F-Secure Oyj · OMXHEX:FSECURE
F-Secure Oyj — Q2 2015 Earnings Presentation
25 slides from F-Secure Oyj's earnings presentation, Jul 23, 2015
Slide 1: Expanding into Cyber Security
EXPANDING INTO CYBER SECURITY F-SECURE CORPORATION INTERIM REPORT Q2 / 2015 July23, 2015 CEO Christian Fredrikson
Slide 2: Contents
CONTENTS • Highlights • Financials • Acquisition of nSense • Business updates • Market review 2
Slide 3: Q2 Highlights
Q2 HIGHLIGHTS Aiming to become the cyber security leader in Europe Overall security revenue +3 % y-o-y totaling EUR 35.5 million Operator security sales -2 % y-o-y totaling EUR 18.6 million Corporate reseller and direct-to-consumer revenues +10 % y-o-y totaling EUR 16.9 million M&A: F-Secure
Slide 4: Key Figures
KEY FIGURES Eur million Revenues % of revenue Revenues by channel 70% 40 34,4 35,9 35,5 35 34,5 34,5 60% 62% 61% 60% 60% 30 54% 50% 52% 48% 25 46% 40% 39% 40% 40% 38% 20 30% 15 20% 10 7,4 6,2 10% 5,2 5,0 5 4,1 0 0% Q214 Q314 Q414 Q115 Q215 Q1/2014 Q2/2014 Q3/2014 Q4/2014 Q1/2015 Q2/2015 Revenues EBI
Slide 5: Key Figures
KEY FIGURES Deferred revenues Eur million Costs Eur million 50 30 2,5 2,8 44,9 44,8 45 43 1,8 0,6 1,9 39,9 25 1,6 7,4 6,2 40 38,3 8,1 6,3 35 20 7,1 30 25 15 20 20,8 22,0 10 18,8 15 18,0 16,9 10 5 5 0 0 Q214 Q314 Q414 Q115 Q215 Q214 Q314 Q414 Q115 Q215 Deferred revenue Sales & Marketing Reseach & Dev
Slide 6: Key Figures
KEY FIGURES Eur million Net cash 120 1 100 1• Personal cloud storage business (younited) sold to Synchronoss 2 Technologies for USD 60 million in 80 3 February 2• Dividend of EUR 24.9 million paid in April 60 110,2 3• Acquisition of nSense in June: EUR 11 million in cash, EUR 4 million in shares 40
Slide 7: The Big Trends
THE BIG TRENDS EVERYTHING INCREASING THREATS ADVENT OF THE GOES INTO THE AMOUNT OF GETTING MORE INTERNET OF CLOUD CONNECTED COMPLEX THINGS DEVICES Most of the data and Mobility and vast variety of Modern, advanced threats will Emerging Internet of services will be in the cloud connected devices is c
Slide 8: nSense - A Foundation for Becoming a European Cyber Security Leader
NSENSE - A FOUNDATION FOR BECOMING A EUROPEAN CYBER SECURITY LEADER Entry into the enterprise customer segment FACTS Services and products to financial institutions, game and gambling companies, • Revenue EUR 7 million service providers and other large businesses with critical IT infrastructure
Slide 9: Our Cyber Offering in More Detail
OUR CYBER OFFERING IN MORE DETAIL Cyber risk advisory Vulnerability assessment, testing Security advisory and management Security policies Compliance and security management Predict Prevent Training and security culture Retro- Detect spective Incident response End-point detection F
Slide 10: Karhu
KARHU VULNERABILITY SCANNING & SECURITY MANAGEMENT • Centralized reporting platform • Vulnerability management capabilities (ticketing system) • API interface • 3-1 scanning solution • Cloud or private hosting Certified as a PCI ASV scanning tool 10 © F-Secure Confidential
Slide 11: Other Corporate Highlights
OTHER CORPORATE HIGHLIGHTS Focus countries continued to show good progress • Sales growth was driven by Protection Service for Business, while sales of traditional licenses slightly declined New features added to Business Suite • Blocking content (Java, flash or other web components) with Advanced P
Slide 12: Consumer Highlights
CONSUMER HIGHLIGHTS SAFE FREEDOME • Over half of operators making • New significant retail partnerships 90% of our operator revenue in Canada and in the Nordics have launched SAFE • First device manufacturer • New features: Windows 10 partnership signed ready, new Network checker • All together 3 op
Slide 13: Freedome - New Protection Log Feature
FREEDOME –NEW PROTECTION LOG FEATURE To be launched in September AVAILABLE from AVAILABLE retailers and On all significant platforms webshops (OSX launched in May) NEW! Elkjöp (Nordics) & Staples (Canada) 13 © F-Secure Confidential
Slide 14: Market Review
MARKET REVIEW Consumer security Corporate security • Short-term growth challenged by • Cloud-based delivery disrupting the declining PC-related sales way of selling security • Churn between operators creates • Especially the cyber security market is sales opportunities offering growing opportunities
Slide 15: Outlook
OUTLOOK The business outlook has not changed Change in phrasing: Guidance for operating profit has been revised due to the IFRS accounting of the deferred payment and earn-out elements of the nSense acquisition as expense The current outlook is: Overall security revenue growth for continuing
Slide 16: Thank You!
THANK YOU! Questions? 16 © F-Secure Confidential
Slide 17: Financials Q2 2015
FINANCIALS Q2 2015
Slide 18: Note on discontinued operations and nSense consolidation
As of the beginning of 2015 the personal cloud storage business (younited), which was sold to Synchronoss Technologies in February, is reported as discontinued operations. Consequently, comparison figures related to the statement of income have been restated. Comparison figures in the text refer to
Slide 19: Revenues
REVENUES EURm 40 34,4 35,9 35,5 Q2 Revenues increased by 3% y-o-y 35 34,5 34,5 Total quarterly revenues 35.5m (Q214: 30 34.4 m) Operator revenues declined by 2% to 25 18.6m (Q214: 19.1 m) 20 Corporate and direct to consumer channels grew by 10% to 16.9m 15 (Q214:15.3 m) 10 7,4 6,2 5,2 5,0 5 4,
Slide 20: Profitability
PROFITABILITY EURm Q2 Operating Profit 8,0 7,4 25% EBIT (non-IFRS) 4.1m, 12% of 7,0 revenues 6,2 20% 6,0 EBIT (IFRS) 4.0m, 11% (Q214: 5.2m, 5,2 5,0 15%) 5,0 15% 4,1 Earnings per share for continuing 4,0 operations EUR 0.02 10% 3,0 (EUR 0.02) Earnings per share EUR 0.02 2,0 5% (EUR 0.02) 1,0
Slide 21: Costs
COSTS 35 EURm 0,111 0,0 0,0 30 2,5 2,8 Q2 costs 1,8 0,6 1,9 Costs 31.0m (Q214: 27.9m), +11% y-o-y 25 1,6 7,4 6,2 The increase is mainly related to 8,1 6,3 20 7,1 personnel related expenses, costs incurred by the acquired nSense business and investments in sales 15 and marketing activities 22,0 10
Slide 22: Deferred Revenues
DEFERRED REVENUES EURm Q2 Deferred revenues increased to 50 44.8m (39.9m) 44,9 44,8 45 43 39,9 40 38,3 Continued growth in Corporate and 35 Direct Business 30 25 20 15 10 5 0 Q214 Q314 Q414 Q115 Q215 22
Slide 23: Solid Cash Position
SOLID CASH POSITION EURm Solid operational cash flow in Q2 120 Cash flow from operations 4.2m* 110,2 (Q214: 6.0m) 100 Change in cash -33.9m* 76,3 Dividend payment of 24.9m 80 Cash consideration of 11m for 61,3 nSense acquisition 60 51,6 47,7 Market value of liquid assets on 40 30 June 76
Slide 24: Number of Personnel
NUMBER OF PERSONNEL Number of personnel 1000 901 (Q214: 951) at the end of the quarter 900 133 129 127 135 800 133 69 nSense employees 700 became F-Secure 344 327 325 273 employees as of 2 June 600 274 2015 500 400 300 474 477 469 434 493 200 100 0 Q214 Q314 Q414 Q115 Q215 Sales and Marketing Re
Slide 25: Regional Revenue
REGIONAL REVENUE % of revenue 50% 46% 45% 45% 40% 35% 35% 32% 30% 25% 20% 15% 14% 12% 9% 10% 7% 5% 0% Nordic Rest of Europe North America Rest 01-06/2015 01-06/2014 25