For the past 18 months we have written about Viscount Systems (VSYS) and their strong technology for internet-based security. Smart phones and an IT-based approach to management is what is driving change for all types of access control, including physical security. For example the newly expanded Microsoft Azure Active Directory Premium service is designed for widespread enterprise use and just became generally available.
There’s a palpable desire to finally rid buildings of proprietary, inflexible and expensive panel-based control systems. The situation is similar to the old days of proprietary telephones versus what we enjoy today with IP-based telephony.
The stock price and enterprise value of the company has expanded since the early days of our coverage but investors are still waiting for rapid revenue growth and expanding profitability.
Today we have some concrete reasons to raise or expectations for 2014 and beyond. Specifically:
1. Raised $2.4 million and is using some of this cash to build out sales and R&D/technical support teams. In the past the company has just been undercapitalized relative to the opportunity. Now they have the resources to be effective.
2. Management is now in what we would call “extreme alignment” with shareholder interest – not just equity but also compensation is directly linked to increasing revenue growth and expanding operating margins. In addition the team has a clear understanding of the consequences of needing any further capital in terms of dilution and is on a path to reach break-even by YE 2014.
3. Additional sales and support staff will help the company convert a large pipeline of qualified leads into actual sales. This has been an acute issue in the past. The new CEO Dennis Raefield was (among other things) President of Honeywell International from 1998 to 2003 and has the experience, network and experience to build the business at Viscount.
4. On the development side a major certification (Federal Identity, Credential and Access Management or FICAM) will help boost sales to the government and government agencies. It will also help the company fend off competition because certification is not simple. There are some new products in the pipeline and some refinements like exploiting PoE (Power over Ethernet) in some existing products but 2014 is about closing sales for existing products. (For more background on FICAM refer to: http://www.idmanagement.gov)
A story early this year regarding new Viscount Freedom deployments from findBIOMETRICS explains fairly clearly the market conditions that are driving the opportunity for VSYS:
“The demands of security over the past decade have been constantly driven up by an increased number of threats of all kinds, yet facilities that would be deemed as critically important still don’t have access control that could be considered in any way modern. The fact of the matter is that the cost associated with implementing an up-to-date security system is costly, especially when it involves placing a new infrastructure.
This obstacle, rather than being a hindrance, is largely the reason behind the recent spread of Viscount Systems Freedom.Today the company announced its first contract of the new year, awarded by the U.S. Federal Government, to secure facilities in California and Vermont with Freedom.
[Freedom] overcomes the obstacle described above through its Freedom Access Bridge technology, which allows authentication devices (including those that verify via biometrics) to be operated and administered through a standard IT infrastructure already in place in the buildings being secured. No installation of control panels and additional wiring means none of the associated costs that keep the unsecured feeling insecure about their choice in access control.”
Wireless ubiquity continues to spread and with it the confidence to roll out more and more critical services on networks and rely on smart devices (phones, watches, cars) to interface with the user and they systems. Developments in the industry are worth noting as well including even more ubiquitous wireless networking with both Google (with Ruckus $RKUS) and Amazon (with $GSAT) bringing their own independent wireless networks to consumers and businesses.
In all this general excitement there will be a big shift to digital authentication and access control. Our work continues to show that Viscount Systems (VSYS) is still well in the lead on the software side and almost unavoidably in the path of this growing opportunity.
An updated version of our initial coverage report can be downloaded here: Viscount Systems (VSYS) The IT Bridge to Physical Security, May 2014.