Firstwave Cloud Technology and Amazon: A match made in heaven!

Firstwave Cloud Technology (ASX:FCT) and Amazon have just announced that the pair are teaming up to deploy the former company’s product suite onto the latter’s AWS marketplace. Shares have gained over 20% this morning off the back of this news.

Recap of Firstwave Cloud Technology

Firstwave is an ASX-listed technology company. Its historical specialty has been cybersecurity, but it has made extensive forays into network management.

In late 2021, it bought Opmantek which resulted in Opmantek products NMIS and Open Audit entering the FCT fold. NMIS helps administrators of networks to better manage and monitor their networks. Open-AudIT is a discovery, audit, asset tracking and reporting system. It audits everything attached to a network cost-effectively and tells customers what is on their network, how it is configured and when it changes.

Secure Traffic Manager (STM) joined the product suite when FCT acquired Saisei Networks in September 2023. STM provides network managers with the ability to have deep network insights and manage their customers bandwidth and quality of service in real time.

FCT’s clients tend to be medium to large enterprises, most commonly telcos and managed service providers but Microsoft and NASA are noteable clients. These clients may use only one, multiple, or all of these products. Through these products, FirstWave offers an end-to-end solution for network discovery, management and cybersecurity.

The company achieves very high gross margins given the development and licensing model, and the fact that the software is managed on-premises by their clients not by FirstWave. With CyberCision, given licence fees paid to global security vendors, gross margins are 50-90%, whereas NMIS and Open Audit are 100% margin.

What’s so special?

FCT’s solutions are not the only options available, but they are quick to deploy, are lower cost, higher scale and have greater flexibility to be employed. They also have certain features that are not available in other competing products.

FCT’s clients run the software on-premise in their data centres, and the Telcos/MSPs combine it with further services to on-sell to their own clients. The Telco/MSP pays a base subscription fee and then a usage-based fee dependant on how many clients and the size of the clients they add to the system. Most NMIS and Open-AudIT licenses are for 12 months and paid upfront. Some customers pay for multi-year licenses upfront to secure discounts (~20% for a 3-year license).

Firstwave Cloud Technology and Amazon are teaming up

Firstwave told investors this morning it formed a strategic partnership with Amazon as well as Corent Technology. Essentially, Open-AudIT, NMIS and CyberCision will be avaliable on the AWS marketplace.

AWS and Corent will be chipping in A$250,000 to make this distribution happen. It will unlock 300,000 monthly active marketplace users, including over 2,500 channel partners that utilise the marketplace platform. Moreover, the deal will also enhance FCT’s AI technologies.

FCT has 150,000 organisations using its free-tier software but has been looking for pathways to get at least some of them to pay. This could be a key step because it will be a simplified pathway to do so – just go to AWS. It will also simplify bill management for both FCT and its clients.

FCT has told investors that it has already begun development work and the first products will be released in 3 weeks’ time (i.e. at the start of July).

A big step for FCT

Firstwave had an appealing product suite, but one of the key issues has been the lack of a central platform to pick up the technology. This deal fixes that issue and exposes the company’s product suite to a broader range of customers.

The fact that Amazon will be chipping money to make this happen gives testament to the promise of FCT’s product suite.

Disclosure: FCT is a research client of Pitt Street Research. Check out our coverage of FCT  here!

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