BAE Systems has reported accelerated growth in its cyber business as nations look to double down on cyber security, amid strong financials for the first half of 2023.
The firm’s Cyber & Intelligence business reported revenue of £1.15 billion ($1.47 billion) in H1 2023, with external customer revenue in Cyber alone having grown 30% across the period to £759 million.
The domain was the main driver for Cyber & Intelligence, representing 69% of its external customer revenue against the smaller contributions of air, maritime, and land.
Overall BAE reported 13% year-on-year revenue growth in its H1 2023 results, topping £11 billion ($14.06 billion). Operating profit hit £1.2 billion ($1.53 billion), up 20% year-on-year.
The firm linked growth in its Cyber & Intelligence business to an increase in systems integration and classified intelligence work, as well as a “sharp” uptick in national security cyber sales outside the US market.
Customers in central government, national security agencies, militaries, telecoms, and law enforcement continue to invest in BAE services. It serves clients around the world such as the US Department of Defense, with 10,700 employees in Cyber & Intelligence in total.
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Both the public and private sectors employ BAE for mission-critical work, against the backdrop of the National Cyber Security Centre’s (NCSC’s) recent warning that new Russian groups seek to destroy critical national infrastructure.
Sales across the business increased by 7% across the period, with a single contract to support critical operations for a government customer having brought in $457 million (£371 million) in March.
The firm stated that it is now using artificial intelligence (AI) at an increasing level across all business areas, such as in manufacturing and design work. Increasing cyber attacks continue to drive revenue across its cyber division in the UK and US.
"We've delivered a strong financial performance in the first half of the year, thanks to the outstanding efforts of our employees,” said Charles Woodburn, CEO at BAE Systems.
"Our global footprint, deep customer relationships, and leading technologies enable us to effectively support the national security requirements and multi-domain ambitions of our government customers in an increasingly uncertain world.”
What does BAE provide?
BAE Systems is Europe’s largest defense contractor, and is based in London. It specializes in cyber security and intelligence services, as well as the production of munitions and equipment for use in land, air, and maritime combat.
Its worldwide workforce comprises more than 93,000 employees, with the majority of these based in the UK, US, Saudi Arabia, and Australia.
Since 2008 the company has heavily invested in cyber security, rapidly expanding its portfolio in the space through a string of acquisitions.
BAE provides risk advisory and incident response services for its clients, alongside more extensive design work on cyber defense for nation-states. It also provides operational expertise on advanced cyber threats, as well as software and hardware to protect against electronic warfare.
In 2022, BAE was hired by the UK Foreign Office for urgent data remediation following a cyber security incident. The same year, the US Army awarded BAE a $699 million (£567 million) contract to provide support for its high-performance computing (HPC) supercomputer work.
The firm has profited greatly from Russia’s invasion of Ukraine, both through increased sales of traditional hardware and munitions by Ukraine’s allies as well as through increased investment in cyber defenses by countries in the wake of booming Russian cyber attacks.
BAE’s order backlog now stands at £66.2 billion ($84.63 billion), following £21.1 billion in order intake across H1 2023. This included new and renewed orders on fighting vehicles for the Czech Republic, UK nuclear submarines, and fighter jets for Saudi Arabia.
