F-Secure Oyj · OMXHEX:FSECURE
F-Secure Oyj — Q3 2017 Earnings Presentation
36 slides from F-Secure Oyj's earnings presentation, 2017
Slide 1: Corporate Security Revenue Up by 11% - Good Growth Continued
Samu Konttinen, CEO Q3 / 2017 CORPORATE SECURITY REVENUE UP BY 11% - GOOD GROWTH CONTINUED 1
Slide 2: Agenda
AGENDA Key takeaways from Q3 Key figures Business updates Outlook Financials FAQ All figures refer to continuing operations unless otherwise stated. 2
Slide 3: Revenue increases by 6% in Q3
REVENUE INCREASES BY 6% IN Q3 “Good progress with new corporate security products underlined our on-going transformation.” CORPORATE SECURITY UP BY 11% CONSUMER SECURITY UP BY 2% ▪ Product sales in above market ▪ Direct sales in accelerating growth, growth, new solutions performed good performance w
Slide 4: Key figures
KEY FIGURES EUR m 7–9/2017 7–9/2016 Change 1–9/2017 1–9/2016 Change 1–12/2016 Revenue 41.0 38.8 6% 125.3 115.9 8% 158.3 of which corporate security 16.8 15.1 11 % 52.3 45.1 16 % 62.5 of which consumer security 24.2 23.7 2% 72.9 70.8 3% 95.8 Operating profit (EBIT) 3.3 4.5 -27 % 7.2 12.3 -42 % 19.2 %
Slide 5: Expanded portfolio of products and services creates business opportunities
EXPANDED PORTFOLIO OF PRODUCTS AND SERVICES CREATES BUSINESS OPPORTUNITIES KEY TRENDS CUSTOMER NEED INCREASING DEMAND FOR ✓ Robust threat Endpoint protection ✓ New prevention regulation ✓ Real-time threat detection and Rapid Detection Service ✓ Cyber attacks incident response increasing in volume an
Slide 6: Corporate security continues to drive growth despite seasonality
CORPORATE SECURITY CONTINUES TO DRIVE GROWTH DESPITE SEASONALITY nSense acquisition Growth % EUR m 6
Slide 7: Deferred revenue grows faster than revenue
DEFERRED REVENUE GROWS FASTER THAN REVENUE Growth % 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 11% in Q3
CORPORATE SECURITY REVENUE UP BY 11% IN Q3 CORPORATE SECURITY PRODUCTS CYBER SECURITY SERVICES ▪ Endpoint security product revenue in above- ▪ Very strong double-digit revenue growth market growth, but country-level performance mixed ▪ New significant wins and expanded accounts with existing custome
Slide 10: Consumer security up by 2% in Q3
CONSUMER SECURITY UP BY 2% IN Q3 OPERATOR CHANNEL DIRECT SALES ▪ Revenue at previous year’s level ▪ Revenue growth continues to outpace the market – order intake growth accelerated ▪ Overall improvement of product activation for the 10th consecutive quarter rates continues ▪ Growth driven by F-Secur
Slide 11: F-Secure continues its transformation
F-SECURE CONTINUES ITS TRANSFORMATION OUR HISTORY F-SECURE TODAY ✓ Broad offering of cyber security services Pure and corporate security products endpoint protection player ✓ Continued investments in sales & marketing and product development to support growth ✓ Expansion of the partner network 11
Slide 12: F-Secure has a strong employer brand
F-SECURE HAS A STRONG EMPLOYER BRAND ”In the IT sector, companies which improved most were F-Secure, Suunto and OP Group.” TOP10 employers in IT: https://universumglobal.com/rankings/finland/
Slide 13: 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 14: Financials Q3 2017
FINANCIALS Q3 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 15: Revenue
REVENUE July–September EURm ▪ Revenue increased by 6% y-o-y ▪ Total quarterly revenue 41.0m (Q316: 38.8m) 45 40 42.4 43.2 41.0 41.0 January–September 38.8 35 ▪ Revenue increased by 8% y-o-y ▪ Total revenue 125.3m (115.9m) 30 25 20 15 10 5 0 Q316 Q416 Q117 Q217 Q317 Revenue 15
Slide 16: Revenue split
REVENUE SPLIT July–September EURm ▪ Revenue from corporate security increased by 11% 30.0 totalling EUR 16.8 million (15.1m) ▪ Revenue from consumer security increased by 2% 25.0 24.4 25.0 24.3 24.2 and was EUR 24.2 million (23.7m) 23.2 23.9 23.7 ▪ Corporate and consumer security represented 41% 20.
Slide 17: Profitability
PROFITABILITY July–September EURm ▪ EBIT 3.3m, 8% of revenue (4.5m, 12%) 8 16 % 16 % ▪ Earnings per share (EPS) EUR 0.02 (EUR 0.02, EUR 0.02 including discontinued operations) 7 14 % January–September 12 % 6.9 6 12 % ▪ EBIT EUR 7.2m, representing 6% of revenue (12.3m, 11%) 5 10 % ▪ Earnings per shar
Slide 18: Fixed costs
FIXED COSTS July–September EURm Fixed costs 35.9m (Q316: 33.7m), +6% y-o-y ▪ Key drivers behind the increase were recruitments in corporate security, the impact of share-based incentive programs ▪ Depreciation and amortization increased to 1.7m (Q316: 1.3m) ▪ Capitalized development expenses were 1.
Slide 19: Deferred revenue
DEFERRED REVENUE 30 September 2017 ▪ Deferred revenue increased by 11% to EUR 56.0m (EUR 50.4m), continuing positive development* EURm 50 40 40.3 40.7 38.8 40.1 30 36.4 37.7 33.2 34.4 32.2 20 10 12.5 12.9 13.9 14.8 11.8 12.1 12.2 11.8 12.1 0 Q315 Q415 Q116 Q216 Q316 Q416 Q117 Q217 Q317 Deferred reve
Slide 20: Solid cash position
SOLID CASH POSITION July–September EURm Cash flow from operations was EUR 1.3 million (6.8m) 120 ▪ F-Secure’s financial position remained solid 100 96.4 92.7 ▪ The decline in cash flow compared to comparison 86.6 period in 2016 was mainly due to M&A related 80.9 80.7 81.1 payments 80 ▪ Gearing ratio
Slide 21: Number of personnel
NUMBER OF PERSONNEL July–September ▪ Net headcount decrease during Q3 was -31 persons ▪ The company’s headcount at the end of Q317 was 1,060 (+44 from Q316) 1016 1026 1055 1091 1060 950 982 1000 121 107 131 123 136 137 139 800 341 350 344 318 325 303 308 600 400 562 570 591 620 609 510 535 200 0 Q11
Slide 22: Regional revenue
REGIONAL REVENUE July–September EURm Revenue growth across all regions 20 ▪ Revenue growth in European countries was EUR 2.1m 18 relative to the comparison period 17.3 16 16.1 14 14.7 13.7 12 10 8 6 5.4 5.2 4 3.5 3.8 2 0 Nordic Rest of Europe North America Other Regions Q316 Q317 22
Slide 23: Frequently used slides
FREQUENTLY USED SLIDES = F-Secure. &
Slide 24: High level trends in security
HIGH LEVEL TRENDS IN SECURITY EXPANDING ATTACK SURFACE DISAPPEARING PERIMETERS SOPHISTICATED ATTACKS HIGHTENED RISK AWARENESS 24
Slide 25: 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 26: 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, August 2017 26
Slide 27: 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 27
Slide 28: 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 29: 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 29
Slide 30: F-Secure's cyber security offering for companies
F-SECURE’S CYBER SECURITY OFFERING FOR COMPANIES 30
Slide 31: 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 32: 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 33: 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 33
Slide 34: 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. 34
Slide 35: 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 35
Slide 36: SENSE @ Home
SENSE @ HOME Own or operator Ethernet F-Secure Ethernet provided router OR AND/OR Wi-Fi connection SENSE Wi-Fi connection 36