Ann: Signs $3m HoA for security and networking solution, page-13

How did you figure 800K to the bottom line? Without wanting to sound negative, connectivity contracts are NOT what we want to see TNT signing. If this agreement was for new security I get it and would be excited too. Think about it, 80 sites into 1M is what roughly, 12.5K a year, 1K a month for connectivity? How much of that do you think accounts for margin and what is then left over? It is even more important to note that this is a renewal, luckily we didnt lose the client and I bet the agreement was agressively signed which would mean that the margin would be wafer thin. The scary part here is the size of this client accounts for nearly 20% of total revenue (on revenue of 5M)!! Not a great ratio for Tesserent.

I have said it many times before, we need Tesserent to be signing deals with Tesserent security solutions. The cost is next to nothing and the return is pure cream to bottom line. Tesserent needs to push security and their product not Palo or any other security vendor they decide they need to compete with to get a foot in the door.