Managed Security Services CMD – high energy and optimistic Managed Services is the star of NCC, growing 36% in FY24 to c£67m, with c£75-£80m expected in FY25 (+c15%). The event showcased a new divisional team, a little over a year into their roles, already seeing benefits of material organisational change. There was energy in the team, coming across as optimistic on the division’s future, based on the market and operational progress, with scope for revenue and margin acceleration. There is still much to be done, but early indications are encouraging. May, the last month of the fiscal year, had 60% more ARR than last year. The market is ‘hot’, with clients seeking benefits from using partners to manage their cyber risks. This creates a fertile, but also competitive backdrop – a reason why the changes have been so essential. Playing to the team For us, a key message running through the event was the importance of both the cross-sell within the division, now its Unified Cyber Platform is operational, but also equally important is playing to the merits of the other divisions, using them as routes to market. NCC is now capable of an end-to-end Cyber Security offering, from Consulting and Implementation, Technical Assurance through to Threat Intelligence and Incident Response, with these customers potentially prospective Managed Service clients. Easy to say, harder to deliver, but with changes ongoing in the other divisions, there is potential to deepen account penetration. Unified Cyber Platform – crucial to driving financial performance Capabilities have been deepened and unified across NCC’s global Security Operation Centres, with its Unified Cyber Platform going live in February. It integrates leading third-party cyber security technologies, builds in NCC’s own IP (responsible for c40% of threat detections) delivering a Managed Service suite from finding sensitive data, adding protections, recommending actions, monitoring, addressing and remediating attacks. Alongside these technological capabilities, emphasis has been placed on dedicated service delivery and technology account management teams to foster client stickiness, as well as drive new wins. While recurring revenue is c88%, NRR is only 77% with too many renewals lost. Pushing NRR to a ‘respectable’ c90% would add c£5m revenue alone. The platform should also enable the business to better scale with new capabilities (organic or M&A) easily added. All to play for The financials suggest the division could alone already account for much of the current Cyber Security valuation, which gives material support to the SoTP. It’s still early days in delivering the strategic plan with a lot of delivery and execution to come, but progress thus far has been encouraging overall and we feel the days of own goals and underperformance are behind us. Buy.