Q&A
1. What is Tempest Security?
We provide comprehensive security services focusing on security solutions based on the interplay between people and technology. Tempest was founded in 2009 by Andrew Spry and Thomas Löfving as a pure surveillance company. Since then, we have expanded our offering to include both traditional surveillance services and special security services, such as personal protection, security investigations and technical security solutions. We are now one of Sweden's ten largest providers of security services. In recent years, we have received several nominations for surveillance company of the year and newspaper Dagens Industri named us a Gazelle Company as one of the Sweden’s fastest growing companies.
2. What types of security services do you offer?
We offer four types of security services: traditional surveillance (mobile and stationary), special security services (such as personal protection and security consultation), alarm center and security technology (surveillance and access control systems). In addition to pure security services, we also offer support for reception and switchboard as well as internal service staff (such as janitor).
3. Who are your customers?
Our customers can be found in both the private and public sectors and include municipalities and authorities as well as companies and private individuals.
4. Which markets does Tempest operate in?
Our biggest market is Sweden but we also operate in Norway, Denmark, Germany, Turkey, the United Kingdom and the United States. We also have representation in Finland, Estonia and Spain.
5. What are your goals and targets?
We want to be the No. 1 choice for customers in need of high-quality security services.
6. What is the purpose of listing the company on the stock exchange?
The listing is meant to facilitate our continued growth and acquisition strategy. We believe that the listing and ownership dispersion will contribute to increased awareness and will strengthen our position as a reliable supplier of comprehensive security solutions. With strong growth and a stable platform, our view is that we have the potential for continued future expansion into new markets and improved profitability.
We also believe that the listing will have a positive impact in terms of recruiting competent staff, while the increased transparency will create demands that are in accordance with our ambition to operate as an employer with a high standard and quality.
7. What are your financial goals?
Our financial goals are to achieve sales of SEK 1 billion by 2025. We also strive to reach an EBITDA margin of 10 percent by 2025.
8. What does your growth strategy look like?
Our strategy is to grow both organically and through acquisitions. We grow organically by being better than our competitors. We achieve this by building long-term relationships with customers and employees, being agile and always using the customer's specific situation as our starting point. We thereby create recurring revenue streams through contractual sales of traditional surveillance and advanced security services to high-level decision makers in the private and public sectors.
We have also made several minor acquisitions over the years to supplement the business. We see good opportunities for further acquisitions within all business segments, both in Sweden and internationally.
9. What current global trends benefit the security sector?
There are several trends that increase the need for security services both regionally and globally. One trend is the increase in socio-economic gaps, leading to social tensions and higher crime rates in some areas. Another is the lack of resources within the judicial and legal systems, which has given the security industry greater responsibilities when it comes to making societies feel safe, protecting individuals and conducting investigations in various cases. We can also see that more and more companies are choosing to outsource the handling of security issues. Those could previously be handled internally, both by companies and authorities, but are now increasingly handled by private security companies.
10. Security companies like Tempest rent out security guards by the hour. How can that be a good financial deal?
When it comes to surveillance, the business model is partially based on charging by the hour, which can have a limited upside. It is also an industry with very low margins, which have been pushed down even further over the last decade despite the industry's continuous discussions about how this must change. We believe that the internal barriers created within larger organizations in the industry are a major obstacle to this change, and that various stakeholders in the industry are more concerned about their own business than about the customers' actual needs. We can take advantage of that because our limited size, strong history and corporate culture enable us to challenge the conventional business models, and by using our toolbox of automated and digital solutions we can always seek the most effective solutions from the customers' point of view. In addition, we have had the opportunity to have several discussions with our customers about why the industry is using the same approach and methods in 2020 that companies were selling 20 years ago.
11. A question about why the share price has soared since mid-2019. What has happened?
Since being listed on First North in December 2017, Tempest Security has continued to grow according to plan, and we have made many of the investments we intended to make after the listing. Since the beginning of 2019, we have been able to shift our focus more toward creating profitability and benefiting from the infrastructure we have created. Of course, this is now beginning to show in our results.
12. Tempest Security announced new financial goals during Q3 in 2020, is there more information on how those will be achieved?
The company's stated financial goal is to reach sales of SEK 1 billion with an EBITDA of 10% by 2025. We have previously presented our plan for transitioning from a surveillance company to a more complete supplier of comprehensive security solutions. That transition is opening up up new markets for us and creates more sales channels that enable us to reach out with our entire range of services. We also have a more acquisition-driven strategy when it comes to our European expansion, which we expect will help us grow at a faster pace.
13. How does the company choose countries and areas to establish itself in?
Our growth strategy includes a selection of countries that we are prioritizing for various reasons. In our immediate vicinity are the Nordic countries, where we already have good entry points for continued expansion. We view these as high-priority countries both from a customer perspective as well as a growth perspective. There are also a number of European countries where our existing customer base needs our services and where we also see a gap in the market between the current offering and the additional services we can offer.
14. What is your view on establishing the company outside Europe?
In the current phase of our growth strategy, our main focus is on Sweden and the European countries which we consider most interesting. We work globally through our partner network and expect to continue doing so for the foreseeable future. Going forward, I am convinced that the needs of our customers coupled with future opportunities will lead to establishments or acquisitions outside Europe, but it is much too early to go into any detail on that.
