Remote Work Lifts Avast From Floppy Disks to London Blue Chip

(Bloomberg) -- As the coronavirus pandemic is reshaping the business world and boosting online retailers and streaming services, another corner of the digital economy is thriving at least as much: cybersecurity.

Software maker Avast Plc expects long-lasting benefits from people around the world switching to home office as online workspace faces growing security threats, Chief Executive Officer Ondrej Vlcek said in an interview.

Avast shares have rallied since mid-March, almost doubling its market value as a surge in remote working boosts sales and helps the Prague-based company recover from an earlier privacy scandal. It's now joining the FTSE 100 Index, the first from the European Union's eastern flank to win the blue-chip accolade in London just two years after selling shares.

“There are surprisingly few technology companies in FTSE 100,” Vlcek said before the index changes were announced on Wednesday. “Not only are the tech stocks now more resilient than most other industries, but Covid-19 has also been associated with a significant increase in cyber attacks. So I don't see it as a coincidence that we're being added now.”

Cyber criminals are increasingly trying to exploit weaknesses of the new digital universe where millions of people log on to work from home. That's boosting demand for defense against attacks like ransomware or data theft. Avast, which provides protection for individuals and small enterprises, sees such business boost lasting after the health crisis abates.

“People will still be trying to avoid packed trains and other crowds,” Vlcek said. “The global pandemic will be an impulse for employers who previously didn't encourage work from home to rethink their approach.”

Expectations of Avast's promotion helped lift the share price to a four-month high of 518 pence two days ago. It has since retreated, trading at 490.2 pence on Thursday as of 12:53 p.m. in London, almost twice the price at which the company sold shares in its May 2018 IPO.

While some other companies are delivering even bigger returns, among them Zoom Video Communications, Avast has outperformed the tech-heavy Nasdaq 100 benchmark and some of its behemoths like Amazon.com Inc.

Avast shares have now almost fully recovered from the impact of reports that its marketing subsidiary Jumpshot was selling sensitive customer data. After the scandal early this year prompted some users to uninstall the company's software, Avast decided to wind down the unit at a cost of about $25 million and stay away from the data-analytics business.

While monetizing user data is helping profits of Internet giants such as Facebook or Google, the practice is raising concerns about potential abuses and attracting more scrutiny from regulators.

The Avast CEO said testing such avenue was “a mistake and gross misjudgment,” but it has helped the company realize it should focus more on services for those willing to pay for better control of their privacy.

“Not only do we find that much more compatible with our core mission and our values, but we also see the data-privacy segment as having a bigger potential from the business-strategy point of view,” Vlcek said. “I see a huge opportunity for companies like Avast in that our business model no longer depends on data mining and this could help us stand out.”

Floppy Disks

Avast founders Eduard Kucera and Pavel Baudis created their first anti-virus program in 1980s communist Czechoslovakia, when malware was mostly spread by floppy disks. Now, the company says it has more than 400 million users worldwide, prevents about 1.5 billion attacks per month, and its market capitalization is 5 billion pounds ($6.3 billion).

That makes Avast the second-biggest publicly traded Czech company, even as its home country is far from being a hotbed for startups. Ex-communist central Europe still relies overwhelmingly on traditional manufacturing with lower-paid jobs and has been struggling to embrace more advanced services and technologies that are more common in the West.

Most of Avast's more than 1,700 employees, including the CEO, are based in the Czech Republic, but its smaller offices in California and London tend to host a majority of the product managers. They create the most value by coming up with new ideas and making them commercially viable.

Still, the company expects a long-term shift toward remote working, which will transform white-collar jobs around the world as more people will look for careers outside their home countries or even continents.

“The increased role of remote work is an equalizer of sorts in that it makes it less relevant where you live,” said Vlcek. “It's good for workers, who won't need to commute, it's good for the environment, and it could be extremely good for diversity and inclusion of, for example, women with small children.”