurity threats have been on the rise as IT systems become vital to the functioning of society and the economy in the United Kingdom. Cyberthreats to the UK come from various factors, key among them being state-sponsored groups. Following Russia’s invasion of Ukraine, the threat has only escalated, prompting many organizations and individuals to explore ways of protecting their systems’ privacy and data.

Amid the ever-growing cyber threat of hackers leveraging complicated systems and tools, cybersecurity has become essential to modern-day businesses and livelihoods. Likewise, demand for cybersecurity solutions has only exploded and is expected to grow as hackers continue to target IT systems. The ever-growing threat has also given rise to one of the biggest cyber security markets in the world.

Under the National Cyber Strategy, the UK has set out to be a leading, responsible, and democratic cyberpower. As the UK strengthens its cyber ecosystem, investment opportunities have cropped up. The country’s cybersecurity market is growing at a compound annual growth rate of 10.42% and is expected to reach $23.37 billion by 2028. RTOP, DARK.L., Shearwater Group, and GRC International are some stocks offering solid exposure to the burgeoning sector.

Investment opportunities are cropping up as the UK cybersecurity market grows and becomes key to national security and prosperity. These are some of the best companies that offer anti-malware solutions for cloud security, among other cybersecurity services.

RegTech Open Project Orbit Open Platform Edge

RegTech Open Project (RTOP.L) has carved a niche for developing an award-winning Orbit Open Platform that allows users to achieve operational resilience in a complex regulatory landscape. Its cybersecurity solutions enable clients to maintain a secure and stable operating environment while also improving compliance with applicable regulations and standards. It also strives to avert the risk of business disruptions due to cyberattacks.

Orbit Open Platform came into being to help enhance business resilience in the face of increasing global uncertainty. The platform helps users stay ahead of potential threats, including natural disasters, economic downturns, and, most importantly, cyber-attacks.

The platform has helped protect businesses, customers, and the brand while also helping them demonstrate compliance with regulations and standards. The company offers the platform as a business-to-business software-as-a-service platform. The model has allowed it to target high gross margins built on a recurring revenue model.

The platform continues to elicit strong demand to reduce operational resilience costs. In return, it has allowed RegTech Open Project to expand its footprint into 13 industry sectors and target 19 clients internationally. Additionally, the company has succeeded in delivering consistent revenue growth on a like-for-like basis over the past three years.

RegTech Open Project continues to capitalize on the significant demand for its products and the increased focus on operational resilience. As the global regulatory landscape changes, compounded by increasing scrutiny, demand for RTOP’s offering continues to grow. Consequently, the company registered a 15% year-over-year growth in revenue in 2022 to £1.1 million.

In a bid to tap into the growing demand, the company has expanded its footprint into new markets in pursuit of growth opportunities. In addition to targeting the UK market, it has also set sights on North Western Europe, the United Arab Emirates, Brazil, and North America.

The addressable market for RegTech Open Project in North West Europe is 7X relative to Italy and 20X in China and the USA relative to Italy. Amid the expansion drive, the company offers the most comprehensive end-to-end specialized management software via the Orbit Open Platform.

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Darktrace AI-Powered Cybersecurity Solutions

Headquartered in Cambridge, the United Kingdom, Darktrace (DARK.L) (OTC:DRKTF) is a company that develops and sells cyber-threat technology solutions. Its flagship product is Darktrace PREVENT, an attack surface management system that monitors attack surfaces for high-impact vulnerabilities and external threats.

The company also offers Darktrace DETECT, which analyzes thousands of metrics to reveal subtle deviations. It stands out for offering artificial intelligence-focused solutions for combating a range of threats, from ransomware to cloud attacks and SaaS breaches. It also boasts operations in over 100 countries, affirming its credibility in this highly competitive industry.

Darktrace has emerged as a critical player in the UK’s cybersecurity market, with its artificial intelligence-powered technology being used by more businesses to bolster their security. The company’s cybersecurity solutions are being used by over 8,000 customers globally. The strong demand explains the solid financial results that the company has delivered in the recent past.

Revenue for the full-year earnings ended June surged 31.3% to $415.4 million, affirming strong demand for cybersecurity solutions. Net profit also exploded to $58.9 million, compared to just $1.4 million the previous year.

According to the company’s CEO, Poppy Gustafsson, the artificial intelligence boom and the growth in popularity of generative AI tools are a watershed moment for the entire industry. Likewise, Darktrace remains well-positioned to take advantage of the opportunities that continue cropping up.

Gustafsson said. “Generative AI was a transition point; we are now living in a generative AI world that is already drastically changing the cyber sector, and it will continue to do so.”

The changes being experienced amid the AI revolution are making the company’s technology more relevant than ever for businesses and individuals. Likewise, the company is increasingly developing solutions to protect clients from ransomware attacks and other emerging threats.

Early this year, the company unveiled HEAL, a new product designed to help businesses recover from cybersecurity attacks. As the number of firms wanting to beef up their digital security and stay one step ahead of hackers rises, Darktrace remains well-positioned to benefit a great deal.

Shearwater Group for a Secure Corporate Environment

Shearwater Group (SWG.L) has set out to become a preferred choice for delivering next-generation technology professional advisory and cybersecurity services. The company offers technology solutions and professional advisory services focused on cyber security and regulatory requirements. Its solutions are delivered across two divisional groups.

The company designs and builds leading software in the software division that helps clients secure and make their corporate environments compliant. The software segment accounts for 9% of total revenue generated and 25% of operating profit. On the other hand, the services segment strives to deliver managed security and cyber solutions. The segment accounts for 91% of total revenues and 75% of operating profit.

Brookcourt Solutions is the company’s unit that specializes in delivering cybersecurity network monitoring and managed security services that help protect any organization’s critical infrastructure. The multi-award-winning IT security solutions unit delivers its offerings to leading Fortune 500 companies.

Early this year, the cybersecurity unit secured two contract renewals with a leading global financial organization. The first renewal was a contract worth $1.1 million that will see the company continue to be the supplier of choice and deliver complex security software solutions. The second renewal is a contract worth £450K, which is a 16-month contract that will see the company support and assist in the delivery of cybersecurity software that prevents potential insider threats in real time.

Shearwater Group’s status as a cybersecurity force was further affirmed in April as its cybersecurity unit, Brookcourt Solutions, received the coveted Cyber Essentials Plus certification. The National Cyber Security Center certification affirms that the company meets requirements under five categories of technical control, including firewalls, secure configuration, user access control, malware protection, and patch management.

GRC International Group SWIFT Compliance Contract

GRC International Group (GRC.L) is a company making a name for itself in the burgeoning UK cybersecurity market by offering products and services that address information technology risk management compliance requirements and governance.

The company offers classroom-based training courses related to data protection and cybersecurity. It also provides on-site and remote support services that help organizations design and implement data protection, privacy, and cyber security policies and procedures.

GRC International Group operates under three divisions: software as a service, e-commerce, and services, whereby it offers a wide range of products and services that encompass IT governance, risk management, data protection, and cyber security. Its products and services enable corporations to address wider governance issues such as money laundering and bribery.

In July, the company became the official partner of the European Center for Certification and Privacy. As the official partner, the company has been evaluated and selected on the basis of its track record and expertise in data protection. The accolade is also an acknowledgment of the company’s ability to offer a comprehensive range of services to organizations that wish to certify the compliance of their data processing activities.

Last year, GRC International Group signed a three-year contract to support a South Asian financial institution in its SWIFT compliance. The contract comes on the heels of the company joining the SWIFT CSP Directory. In the contract, the company identifies and reports any gaps in the financial institutions’ SWIFT compliance and addresses any cybersecurity threats.

“Securing one of South Asia’s largest financial institutions as a client and being approved for the SWIFT CSP directory demonstrate our growing international reach in Asia-Pacific and our widening capabilities,” Alan Calder, Chief Executive Officer of GRC International Group, commented.

GRC International Group is also tasked with recommending minimum security controls and reassessing its SWIFT compliance framework.



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