F-Secure Oyj · OMXHEX:FSECURE
F-Secure Oyj — Q4 2018 Earnings Presentation
25 slides from F-Secure Oyj's earnings presentation, 2019
Slide 1: Business in strategic growth areas performed well
F-Secure Q4 / 2018 BUSINESS IN STRATEGIC GROWTH AREAS PERFORMED WELL CORPORATE SECURITY UP BY 48%
Slide 2: Agenda
AGENDA Key takeaways from Q4 Key figures Business updates Outlook Financials 2
Slide 3: Key takeaways from Q4
KEY TAKEAWAYS FROM Q4 ▪ In corporate security, progress was made with our strategic growth businesses ▪ Very strong progress with MDR solutions with a large amount of deals closed in several countries ▪ Integration of MWR InfoSecurity proceeding well, consulting business is performing well ▪ Success
Slide 4: Key figures
KEY FIGURES EUR m 10–12/2018 10–12/2017 Change 1–12/2018 1–12/2017 Change Revenue 53.7 44.4 21 % 190.7 169.8 12 % of which corporate security 29.8 20.1 48 % 95.9 72.2 33 % of which consumer security 24.0 24.3 -1 % 94.9 97.5 -3 % Adjusted EBITDA1) 4.9 5.4 -11 % 17.4 18.2 -4 % % of revenue 9.0 % 12.2
Slide 5: Corporate security driving growth
CORPORATE SECURITY DRIVING GROWTH M€ Growth-% 30 58% 60% * MWR InfoSecurity acquired on 2 July 2018 55% ▪ Corporate security 48% revenue is our largest 50% 25 business (55% in 45% Q4/2018), and grew by 40% 48% in Q4/2018 20 35% ▪ The majority of our 30% corporate security order 23% intake comes from
Slide 6: Adjusted EBITDA at the higher end of expectations
ADJUSTED EBITDA AT THE HIGHER END OF EXPECTATIONS M€ % of revenue 14 10 14 Adjusted EBITDA 9 13 ▪ F-Secure continues to M&A costs 12 12 12 focus on growth, and is PPA Amortization investing in product 8 11 Depreciation & Amortization development as well as Reported EBIT 10 7 9 9 9 sales and marketin
Slide 7: Corporate security revenue grew by +48% in Q4
CORPORATE SECURITY REVENUE GREW BY +48% IN Q4 CORPORATE SECURITY PRODUCTS F-Secure EDR’s unique “Elevate to F-Secure” functionality ▪ MDR order intake in strong growth, increased significantly from the previous quarter F-Secure’s experts respond 24/7 to the Elevate to F-Secure requests by ▪ A large
Slide 8: Testimonials of our competitiveness
TESTIMONIALS OF OUR COMPETITIVENESS WINNING MOST WINNING MDR DEALS EXPANDING CROSS-SELL DEMANDING CUSTOMERS THROUGH CONSULTING OPPORTUNITIES A very demanding defense A large financial An accounting company contractor expanded their institution who had been supplemented their existing protection with
Slide 9: Targeted Attack Simulation, Threat Hunting, Incident response
Targeted Attack Simulation Threat Hunting Incident response INDUSTRY-LEADING RESEARCH AND THREAT VISIBILITY AUTONOMOUS SELF-LEARNING BIG DATA PLATFORM F-Secure Labs BROAD CONTEXT DETECTION ® Forensics Corrective actions Endpoint data Big Data and AI platform Actionable is essential insights and cont
Slide 10: Corporate security revenue grew by +48% in Q4
CORPORATE SECURITY REVENUE GREW BY +48% IN Q4 CYBER SECURITY CONSULTING Our global presence in cyber security consulting is a real strength when serving international customers ▪ Order intake in strong growth driven by the increased contribution from MWR InfoSecurity ▪ Continued strong demand in the
Slide 11: Addressing several growth markets
ADDRESSING SEVERAL GROWTH MARKETS PREDICT PREVENT DETECT & RESPOND Cyber security consulting 2016 2018 2018 2016 2018 Vulnerability Anti-phishing Endpoint Endpoint detection Managed Detection Managed Threat management behavioral protection and response & Response Hunting management Protection Servic
Slide 12: Consumer security revenue at the previous year's level in Q4
CONSUMER SECURITY REVENUE AT THE PREVIOUS YEAR’S LEVEL IN Q4 OPERATOR CHANNEL In 2018 we continued to win new accounts ▪ Order intake at previous year’s level ▪ Signed first F-Secure SENSE SDK deals, and negotiations on-going with several operators and leading router manufacturers ▪ Signed new or ex
Slide 13: Consumer security revenue at the previous year's level in Q4
CONSUMER SECURITY REVENUE AT THE PREVIOUS YEAR’S LEVEL IN Q4 DIRECT SALES ▪ Order intake at previous year’s level ▪ Renewals at a good level ▪ Continued focus on selling broad consumer portfolio to increase average revenue per customer AARPU* uplift with F-Secure TOTAL (ARPU) AARPU = Annualized Aver
Slide 14: Outlook for 2019
OUTLOOK FOR 2019 ▪ Revenue from corporate security is expected to grow by over 30% compared to 2018 ▪ Revenue from consumer security is expected to stay approximately at the same level as in 2018 ▪ Adjusted EBITDA is expected to be above EUR 15 million excluding the impact of IFRS 16 14
Slide 15: 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 16: We are on right track
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Slide 17: Financials Q4 2018
FINANCIALS Q4 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. 17
Slide 18: Revenue
REVENUE EURm +21% 55 53.7 50.5 October-December 50 ▪ Revenue increased by 21% y-o-y 45 43.3 44.4 43.1 43.4 ▪ Total quarterly revenue 53.7m 40.9 41.2 (Q417: 44.4m) 40 35 30 25 20 15 10 5 0 Q117 Q217 Q317 Q417 Q118 Q218 Q318 Q4/18 Revenue 18
Slide 19: Revenue split
REVENUE SPLIT +48% EURm 29.8 30 October-December 26.7 ▪ Revenue from corporate security increased by 48% 24.7 totalling EUR 29.8 million (20.1m) 25 24.2 24.3 24.3 24.0 23.8 23.8 23.4 ▪ Revenue from consumer security was at the previous year’s level at EUR 24.0 million (24.3m) 20 20.1 19.4 20.0 ▪ Cor
Slide 20: Profitability
PROFITABILITY EURm 14 10,0 14 October-December 13 ▪ Adjusted EBITDA 4.9m, 9.0% of revenue 9,0 12 12 (5.4m, 12.2%), excluding EUR 0.3 million 12 of costs related to the acquisition of 8,0 11 MWR InfoSecurity 10 ▪ Earnings per share (EPS) EUR 0.00 (EUR 7,0 0.02) 9 9 9 9 5.8 6,0 6,0 0,1 5,4 8 7 0,1 5,0
Slide 21: Operating expenses
OPERATING EXPENSES EURm +20% 42 40,4 40 38.7 1.5 October-December 38 3.2 36 35.9 35.5 3.8 ▪ Operating expenses 40.4m (33.6m), +20% y-o-y, due 34.4 34.4 34 3.9 33.6 3.4 to the acquisition of MWR InfoSecurity 3.1 3.8 3.8 32 31.2 3.3 9.7 ▪ Expenses for the period include EUR 1.5 million of 30 3.3 acqui
Slide 22: Deferred revenue
DEFERRED REVENUE EURm +11% 75 70 31 December 2018 ▪ Deferred revenue increased by 11% y-o-y 60 to EUR 72.9m (EUR 65.7m), driven by the increased contribution from the acquired MWR InfoSecurity, and increasing order 50 intake from corporate security products and 50.5 55.3 services with long-term cont
Slide 23: Regional revenue
REGIONAL REVENUE EURm +31% 25 October-December ▪ Revenue increased in all regions 20 +3% ▪ In Rest of Europe, North America and in Other regions increases were driven by the increased 15 contribution from MWR InfoSecurity 24.1 10 18.4 +62% 17.4 18.0 +9% 5 6.8 4.4 4.8 4.2 0 Nordic Rest of Europe Nort
Slide 24: Balance sheet change due to the acquisition
BALANCE SHEET CHANGE DUE TO THE ACQUISITION EURm October-December 100 96,3 * MWR InfoSecurity 90,2 88,5 acquired on 2 July 2018 ▪ The main driver behind the change in cash position 90 was the acquisition of MWR InfoSecurity 80,7 81,1 79,8 80 ▪ Cash flow from operating activities before financial ite
Slide 25: Number of personnel
NUMBER OF PERSONNEL October-December ▪ At the end of the quarter, F-Secure had 1,666 employees (1,104) ▪ In Q3/18, the increase in personnel from the acquisition of MWR InfoSecurity was 391 +51% 1 800 1 636 1 666 1 600 1 400 1 201 1 200 1 104 1 145 1 055 1 091 1 060 1 000 800 600 400 200 0 Q117 Q217