F-Secure Oyj · OMXHEX:FSECURE
F-Secure Oyj — Q1 2017 Earnings Presentation
27 slides from F-Secure Oyj's earnings presentation, 2017
Slide 1: A Strong Quarter for Corporate and Consumer Security
A STRONG QUARTER FOR CORPORATE AND CONSUMER SECURITY Samu Konttinen, CEO Interim Results Q1 2017 1
Slide 2: Agenda
AGENDA ▪ Key takeaways from Q1 ▪ Financials ▪ Business updates ▪ Outlook 2
Slide 3: Key Takeaways from Q1
KEY TAKEAWAYS FROM Q1 ✓ Corporate security in double-digit growth, new products performing well ✓ Cyber security services in very fast double- digit growth, supports product business ✓ Consumer security showing steady progress, both operator channel business and direct sales growing = We are perform
Slide 4: Financial Highlights
FINANCIAL HIGHLIGHTS January–March(Q1) ▪ Total revenue increased by 9% to EUR 41.0 million (37.8m); ➢ corporate security increased by 14% to EUR 16.7 million (14.6m) ➢ consumer security increased by 5% to EUR 24.3 million (23.2m) ▪ Deferred revenue continued to grow faster than revenue (+13%) ▪ EBIT
Slide 5: Deferred Revenue Continues to Outpace Revenue Growth
DEFERRED REVENUE CONTINUES TO OUTPACE REVENUE GROWTH nSense acquisition 5
Slide 6: Both Businesses Grow at Above-Market Rates
BOTH BUSINESSES GROW AT ABOVE-MARKET RATES EUR m nSense acquisition Growth % 6
Slide 7: Corporate Security Up by 14% in Q1
CORPORATE SECURITY UP BY 14% IN Q1 CORPORATE SECURITY CYBER SECURITY PRODUCTS CONSULTING • Endpoint security product revenue in • Services revenue in very strong, above-market growth double-digit growth • New solutions (F-Secure Radar & RDS) • Deal sizes are increasing performed well – Radar so far
Slide 8: Consumer Security Up by 5% in Q1
CONSUMER SECURITY UP BY 5% IN Q1 OPERATOR DIRECT SALES & SALES RETAILERS • Regional growth evenly distributed; • Continued strong growth, driven by online Finland, several key markets in Europe sales of Freedome as well as North and South America • Increasing interest towards VPN & Privacy developin
Slide 9: Demand Rising for VPN & Privacy Solutions
DEMAND RISING FOR VPN & PRIVACY SOLUTIONS
Slide 10: F-Secure Sense Protecting Your Connected Home
F-SECURE SENSE PROTECTING YOUR CONNECTED HOME PROTECT YOUR EASY TO CONTROL CONNECTED HOME AND MONITOR PRIVACY FOR YOUR PROTECTION CONNECTED HOME ON THE GO 10
Slide 11: We Continue with Our Investments
WE CONTINUE WITH OUR INVESTMENTS 2016 2017 Our model works Seize the opportunity ✓ Very competitive ✓ Boost product portfolio development ✓ Fast growing ✓ More cross-selling channel ✓ Expand channel ✓ Security capabilities best-in-class ✓ Recruit best people 11
Slide 12: Outlook for 2017 Unchanged
OUTLOOK FOR 2017 UNCHANGED Encouraged by the results from ▪ Revenue is anticipated to grow from the previous year’s level (2016: EUR our growth investments in 158.3 million) corporate security in 2016, we have decided to make a ▪ Operating profit is anticipated to be EUR 8–12 million (2016: EUR 19.2
Slide 13: Financials Q1 2017
FINANCIALS Q1 2017 All income statement figures refer to continuing operations, and figures in brackets refer to the corresponding period in the previous year, unless otherwise stated. F-Secure’s personal cloud storage business (younited) was sold to Synchronoss Technologies in February 2015 and is
Slide 14: Revenue
REVENUE January–March ▪ Revenue increased by 9% y-o-y EURm ▪ Total quarterly revenue 41.0m (Q116: 37.8m) 14
Slide 15: Revenue Split
REVENUE SPLIT January–March EURm ▪ Revenue from corporate security increased by 14% totalling EUR 16.7 million (14.6m) ▪ Revenue from consumer security increased by 5% and was EUR 24.3 million (23.2m) ▪ Corporate and consumer security represented 41% (39%) and 59% (61%) of total revenue respectively
Slide 16: Profitability
PROFITABILITY January–March EURm ▪ EBIT 1.6m, 4% of revenues (Q116: 3.2m, 8%) ▪ Earnings per share (EPS) for continuing operations EUR 0.01 (EUR 0.01) ▪ EPS EUR 0.01 (EUR 0.02) for the Group including discontinued operations 16
Slide 17: Fixed Costs
FIXED COSTS January–March EURm Fixed costs 38.6m (Q116: 33.9m), +14% y-o-y ▪ The increase was driven by costs incurred as a result of significant recruitment in corporate security ▪ Depreciation and amortization increased to 1.4m (Q116: 1.3m) ▪ Capitalized development expenses were 0.7m (Q116: 0.4m)
Slide 18: Deferred Revenue
DEFERRED REVENUE 31 March 2017 ▪ Deferred revenue increased by 13% to EUR 56.3m (EUR 49.7m), continuing positive development* EURm 18 *figure shows 4-qtr rolling average deferred revenue
Slide 19: Solid Cash Position
SOLID CASH POSITION January–March EURm Q1 cash flow from operations was EUR 5.5m (Q116: -1.1m) ▪ F-Secure’s financial position remained solid. ▪ Gearing ratio was 124.5% negative (116.2% negative) ▪ Net working capital developed positively during the reporting period, whereas the comparison period c
Slide 20: Number of Personnel
2 0 NUMBER OF PERSONNEL January–March Investments reflected in headcount growth ▪ F-Secure’s substantial investments reflected in the headcount development in Q1 ▪ Net headcount increase during Q1 +29 personnel ▪ The company’s headcount at the end of Q117 was 1,055 (+105 from Q116) 20
Slide 21: Regional Revenue
2 1 REGIONAL REVENUE January–March EURm Revenue growth across all regions ▪ Revenue in the Nordic countries grew more than EUR 1 million relative to the comparison period ▪ All other regions saw growth between EUR 0.4m (North America) and 0.9m (Rest of the world) 21
Slide 22: Frequently Used Slides
FREQUENTLY USED SLIDES = F-Secure. &
Slide 23: Corporate Security Continues to Drive the Growth
CORPORATE SECURITY CONTINUES TO DRIVE THE GROWTH USD billion Information security revenue forecast 2014-2020 8-9% annually 7-8% annually 1% annually Source: Gartner, January 2017 23
Slide 24: We Have a Strong Scalable Business Model
WE HAVE A STRONG SCALABLE BUSINESS MODEL CORPORATE SECURITY CONSUMER SECURITY PRODUCTS & SERVICES PRODUCTS RESELLERS CYBER SECURITY OPERATORS RETAILERS AND 4000+ SERVICES 200+ globally WEBSHOPS 100,000 COMPANIES HUNDREDS OF LARGE TENS OF MILLIONS OF CONSUMERS ENTERPRISES 24
Slide 25: Extended Offering Enables Cross-Selling and Supports Product Development
EXTENDED OFFERING ENABLES CROSS-SELLING AND SUPPORTS PRODUCT DEVELOPMENT CYBER SECURITY SECURITY EXPERTS TECHNOLOGY Our world-renowned labs research team, Our Live Security-approach combines Our tens-of-millions of security solutions security consultants and ethical hackers the latest human expertis
Slide 26: Expanded Offering Allows Us to Expand into New Corporate Customer Segments
EXPANDED OFFERING ALLOWS US TO EXPAND INTO NEW CORPORATE CUSTOMER SEGMENTS Mid-market & Small businesses local enterprises Global enterprises Protection Service for & Business Suite Business F-Secure traditional Rapid Detection strongholds Service F-Secure Radar New opportunities Cyber security serv
Slide 27: Increasing Focus on Detection Creates New Opportunities in the Endpoint Market
INCREASING FOCUS ON DETECTION CREATES NEW OPPORTUNITIES IN THE ENDPOINT MARKET Endpoint Protection Protection & Business Platforms (EPP) Service for Suite Business market Endpoint Detection & Rapid Detection Response (EDR) Service market “EDR is an addition, not a replacement for other endpoint secu