SSH Communications Security's Strategic Leonardo Partnership: A Catalyst for Defense Sector Cyber Growth

The recent strategic partnership between SSH Communications Security and Leonardo S.p.A. marks a pivotal moment in the cybersecurity landscape, particularly for defense and critical infrastructure sectors. This EUR 20 million investment, structured as a directed share issuance, grants Leonardo a 24.55% stake in SSH and exclusive distribution rights to its Privileged Access Management (PrivX) and Quantum-Safe Network Encryption (NQX) solutions across defense, government, and critical infrastructure markets outside the Nordic region. The transaction, which values SSH's technology at a 49.6% premium to its five-day volume-weighted average share price, signals a re-rating of the company's valuation potential, driven by Leonardo's industrial-scale distribution capabilities and the growing demand for Zero Trust and quantum-resistant security frameworks.

Valuation Re-Rating: Premium Financing and Operational Synergies

The partnership's financial terms alone justify a re-rating of SSH's valuation. Leonardo's investment not only provides immediate capital but also secures strategic control through a Right of First Offer and Right of First Refusal (ROFO/ROFR) agreement with SSH's largest shareholders, Accendo Capital and founder Tatu Ylönen. This lock-in mechanism reduces dilution risks and ensures long-term alignment between SSH and Leonardo's growth objectives.

Redeye's revised forecasts further reinforce this narrative. The firm has raised its sales projections for SSH by 10% in 2026 and 15% in 2027, citing the partnership as a catalyst for economies of scale and margin expansion. EBITDA margins are expected to climb from 17% in 2025 to 20% by 2027, driven by cross-selling opportunities and operational efficiencies from Leonardo's global infrastructure. For context, SSH's PrivX product already demonstrated 15.1% growth in Q2 2025, outpacing broader market trends. These metrics suggest that the partnership is not merely a strategic alliance but a structural upgrade to SSH's revenue model.

Scalable Market Access: Defense and Critical Infrastructure as Growth Levers

Leonardo's dominance in aerospace, defense, and security positions it as an ideal partner for SSH's penetration into high-margin, regulated markets. The Italian conglomerate's portfolio includes contracts with NATO, the European Union, and national defense agencies, providing SSH with a direct conduit to institutions prioritizing Zero Trust architectures and quantum-safe encryption.

The exclusivity agreement grants Leonardo the right to integrate SSH's PrivX and NQX solutions into its broader cybersecurity offerings, including its recently acquired Axiomatics authentication platform. This synergy is critical: Leonardo's 2025 first-half revenue grew 12.9% year-over-year, with CEO Roberto Cingolani explicitly linking this success to strategic investments in “multi-domain cybersecurity capabilities”. By embedding SSH's technology into Leonardo's ecosystem, the partnership creates a flywheel effect—Leonardo's customer base gains access to cutting-edge encryption, while SSH benefits from recurring revenue streams tied to large-scale defense contracts.

Zero Trust and Quantum-Safe Transition: A European Imperative

The partnership aligns with Europe's accelerating shift toward Zero Trust and quantum-resistant infrastructure. SSH's NQX solution, which employs post-quantum cryptographic algorithms, is uniquely positioned to address vulnerabilities in legacy systems exposed to quantum computing threats. Leonardo's 2025 presentation emphasized its commitment to “digital transformation in defense,” with SSH's technology forming a cornerstone of its strategy.

This timing is fortuitous. The European Union's Cybersecurity Act and NATO's Zero Trust initiatives are driving regulatory tailwinds, creating a EUR 12.3 billion market opportunity for quantum-safe solutions by 2030. SSH's focus on defense and critical infrastructure—sectors with long contract cycles and high switching costs—positions it to capture a disproportionate share of this growth.

Risks and Mitigants

While the partnership is a net positive, risks remain. Over-reliance on Leonardo's distribution channels could stifle organic growth in APAC and North America, where SSH must maintain momentum. However, the ROFO/ROFR agreement ensures Leonardo's stake is contingent on regulatory approvals, providing a buffer against over-concentration. Additionally, SSH's existing APAC and North American partnerships, such as its collaboration with Microsoft Azure, offer diversification.

Conclusion: A Leveraged Play on Europe's Cybersecurity Future

SSH Communications Security's partnership with Leonardo is more than a capital raise—it is a strategic repositioning as a leader in Europe's Zero Trust and quantum-safe transition. The premium financing terms, exclusive distribution rights, and operational synergies with Leonardo's defense footprint create a compelling case for valuation re-rating. As Redeye's forecasts and management commentary underscore, this collaboration unlocks scalable market access in high-growth sectors, making SSH a leveraged play on the continent's most urgent cybersecurity priorities.