Every day, there seems to be a headline about some type of online security breach. Just look at the recent denial-of-service attacks at Twitter and Facebook. Yes, it seems that no one is immune from the perils of the electronic world.
Interestingly enough, this is good news for ArcSight (NASDAQ: ARST), which develops a variety of security solutions. To get a sense of this, look at the company's fiscal Q1 results (which came out Thursday).
Revenues grew 25% to $34.6 million and product sales were up 16%. There was a profit of $1 million (which compares to a loss of $1.3 million in the same period a year ago). Moreover, cash flows came to $9 million.
All in all, there seems to be no stopping the growth of cyber threats -- which are becoming even more dangerous. For example, the average cost of a cyber-fraud attack is roughly $500,000.
Actually, the cyber attacks may even have national security implications, such as with cyber-warfare. Essentially, these are attacks against vital infrastructure like transportation systems, financial services firms, utilities, telecom networks, and so on. If such an attack is successful, the consequences can be severe.
So, to deal help with these problems, ArcSight has been investing aggressively in its technology, as well as expanding into new markets. So far, it seems to be working. In fact, in the prior quarter, about 59% of product revenues came from existing customers.
In morning trading, the shares of ArcSight rose 9.87% to $21.60.
Tom Taulli is the author of various books, including The Complete M&A Handbook
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