Thales and the Tangible Link Between Cyber Expansion and ROI

In today’s volatile threat landscape, cybersecurity threats present an issue not only to a company’s current operations, but its ability to expand. 

This has become all the more pressing in the age of digital transformation and AI, as although this new infrastructure brings new capabilities, it also expands the attack surface. 

Therefore, companies that can help enterprises enter in this new age, securely, are reaping the rewards. 

Technology firm Thales, recognising the growing urgency of digital security, projects its revenue to exceed €25bn (US$31.6bn) by 2028, driven largely by a strong cybersecurity portfolio that has expanded significantly in recent years.

Strategic pivot to cybersecurity yields 

With the rising integration of digital processes in business operations, cybersecurity threats have multiplied. 

According to CrowdStrike, cyber intrusions have surged by 75%, underscoring the pressing need for advanced cybersecurity measures. 

This is increased by the new attack surface, and augmented by the sophistication of cyber threats has escalated in tandem with advancements in digital transformation technologies like AI. 

In this uncertain landscape, firms that can provide robust cybersecurity solutions, like Thales, are not only mitigating risks for their clients but also generating substantial growth.

Since Patrice Caine took the helm as CEO nearly a decade ago, Thales has redefined its strategic direction, prioritising cybersecurity by acquiring high-value assets such as chipmaker Gemalto in 2019 and, more recently, the US cybersecurity firm Imperva. 

This shift reflects the company's foresight in recognising cybersecurity as a critical business area amid heightened digital risks.

As Patrice pointed out, Thales intends to cater to industries like finance and energy, which are more willing to invest in high-quality, specialised software due to the stakes involved. 

The emphasis on such sectors aligns with findings from law firm Mayer Brown which reported that nearly 80% of leaders in finance view cybersecurity as essential for future readiness. 

Financial firms, dealing with sensitive and heavily regulated data, find themselves particularly vulnerable. 

The risks associated with data breaches are staggering, as seen in Equifax's 2017 breach, which resulted in over US$1bn in penalties and a severe blow to the company’s reputation.

Growing profit margins and clientele

Thales has set a goal of achieving an operating profit margin of 13-14% by 2028, an increase from the 11.6% it reported in 2023. This growth aligns with the company's increased focus on premium cybersecurity offerings. 

While traditional defence contracts and aerospace have historically driven revenue, cybersecurity now constitutes a substantial part of Thales' growth strategy, promising higher returns due to the increasing complexity and cost of digital threats.

The demand for robust cybersecurity solutions among financial services is mounting. In response, companies like Thales, equipped to address these challenges, are positioning themselves as indispensable partners to sectors navigating both innovation and security.

While Thales’ traditional space business remains under pressure from competitors like Elon Musk’s Starlink, the company’s cybersecurity division has provided a stable growth foundation. 

Thales CFO Pascal Bouchiat recently affirmed the company's resilience in the US market, pointing to a robust cybersecurity portfolio that has expanded beyond Europe.

Thales' focus on cybersecurity solutions positions it well amid potential defence spending increases in Europe and a shifting US policy on cybersecurity on critical infrastructure.

Cybersecurity as the cornerstone of growth

The strategic emphasis on cybersecurity has made Thales an appealing option for firms keen on staying ahead of the threat landscape. 

Patrice’s approach, prioritising high-value sectors, has proven prescient, given the escalating cyber risks facing industries such as finance.

For Thales, cybersecurity represents more than just a revenue stream; it is the cornerstone of its future growth. 

As businesses push forward with digital transformation and AI initiatives, companies equipped to provide robust cybersecurity solutions, like Thales, are positioned to reap the benefits.

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