F-Secure Oyj · OMXHEX:FSECURE
F-Secure Oyj — Q2 2018 Earnings Presentation
34 slides from F-Secure Oyj's earnings presentation, 2018
Slide 1: F-Secure acquired MWR InfoSecurity to accelerate corporate security growth
Samu Konttinen, CEO Q2 / 2018 F-SECURE ACQUIRED MWR INFOSECURITY TO ACCELERATE CORPORATE SECURITY GROWTH CORPORATE SECURITY REVENUE INCREASED BY 8% IN Q2 1
Slide 2: Agenda
AGENDA Key takeaways from Q2 Acquisition of MWR InfoSecurity Key figures Business updates Outlook Financials Supplementary material 2
Slide 3: Key takeaways from Q2
KEY TAKEAWAYS FROM Q2 ▪ The acquisition of MWR InfoSecurity was a major milestone for F-Secure ▪ Corporate security revenue growth below expectations, due to weak new customer acquisition in endpoint protection, but good progress with renewals, new products and services ▪ Consumer security revenue a
Slide 4: Key figures
KEY FIGURES EUR m 4–6/2018 4–6/2017 Change 1–6/2018 1–6/2017 Change 1–12/2017 Revenue 43.4 43.3 0% 86.5 84.2 3% 169.8 of which corporate security 20.0 18.6 8% 39.4 35.2 12 % 72.2 of which consumer security 23.4 24.7 -5 % 47.1 48.9 -4 % 97.5 Adjusted EBITDA1) 2.7 4.0 -33 % 6.6 6.9 -5 % 18.1 EBITDA 2.
Slide 5: Acquisition creates a leading offering for midmarket
ACQUISITION CREATES A LEADING OFFERING FOR MIDMARKET PREDICT PREVENT DETECT RESPOND Cyber security services Vulnerability Anti-phishing Proactive Remote Remote Endpoint Breach detection management behavior threat hunting forensics incident response protection management Protection Service Rapid Dete
Slide 6: World's best cyber security experts
6 WORLD’S BEST CYBER SECURITY EXPERTS F-Secure is now one the few truly global technical cyber security advisors ✓ Acquisition adds hundreds of experts performing incident response and forensics on four continents ✓ Unparalleled visibility into real-life cyber attacks 24/7 COPENHAGEN LONDON MAIN SIT
Slide 7: Competitive advantage from man & machine
COMPETITIVE ADVANTAGE FROM MAN & MACHINE SYNERGIES Threat research Product development Product sales Company brand
Slide 8: Corporate security revenue grew by 8% Q2
CORPORATE SECURITY REVENUE GREW BY 8% Q2 CORPORATE SECURITY PRODUCTS CYBER SECURITY SERVICES ▪ Endpoint security order intake at previous year’s ▪ High demand and successful recruitment level ▪ Order intake slightly declined, driven by ▪ Renewals at their highest levels, but new customer reorganizat
Slide 9: Consumer security down by 5% in Q2
CONSUMER SECURITY DOWN BY 5% IN Q2 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 partially visible in Q3/2018 ▪ Growth driven by F-Secure SAFE and FREED
Slide 10: Consumer business impacts total growth, weaker quarter in corporate business
CONSUMER BUSINESS IMPACTS TOTAL GROWTH, WEAKER QUARTER IN CORPORATE BUSINESS EUR m Growth % 10
Slide 11: Deferred revenue grows faster than revenue
DEFERRED REVENUE GROWS FASTER THAN REVENUE Growth % 11
Slide 12: Profitability as expected, continues to reflect focus on growth
PROFITABILITY AS EXPECTED CONTINUES TO REFLECT FOCUS ON GROWTH EUR million % of revenue *) *) excluding EUR 0.6 million of costs related to the acquisition of MWR InfoSecurity 12
Slide 13: Key focus areas for 2018-2019
KEY FOCUS AREAS FOR 2018-2019 Enterprise-grade cyber security for the midmarket ▪ Accelerate corporate security growth with successful integration of MWR InfoSecurity ▪ Aim is to become the leader in detection and response solutions ▪ Continued growth of cyber security services ▪ Increase share of w
Slide 14: New outlook for 2018
NEW OUTLOOK FOR 2018 As previously communicated, F-Secure gives a new ▪ Revenue from corporate security is expected outlook for 2018. As of 2 July 2018, F-Secure to grow over 35% compared to 2017 includes the acquired MWR InfoSecurity in the Group’s financials. Management remains confident ▪ Revenue
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: Financials Q2 2018
FINANCIALS Q2 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 17: Revenue
REVENUE April-June EURm ▪ Revenue increased by 0,2% y-o-y ▪ Total quarterly revenue 43.4m (Q217: 43.3m) 17
Slide 18: Revenue split
REVENUE SPLIT April-June EURm ▪ Revenue from corporate security increased by 7.7% totalling EUR 20,0 million (18.6m) ▪ Revenue from consumer security decreased by -5.4% and was EUR 23.4 million (24.7m) ▪ Corporate and consumer security represented 46% (43%) and 56% (57%) of total revenue respectivel
Slide 19: Profitability
PROFITABILITY April–June EURm ▪ Adjusted EBIT 1.1m, 2.6% of revenue (2.5m, 5.9%), excluding EUR 0.6 million of costs related to the acquisition of MWR InfoSecurity ▪ Earnings per share (EPS) EUR -0.00 (EUR 0.03) 19
Slide 20: Operating expenses
OPERATING EXPENSES April-June EURm Operating expenses 35.6m (Q217: 35.9m), -1% y-o-y ▪ Depreciation and amortization 1.6m (Q217: 1.5m) ▪ Capitalized development expenses were 1.5 m (Q217: 1.1m) 20
Slide 21: Deferred revenue
DEFERRED REVENUE 30 June 2018 ▪ Deferred revenue increased by 10% y-o-y to EUR 66.7m (EUR 60.4m) EURm 21
Slide 22: Regional revenue
REGIONAL REVENUE April-June EURm ▪ Other regions revenue declined slightly due to the loss of a single operator customer in Latin America in H2/17 22
Slide 23: Solid cash position
SOLID CASH POSITION April-June EURm Cash flow from operations was EUR 1.3 million (7.9m) reflecting a decrease in EBIT and paid income tax advances. ▪ F-Secure’s financial position remained solid. Short term investments were sold in June 2018 as F- Secure prepared to finance the acquisition of MWR I
Slide 24: Number of personnel
NUMBER OF PERSONNEL April-June ▪ Net headcount increase during Q2 was +56 persons ▪ The company’s headcount at the end of Q218 was 1,201 (Q217: 1,091) 24
Slide 25: Strategy slides from the Capital Markets Day Nov 2017
STRATEGY SLIDES FROM THE CAPITAL MARKETS DAY 22 Nov 2017 25
Slide 26: Corporate security continues to drive the growth
CORPORATE SECURITY CONTINUES TO DRIVE THE GROWTH USD billion INFORMATION SECURITY REVENUE FORECAST 2016-2022 +10.5% annually +9.0% annually +5.0% annually Source: Gartner, July 2018 DISLAIMER: Gartner has changed the way it provides forecast information. As of Q2 2018, It is publishing an overall en
Slide 27: 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 28: 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 28
Slide 29: 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 29
Slide 30: 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 – 30
Slide 31: Broader offering expands business opportunities
BROADER OFFERING EXPANDS BUSINESS OPPORTUNITIES Sales CYBER SECURITY SERVICES ADDITIONAL SOLUTIONS INITIAL SOLUTION Time 31
Slide 32: 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 32
Slide 33: 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 33
Slide 34: Synergies across segments
SYNERGIES ACROSS SEGMENTS Privacy Family Connected home 34