Samu Konttinen, CEO Q4 / 2017 CORPORATE SECURITY REVENUE GROWTH ACCELERATED TO 16%

Transcription

1 Samu Konttinen, CEO Q4 / 2017 CORPORATE SECURITY REVENUE GROWTH ACCELERATED TO 16% 1

2 AGENDA Key takeaways from Q4 Key figures Business review for 2017 Outlook 2018 Outlook for Financials FAQ 2 All figures refer to continuing operations unless otherwise stated.

3 HIGHLIGHTS FROM Q4 Corporate security growth accelerated, new products and cyber security services in strong growth. CORPORATE SECURITY UP BY 16% New product sales in strong growth Services in strong growth, signed largest service deal ever Endpoint protection business at previous year s level, mixed performance continues CONSUMER SECURITY DOWN BY 3% Direct sales in good growth, increased cross-selling and upselling, especially F-Secure TOTAL Operator revenue declined, due to the loss of a single operator customer in South America Elsewhere operator revenue slightly increased 3

4 KEY FIGURES EUR m 10 12/ /2016 Change 1 12/ /2016 Change Revenue % % of which corporate security % % of which consumer security % % Operating profit (EBIT) % % % of revenue 9% 16 % 7 % 12 % Earnings per share (EUR) 1) 2) % % Deferred revenue % Cash and available-for-sale financial assets % Personnel, end of period 1) 1,104 1,026 8 % 1) Includes both continuing and discontinued operations 2) Earnings per share (EPS) excluding returned withholding taxes was EUR 0.05 for 1 12/

5 SIGNIFICANT GROWTH INVESTMENTS CONTINUED PROFITABILITY AS PLANNED EUR million % of revenue Previous announcement in Q4/2016 Encouraged by the results from the Company s growth investments in corporate security in 2016, F- Secure decided in 2017 to make a meaningful additional investment in both product development and go to market, which is reflected in the lowered profitability of

6 DEFERRED REVENUE GROWS FASTER THAN REVENUE Growth % 6

7 CORPORATE SECURITY CONTINUES TO DRIVE GROWTH DESPITE SEASONALITY EUR m nsense acquisition impact Growth % 7

8 F-SECURE S TRANSFORMATION CONTINUES FOUNDATION World class endpoint protection with special focus in operator channel and consumers NEW STRATEGY Shifting investments towards corporate cyber security ACCELERATE GROWTH Special focus on Enterprise-Grade cyber security for mid-market

9 9 WE ARE BUILDING ON A SOLID FOUNDATION

10 IMPORTANT STEPS TAKEN IN OUR TRANSFORMATION IN 2017 STRONG GROWTH WITH NEW PRODUCTS STRONG GROWTH IN CYBER SECURITY SERVICES SOLID GROWTH WITH ENDPOINT PROTECTION BUSINESS SUCCESFUL RECRUITMENT IN R&D, SALES & MARKETING Sales expansion of Rapid Detection Service and F-Secure Radar, sales in 20 countries Strong demand, increased deal sizes and repetitive deals Continued slightly above market growth in endpoint protection, best-in-class security technology Attractive employer brand, net addition of 78 employees in

11 SIGNIFICANT INVESTMENT IN DETECTION & RESPONSE SOLUTIONS Rapid Detection Service (RDS) As a service Strong growth in 2017 Wins in several new key markets in Europe, including replacements Customers in demanding verticals: Finance, Media, High-Tech, IT-Services, Energy Endpoint detection & Response (EDR) Fully automated solution expected in

12 PROTECTION SERVICES FOR BUSINESS UPDATED TO SUPPORT GROWTH MORE SALES POTENTIAL Improved cross selling features IMPROVED USABILITY New clients for Macs and PCs NEW SECURITY FEATURES DataGuardfor Ransomware protection New Password Protection feature

13 SOLID PROGRESS WITH CONSUMER SECURITY STRONG GROWTH IN DIRECT SALES CONSUMERS INCREASINGLY BUYING BOTH SECURITY & PRIVACY OPERATOR CHANNEL REMAINS STABLE ON-GOING DISCUSSIONS OF SENSE AS SOFTWARE Increased upselling and strong growth with TOTAL, FREEDOME also in good growth Strong demand, increased deal sizes and repetitive deals Revenue at previous year s level, high NPS scores, Operators interested in the security for connected homes

14 STRATEGY FOR : FOCUS ON ENTERPRISE-GRADE CYBER SECURITY FOR THE MID-MARKET

15 OUTLOOK FOR 2018 F-Secure continues to invest in the growth of the corporate business, both the development of cyber security products and services as well as sales and marketing of these solutions. Revenue from corporate security is expected to grow by over 15% compared to 2017 Revenue from consumer security to stay at the same level as in EBIT is expected to be in the range of 8-12M 15

16 OUTLOOK FOR 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 Driven by the anticipated revenue growth and scalable business model, the company s profitability is expected to improve significantly in the longterm. The board and the management continuously seek to balance growth investments and profitability to optimize long-term value creation for the shareholders. 16

17 DIVIDEND PROPOSAL The Board proposes to the AGM the distribution of a EUR 0.04 dividend per share for The Company's dividend policy is to pay approximately half of its profits as dividends. Subject to circumstances, the Company may deviate from this policy. 17

18 FINANCIALS Q 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 reported as discontinued operations

19 REVENUE October December Revenue increased by 5% y-o-y EURm Total quarterly revenue 44.4m (Q416: 42.4m) January December Revenue increased by 7% y-o-y Total revenue 169.7m (158.3m) Q416 Q117 Q217 Q317 Q417 Revenue 19

20 REVENUE SPLIT October December Revenue from corporate security increased by 16% totalling EUR 20.2 million (17.4m) Revenue from consumer security decreased by -3% and was EUR 24.2 million (25.0m) Corporate and consumer security represented 45% (41%) and 55% (59%) of total revenue respectively January December Revenue from corporate security increased by 16% totalling EUR 72.6 million (62.5m) Revenue from consumer security increased by 1% and was EUR 97.1 million (95.8m) Corporate and consumer security represented 43% (39%) and 57% (61%) of total revenue respectively EURm Q116 Q216 Q316 Q416 Q117 Q217 Q317 Q417 Corporate Total Consumer Total 20

21 PROFITABILITY October December EURm EBIT 3.9m, 9% of revenue (6.9m, 16%) Earnings per share (EPS) EUR 0.02 (EUR 0.04, EUR 0.04 including discontinued operations) January December % % 14 % EBIT EUR 11.1m, representing 7% of revenue (19.2m, 12%) 6 12 % Earnings per share (EPS) EUR 0.07 (EUR 0.10, EUR 0.10 including discontinued operations) % 9 % % 8 % 3 4 % 5 % % % % 0 Q416 Q117 Q217 Q317 Q417 0 % EBIT EBIT % 21

22 FIXED COSTS October December Fixed costs 39.4m (Q416: 35.7m), +11% y-o-y Key driver behind the increase was recruitments in corporate security Depreciation and amortization increased to 1.8m (Q416: 1.3m) Capitalized development expenses were 1.0m (Q416: 1.2m) January December Fixed costs 153.8m (Q416: 137.6m), +12% y-o-y Key drivers behind the increase were recruitments in corporate security and the impact of share-based incentive programs Depreciation and amortization increased to 6.3m (Q416: 5.3m) Capitalized development expenses were 3.9m (Q416: 3.2m) EURm Q416 Q117 Q217 Q317 Q417 Sales & Marketing Reseach & Development Administration 22

23 DEFERRED REVENUE 31 December 2017 Deferred revenue increased by 13% to EUR 61.1m (EUR 54.3m), continuing positive development* EURm Q415 Q116 Q216 Q316 Q416 Q117 Q217 Q317 Q417 Deferred revenue, non-current 23 *figure shows 4-qtr rolling average deferred revenue

24 REGIONAL REVENUE October December EURm Revenue growth in Europe and North America 20 Other regions revenue declined slightly due to the loss of a single operator customer in Latin America Nordic Rest of Europe North America Other Regions Q416 Q417 24

25 SOLID CASH POSITION October December Cash flow from operations was EUR 11.4 million (8.3m) F-Secure s financial position remained solid Gearing ratio was 129.9% negative (122.1% negative) EURm January December Cash flow from operations was EUR 26.0 million (21.9m) 94,3 25

26 NUMBER OF PERSONNEL October December Net headcount increase during Q4 was +44 persons The company s headcount at the end of Q417 was 1,104 (Q416: 1026) Q116 Q216 Q316 Q416 Q117 Q217 Q317 Q417 Sales & Marketing Reseach & Development Administration 26

27 27 STRATEGY SLIDES FROM THE CAPITAL MARKETS DAY 22 Nov 2017

28 F-SECURE S TRANSFORMATION CONTINUES FOUNDATION World class endpoint protection with special focus in operator channel and consumers NEW STRATEGY Shifting investments towards corporate cyber security ACCELERATE GROWTH Special focus on Enterprise-Grade cyber security for mid-market

29 CORPORATE SECURITY CONTINUES TO DRIVE THE GROWTH USD billion INFORMATION SECURITY REVENUE FORECAST % annually 7.4% annually 1.6% annually Source: Gartner, Aug 2017

30 MEGATRENDS REGULATION GEOPOLITICS CLOUDIFICATION CYBER ATTACKS Increasing demand for cyber security products and services DIGITALIZATION Evolving threat landscape No 100% protection More data sources Automation and AI Visibility Increasing complexity Lack of trained personnel Cost of expertise NEED FOR DETECTION AND RESPONSE NEED FOR BETTER SECURITY ORCHESTRATION NEED FOR OUTSOURCING

31 3 1 CHANNEL PAYS A BIG ROLE WITH MID-MARKET CUSTOMERS & CONSUMERS Channel influence Product differentiation Endpoint protection only Best of suite Best of breed products Customer size Consumers Small companies Mid-market Enterprise

32 MID-MARKET HAS BROADER NEEDS & MORE CAPACITY TO SPEND Company size Available budget* Customer focus SMALL COMPANIES seats 1k 10k Endpoint protection MID-MARKET seats 100k 1M Best of Suite ENTERPRISES seats 1M 5M Best of Breed * SOURCE: SANS institute

33 EXPANSION OF F-SECURE S OFFERING FOR MID-MARKET ENDPOINT PROTECTION ONLY COMPREHENSIVE CYBER SECURITY OFFERING INTEGRATED SECURITY SUITE FOR MID-MARKET F-Secure Radar Endpoint protection Cyber security services Rapid Detection Service

34 BROADER OFFERING EXPANDS BUSINESS OPPORTUNITIES Sales CYBER SECURITY SERVICES ADDITIONAL SOLUTIONS INITIAL SOLUTION Time 34

35 BRINGING TOGETHER ENDPOINT PROTECTION AND DETECTION & RESPONSE 2018 World-class endpoint protection Endpoint detection & response F-Secure Rapid Detection Service

36 SCALABILITY THOUGH A GLOBAL NETWORK OF PARTNERS CORPORATE SECURITY PRODUCTS & SERVICES CONSUMER SECURITY PRODUCTS RESELLERS CYBER SECURITY SERVICES OPERATORS 200+ globally RETAIL & ETAIL 100,000+ COMPANIES HUNDREDS OF LARGE ENTERPRISES TENS OF MILLIONS OF CONSUMERS

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