AhnLab experienced growth in its solutions and services sector last year, but the poor performance of its subsidiaries is seen as a challenge that needs to be addressed. Despite efforts in various new businesses such as blockchain and cloud, related revenues remain minimal as they have been stuck in the research and development stage for several years.
According to AhnLab on the 20th, the company's consolidated revenue last year was 260.6 billion won, an increase of 8.9% compared to the same period the previous year (239.2 billion won). The revenue growth that has been ongoing since 2016 continues. During the same period, operating profit was 27.7 billion won, an increase of 4.8% compared to the same period last year (26.4 billion won), marking an all-time high.
Revenue growth was driven by AhnLab's headquarters services, including security solutions, security monitoring services, and consulting. An AhnLab official stated, "All service areas generally grew, with next-generation endpoint threat detection and response solution 'AhnLab EDR' and next-generation threat intelligence platform 'AhnLab TIP' showing relatively high growth. In particular, the overseas revenue share increased compared to the previous year due to early infrastructure establishment of the Saudi Arabian joint venture 'Rakeen,'" he explained.
However, net profit declined. Last year, AhnLab's consolidated net profit was 32.4 billion won, down 6.7% compared to the same period the previous year (34.7 billion won). The industry believes that AhnLab's subsidiaries are hindering the growth trend. In fact, when looking at the standalone figures, AhnLab's operating profit last year was 36 billion won, up 11.6% from the same period the previous year (32.2 billion won). The net profit during the same period also recorded 44.6 billion won, an increase of 28.2% compared to the previous year (34.8 billion won).
However, four subsidiaries under AhnLab—'AhnLab Blockchain Company,' 'AhnLab Cloud Mate,' 'Nawn Works,' and 'Jason'—have low profitability. AhnLab established the blockchain specialist subsidiary 'AhnLab Blockchain Company' in 2022 and launched the 'ABC Wallet' to engage in business. ABC Wallet is a service that supports the storage and transaction of digital assets such as cryptocurrency and non-fungible tokens (NFTs). However, its performance has not been strong in the two years since its establishment. According to last year's semi-annual report, AhnLab Blockchain Company's first-half revenue was 1.05 billion won, with a net loss of 2.16386 billion won.
AhnLab's cloud operation management service (MSP) specialized subsidiary, AhnLab Cloud Mate, has also not contributed positively to performance yet. AhnLab Cloud Mate recorded first-half revenue of 1.9 billion won and a net loss of 253.06 million won last year. Jason, an artificial intelligence (AI)-based security startup acquired in 2020, also recorded first-half revenue of 1.6 billion won and a net loss of 648.76 million won last year. This company is also known to be in a phase focused on research and development, thus unable to report immediate results.
AhnLab's investment costs are gradually increasing. AhnLab spent 65.3 billion won on research and development expenses in 2023 and 33.2 billion won in the first half of last year. The research and development expenses relative to AhnLab's revenue increased from 27.29% last year to 30.34% in the first half of last year.
AhnLab finds itself in need of a new breakthrough, as it cannot rely solely on the limited domestic security business for future performance improvements. Currently, more than 90% of AhnLab's revenue comes from the domestic security business.
AhnLab views entry into the Middle Eastern market as a new opportunity. The company plans to service its products suitable for the Middle Eastern market through the overseas corporation Rakeen established in Saudi Arabia last October. According to the Korea Internet & Security Agency, the size of Saudi Arabia's security market is expected to grow by an average of 11.8% annually from 2022, reaching $632 million (925.1 billion won) by 2026.
A security industry official noted, "AhnLab can no longer rely solely on the domestic security business, and for performance improvement, future achievements in new businesses are necessary. Subsidiary services such as blockchain and AI are not products but technologies, and to generate revenue, services utilizing those technologies need to be developed, which is expected to be challenging to achieve in the short term."