One-glance verdict
Undervalued
$3.25 our estimate vs market $1.26
61% below our estimate, below the bear case
Fundamentals snapshot
SideChannel, Inc.
SDCH · OQB · Technology · Software - Infrastructure
Current price
$1.26
52-week range
$0.05 - $3.38
Market cap
$5.77M
Balance sheet
Healthy
— Coverage unavailable
Net cash $326.00K. Interest coverage shows how many times profit covers the interest bill.
What stands out
1 Reward
2 Risks
1 rewards · 2 risks
- Reward Free cash flow was positive in 1/10 years.
- Risk Return on equity was -71.1% last year — the company lost money on shareholders' equity.
- Risk Operating margin compressed from 6.1% to -7.5% over 3 years.
What this company does
SideChannel, Inc.
SideChannel, Inc. helps businesses protect themselves from cyber threats by offering software and expert services to manage their digital security. Their main income comes from selling their cybersecurity software, Enclave, and providing virtual chief information security officer (vCISO) services, which are like hiring an expert to handle your company's security needs. This matters because in today's digital world, keeping sensitive information safe from hackers is crucial for any business.
How the company got here
SideChannel was founded in 2019 with the belief that even smaller and mid-sized organizations deserve expert cybersecurity leadership, similar to what larger companies have, but at a more accessible cost. The founders, who had extensive experience leading security programs in various industries, noticed recurring gaps in the security tools available to these companies. These gaps included issues with network segmentation, managing digital certificates, and a lack of visibility into an organization's digital assets. This realization led them to develop their own solution, the Enclave platform, to address these specific challenges and provide a more integrated approach to cybersecurity. The company has since focused on bridging the gap between enterprise-level security solutions and the needs of small to mid-sized businesses.
What it actually does
SideChannel provides cybersecurity and privacy risk management solutions. Think of them as a digital bodyguard service for businesses. They help companies protect their sensitive information and systems from online threats. This involves both offering expert advice on how to stay safe and providing the technology tools to make that happen. Their goal is to make robust cybersecurity accessible and manageable for organizations that might not have a large in-house security team.
Enclave (Software Platform)
Enclave is SideChannel's proprietary software platform designed to simplify complex cybersecurity tasks. It acts like a digital security guard for a company's computer systems and network. Enclave helps with tasks such as keeping track of all the digital devices a company uses (asset inventory), identifying weaknesses that hackers could exploit (vulnerability management), and dividing the network into smaller, more secure zones (microsegmentation). This helps prevent a small breach from spreading throughout the entire system. The company is increasingly focusing on growing this platform business, aiming for recurring revenue from software subscriptions.
vCISO Services (Virtual Chief Information Security Officer)
vCISO services are like having a top-level cybersecurity expert on call, without needing to hire them full-time. SideChannel offers these services to assess a company's current security risks, create plans to reduce those risks, and manage the day-to-day security tasks needed to stay compliant with regulations. This means they provide strategic guidance and hands-on management to build and maintain a strong security program. These services are a significant part of SideChannel's business, helping clients navigate the complex world of cybersecurity.
What management is betting on now
SideChannel's management is focused on transitioning the company from a primarily services-based business to one that generates more recurring revenue from its Enclave software platform. They are strategically investing in the growth of Enclave, aiming to scale it through partnerships and alliances. The goal is to leverage the established expertise in their vCISO services to drive adoption of the Enclave platform, creating a more predictable and higher-margin revenue stream for the company. This shift is intended to capitalize on the growing demand for cybersecurity solutions in the mid-market.
Price history
How the share price has moved
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Earnings history
Last 8 quarters — what happened
Click any quarter to read the call summary and what the numbers say.
Revenue
$1.80M
Net income
$-134.00K
Diluted EPS
-0.03
Operating cash flow
$15.00K
Free cash flow
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Sources
Revenue
$1.58M
Net income
$-444.00K
Diluted EPS
-0.10
Operating cash flow
$-284.00K
Free cash flow
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Sources
Revenue
$1.77M
Net income
$-396.00K
Diluted EPS
-0.09
Operating cash flow
$-570.00K
Free cash flow
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Sources
Revenue
$1.77M
Net income
$-382.00K
Diluted EPS
0.00
Operating cash flow
$-84.00K
Free cash flow
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Sources
Revenue
$1.78M
Net income
$-261.00K
Diluted EPS
0.00
Operating cash flow
$-95.00K
Free cash flow
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Sources
Revenue
$1.89M
Net income
$-54.00K
Diluted EPS
0.00
Operating cash flow
$-26.00K
Free cash flow
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Sources
Revenue
$1.91M
Net income
$-195.00K
Diluted EPS
0.00
Operating cash flow
$75.00K
Free cash flow
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Sources
Revenue
$1.89M
Net income
$-259.00K
Diluted EPS
0.00
Operating cash flow
$190.00K
Free cash flow
$190.00K
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Sources
Is it cheap or expensive?
Fair value $3.25 vs current price $1.26
Our most-likely fair value is $3.25 a share — about 157.5% above today's price of $1.26, so the stock currently looks cheap (undervalued).
Is it drowning in debt?
Healthy
Net cash $326,000 - more cash than debt. Interest coverage unavailable.
Net debt
$-326.00K
Interest coverage
—
SideChannel, Inc. is healthier than 1 of 2 peers on balance-sheet leverage.
Healthy
Worse cushion
Baseline
Better cushion
SDCH
BASELINE
SideChannel, Inc.
Total debt $0.00 Interest coverage — This is the baseline the peer rows are being compared against.
Total debt $230.60K Interest coverage -1.78x This peer's profit covers its interest bill about 0.0 times over.
Total debt $4.49M Interest coverage -0.95x This peer's profit covers its interest bill about 0.0 times over.
What you should know
The case for and against SDCH
1 Reward
2 Risks
Rewards
-
Free cash flow was positive in 1/10 years.
Risks
-
Return on equity was -71.1% last year — the company lost money on shareholders' equity.
-
Operating margin compressed from 6.1% to -7.5% over 3 years.
The numbers
All the key metrics, grouped by purpose
Tap any ? icon to learn what it means.
Valuation
How expensive the stock looks
P/E (TTM)
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Forward P/E
—
P/B
4.19x
P/S
0.83x
EV/EBITDA
-4.07x
PEG ratio
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Profitability
How much profit each dollar creates
Gross margin
51.9%
Operating margin
-7.5%
Net margin
-19.6%
ROE
-71.1%
ROA
-26.6%
Health
Liquidity and balance-sheet strength
Debt / equity
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Current ratio
1.01x
Quick ratio
0.68x
Total debt
$0.00
Total cash
$326.00K
Growth
How the business has been compounding
Revenue TTM
$6.92M
Revenue 5Y CAGR
367.3%
EPS TTM
-0.22
EPS 5Y CAGR
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Cash flow
How much cash the business throws off
Operating CF TTM
$-923.00K
Free CF TTM
$-145.00K
FCF margin
-2.1%
Dividend
Shareholder payout
Yield
0.0%
Payout ratio
0.0%
Last ex-div date
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