High Wire Networks has sold its legacy staffing business in an $11.5 million deal. The company did not disclose the buyer of the subsidiary, but said the transaction consisted primarily of the elimination of debt and cancellation of certain shares of its Series D preferred equity.
The transaction also eliminates approximately $325,000 in monthly debt payments or $3.9 million on an annualized basis. The managed cybersecurity and technology enablement services company says it will use the leftover capital to support its faster-growing, higher-margin managed cybersecurity and technology business that is generating recurring revenue from long-term contracts.
The transaction also reduces High Wire’s fully diluted common shares by more than 16% through the elimination of conversion provisions associated with the debt and preferred equity.
High Wire’s Staffing Sale: Executive Commentary
Mark Porter, CEO, High Wire Networks, commented on the sale:
“While our staffing subsidiary had been growing steadily, this was a strategic sale at a significant multiple to our original acquisition price in 2021. Moreover, its divestiture allows us to focus our attention and financial resources on our core cybersecurity and technology enablement business. These areas have been generating our strongest growth and providing the most attractive market opportunities with our unique channel partner program.”
Stephen LaMarche, COO, High Wire Networks, said:
“Our growth outlook for 2023 is supported by both the many benefits of this divestiture and our backlog of contracted deployments currently remaining at a historical high. Our sales pipeline is also the strongest it has ever been in terms of both the number and size of prospective deals, particularly for managed security. Our recurring revenue from our managed cybersecurity offering, Overwatch by High Wire Networks, has also grown by more than 420% over the past year.”
High Wire’s Growth Plans
In addition to driving higher quality revenue streams and profitability, the sale of the staffing business is part of a larger initiative by the company over the last several months to strengthen its capitalization and organizational structure, eliminate high-interest debt, secure more favorable financing, and prepare for an uplisting to a major U.S. stock exchange, High Wire said.
The company estimated its revenue for 2022 at $27 million, an increase of 27% from the previous year. Most of that revenue was recurring based on long-term contracts, and the company says it expects this to continue to expand in 2023 with the anticipated growth of its managed service offerings.
The company’s growth in managed services has been driven by a growing number of channel partners who have expanded their managed cybersecurity service offerings using High Wire’s Overwatch cybersecurity solution, according to the company. Membership of the company’s channel partner program now totals more than 600 worldwide.
