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LGMS Q2 2025 Deep Dive: Navigating Headwinds Amidst a Booming Cybersecurity Landscape
LGMS Berhad, a prominent name in Malaysia’s cybersecurity sector, has just released its financial results for the second quarter ended June 30, 2025. The report reveals a mixed picture: while the company faced a dip in top-line revenue and profitability compared to the same period last year, it also showcased underlying strengths and strategic moves that paint an interesting picture for the future. A key highlight is the proposed transfer from the ACE Market to the Main Market, signalling the company’s maturity and ambition.
Let’s dive into the numbers and see what they tell us about LGMS’s performance and prospects.
Core Data Highlights: A Tale of Two Segments
This quarter’s performance was a classic example of short-term pressures masking long-term strategy. While overall revenue saw a decline, the reasons behind it are crucial for investors to understand.
Financial Snapshot: Q2 2025 vs Q2 2024
Compared to the corresponding quarter last year, LGMS saw a contraction in both revenue and profit. The primary driver was a reduction in higher-value projects within its core cyber risk prevention segment.
Q2 2025 (Current Quarter)
- Revenue: RM 10.02 million
- Profit Before Tax: RM 2.78 million
- Net Profit: RM 2.03 million
- Basic Earnings Per Share (EPS): 0.44 sen
Q2 2024 (Comparative Quarter)
- Revenue: RM 11.53 million
- Profit Before Tax: RM 4.82 million
- Net Profit: RM 3.65 million
- Basic Earnings Per Share (EPS): 0.80 sen
The dip in profit was further impacted by a strategic increase in employee benefits expenses, a result of the company’s decision to expand its workforce. While this move pressures margins in the short term, it is a necessary investment to scale up and meet future demand.
Segment Performance Breakdown
A closer look at the business segments reveals a more nuanced story. The decline in the ‘Cyber Risk Prevention’ segment was partially offset by strong growth in ‘Cyber Risk Management and Compliance’. This diversification shows resilience and an ability to capture opportunities across different cybersecurity domains.
| Business Segment | Q2 2025 Revenue (RM’000) | Q2 2024 Revenue (RM’000) | Change |
|---|---|---|---|
| Cyber Risk Prevention | 5,826 | 8,162 | ▼ |
| Cyber Risk Management and Compliance | 3,275 | 2,170 | ▲ |
| Cyber Threat and Incident Response | 923 | 1,199 | ▼ |
The significant uptick in the compliance segment is particularly noteworthy, suggesting that regulatory tailwinds and increasing corporate governance requirements are creating a steady stream of demand.
Risk and Prospect Analysis: Riding the Wave of Digitalisation
Despite the quarterly headwinds, the long-term outlook for the cybersecurity industry remains exceptionally strong. LGMS appears well-positioned to capitalize on these trends.
Opportunities on the Horizon
The ASEAN cybersecurity market is projected to grow at a blistering CAGR of 17.24% between 2025 and 2030. In Malaysia, government initiatives like the Cyber Security Act 2024 and the MyDIGITAL Blueprint are creating a robust framework that mandates stronger digital defenses for businesses, especially those in critical infrastructure. This regulatory push is a direct tailwind for LGMS’s services.
With an established track record and deep technical expertise, LGMS is set to benefit from this expanding market. The company is also innovating its business model, particularly for its automated security tool, StarSentry, to offer more flexible and valuable solutions to clients. Furthermore, the proposed transfer to the Main Market will enhance its visibility, credibility, and access to capital, supporting its expansion plans.
Navigating the Risks
The primary challenge highlighted by this quarter’s results is the lumpy nature of revenue from high-value projects. A temporary slowdown in securing such projects can significantly impact quarterly figures. Additionally, the investment in workforce expansion, while strategic, puts pressure on short-term profitability. The company must effectively manage these costs and ensure that the new talent contributes to revenue growth in the near future.
Summary and Outlook
In summary, LGMS’s Q2 2025 results reflect a period of strategic investment and realignment against a backdrop of temporary project-based revenue decline. While the headline numbers are lower year-on-year, the company’s financial health remains robust with a strong cash position (RM 68.7 million) and low borrowings. The growth in the compliance segment is a significant positive, indicating a successful diversification of revenue streams. The Board remains confident, expecting the full year’s performance to be “satisfactory”. This analysis is for informational purposes only and should not be construed as investment advice.
Key takeaways for investors to consider:
- Short-Term Profit Pressure: The decline in profit is a direct result of lower revenue from the risk prevention segment and a conscious decision to increase headcount for future growth.
- Powerful Industry Tailwinds: The regional and national push for stronger cybersecurity provides a fertile ground for growth, which LGMS is well-equipped to tap into.
- Strategic Repositioning: The planned transfer to the Main Market is a major corporate milestone that could unlock new opportunities and enhance shareholder value over the long term.
- Solid Financial Foundation: A strong balance sheet with substantial cash reserves gives the company the stability and resources to navigate challenges and fund its growth initiatives.
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