F-Secure Oyj · OMXHEX:FSECURE
F-Secure Oyj — Q3 2018 Earnings Presentation
24 slides from F-Secure Oyj's earnings presentation, 2018
Slide 1: Acquisition of MWR InfoSecurity Accelerated Revenue Growth
ACQUISITION OF MWR INFOSECURITY ACCELERATED REVENUE GROWTH F-Secure Q3 / 2018 1
Slide 2: Agenda
AGENDA Key takeaways from Q3 Key figures Business updates Outlook Financials Supplementary material 2
Slide 3: Key takeaways from Q3
KEY TAKEAWAYS FROM Q3 ▪ Growth accelerated driven by the inclusion of MWR InfoSecurity. Integration has started and progressed as planned. ▪ Organic corporate security revenue growth improved from Q2, but was below expectations. Encouraging number of MDR deals, cyber security services grew well, and
Slide 4: Key figures
KEY FIGURES EUR m 7–9/2018 7–9/2017 Change 1–9/2018 1–9/2017 Change 1–12/2017 Revenue 50.5 41.2 23 % 137.0 125.4 9% 169.8 of which corporate security 26.7 16.9 58 % 66.1 52.1 27 % 72.2 of which consumer security 23.8 24.3 -2 % 70.9 73.2 -3 % 97.5 Adjusted EBITDA1) 6.0 5.8 3% 12.6 12.8 -2 % 18.1 EBIT
Slide 5: Corporate security now represents over half of revenue
CORPORATE SECURITY NOW REPRESENTS OVER HALF OF REVENUE M€ Growth-% * MWR InfoSecurity acquired on 2 July 2018 58% 20 22% 23% 16% 16% 14% 10 11% 9% 10% 8% 5% 6% 5% 6% 2% 2% 0% -3% -2% -2% -5% 0 Q117 Q217 Q317 Q417 Q118 Q218 Q318 Revenue from corporate security Corporate growth (YoY) Total growth (YoY
Slide 6: Adjusted EBITDA improved
ADJUSTED EBITDA IMPROVED M€ % of revenue 6.0 15% 5.0 4.0 10% 9% 9% 3.0 7% 6.0 5.8 5.4 6% 2.0 4.0 3.8 5% 2.9 2.8 1.0 0.0 0% Q117 Q217 Q317 Q417 Q118 Q218 Q318 Adjusted EBITDA Adjusted EBITDA, % of revenue Adjustments are material items outside normal course of business associated with acquisitions, 6
Slide 7: Comprehensive offering for businesses, a global network of 6000+ resellers
COMPREHENSIVE OFFERING FOR BUSINESSES, A GLOBAL NETWORK OF 6000+ RESELLERS We reduce the likelihood of the attacker to succeed by minimizing vulnerabilities, prevent malicious applications from running, and detect & respond if an advanced persistent attacker gets in. Predict Prevent Detect Respond C
Slide 8: World-leading expertise in consultancy, capability to serve across the globe
WORLD-LEADING EXPERTISE IN CONSULTANCY, CAPABILITY TO SERVE ACROSS THE GLOBE HELSINKI COPENHAGEN POZNAN EXPANDED LONDON NEW! NEW YORK NEW! SINGAPORE F-Secure’s main sites for cyber security services NEW! JOHANNESBURG 8
Slide 9: Corporate security revenue grew by 58% in Q3
CORPORATE SECURITY REVENUE GREW BY 58% IN Q3 CORPORATE SECURITY PRODUCTS CYBER SECURITY SERVICES ▪ Growth accelerated driven by the inclusion of MWR ▪ Acquisition significantly increased InfoSecurity, organic growth slightly improved capacity, expertise and go-to-market from Q2 capabilities – hundre
Slide 10: Positive milestones in consumer security
POSITIVE MILESTONES IN CONSUMER SECURITY The first operator deal on F-Secure SENSE-as- F-Secure TOTAL to include all consumer software signed with Elisa to secure all connected products: F-Secure SAFE, F-Secure FREEDOME, home devices F-Secure KEY (new), F-Secure SENSE (new) 10
Slide 11: Consumer security revenue down by 2% in Q3
CONSUMER SECURITY REVENUE DOWN BY 2% IN Q3 OPERATOR CHANNEL DIRECT SALES ▪ Order intake declined slightly, comparison ▪ Order intake increased slightly period includes operator partner loss (Q3/2017) ▪ Renewals at a good level ▪ Order intake from other regions in slight ▪ F-Secure TOTAL expanded to
Slide 12: Outlook for 2018 (updated 18 Oct)
OUTLOOK FOR 2018 (UPDATED 18 OCT) ▪ Revenue from corporate security is expected to grow around 30% compared to 2017 ▪ Revenue from consumer security is expected to decrease by 0-4% compared to 2017 ▪ Adjusted EBITDA is expected to be in the range of EUR 14-18 million ▪ M&A related acquisition and in
Slide 13: Outlook for 2018-2021 unchanged
OUTLOOK FOR 2018-2021 UNCHANGED ▪ The demand for corporate cyber security products and services is expected to grow strongly. F-Secure aims to grow faster than the market, with revenue from corporate security expected to grow above 15% annually during our strategy period 2018-2021. ▪ Driven by the a
Slide 14: Key focus areas for 2018-2019
KEY FOCUS AREAS FOR 2018-2019 Enterprise-grade cyber security for the midmarket ▪ Accelerate corporate security growth with successful integration of MWR InfoSecurity ▪ Aim is to become the leader in detection and response solutions ▪ Continued growth of cyber security services ▪ Increase share of w
Slide 15: We are on right track
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Slide 16: Financials Q3 2018
FINANCIALS Q3 2018 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 17: Revenue
REVENUE M€ 55 +23% 50.5 July-September 50 ▪ Revenue increased by 23.0% y-o-y 45 43.3 44.3 43.1 43.4 ▪ Total quarterly revenue 50.5m 40.9 41.2 (Q317: 41.2m) 40 35 30 25 20 15 10 5 0 Q117 Q217 Q317 Q417 Q118 Q218 Q318 Revenue 17
Slide 18: Revenue split
REVENUE SPLIT M€ 30 +58% July-September 26.7 ▪ Revenue from corporate security increased by 58% 24.7 totalling EUR 26.7 million (16.9m) 25 24.2 24.3 24.3 23.8 23.8 23.4 ▪ Revenue from consumer security decreased by -2% and was EUR 23.8 million (24.3m) 20 20.1 19.4 20.0 ▪ Corporate security represent
Slide 19: Profitability
PROFITABILITY 6.0 14% 15% July–September 14% ▪ Adjusted EBITDA 6.0m, 11.9% of 13% revenue (5.8m, 14.2%), excluding EUR 5.0 12% 12% 2.7 million of costs related to the 12% acquisition of MWR InfoSecurity 11% ▪ Earnings per share (EPS) EUR 0.01 (EUR 4.0 10% 0.02) 9% 9% 9% 8% 3.0 7% 6.0 5.8 5.4 7% 6% 6
Slide 20: Operating expenses
OPERATING EXPENSES EURm 38.7 35.9 3.8 July-September 35.5 34.4 34.4 3.9 33.6 3.4 ▪ Operating expenses 38.7m (31.2m), +24% y-o-y, due 3.1 to the acquisition of MWR InfoSecurity 3.8 31.2 3.3 3.8 ▪ Expenses for the period include EUR 2.7 million of 3.3 8.2 acquisition and integration related costs and
Slide 21: Deferred revenue
DEFERRED REVENUE 70 30 September 2018 60 ▪ Deferred revenue increased by 14% y-o-y to EUR 69.0m (EUR 60.6m), driven by the inclusion of MWR InfoSecurity and 50 increasing order intake from corporate security products and services with long- 46.7 50.5 48.3 term contracts 40 41.7 41.9 54.8 47.4 30 20
Slide 22: Regional revenue
REGIONAL REVENUE M€ July-September ▪ Revenue increased in all regions ▪ In Rest of Europe, North America and in Other regions increases were driven by the inclusion of MWR InfoSecurity 23.2 17.3 16.0 14.7 6.6 4.7 5.3 3.8 Nordic Rest of Europe North America Other Regions Q317 Q318 22
Slide 23: Change in cash position due to the acquisition
CHANGE IN CASH POSITION DUE TO THE ACQUISITION M€ 120 July-September ▪ The main driver behind the change in cash position 100 96.4 was the acquisition of MWR InfoSecurity 90.2 88.5 ▪ Cash flow from operating activities before financial 80.7 81.1 79.8 80 0.0 items and taxes was -1.0m (3.8m). ▪ Cash f
Slide 24: Number of personnel
NUMBER OF PERSONNEL April-June ▪ The increase in personnel from the acquisition of MWR InfoSecurity was 391 ▪ At the end of the quarter, F-Secure had 1,636 employees (1,060) +54% 1 800 1 600 1 400 1 200 1 104 1 145 1 000 800 600 400 200 0 Q117 Q217 Q317 Q417 Q118 Q218 Q318 Headcount 24