F-Secure Corporation, Interim Report, 4 May 2018 at 09.00 EEST
F-Secure Interim Report 1 January - 31 March 2018
CORPORATE SECURITY REVENUE INCREASED BY 16%
This is a summary of F-Secure’s Interim Report. The full report is attached to this stock exchange release and it is also available on the company's website at the address: www.f-secure.com/ir.
Highlights of January-March (Q1)
Figures in this Interim Report are unaudited. Figures in brackets refer to the corresponding period in the previous year, unless otherwise stated.
Restatement of comparative financials
As of 1 January 2018 F-Secure has adopted the new guidance on revenue recognition, IFRS 15, and therefore restated 2017 financials. Together with analyzing the IFRS 15 impact F-Secure has also revised the allocation of costs between Cost of Revenue (CoR) and Operating Expenses (OPEX).
All comparative figures in this Interim Report have been adjusted according to the restatement. A stock exchange release on the restatement has been published on 3 May 2018, and more information is available in the Table section of this Interim Report.
Link to the 3 May 2018 release:
https://otp.tools.investis.com/clients/fi/fsecure1/omx/omx-story.aspx?cid=947&newsid=63087&culture=en-US
Additionally, the terminology used in financial statements has been revised to describe the items more accurately. Net sales is called Revenue, and Materials & Services is called Cost of Revenue. Changes in the content of the item Cost of Revenue has been described in the Table section. The content of Revenue remains the same.
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.
The company’s outlook for 2018 is unchanged:
Outlook for strategy period 2018-2021
The demand for cyber security products and services is expected to continue in strong growth and F-Secure aims to grow faster than the market. Revenue from corporate security is expected to grow above 15% annually during our strategy period 2018-2021.
Driven by the anticipated revenue growth and scalable business model, profitability is expected to improve significantly in the long-term. The management continuously seeks to balance the growth investments and profitability to optimize long-term growth and value creation for the shareholders.
CEO SAMU KONTTINEN:
2018 started according to our expectations. Corporate security revenue grew by 16%, driven by strong growth in cyber security services and new corporate security products. I was pleased with the good progress we made with Rapid Detection Service (RDS). We won new customers in demanding verticals, and our sales funnel expanded steadily. With F-Secure RADAR we had sales in 20 countries during the quarter, creating a good foundation to build further growth. In endpoint security, new customer acquisition was below our expectations, but renewal rates were strong, reflecting high product quality and customer satisfaction. That said, variances in regional performance persisted.
In consumer security, we continued to see an impact from the loss of one operator partner in Latin America which occurred in the second half of last year. This caused revenue from consumer security to decline by 2 %. In other regions our operator business experienced slight growth, and direct sales continued to clearly outperform the market. This further strengthens our confidence in the overall stability of F-Secure’s consumer security business. Our portfolio is comprehensive and includes security and privacy solutions for PC’s and mobile devices, as well as internet of things devices.
In total, F-Secure’s revenue increased by 6% to EUR 43.1 million. Our EBIT was EUR 2.3 million, also very much as we expected and in line with our guidance for the year.
Overall, our first quarter’s performance reflected how F-Secure clearly continues to benefit from key trends in the industry. The growing lack of cyber security expertise keeps creating a significant tailwind for our service business, and targeted cyber attacks continue to drive customer demand for better detection and response capabilities. These are key drivers behind our growth.
Going forward, we will proceed with our strategic growth initiatives, with a particular focus on addressing the cyber security needs of the corporate midmarket and local enterprises. We will use the full power of our portfolio, including both prevention and detection capabilities, as well as vulnerability management and our vast range of cyber security services. To ensure efficient execution of this strategy, we made changes in our organizational structure last February. By elevating key functional areas within corporate security to the Leadership Team we can ensure improved management visibility into this focus area.
In the beginning of February, more than 900 fellows gathered in Helsinki to celebrate our 30 years in the cyber security industry - and to plan for the future. I am immensely proud of the vast amount of knowledge and expertise we have accumulated in our company over the years. F-Secure employs many of the world’s leading cyber security experts, who spend thousands of hours on threat intelligence, responding to breaches, and witnessing firsthand how hackers are evading companies’ defenses. I believe with this committed team, F-Secure is uniquely positioned to support our customers as they improve their cyber resilience.
Key figures
| EUR m | 1-3/2018 | 1-3/20173) | Change | 1-12/20173) | ||||
| 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 | % | 6.7 | % | ||
| Earnings per share, (EUR) 1) 2) | 0.00 | 0.01 | 0,07 | |||||
| Deferred revenue | 67.2 | 61.2 | 10 | % | 65.7 | |||
| Cash and financial assets at fair value through P&L | 88.5 | 96.4 | -8 | % | 90.2 | |||
| ROI, % | 19.9 | % | 8.4 | % | 20.0 | % | ||
| Equity ratio, % | 70.4 | % | 69.1 | % | 61.9 | % | ||
| Gearing, % | -123,1 | % | -123,3 | % | -127.8 | % | ||
| Personnel, end of period | 1,145 | 1,055 | 9 | % | 1,104 | |||
1) Based on the weighted average number of outstanding shares during the period 156,793,800 (1-3/2018)
2) Earnings per share (EPS) excluding returned withholding taxes was EUR 0.05 for 1-12/2017.
3) As of 1 January 2018 F-Secure has adopted the new guidance on revenue recognition, IFRS 15, and therefore restated 2017 financials
News conference and webcast
A news conference for analysts and media will be held (in Finnish) at the company's headquarters (address: Tammasaarenkatu 7, 00180 Helsinki) today at 11.00–12.00 a.m. (EEST).
A webcast will be held (in English) at 14.00 p.m. (EEST ).
The material will be available at the company's website before the call begins: www.f-secure.com/investors.
F-Secure Corporation
F-Secure Corporation
Additional information
This is a summary of F-Secure’s Interim Report. The full report is attached to this stock exchange release and it is also available on the company's website at the address: www.f-secure.com/ir.
Contact information
Samu Konttinen, CEO, F-Secure
+358 9 2520 0700
Eriikka Söderström, CFO, F-Secure
+358 40 669 1844
Tapio Pesola, IR Manager, F-Secure
+358 44 3734693
Financial calendar
F-Secure Corporation will publish its interim reports during 2018 as follows:
Attachment