F-Secure Corporation, Half year report, 10 August 2017 at 09.00 EEST
CORPORATE SECURITY REVENUE GREW BY 22% IN Q2
This is a summary of F-Secure’s Half Year Report. The full report is a PDF file attachment to this stock exchange release and is also available on the company's website at the address: www.f-secure.com/ir.
Highlights of April-June (Q2)
- Revenue increased by 10% year-on-year to EUR 43.2 million (39.3m)
- Revenue from corporate security increased by 22% to EUR 18.8 million (15.4m), representing 43% (39%) of all revenue
- Revenue from consumer security increased by 2% to EUR 24.4 million (23.9m), representing 57% (61%) of all revenue
- EBIT was EUR 2.3 million, representing 5% of revenue (4.6m, 12%) and reflecting significant investments in growth
- Earnings per share (EPS) was EUR 0.03 (EUR 0.03, EUR 0.03 including discontinued operations)
- Deferred revenue increased by 9% to EUR 55.6 million (51.1m) at the end of the quarter, reflecting strong order intake in corporate security
- Cash flow from operations was EUR 8.0 million (6.7m)
- In June, the Finnish Tax Administration’s Board of Adjustment approved F-Secure’s appeal related to withholding taxes from 2009-2011. As a result, EUR 3.1 million consisting of taxes, interests and late payment penalties was returned to the Company.
Highlights of January-June (H1)
- Revenue increased by 9% year-on-year to EUR 84.3 million (77.1m)
- Revenue from corporate security increased by 18% to EUR 35.5 million (30.0m), representing 42% (39%) of all revenue
- Revenue from consumer security increased by 3% to EUR 48.7 million (47.1m), representing 58% (61%) of all revenue
- EBIT was EUR 3.9 million, representing 5% of revenue (7.8m, 10%)
- Earnings per share (EPS) was EUR 0.03 (EUR 0.04, EUR 0.04 including discontinued operations)
- Cash flow from operations was EUR 13.4 million (5.5m)
Figures in this Half Year Report are unaudited. 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 2015-2016.
Outlook for 2017
The Company’s outlook for 2017 is unchanged:
- Revenue is anticipated to grow from the previous year’s level (2016: EUR 158.3 million )
- Operating profit is anticipated to be EUR 8-12 million (2016: EUR 19.2 million); profitability in the first quarter of 2017 is foreseen to be lowest during the year following typical seasonality, and clearly better towards the year-end
CEO SAMU KONTTINEN
In the second quarter, F-Secure improved its performance, building on the continued investments we’ve made to grow our business. I was particularly pleased with the strong revenue growth in F-Secure’s corporate security business, where we grew by 22% year-on-year - the high end of our own expectations. Our total revenue increased by 10% compared to the previous year, and amounted to EUR 43.2 million. The 2% growth in consumer security revenue was in line with our plans. In April-June, F-Secure’s operating profit was EUR 2.3 million, and 5% of revenue. Our profitability continued to reflect the significant investments we’ve made in sales, marketing and product development to support our growth.
In corporate security, F-Secure’s current portfolio of products and services is well matched with the needs of our customers. Throughout the quarter, we continued to win market share with our award-winning corporate endpoint protection solutions. Moreover, we saw positive development in the demand for our new corporate products, and we received an increasing number of new orders for Rapid Detection Service (RDS), F-Secure Radar and F-Secure Cloud protection for SalesForce. Overall, approximately half of corporate security revenue growth came from product sales.
Cyber security services also enjoyed a strong quarter, and growth accelerated, fueled by high demand in the market. More organizations are choosing to test their cyber resilience with our red teaming service, and there is increased demand for incident response and forensics. The EU’s upcoming General Data Protection Regulation (GDPR) continues to create demand for security management services. In keeping with our goal of expanding the geographical reach of our services business in European key markets, in May we announced the acquisition of UK-based Digital Assurance. Overall, cyber security services are complementary to our product business, and our learnings from incident investigations provide valuable insights that feed back into our product creation.
Our consumer security business had a solid quarter with revenue both from the operator and direct sales channels growing. Demand for F-Secure Safe increased slightly, and some of our largest operator partners extended their security offering by combining Safe with our password management solution F-Secure Key. In direct sales we continued to see good demand for our privacy and VPN product, F-Secure Freedome. In June, we reached a clear milestone in expanding our consumer portfolio with the launch of F-Secure Sense, our new solution for protecting the connected home. The delivery of F-Secure’s first-ever hardware product was greeted with positive media reviews. The connected home market is an interesting business opportunity for F-Secure.
The fact that Sense is being sold through two operators immediately after the product’s launch, is one example of the benefits of our go-to-market model in the consumer market. Overall the operator channel remains a strategic asset to F-Secure, and our leadership in this ecosystem was underscored by the over 80 operator partners who joined our annual partner summit in Barcelona.
Recent high-profile malware outbreaks Wannacry and Petya have acted as a reminder of the broad challenges that consumers and companies of all sizes face today. These cases also show that we are on the right track by providing solutions not only for endpoint protection, but also for vulnerability management as well as detection and response. These products, combined with world-class cyber security services, ensure F-Secure’s competitiveness in this market.
Key figures are for continuing operations unless otherwise stated.
|Revenue||43.2||39.3||10 %||84.3||77.1||9 %||158.3|
|Operating profit (EBIT)||2.3||4.6||-51 %||3.9||7.8||-50 %||19.2|
|% of revenue||5 %||12 %||5 %||10 %||12 %|
|Profit before taxes||3.3||5.7||-41 %||4.9||8.6||-43 %||20.8|
|Earnings per share, continuing operations (EUR) 1) 3)||0.03||0.03||4%||0.03||0.04||-20%||0.10|
|Earnings per share, (EUR) 1) 2) 3)||0.03||0.03||0%||0.03||0.04||-19%||0.10|
|Deferred revenue||55.6||51.1||9 %||54.3|
|Cash and available-for-sale financial assets||80.7||80.9||-13 %||92.7|
|ROI, % 2)||17.5 %||31.8 %||13.1 %||26.4 %||28.6 %|
|Equity ratio, % 2)||61.7 %||69.7 %||66.7 %|
|Gearing, % 2)||-126.4 %||-120.9 %||-122.1 %|
|Personnel, end of period 2)||1,091||982||11 %||1,026|
1) Based on the weighted average number of outstanding shares during the period 156,322,620 (4-6/2017) and 156,290,588 (1-6/2017)
2) Includes both continuing and discontinued operations
3) Earnings per share (EPS) excluding returned withholding taxes was EUR 0.01 for 4-6/2017 and EUR 0.02 for 1-6/2017.
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. (EET).
A webcast for international investors and analysts will be held (in English) at 14.00 p.m. (EET ).
- To participate and ask questions in the online meeting via web, please click on the link: https://meet.f-secure.com/tapio.pesola/WLW2FVWV
- To listen via phone, please dial in to +358975110100. The conference ID is 4666716.
The material will be available at the company's website before the call begins: www.f-secure.com/investors.
This is a summary of F-Secure’s Half Year Report. The full report is a PDF file attachment to this stock exchange release and is also available on the company's website at the address: www.f-secure.com/ir
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
F-Secure Corporation will publish its next interim report as follows:
- Q3/2017: 9 November 2017