SECOND QUARTER REVENUES INCREASE BY 11% FROM PREVIOUS YEAR AGENDA - - PowerPoint PPT Presentation

SECOND QUARTER REVENUES INCREASE BY 11% FROM PREVIOUS YEAR

Interim Report Q2/2016 Samu Konttinen, CEO

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• New CEO
• Highlights from Q2
• Market update
• Business update
• Outlook
• Financials

AGENDA

SAMU KONTTINEN STARTS AS THE NEW CEO

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The F-Secure Board of Directors has appointed Samu Konttinen as new President and CEO, effective 1 August 2016

• Joined F-Secure in 2005
• Member of the Leadership Team since 2009
• Previous positions held:
• Executive Vice President Corporate Security Business
• Executive Vice President of F-Secure’s Consumer Business
• Executive Vice President of Sales and Marketing
• Board membership:
• Ixonos, member of the board since 2011
• Mobile Ecosystem Forum, member of the board since 2015

The previous CEO Christian Fredrikson resigned in June to pursue another leadership

• pportunity outside the Company

April-June (Q2)

• Total revenues increased by 11% to EUR

39.3 million;

• corporate security increased by 26% to

EUR 15.4 million

• consumer security increased by 3% to

EUR 23.9 million

• EBIT (IFRS) was EUR 4.6 million, 12% of

revenues (4.0 m; 11%); reflects investments in sales growth and product development

• Cash flow from operations was EUR 6.6

million (4.3 m)

• Deferred revenues in robust growth

(+14%) due to increased new sales .

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FINANCIAL HIGHLIGHTS

All figures for continuing operations, except cash flow

January-June (H1)

• Total revenues increased by 8% to EUR

77.1 million;

• corporate security increased by 26% to

EUR 30.0 million

• consumer security decreased by 1% to

EUR 47.1 million

• EBIT (IFRS) was EUR 7.8 million, 10% of

revenues (9.0 m; 13%); reflects investments in sales growth and product development

• Cash flow from operations was EUR 5.5

million (8.9 m);

KEY FIGURES

Revenues and EBIT

Eur million Eur million

Deferred revenues

5 35,5 37,2 38,9 37,8 39,3 4,0 6,0 5,0 3,2 4,6 5 10 15 20 25 30 35 40 45 Q215 Q315 Q415 Q116 Q216 Revenues EBIT (IFRS) 13,9 11,1 12,1 11,6 12,3 30,9 32,5 36,0 38,2 38,8 10 20 30 40 50 60 Q215 Q315 Q415 Q116 Q216 Deferred revenue, non-current Deferred revenue, current

KEY FIGURES

Costs

Eur million Eur million 6 94,3

Liquid assets*

22,0 20,9 22,6 23,5 24,4 6,2 6,5 6,8 7,4 6,6 2,8 3,2 4,3 3,0 3,3 5 10 15 20 25 30 35 40 Q215 Q315 Q415 Q116 Q216 Sales & Marketing Reseach & Development Administration 76,3 80,5 94,3 93,0 80,9 35,2 18,7 20 40 60 80 100 120 Q215 Q315 Q415 Q116 Q216 Cash position Dividend/ Other

*Liquid assets include cash and cash equivalents and short term investments in interest rate funds classified as Available-for-sale assets

CORPORATE SECURITY THE LARGEST MARKET AND GROWING

20 40 60 80 100 120 2014 2015 2016 2017 2018 2019 2020

IT security services and consulting IT security products Consumer Security

Source: Gartner, May 2016

USD billion 7

10% annually 6% annually 3% annually

Forecast Information Security 2014-2020

10 26 33 27 26 3

• 5

3

• 10
• 5

5 10 15 20 25 30 35 F-Secure CORPORATE security F-Secure CONSUMER security

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Q2/15 Q3/15 Q4/15 Q1/16 Q2/16

WE ARE GROWING FASTER THAN THE MARKET

% growth y-o-y

Corporate security market growth 3-16% Consumer security software market growth 1-3%

Source: Gartner May 2016

F-Secure vs. Market

nSense acquired in June 2015

INVESTMENTS IN GROWTH PRODUCING FIRST RESULTS

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RESEARCH & DEVELOPMENT SALES & MARKETING

PROFITABLE GROWTH BY UTILIZING F-SECURE’S SCALABLE BUSINESS MODEL

Short-term: Increased investments Long-term: Increased revenues & profitability

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PREDICT PREVENT DETECT RESPOND

END-POINT & NETWORK SECURITY SUITES

• Device & server security
• Mobile security
• Virtual Security
• Central management
• As a service or On-premise

VULNERABILITY & PATCH MGMT

• Vulnerability scanning
• Vulnerability management
• Automatic patch management

ATTACK SURFACE ASSESSMENT

• Threat level assessment
• Attack surface mapping

SERVICES

• Professional services
• Consulting & coaching
• For all areas of the security strategy

RAPID DETECTION SERVICE (NEW!)

Incident detection & response service platform

• 24/7 Security monitoring & alerting
• Incident response

WE ARE EXPANDING OUR PRODUCT & SERVICE OFFERING

SCALABILITY THROUGH STRONG GO-TO-MARKET CHANNELS

100 000 COMPANIES

CUSTOMERS: GO-TO-MARKET: OFFERING:

CORPORATE SECURITY CONSUMER SECURITY

3500+ IT RESELLERS & SERVICE PARTNERS 200+ OPERATOR PARTNERS ONLINE AND TRADITIONAL RETAILERS

TENS OF MILLIONS OF CONSUMERS

DIRECT SALES TECHNOLOGY:

BEST-IN-CLASS CYBER SECURITY TECHNOLOGY PLATFORM

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CORPORATE SECURITY IN STRONG ABOVE-MARKET GROWTH

Q2 HIGHLIGHTS

• End point protection sales showed strong growth, significantly
• utpacing the market
• Especially strong growth in Germany, France and Japan.
• Good progress in North America and several countries in Europe
• Cyber security services in very strong double-digit growth
• Continued strong demand across different verticals
• Managed services sales steadily increasing
• Sales teams strengthened, new products into the reseller channel
• 50 new channel sales people to be recruited in 2016
• F-Secure Radar introduced to the reseller channel in April
• Rapid Detection Service (RDS) launched in May
• First customer contracts signed
• Continue to look for new service partners

”First Rapid Detection Service contracts were quickly signed following the launch signaling strong demand in the market.”

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FIRST RAPID DETECTION SERVICE DEALS SIGNED SOON AFTER LAUNCH

SENSORS IN THE NETWORK AND END-POINTS ANOMALY ALERT

RAPID DETECTION CENTER

THREAT INTELLIGENCE BEHAVIOURAL ANALYSIS

BIG DATA

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10,9 11 11,6 12,2 13,7 14,6 14,6 15,4 23,6 23,5 24,4 23,3 23,6 24,3 23,2 23,9

5 10 15 20 25 30 Q314 Q414 Q115 Q215 Q315 Q415 Q116 Q216

Corporate Total Consumer Total

CORPORATE SECURITY’S SHARE OF TOTAL REVENUES INCREASED TO 39%

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CONSUMER SECURITY SALES IMPROVED COMPARED TO Q1 IN ALL REGIONS

Q2 HIGHLIGHTS

• Operator revenues remained at previous year’s levels
• Sales improved in all regions, especially in North America
• The roll-out of the F-Secure SAFE continued
• Elisa/Appelsin (Finland), XS4ALL (Netherlands) and Voo (Belgium)
• New partnerships with NetCologne (Germany), Vinaphone (Vietnam)
• Continued healthy growth in direct-to-consumer sales
• Sales growing faster than the overall market
• Online sales and sales through Nordic retail partnerships made

particularly good progress

• Freedome sales increasing steadily
• Preparations for F-Secure Sense continued as planned
• First deliveries expected by the end of the year

“The growth of our direct-to-consumer business was significantly supported by steadily increasing revenues from Freedome.”

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 Q2 / 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

19 EURm

Q2 Revenues increased by 11% y-o-y

• Total quarterly revenues 39.3m

(Q215: 35.5m) Organic revenues grew by 7% year-on-year

35,5 37,2 38,9 37,8 39,3 4,0 6,0 5,0 3,2 4,6

5 10 15 20 25 30 35 40 45 Q215 Q315 Q415 Q116 Q216 Revenues EBIT (IFRS)

REVENUE SPLIT

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Revenues from corporate security increased by 26% totaling EUR 15.4 million (12.2m)

• Corporate security represented 39 %

(Q215: 34%) of F-Secure’s total revenues Revenues from consumer security increased by 3% and were EUR 23.9 million (23.3m)

• Consumer security represented 61%

(Q215: 66%) of F-Secure’s total revenues

EURm 10,9 11 11,6 12,2 13,7 14,6 14,6 15,4 23,6 23,5 24,4 23,3 23,6 24,3 23,2 23,9 5 10 15 20 25 30 Q314 Q414 Q115 Q215 Q315 Q415 Q116 Q216

Corporate Total Consumer Total

PROFITABILITY

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Q2 Operating Profit

• EBIT (IFRS) 4.6m, 12% of revenues (Q215:

4.0m, 11%)

• Earnings per share for continuing operations

EUR 0.03 (EUR 0.02)

• Earnings per share EUR 0.03 (EUR 0.02)

EURm 4,0 6,0 5,0 3,2 4,6 0% 2% 4% 6% 8% 10% 12% 14% 16% 18% 1 2 3 4 5 6 7 Q215 Q315 Q415 Q116 Q216 EBIT (IFRS) EBIT (IFRS) %

COSTS

Q2 costs Costs 34.3m (Q215: 31.0m), +11% y-o-y

• The increase largely reflects costs incurred by

corporate security as a result of successful recruiting as well as expenses relating to product development and marketing

• In the comparison period, costs relating to

cyber security services were only included for the month of June following the acquisition

• f nSense
• Depreciations from past capitalized expenses

decreased to 1.3m (Q215: 1.4m)

• Capitalized R&D expenses were 0.4m (Q215:

0.5m)

EURm 22

22,0 20,9 22,6 23,5 24,4 6,2 6,5 6,8 7,4 6,6 2,8 3,2 4,3 3,0 3,3

5 10 15 20 25 30 35 40 Q215 Q315 Q415 Q116 Q216 Sales & Marketing Reseach & Development Administration

DEFERRED REVENUES

Q2 Deferred revenues increased by 14% to 51.1m (44.8m)

EURm 23

6,5 7,3 11,0 11,3 13,9 11,1 12,1 11,6 12,3 33,4 31,0 32,0 33,5 30,9 32,5 36,0 38,2 38,8

10 20 30 40 50 60 Q214 Q314 Q414 Q115 Q215 Q315 Q415 Q116 Q216

Deferred revenue, non-current Deferred revenue, current

SOLID CASH POSITION

Q2 Cash flow from operations 6.6m* (Q215: 4.3m)

• Cash flow impacted partly by the release of the

EUR 4.5 million escrow account relating to the sale of the personal cloud storage business to Synchronoss and the residual tax payment of EUR 6.1 million resulting from the positive net impact of said divestment and the nSense acquisition in 2015

• Market value of liquid assets on

30 June 80.9m (31 Dec 2015: 94.3m)

EURm

* Including discontinued business

24 94,3

76,3 80,5 94,3 93,0 80,9 35,2 18,7

20 40 60 80 100 120 Q215 Q315 Q415 Q116 Q216 Cash position Dividend/ Other

NUMBER OF PERSONNEL

• F-Secure stated as its target to recruit over a hundred new employees in 2016 to

support the Company growth

• Number of personnel 982 (Q116: 950; Q415: 926) at the end of the quarter

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493 490 500 510 535 273 279 279 303 308 135 144 147 137 139

100 200 300 400 500 600 700 800 900 1000 Q215 Q315 Q415 Q116 Q216 Sales & Marketing Reseach & Development Administration 25

REGIONAL REVENUE

EUR million 26 11,6 15,7 3,3 4,9 14,1 16,3 3,7 5,3 2 4 6 8 10 12 14 16 18 Nordic Rest of Europe North America Rest Q215 Q216 26