Exclusive: DarkMatter eyes Saudi expansion in 2019, CEO says
The Abu Dhabi cybersecurity start-up is structuring the business into four divisions as part of a new strategy
DarkMatter Group, the Abu Dhabi cyber-security start-up, is planning to enter Saudi Arabia next year in a regional expansion push after hatching a business strategy to capitalise on new opportunities.
The firm is in "advanced" talks with the Saudi government and corporations in the kingdom, Karim Sabbagh, DarkMatter Group's chief executive, told The National. Sectors under discussion include energy and utilities, finance, telecoms and transport as well as defence, security and intelligence.
"There’s a level of strategic alignment between the UAE and Saudi, and that provides a lever on which we can build," Mr Sabbagh, said.
Founded three years ago by Faisal Al Bannai, an Emirati businessman who previously set up regional mobile phone retailer Axiom Telecom, DarkMatter Group is now led by technology veteran Mr Sabbagh. Formerly chief executive of the world’s largest satellite operator, SES, Mr Sabbagh took over the role of chief executive in April. Mr Al Bannai became managing director and leads the company's strategic direction.
The company began structuring its business in the first half of this year as part of a new strategy to capitalise on "significant" opportunities as regional corporations and governments boost investment in digitisation, Mr Sabbagh said.
The firm changed its name to DarkMatter Group this month, with its new model focusing on four areas: DarkMatter, which covers cyber-security and secure communications; DigitalX1, which oversees so-called digital transformation; DigitalE1, which handles digital education and, finally, its Government Solutions area will help sovereigns strengthen their defence and security solutions.
The group, set to grow its workforce to about 750 employees this year from 600 in 2017, plans to expand in the Arabian Gulf and Mena over the next two years, Mr Sabbagh said. It is currently in talks with potential government and corporate clients in the GCC.
In Egypt, it had several "productive" discussions with both government agencies and the private sector, he said. “There’s very significant demand, it’s just a matter of making sure we’re ready to commit to all of this at the same time."
As it invests to build its new divisions, DarkMatter Group is also open to growing inorganically through acquisition of other companies and has a team scouting technology start-ups in areas beyond its scope of work to complement its capabilities.
"If we need to go one step further, have skin in the game and have equity, we’ll keep that option open," Mr Sabbagh said.
However, there are no immediate plans and it is "too early" to identify potential acquisition targets.
Mr Sabbagh said investors in the US and Europe are interested in the company, which is self-financed and expects to post a profit in 2018, but it does not see an immediate need to attract additional capital.
"This does not preclude in the future that we could develop, for example, joint ventures and partnerships to prosecute new areas," he said, though selling the company to investors is not on the cards.
The company, which is profitable, does not see an initial public offering as a priority and does not have a requirement to raise funds from other financing instruments as it continues self-financing its growth, Mr Sabbagh said.
The second batch of the company's secure smartphone, Katim, is already sold out ahead of its release in 2019 in a "sizable volume of thousands of units", Mr Sabbagh said, with the third generation of handsets now being developed.
The device, first revealed in February, is sold directly to government clients and is not available through retail channels.
Katim's circle of clients will expand to include private entities that require secure communications, potentially by the time the third model becomes available, he said, declining to provide a timeframe.
DarkMatter' Group’s products, including Katim, could spread rapidly into regions including Asia and Europe, he said.
The company, which earns most of its revenue from government contracts, doubled its revenues last year to more than $400 million (Dh1.6 billion). Mr Sabbagh declined to reveal earnings targets for 2018.
About 30 per cent of its annual revenue and 20 per cent of its staff are focused on research and development.
DarkMatter Group is one of a few cyber security companies in the Middle East with research centres in Canada, Finland and China.
Updated: September 22, 2018 03:58 PM