The pandemic has taken a toll on the global economy, affecting various sectors, including security. Amid 2020 revenue declines reported by security companies, certain ones showed strong resilience against the recession. This note examines what their secrets were.
Security has long been dubbed as “recession-resistant,” achieving growth even in the worst of times. Yet in 2020, something unprecedented happened. On Security 50, 28 companies reported 2020 revenue declines while 22 reported growth. For the first time in Security 50 history, companies reporting revenue losses outnumber those reporting growth.
Indeed, the pandemic-triggered global downturn had a lot to do with it. “Clearly, 2020 was a period of unparalleled global challenges, and we also felt it at Milestone. Despite the tough conditions we managed to reach a net revenue above DKK 1 billion – EUR 134 million – for the second year in a row, and we continued to grow our organization,” said Thomas Jensen, CEO of Milestone Systems.
“The first half of the 2020/21 fiscal year was characterized by challenging conditions, particularly in the Asia-Pacific (APAC) region, where several markets suffered from multiple and repeated lockdowns as a result of the COVID 19 pandemic. In particular, the project business (for example hotels and shopping malls) experienced shortfalls that could not be offset,” said Thomas Lausten, CEO of MOBOTIX. “In the DACH region, the Nordic countries and the Middle East, however, sales grew compared to the previous fiscal year and in line with the company's expectations.”
Companies that showed resilience
Despite these challenges, certain security companies still showed
resilience in the face of adversity (see table below). Some companies reported remarkable growth during this time. Some managed to stay profitable. So, what’s the key for their success?
2021 Security 50: Top resilient companies (Revenue growth 2020-2019)
| Company |
Headquarters |
% Growth |
| Smartsens Technology |
China |
124.9% |
| IDIS |
Korea |
37.2% |
| Motorola Solutions (Video Security and Analytics) |
U.S. |
30.8% |
| Bluesky Technologies |
China |
25% |
| TVT |
China |
24% |
| YTOT |
China |
19.5% |
| Intelbras |
Brazil |
14% |
| Raysharp |
China |
12.4% |
| Tiandy Technologies |
China |
11% |
| Hikvision Digital Technology |
China |
7.7% |
Well-executed supply chain management
Ensuring
time-to-market so that customers get their products on time is critical. “While many security technology vendors struggled with supply chain issues as their manufacturing facilities shut down, the IDIS Smart Factory in South Korea continued operating throughout the pandemic. We strategically targeted supply at regions with continued growth, while always ensuring that our partners in Europe, the Middle East and the U.S. had the stock they needed for projects to continue unhindered,” said Joon Jun, President of IDIS Global Business Division, a high-growth company on Security 50.
Another growth company, BCDVideo, stressed the importance of being agile and nimble. “We were most fortunate, as this could have gone in a 180-degree different direction. Our VP of Supply Chain Global Operations previously worked for an industrial distributor/supplier as the procurement manager covering goods from China. Therefore, he had previous experience in how quickly China shuts itself down when something is amiss. Back in January 2020, news leaked that the World Health Organization was sniffing around Wuhan, China. The next day, he ordered four time our regular monthly parts spend from Dell OEM. Three days later, China shutdown. We were able to utilize ready-to-build stock from Dell in Mexico, as any Chinese components were already at that site. Because of this quick action, we were on top of it early, never lagged, and crazy as it sounds, our average days to ship in 2020, during the pandemic was 2.5 percent less than the preceding non-COVID year of 2019, dropping from 4.77 days to 4.65 days to ship a customer order. That 4.65 days has stayed consistent in 2021. Days, not weeks. Unheard of, not only in the safety and security market, but everywhere else, according to all the newswires,” said Jeff Burgess, CEO of BCD.
Customer-tailored solutions
Offering solutions that catered to customers’ special needs was also critical. “In some cases, the pandemic increased demand – for example, we saw growth in the development of 24-hour unmanned stores in South Korea. At these outlets, IDIS cameras monitor customers as they move around the store, with real-time footage displayed on screens. The IDIS IoT retail solution utilizes facial recognition for enrolment, access, payment and exit purposes. These stores also benefit from an increasing choice of other IDIS IoT devices and sensors, which can be simply and affordably integrated with our NVRs, and can alert remote staff and the emergency services in the event of safety or security threats,” Jun said.
NDAA compliance was another example Jun cited. “Throughout 2020 we focused on migrating our cameras, NVRs and enterprise servers away from using Chinese system-on-chips (SOCs) and another Chinese components. It was a strategy that paid off,” he said. “There was already significant demand for NDAA-complaint equipment in the United States, but as companies emerged from the first wave of the pandemic many larger organizations in EMEA also realized the implications of the legislative tightening on their US trade within federal supply chains and the risk that installing Chinese surveillance equipment might pose for their future plans for U.S. expansion.”
Investing in people and technology
Certain companies were profitable last year, despite the downturn. Rather than taking a “cost-down” approach, these companies invested in people and technology that they said were key to their success.
“Even though profit was lower than expected, we were able to remain in the profit zone. In addition to the savings resulting from the pandemic (travel expenses, marketing costs, cancelled trade fairs), we did not launch a ‘savings program,’ but rather invested additionally in our innovations and the positioning of MOBOTIX as a complete and comprehensive service provider in the field of intelligent video technologies,” Lausten said. “For three years – even during the pandemic – we have stringently pursued our goal of positioning MOBOTIX in such a way that we can solve any conceivable video technology project worldwide in a future- and cyber-proof manner – regardless of size, number of locations, requirements or industry.”
“Employees are Senstar’s main asset; therefore leadership took an employee-first approach during the pandemic by maintaining salaries and staffing levels. As well, Senstar was transparent with employees about our strategy and were proud to have them support it. We are very thankful our employees remained committed to Senstar and continued to give their all to keep the company on track during this difficult time,” said Fabien Haubert, MD of Senstar. “Overall, Senstar was cautious and clever. We took no specific cost reduction measures, but instead closely monitored non-strategic costs and expenses. At the same time, we continued full investment in R&D and innovation, and kept a feet-on-the-ground sales presence to ensure we could continue to meet customer needs.”
“First and foremost, it really comes down to our people. They are key to Milestone’s success, and from a leadership point of view it was crucial to avoid restructuring and keeping people safe and included as part of the team. To support this, we launched the Grow Together program that focuses on mental and physical health and knowledge-sharing about exercise, food and sleep. In addition, we managed to live up to our ambition to invest in people and growth, increasing the number of employees by 69 closing in to nearly 1,000 employees by the end of 2020,” Jensen said. “In a way, the pandemic has served as a stress test for our company culture and People First approach, which have proven to be strong and resilient. We can withstand a crisis within the industry and beyond.”
Growth prospects for 2021/22
Looking at our data, a quick comparison of 1H revenue (n=21) for the past 3 years shows a stronger performance in the first half of 2021 compared to the same period in 2020. However, it is yet to reach the numbers attained in 2019.
In the same line of thought, when companies were asked about growth prospects for this year and next year, most expressed optimism.
“We have been somewhat spoiled as we have experienced year-over-year growth for the past nine years. Therefore, we somewhat expect it. Q3 2020 was our largest quarter to date, which, based upon our new foreign hires, should be surpassed in the fourth quarter,” Burgess said. “As the pandemic is still with us, we keep our eyes wide open and know things can be shut down upon a moment’s notice, either from state or local government, or various vertical markets – education and gaming, for instance – where the security integrator cannot do the install as the site is shut down. Thus, we just keep our nose to the grindstone, and control whatever we can control. In any case, we always expect growth; now more than ever, what with the investors expecting it as well!”
“We have high expectations for 2021 and 2022 as the industry recovers from lockdowns and restrictions. We expect to be able to resume existing projects that were put on hold due to COVID, although travel continues to be an issue in specific places With 50 percent of our employees market-facing (local sales and technical support teams close to our customers’ bases), Senstar has an excellent platform to overcome travel restrictions and give the best service and support to our customers,” Haubert said.