INVESTOR UPDATE SSH COMMUNICATIONS SECURITY Kaisa Olkkonen, CEO 21.12.2017
CONTENTS 1 2 3 4 SSH Background and Business SSH Strategic Direction renewed Marketing Update Questions and Answers 22 December 2017 SSH Communications Security 2
SSH BACKGROUND AND BUSINESS
WHAT IS SSH ABOUT 1 Inventor of the SSH protocol the backbone of Internet security 2 3000+ demanding customers worldwide 3 100+ patents 4 Industry-leading products 5 20+ years of engineering excellence 22 December 2017 SSH Communications Security 4
SSH STRATEGIC DIRECTION RENEWED
OUR GROWTH EQUATION (JUNE 2017) ELIMINATING THE SYSTEMIC PROBLEMS INTRODUCING DISRUPTIVE NEW TECHNOLOGIES EXPLOITING THE CLOUD OPPORTUNITY ACTIVELY MONETIZING IPRS Reshape and widen offering for a more strategic vendor position Reposition SSH into relevant segment(s) Expand into more customer segments Rapidly introduce new technologies and products to exploit the cloud opportunity PrivX On-Demand Access Manager is the first step Use SSH s unique differentiators to establish leading position in Cloud Access Management Continue IPR creation and filings Actively pursue licensing Be prepared to protect our rights in courts if necessary 22 December 2017 CONFIDENTIAL SSH Communications Security 6
GROWTH: EXPANDING OUR REACH WITH PRIVX (JUNE 2017) New customer segments with PrivX MARKET EXPANSION Wider offering for better competitive position when competing for new Fortune 1000 class customers PrivX creates a wider offering for existing customers and segments Existing Base Upsell Cross- Sell Wider offering with PrivX More strategic offering PrivX enables both new customer segments and new business models (SaaS) for accelerating growth 22 December 2017 CONFIDENTIAL SSH Communications Security 7
THE CLOUD CHANGES EVERYTHING "Cloud-first strategies are the foundation for staying relevant in a fast-paced world -- Ed Anderson, Gartner Source: Vmoksha Technologies (2017) More than $1 trillion in IT spending will be directly or indirectly affected by the shift to cloud during the next five years, said Gartner, Inc. This will make cloud computing one of the most disruptive forces of IT spending since the early days of the digital age. -- Gartner 22 December 2017 SSH Communications Security 8
SECURITY IS SLOWING DOWN THE CLOUD TRANSFORMATION Top challenges holding back cloud projects Concern about the security of data 73% Concern about regulatory compliance Loss of control over IT services Knowledge and experience of both IT and business managers Concern over compromised accounts or insider threats Concern over business continuity or disaster recovery Source: Cloud Security Alliance: Cloud Adoption Practices & Priorities Survey Report 38% 38% 34% 30% 28% Focus areas of SSH 22 December 2017 SSH Communications Security 9
THE MARKET IS GROWING MARKET GROWTH CONTINUES INSIDERS ARE THE KEY THREAT AWARENESS IS INCREASING Projected CAGR of 9.5% between 2016 and 2021 Top 3 sources of security incidents Current employees Former employees 30% 35% 42,8 Hackers 22,7 24% 24,9 28,9 9,4 3,4 2009 2010 2011 2012 2013 2014 Zion Research: Cyber Security Market Trends and Forecast 2015-2021 (August 2016) PwC GSISS 2015: Number of detected security incidents (millions) with sources The Economist (May 28,2016) 22 December 2017 SSH Communications Security 9
CLOUD SECURITY GROWS EVEN FASTER OVERALL INFORMATION SECURITY MARKET CLOUD SECURITY MARKET 9.5% 26% vs. Sources: Zion Research 2016; MarketsandMarkets 2017 The cloud security market grows significantly faster than the overall information security market 22 December 2017 SSH Communications Security 11
OUR MISSION Access Your Digital Core Digital core is where organizations most valuable information, business applications, and core services exist and operate. Frictionless and secured access to the digital core is a new competitive advantage as every organization is either morphing into or born "digital" in the global data economy. We help all businesses access their digital core securely and frictionlessly. 27 October 2017 CONFIDENTIAL SSH Communications Security 6
KEY ACTIONS 2017 Internal Personnel Engagement through the strategy renewal work with the whole SSH team. Renewal of the target setting and incentive process to improve everybody s understanding of the key targets of the company and their role in reaching those targets. Regular pulse surveys to measure the commitment and understanding. Development of the finance tools to give us more detailed visibility to cost structures and financial situation. Competence analysis and recruitments based on that to build our capabilities in the new digital business model. Continuous building of the leadership team with internal and external recruitments and work on the ways of working and behaviors of the leadership team. Strong cost consciousness and reducing the losses substantially from 2016. Journey on the performance culture change started 22 December 2017 CONFIDENTIAL SSH Communications Security 13
KEY ACTIONS 2017 Product portfolio Universal Key Manager as the best SSH key management tool for SSH users, offering different levels of deployment possibilities. Crypto Auditor repackaged as a product for key defined use cases: third party access as the key use case in the ecosystem world. Tectia client/server as our bread and butter. Firewall product reached the certification process stage. PrivX On Demand Access manager as the lead product for cloud transformation. PrivX 1.0 launch in June and customer engagements started. PrivX organized as a separate Business Program to ensure focus and agility New version of PrivX On-Demand Access Manager in Q1/18. Development of a SaaS version of PrivX On-Demand Access Manager as the next step. From point solutions to a broader offering 22 December 2017 CONFIDENTIAL SSH Communications Security 14
KEY ACTIONS 2017 Sales Acknowledging the volatility of the SSH turnover quarter on quarter. Balance between license and subscription deals to increase predictability. Renewing the sales teams over the year, recruitments in Germany and UK. Refocus of roles in the US. Understanding customer needs and behavior: Shortening sales cycles through repackaging of products. Adding automation and analysis to recurring business process maximizing revenue. Building our capability to address the new segment for PrivX. Start of online sales during H1/18. Building the sales development team, inside sales team starting in the US, global roles starting the work in Finland. Theme focused campaigns continue, utilizing e.g. GDPR, ecosystem development First customer satisfaction survey conducted with our customer support interfaces. Growing customer focus, facilitating faster sales cycles 22 December 2017 CONFIDENTIAL SSH Communications Security 15
KEY ACTIONS Marketing Ari Vänttinen as the Chief Marketing Officer and Simo Karkkulainen as the Chief Digital Officer. A completely new way of addressing marketing in SSH: turning SSH Communications Security to SSH.COM. Turning the substantial website traffic to sales 22 December 2017 CONFIDENTIAL SSH Communications Security 16
IPR DEVELOPMENT As announced on December 6, 2017, SSH has entered into a patent crosslicense agreement with a global technology company including a one-time license fee payment of 2.1 M EUR paid to SSH The agreement does not have any direct impact on our ongoing patemnt litigation with Sony in Germany and the UK and the court cases proceed normally The agreement reflects the strength of our IPR portfolio and validates our patent licensing program We will continue the litigation and further intensify the many active licensing negotiations with several leading global technology companies 22 December 2017 SSH Communications Security 17
EXECUTING THE STRATEGY Announcement of new direction; Launch of PrivX; decreasing loss New marketing leadership and renewed marketing focus; first patent licensing win Ecommerce and new sales model start Q2/17 Q3/17 Q4/17 Q1/18 Q2/18 Start of new PrivX Business Program; operating cash flow positive quarter PrivX 2.0 launch; major digital presence and marketing upgrade
Q&A
SIZING UP THE COMPETITION Cloud-Only Cloud-First Company Cyberark ScaleFT aqua Venafi Notes Acquired SSH ex-partner Conjur Similar approach, cloud only Well-funded, container focus Strong in key & certificate mgmt SSH: the smart and credible player Also-Rans Legacy-First 22 December 2017 CONFIDENTIAL SSH Communications Security 20
THE IMPACT OF GDPR GDPR is happening fast and non-compliance can get VERY expensive Multiple SSH product help cope with GDPR: we help reach compliance and report promptly 22 December 2017 CONFIDENTIAL SSH Communications Security 21