HIGH DEMAND FOR CORPORATE SECURITY Interim Report Q1/2016 - - PowerPoint PPT Presentation

HIGH DEMAND FOR CORPORATE SECURITY

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Interim Report Q1/2016 Christian Fredrikson, CEO

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AGENDA

• Highlights from Q1
• Market review
• Business updates
• Outlook
• Financials

Investments in growth continued

• Total revenues increased by 5% to EUR 37.8 million;
• corporate security increased by 27% to EUR 14.6 million
• consumer security decreased by 5% to EUR 23.2 million
• Organic revenue growth was flat, but organic order intake showed a healthy increase
• Deferred revenues in strong growth (+11%) thanks to increased new sales
• EBIT (IFRS) was EUR 3.2 million, 8% of revenues (5,0 m; 14%);

reflects investments in sales growth and product development, and decline in operator revenue

• Cash flow from operations was EUR -1.1 million (4.6 m);

reflects the repayment of foreign tax credits (3.9 m) on withholding taxes from 2009-2011 .

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HIGHLIGHTS Q1

All figures for continuing operations,

KEY FIGURES

Revenues and EBIT

Eur million Eur million

Deferred revenues

4 11,3 13,9 11,1 12,1 11,6 33,5 30,9 32,5 36,0 38,2

0,0 5,0 10,0 15,0 20,0 25,0 30,0 35,0 40,0 45,0 50,0

Q115 Q215 Q315 Q415 Q116

Deferred revenue, non-current Deferred revenue, current

35,9 35,5 37,2 38,9 37,8 5,0 4,0 6,0 5,0 3,2 5 10 15 20 25 30 35 40 45 Q115 Q215 Q315 Q415 Q116

Revenues EBIT (IFRS)

KEY FIGURES

Costs

Eur million Eur million 5 20,8 22,0 20,9 22,6 23,5 7,4 6,2 6,5 6,8 7,4 2,5 2,8 3,2 4,3 3,0

5 10 15 20 25 30 35 40

Q115 Q215 Q315 Q415 Q116

Sales & Marketing Reseach & Development Administration

110,2 76,3 80,5 93 35,2 20 40 60 80 100 120 Q115 Q215 Q315 Q415 Q116

Cash position Dividend/ Other

Cash position reflects the repayment of foreign tax credits

• n withholding taxes from 2009-

2011 based on debit decisions by the Finnish tax authority

94,3

Net cash

CORPORATE SECURITY DRIVING THE MARKET

20 40 60 80 100 120 2014 2015 2016 2017 2018 2019

3% 7%

Source: Gartner, March 2016

USD billion CORPORATE SECURITY SERVICES AND CONSULTATION CORPORATE SECURITY PRODUCTS CONSUMER SECURITY

Average annual growth

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8-15%

Enterprises Mid-size Business Consumers

ADVANCED ATTACKS AND THE NEED FOR COMPREHENSIVE SOLUTIONS ARE DRIVING THE SECURITY MARKET

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CORPORATE SECURITY INCREASES ITS SHARE OF F-SECURE REVENUES

8 11,1 10,9 11,0 11,6 12,2 13,7 14,6 14,6 23,3 23,6 23,5 24,4 23,3 23,6 24,3 23,2

0,0 5,0 10,0 15,0 20,0 25,0 2014 Q2 2014 Q3 2014 Q4 2015 Q1 2015 Q2 2015 Q3 2015 Q4 2016 Q1

Corporate Total Consumer Total

Note: Some minor re-allocation of revenues between consumer and corporate businesses was made in Q1 2016; revenues from past quarters have been restated to reflect this.

CORPORATE RESELLER BUSINESS

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HIGHLIGHTS FROM Q1 Revenues from the corporate reseller channel were the highest ever for the first quarter

• Revenues have now grown (y-o-y)

for 2 years in a row

• Sales in strong growth across the

board in Europe and in Japan

• Protection Service for Business

the fastest growing solution, one third of sales

• Continued investment in sales

Investments now cover Europe more broadly

• First cyber security product

introduced to the reseller channel: Fujitsu Finland to sell F-Secure Radar (vulnerability management solution) to enterprise customers in all Nordics

GOING FORWARD

F-SECURE RADAR OFFICIALLY PART OF THE CORPORATE OFFERING

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Allows companies to easily control and manage IT security risks.

• A sophisticated vulnerability

scanning, management and reporting service

• Helps companies to identify and

remediate known vulnerabilities in any platform or web application

• Easy-to-use, web-based platform
• Third party integration capabilities

F-Secure Radar THE PRODUCT WHAT DOES IT DO? THE CHANNEL

THE PRODUCT FEATURES

Radar formerly known as Karhu

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HIGHLIGHTS FROM Q1

CYBER SECURITY SERVICES

Revenues in strong double- digit growth

• Significant new customers, some

in new markets

• Recruited tens of new cyber

security experts since nSense acquisition

• Continued sales expansion and

product development

• New solution to be launched

for enterprises in Q2: Rapid Detection Service (RDS)

• Service center founded to

support RDS

GOING FORWARD

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RAPID DETECTION SERVICE LAUNCH IN Q2

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HIGHLIGHTS FROM Q1

OPERATOR BUSINESS

Decline in operator revenue largely caused by currency fluctuations and one client in Latin America

• Revenue decline anticipated to be

temporary

• Outlook remains unchanged; operator

business largely flat in 2016

• Expanded product offering to
• perators
• Increased cross-selling functionalities
• Broadening of offering to
• perators:

Freedome and F-Secure Key increasingly part of the partner

• ffering
• Initiatives with partners to

improve take-up rates and usage: Work together with partners continues

GOING FORWARD

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HIGHLIGHTS FROM Q1

DIRECT CONSUMER BUSINESS

Revenue continues to grow and

• utpace market growth
• Increasing contribution from Freedome
• Partnerships with global device

manufacturers into execution phase

• Partnerships with global device

manufacturers: Now in execution phase; 2016 will show how pre-installations convert to customers

• Sense product development

continues: First deliveries now expected by end

• f year

GOING FORWARD

OUTLOOK FOR 2016 IS UNCHANGED

 F-Secure anticipates its overall security revenues to grow in 2016 compared to the year before (2015: EUR 148 million).

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 EBIT for continuing operations is estimated to be EUR 17-21 million (2015: EUR 20 million).

FINANCIALS Q1 / 2016

This interim report is unaudited and prepared in accordance with IAS 34 standard Interim Financial Reporting and with accounting principles stated in the annual report 2015. As of the first quarter of 2015, the personal cloud business is reported as discontinued

• perations. Consequently, comparison figures related to the statement of comprehensive

income have been restated. All figures in the following tables are EUR million unless

• therwise stated.

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REVENUES

18 EURm

Q1 Revenues increased by 5% y-o-y

• Total quarterly revenues 37.8m

(Q115: 35.9m) Organic revenues were flat year-on-year, but organic order intake showed healthy growth.

35,9 35,5 37,2 38,9 37,8 5,0 4,0 6,0 5,0 3,2 5 10 15 20 25 30 35 40 45 Q115 Q215 Q315 Q415 Q116 Revenues EBIT (IFRS)

REVENUE SPLIT

19 EURm

Revenues from corporate security increased by 27% totaling EUR 14.6 million (11.6m)

• Corporate security represented 39 %

(Q115: 32%) of F-Secure’s total revenues Revenues from consumer security decreased by 5% and were EUR 23.2 million (24.4m)

• Consumer security represented 61%

(Q115: 68%) of F-Secure’s total revenues

11,1 10,9 11,0 11,6 12,2 13,7 14,6 14,6 23,3 23,6 23,5 24,4 23,3 23,6 24,3 23,2

0,0 5,0 10,0 15,0 20,0 25,0 2014 Q2 2014 Q3 2014 Q4 2015 Q1 2015 Q2 2015 Q3 2015 Q4 2016 Q1

Corporate Total Consumer Total EURm

5,0 4,0 6,0 5,0 3,2

0% 2% 4% 6% 8% 10% 12% 14% 16% 18%

0,0 1,0 2,0 3,0 4,0 5,0 6,0 7,0 Q115 Q215 Q315 Q415 Q116

EBIT (IFRS) EBIT (IFRS) %

PROFITABILITY

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Q1 Operating Profit

• EBIT (IFRS) 3.2m, 8% of revenues (Q115: 5.0m,

14%)

• Earnings per share for continuing operations

EUR 0.01 (EUR 0.04)

• Earnings per share EUR 0.02 (EUR 0.11)

EURm

COSTS

Q1 costs Costs 33.9m (Q115: 30.7m), +10% y-o-y

• The increase is mainly related to personnel

related expenses, external services and costs incurred by the acquired nSense business

• Depreciations from past capitalized expenses

decreased to 1.3m (Q115: 1.6m)

• Capitalized R&D expenses were 0.4m (Q115:

0.5m)

EURm 21 20,8 22,0 20,9 22,6 23,5 7,4 6,2 6,5 6,8 7,4 2,5 2,8 3,2 4,3 3,0

5 10 15 20 25 30 35 40

Q115 Q215 Q315 Q415 Q116 Sales & Marketing Reseach & Development Administration

DEFERRED REVENUES

Q1 Deferred revenues increased by 11% to 49.7m (44.9m)

EURm 22 4,7 6,5 7,3 11,0 11,3 13,9 11,1 12,1 11,6 35,2 33,4 31,0 32,0 33,5 30,9 32,5 36,0 38,2 0,0 10,0 20,0 30,0 40,0 50,0 60,0 Q114 Q214 Q314 Q414 Q115 Q215 Q315 Q415 Q116 Deferred revenue, non-current Deferred revenue, current

SOLID CASH POSITION

Q1 Cash flow from operations -1.1m* (Q115: 4.6m)

• Cash flow reflected the repayment of foreign tax

credits on withholding taxes from 2009-2011 based on debit decisions by the Finnish tax authority

• Market value of liquid assets on

31 March 93.0m (31 Dec 2015: 94.3m)

EURm

* Including discontinued business

23 110,2 76,3 80,5 93 35,2 20 40 60 80 100 120 Q115 Q215 Q315 Q415 Q116 Cash position Dividend/ Other 94,3

NUMBER OF PERSONNEL

• Number of personnel 950 (Q415: 926; Q115: 841) at the end of the quarter

24 434 493 490 500 510 274 273 279 279 303 133 135 144 147 137 100 200 300 400 500 600 700 800 900 1000

Q115 Q215 Q315 Q415 Q116

Sales and Marketing Research and Development Administration

REGIONAL REVENUE

EUR million 25 11,5 16,2 3,1 5,2 35,9 13,9 15,4 3,6 4,9 37,8 0,0 5,0 10,0 15,0 20,0 25,0 30,0 35,0 40,0 Nordic Rest of Europe North America Rest Total

Q115 Q116