F-Secure Oyj · OMXHEX:FSECURE
F-Secure Oyj — Q1 2018 Earnings Presentation
37 slides from F-Secure Oyj's earnings presentation, 2018
Slide 1: Corporate security grew by 16%
Samu Konttinen, CEO Q1 / 2018 CORPORATE SECURITY GREW BY 16% 1 F-Secure Interim Results Q1/2018
Slide 2: Agenda
AGENDA Restatements Key takeaways from Q1 Key figures Business updates Outlook Financials Supplementary material 2 F-Secure Interim Results Q1/2018
Slide 3: Restatement of comparative financials
RESTATEMENT OF COMPARATIVE FINANCIALS ▪ As of 1 January 2018 F-Secure has adopted the new guidance on revenue recognition (IFRS 15) ▪ Together with analyzing the IFRS 15 impact, the allocation of costs between Cost of Revenue (CoR) and Operating Expenses (OPEX) has also been revised. ▪ All comparati
Slide 4: 2018 started according to our expectations
“2018 started according to our expectations.” CORPORATE SECURITY UP BY 16% CONSUMER SECURITY DOWN BY 2% ▪ Growth continued to be driven by ▪ Direct sales in good growth, solid strong growth in cyber security performance with FREEDOME and F- services and new products Secure TOTAL ▪ Good progress with
Slide 5: Key figures
KEY FIGURES EUR m 1–3/2018 1–3/2017 Change 1–12/2017 Revenue 43.1 40.9 6% 169.8 of which corporate security 19.4 16.6 16 % 72.2 of which consumer security 23.8 24.2 -2 % 97.5 EBIT 2.3 1.6 45 % 11.5 % of revenue 5.2% 3.8% 7% Earnings per share (EUR) 1) 0.00 0.01 0.07 Deferred revenue 67.2 61.2 10% 65
Slide 6: Profitability slightly improved y-o-y, continues to reflect focus on growth
PROFITABILITY SLIGHTLY IMPROVED Y-O-Y, CONTINUES TO REFLECT FOCUS ON GROWTH EUR million % of revenue 6 F-Secure Interim Results Q1/2018
Slide 7: Deferred revenue grows faster than revenue
DEFERRED REVENUE GROWS FASTER THAN REVENUE Growth % 7 F-Secure Interim Results Q1/2018
Slide 8: Corporate security continues to drive growth
CORPORATE SECURITY CONTINUES TO DRIVE GROWTH EUR m Growth % 8 F-Secure Interim Results Q1/2018
Slide 9: Corporate security revenue up by 16% in Q1
CORPORATE SECURITY REVENUE UP BY 16% IN Q1 CORPORATE SECURITY PRODUCTS CYBER SECURITY SERVICES ▪ Good progress with Rapid Detection Service ▪ Strong revenue growth, driven by high (RDS), significant wins in demanding verticals demand ▪ Regional sales expansion continued with new ▪ Successful recruit
Slide 10: Corporate security organizational change
CORPORATE SECURITY ORGANIZATIONAL CHANGE IN FEBRUARY NEW LEADERSHIP TEAM ROLES ▪ To ensure efficient execution of this strategy, F-Secure has made changes into our corporate security organization structure last February ▪ Key functional areas within corporate security elevated to the Leadership Team
Slide 11: Consumer security down by 2% in Q1
CONSUMER SECURITY DOWN BY 2% IN Q1 OPERATOR CHANNEL DIRECT SALES ▪ Revenue declined due to previously ▪ Revenue growth continues to outpace the communicated (H22017) operator partner market loss in Latin America - impact remains visible in Q2/2018 ▪ Growth driven by F-Secure SAFE and FREEDOME – both
Slide 12: Ready for the next 30 years
READY FOR THE NEXT 30 YEARS 12 F-Secure Interim Results Q1/2018
Slide 13: Key focus areas in 2018
KEY FOCUS AREAS IN 2018 Enterprise-grade cyber security for the midmarket ▪ Increase share of wallet by cross-selling and upselling ▪ Sales expansion of the new corporate security products (RDS & F-Secure RADAR) ▪ Successful launch of the new Endpoint Detection & Response solution (EDR) ▪ Best-in-cl
Slide 14: Outlook for 2018 - unchanged
OUTLOOK FOR 2018 - UNCHANGED F-Secure continues to invest in ▪ Revenue from corporate security is the growth of the corporate expected to grow by over 15% business, both the development compared to 2017 of cyber security products and • Revenue from consumer security services as well as sales and to
Slide 15: Financials Q1 2018
FINANCIALS Q1 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 16: Revenue
REVENUE January–March EURm ▪ Revenue increased by 6% y-o-y ▪ Total quarterly revenue 43.1m (Q117: 40.9m) 16 F-Secure Interim Results Q1/2018
Slide 17: Revenue split
REVENUE SPLIT January–March EURm ▪ Revenue from corporate security increased by 16% totalling EUR 19.4 million (16.6m) ▪ Revenue from consumer security decreased by -2% and was EUR 23.8 million (24.2m) ▪ Corporate and consumer security represented 45% (41%) and 55% (59%) of total revenue respectivel
Slide 18: Profitability
PROFITABILITY January–March EURm ▪ EBIT 2.3m, 5% of revenue (1.6m, 3.8%) ▪ Earnings per share (EPS) EUR 0.00 (EUR 0.01) 18 F-Secure Interim Results Q1/2018
Slide 19: Operating expenses
OPERATING EXPENSES January–March EURm Operating expenses 34.4m (Q117: 34.4m), 0% y-o-y ▪ Depreciation and amortization 1.6m (Q117: 1.4m) ▪ Capitalized development expenses were 0.5 m (Q117: 0.7m) 19 F-Secure Interim Results Q1/2018
Slide 20: Deferred revenue
DEFERRED REVENUE 31 March 2018 ▪ Deferred revenue increased by 10% to EUR 67.2m (EUR 61.2m) EURm 20 F-Secure Interim Results Q1/2018
Slide 21: Regional revenue
REGIONAL REVENUE January–March EURm ▪ Other regions revenue declined slightly due to the loss of a single operator customer in Latin America 21 F-Secure Interim Results Q1/2018
Slide 22: Solid cash position
SOLID CASH POSITION January–March EURm Cash flow from operations was EUR -0.3 million (5.5m), including a cash settlement related to the company’s long-term incentive plan (-2.3m) ▪ F-Secure’s financial position remained solid ▪ Gearing ratio was 123.1% negative (123.3% negative) 94,3 22 F-Secure In
Slide 23: Number of personnel
NUMBER OF PERSONNEL January–March ▪ Net headcount increase during Q1 was +41 persons ▪ The company’s headcount at the end of Q118 was 1,145 (Q117: 1,055) 1200 1 145 1 091 1 104 1 055 1 060 1000 800 600 400 200 0 Q117 Q217 Q317 Q417 Q118 Headcount 23 F-Secure Interim Results Q1/2018
Slide 24: Outlook for 2018
OUTLOOK FOR 2018 F-Secure continues to invest in ▪ Revenue from corporate security is the growth of the corporate expected to grow by over 15% business, both the development compared to 2017 of cyber security products and • Revenue from consumer security services as well as sales and to stay at the
Slide 25: Outlook for 2018-2021
OUTLOOK FOR 2018-2021 ▪ 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 anticipated
Slide 26: Strategy slides from the Capital Markets Day 22 Nov 2017
STRATEGY SLIDES FROM THE CAPITAL MARKETS DAY 22 Nov 2017 26 F-Secure Interim Results Q1/2018
Slide 27: F-Secure's transformation continues
F-SECURE’S TRANSFORMATION CONTINUES ACCELERATE GROWTH Special focus on NEW STRATEGY Enterprise-Grade cyber Shifting investments security for mid-market FOUNDATION towards corporate cyber 2018- World class endpoint security protection with special 2015-2017 focus in operator channel and consumers -20
Slide 28: Corporate security continues to drive the growth
CORPORATE SECURITY CONTINUES TO DRIVE THE GROWTH USD billion INFORMATION SECURITY REVENUE FORECAST 2015-2021 +8.9% annually +7.7% annually +1.7% annually Source: Gartner, Feb 2018 28 F-Secure Interim Results Q1/2018
Slide 29: Differences between segments
DIFFERENCES BETWEEN SEGMENTS ENDPOINT ENDPOINT DETECTION VULNERABILTY CYBER SECURITY CONSUMER PROTECTION & RESPONSE MANAGEMENT SERVICES SECURITY “Mature” “Emerging” “Fast growth” “Fast growth” “Mature” 3,6 0,4 1,0 16,0 4,6 BILLION BILLION BILLION BILLION BILLION CAGR 2015-21 CAGR 2015-20 CAGR 2015-2
Slide 30: Megatrends
MEGATRENDS GEOPOLITICS REGULATION CLOUDIFICATION Increasing demand CYBER ATTACKS DIGITALIZATION for cyber security products and services Evolving threat landscape More data sources Increasing complexity No 100% protection Automation and AI Lack of trained personnel Visibility Cost of expertise NEED
Slide 31: Channel plays a big role with mid-market customers & consumers
CHANNEL PAYS A BIG ROLE WITH MID-MARKET CUSTOMERS & CONSUMERS Channel influence Product differentiation Best of suite Endpoint protection only Best of breed products Customer size Consumers Small companies Mid-market Enterprise 31 F-Secure Interim Results Q1/2018
Slide 32: Mid-market has broader needs & more capacity to spend
MID-MARKET HAS BROADER NEEDS & MORE CAPACITY TO SPEND Company size Available budget* Customer focus SMALL COMPANIES Endpoint 25–200 seats 1k–10k protection MID-MARKET 200–5000 seats 100k–1M Best of Suite ENTERPRISES +5000 seats 1M–5M Best of Breed * SOURCE: SANS institute 32 F-Secure Interim Results
Slide 33: Expansion of F-Secure's offering for mid-market
EXPANSION OF F-SECURE’S OFFERING FOR MID-MARKET ENDPOINT COMPREHENSIVE CYBER INTEGRATED SECURITY PROTECTION ONLY SECURITY OFFERING SUITE FOR MID-MARKET F-Secure Endpoint Radar protection Cyber security Rapid Detection services Service – 2015 2015–2017 2018 – 33 F-Secure Interim Results Q1/2018
Slide 34: Broader offering expands business opportunities
BROADER OFFERING EXPANDS BUSINESS OPPORTUNITIES Sales CYBER SECURITY SERVICES ADDITIONAL SOLUTIONS INITIAL SOLUTION Time 34 F-Secure Interim Results Q1/2018
Slide 35: Bringing together endpoint protection and detection & response
BRINGING TOGETHER ENDPOINT PROTECTION AND DETECTION & RESPONSE 2018 World-class F-Secure Rapid endpoint protection Detection Service Endpoint detection & response 35 F-Secure Interim Results Q1/2018
Slide 36: Scalability through a global network of partners
SCALABILITY THOUGH A GLOBAL NETWORK OF PARTNERS CORPORATE SECURITY CONSUMER SECURITY PRODUCTS & SERVICES PRODUCTS RESELLERS CYBER SECURITY OPERATORS RETAIL & ETAIL 6000+ SERVICES 200+ globally 100,000+ COMPANIES HUNDREDS OF LARGE TENS OF MILLIONS OF CONSUMERS ENTERPRISES 36 F-Secure Interim Results
Slide 37: Synergies across segments
SYNERGIES ACROSS SEGMENTS Privacy Family Connected home 37 F-Secure Interim Results Q1/2018