F-Secure Oyj · OMXHEX:FSECURE
F-Secure Oyj — Q2 2017 Earnings Presentation
39 slides from F-Secure Oyj's earnings presentation, 2017
Slide 1: Corporate Security Grew by 22% in Q2
Samu Konttinen, CEO Q2 / 2017 CORPORATE SECURITY GREW BY 22% IN Q2 1
Slide 2: Agenda
AGENDA Key takeaways from Q2 Key figures Business updates Outlook Financials FAQ All figures refer to continuing operations unless otherwise stated. 2
Slide 3: Key Takeaways from Q2
KEY TAKEAWAYS FROM Q2 “We improved our performance, building on our investments in growth.” CORPORATE SECURITY UP BY 22% CONSUMER SECURITY UP BY 2% ▪ Product sales continued to show ▪ Steady progress, with both operator above market growth, new and direct sales growing solutions performed well ▪ F-S
Slide 4: Key Figures
KEY FIGURES EUR m 4–6/2017 4–6/2016 Change 1–6/2017 1–6/2016 Change 1–12/2016 Revenue 43.2 39.3 10 % 84.3 77.1 9% 158.3 of which corporate security 18.8 15.4 22% 35.5 30.0 18% 62.5 of which consumer security 24.4 23.9 2% 48.7 47.1 3% 95.8 Operating profit (EBIT) 2.3 4.6 -51 % 3.9 7.8 -50 % 19.2 % of
Slide 5: Ransomware Outbreaks Highlighted the Need for Security for Everyone
RANSOMWARE OUTBREAKS HIGHLIGHTED THE NEED FOR SECURITY FOR EVERYONE Map of the countries initially affected by WannaCry Source: Wikipedia 5
Slide 6: Corporate Security Revenue Growth Has Improved
CORPORATE SECURITY REVENUE GROWTH HAS IMPROVED nSense acquisition EUR m Growth % 6
Slide 7: Deferred Revenue vs. Revenue
DEFERRED REVENUE VS. REVENUE Growth % nSense acquisition 7
Slide 8: Investments Are Visible in Our Profitability
INVESTMENTS ARE VISIBLE IN OUR PROFITABILITY EUR million % of revenue Announced in Q4/2016: “Encouraged by the results from our growth investments in corporate security in 2016, we have decided to make a meaningful additional investment in both product development and go to market in 2017” 8
Slide 9: Corporate Security Revenue Up by 22% in Q2
CORPORATE SECURITY REVENUE UP BY 22% IN Q2 CORPORATE SECURITY PRODUCTS CYBER SECURITY SERVICES ▪ Endpoint security product revenue in ▪ Very strong double-digit revenue growth above-market growth ▪ Increasing share of order intake coming ▪ Increasing share of order intake from from outside of the tr
Slide 10: New Corporate Solutions Performed Well
NEW CORPORATE SOLUTIONS PERFORMED WELL F-Secure F-Secure new corporate solutions are Radar addressing fast growth security markets Sales pipelines continued to develop favorably First deals made now in 13 countries in Europe, Asia and the USA F-Secure Cloud Protection for Salesforce New key partners
Slide 11: Scaling Up Our Cyber Security Services
SCALING UP OUR CYBER SECURITY SERVICES F-Secure’s cyber security services business has customers across the globe ▪ Operations in 8 countries in Europe ▪ We continue to recruit consultants and sales people to meet the demand ▪ Digital Assurance (UK) acquired in Q2 “Services are complementary to our
Slide 12: Consumer Security Up by 2% in Q2
CONSUMER SECURITY UP BY 2% IN Q2 OPERATOR CHANNEL DIRECT SALES ▪ Revenue in slight growth, improvement of ▪ Revenue growth continued to outpace the product activation rates continues market ▪ Clear leader in the operator ecosystem ▪ Growth driven by online and retail sales of – 80+ operator partners
Slide 13: Positive Reactions in the Media
POSITIVE REACTIONS IN THE MEDIA “It’s a well made, good looking wireless router.” Gadgety News (UK) “F-Secure SENSE will das Smart Home sicher machen.” Mobile Geeks (GER) “F-secure Sense review – the best online security?” “SENSE requires minimal effort and works tirelessly ”Tuotteistus on onnistunu
Slide 14: Portfolio Expansion Offers Cross-Sell Opportunities
PORTFOLIO EXPANSION OFFERS CROSS-SELL OPPORTUNITIES Endpoint VPN & 200+ OPERATOR PARTNERS security Privacy F-Secure SAFE F-Secure Freedome Connected Password homes management F-Secure SENSE F-Secure Key DIRECT SALES & RETAILERS 14
Slide 15: 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 15
Slide 16: 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 17: Financials Q2 2017
FINANCIALS Q2 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 18: Revenue
REVENUE April–June ▪ Revenue increased by 10% y-o-y EURm ▪ Total quarterly revenue 43.2m (Q216: 39.3m) January–June ▪ Revenue increased by 9% y-o-y ▪ Total H1 revenue 84.3m (H117: 77.1m) 18
Slide 19: Revenue Split
REVENUE SPLIT April–June EURm ▪ Revenue from corporate security increased by 22% totalling EUR 18.8 million (15.4m) ▪ Revenue from consumer security increased by 2% and was EUR 24.4 million (23.9m) ▪ Corporate and consumer security represented 43% (39%) and 57% (61%) of total revenue respectively Ja
Slide 20: Profitability
PROFITABILITY April–June EURm ▪ EBIT 2.3m, 5% of revenues (Q216: 4.6m, 12%) ▪ Earnings per share (EPS) for continuing operations EUR 0.03 (EUR 0.03) ▪ Earnings per share (EPS) excluding returned withholding taxes was EUR 0.01 January–June ▪ EBIT 3.9m, 5% of revenues (Q216: 7.8m, 10%) ▪ Earnings per
Slide 21: Fixed Costs
FIXED COSTS April–June EURm Fixed costs 39.9m (Q216: 34.3m), +17% y-o-y ▪ Key drivers behind the increase were recruitments in corporate security, the impact of share-based incentive programs as well as acquisition-related costs ▪ Depreciation and amortization increased to 1.5m (Q216: 1.3m) ▪ Capita
Slide 22: Deferred Revenue
DEFERRED REVENUE 30 June 2017 ▪ Deferred revenue increased by 9% to EUR 55.6m (EUR 51.1m), continuing positive development* EURm 22 *figure shows 4-qtr rolling average deferred revenue
Slide 23: Solid Cash Position
SOLID CASH POSITION April–June EURm Q2 cash flow from operations was EUR 8.0m (Q216: 6.7m) ▪ F-Secure’s financial position remained solid. ▪ Gearing ratio was 126.4% negative (120.9% negative) ▪ In June, the Company received a payment of EUR 3.1 million, related to withholding taxes from 2009– 2011.
Slide 24: Number of Personnel
NUMBER OF PERSONNEL April–June Investments reflected in headcount growth ▪ Net headcount increase during Q2 +36 persons ▪ The company’s headcount at the end of Q217 was 1,091 (+109 from Q216) 24
Slide 25: Regional Revenue
REGIONAL REVENUE April–June EURm Revenue growth across all regions ▪ Revenue growth in European countries was EUR 3.0m relative to the comparison period ▪ All other regions saw growth between EUR 0.5m (North America) and 0.4m (Rest of the world) 25
Slide 26: Frequently Used Slides
FREQUENTLY USED SLIDES = F-Secure. &
Slide 27: High Level Trends in Security
HIGH LEVEL TRENDS IN SECURITY EXPANDING ATTACK SURFACE DISAPPEARING PERIMETERS SOPHISTICATED ATTACKS HIGHTENED RISK AWARENESS 27
Slide 28: Several Factors Drive Demand
SEVERAL FACTORS DRIVE DEMAND Targeted attacks - almost anything Ransomware for the seems possible cloud era and IoT? The cloud industry grows – vulnerable Emerging attacks with simple encryption for IoT Email continues to be a Governmental popular attack vector cyber strikes EU’s General Data Protec
Slide 29: Corporate Security Continues to Drive the Growth
CORPORATE SECURITY CONTINUES TO DRIVE THE GROWTH USD billion Information security revenue forecast 2015-2021 +9% annually +7% annually 1-2% annually Source: Gartner, May 2017 29
Slide 30: F-Secure's Approach to Cyber Security
F-SECURE’S APPROACH TO CYBER SECURITY Understand your risk, Minimize attack surface, know your attack surface, prevent incidents uncover weak spots React to breaches, Recognize incidents and mitigate the damage, threats, isolate and analyze and learn contain them 30
Slide 31: 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 32: 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 32
Slide 33: F-Secure's Cyber Security Offering for Companies
F-SECURE’S CYBER SECURITY OFFERING FOR COMPANIES 33
Slide 34: 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 35: 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
Slide 36: F-Secure's Cyber Security Offering for Consumers
F-SECURE’S CYBER SECURITY OFFERING FOR CONSUMERS Endpoint Security Password Management - F-Secure SAFE - F-Secure Key VPN IoT – Connected homes - F-Secure Freedome - F-Secure SENSE 36
Slide 37: In Consumer Security Increased Bundling with Operator Partners
IN CONSUMER SECURITY INCREASED BUNDLING WITH OPERATOR PARTNERS 200+ OPERATOR PARTNERS TOTAL SECURITY AND PRIVACY + F-SECURE SAFE F-SECURE FREEDOME Bundling enables cross-selling to leverage the power of portfolio, and increase average revenue per customer. 37
Slide 38: How Does Sense Protect You?
HOW DOES SENSE PROTECT YOU? At home On the go SENSE creates a secure network for all your devices are protected with the your connected things SENSE app Total privacy and security both at home and when on the go 38
Slide 39: Sense @ Home
SENSE @ HOME Own or operator Ethernet F-Secure Ethernet provided router OR AND/OR Wi-Fi connection SENSE Wi-Fi connection 39