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MarketScreener Homepage  >  Equities  >  NASDAQ OMX HELSINKI LTD.  >  F-Secure Oyj    FSC1V   FI0009801310

F-SECURE OYJ

(FSC1V)
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F Secure Oyj : Secure Hal Year Report 1 January - 30 June 2019

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07/19/2019 | 02:00am EDT

F-Secure Corporation, Half Year Report 2019, 19 July 2019 at 09.00 EEST

F-Secure Half Year Report 1 January - 30 June 2019

All businesses continued to grow – revenue up by 25 % in Q2

Highlights of April-June (Q2)

  • Revenue increased by 25% to EUR 54.1 million (43.4m)
  • Revenue from corporate security increased by 50% to EUR 30.1 million (20.0m)
  • Revenue from consumer security increased by 3% to EUR 24.0 million (23.4m)
  • Deferred revenue increased by 6% to EUR 71.0 million (66.7m)
  • Adjusted EBITDA was EUR 4.8 million (2.7m), 8.9% of revenue (6.3%)1)
  • Earnings per share (EPS) was EUR 0.02 (EUR -0.00)
  • Cash flow from operating activities before financial items and taxes was EUR 6.9 million (3.2m)1)   
  • EBIT includes positive net impact of EUR 3.1 million related to MWR InfoSecurity acquisition valuation revision

Highlights of January-June (H1)

  • Revenue increased by 24% to EUR 107.5 million (86.5m)
  • Revenue from corporate security increased by 51% to EUR 59.5 million (39.4m)
  • Revenue from consumer security increased by 2% to EUR 48.0 million (47.1m)
  • Deferred revenue increased by 6% to EUR 71.0 million (66.7m)
  • Adjusted EBITDA was EUR 9.8 million (6.6m), 9.1% of revenue (7.6%)1)
  • Earnings per share (EPS) was EUR 0.01 (EUR 0.00)
  • Cash flow from operating activities before financial items and taxes was EUR 6.6 million (4.3m)1)   

1 F-Secure has adopted the new Leases standard (IFRS 16) on 1 January 2019 using the modified approach. Comparative information has not been restated. The impact of IFRS 16 on adjusted EBITDA is EUR +1.7 million for the second quarter and EUR +3.2 million for the first half. Impact on operative cash flow is EUR +1.5 million for the second quarter and EUR 3.0 million for the first half. For the full year 2019, the impact on adjusted EBITDA is estimated to be around EUR +6.7 million.

Figures in this report are unaudited. Figures in brackets refer to the corresponding period in the previous year, unless otherwise stated.


Outlook

Outlook for 2019 unchanged

The company's outlook for 2019 is unchanged:

  • Revenue from corporate security is expected to grow by over 30% compared to 2018
  • Revenue from consumer security is expected to stay approximately at the same level as in 2018
  • Adjusted EBITDA is expected to be above EUR 21 million including the impact of IFRS 16

Outlook for the strategy period 2018-2021 is unchanged

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

F-Secure’s revenue growth continued in all businesses during the second quarter. The total revenue increased by 25% to EUR 54.1 million, with revenue from corporate security increasing by 50% driven by both the contribution from the acquired MWR InfoSecurity as well as continuing organic growth. Consumer revenue grew by 3%. The profitability was according to our expectations.

Our endpoint security business continued to perform well. Renewal rates remained high and new sales improved from the previous year, supported by a large deal with a significant service provider who replaced a competing solution with our cloud based end point security. On the EDR front, our solution is still in its early days since entering the market late Q4 last year. We have made good progress in onboarding partners and expect EDR to play an important role in our portfolio as customers are increasingly lookingfor endpoint solutions where both preventive and detection capabilities are included.

Managed Detection and Response (MDR) solutions had good revenue growth in Q2. I find it encouraging that we are winning customers at very demanding verticals such as finance  and critical infrastructure for both of our MDR solutions, Countercept and RDS. Targeted attacks  are a major risk for increasing amount of businesses and we have a very strong offering for response and detecting stealth mode attacks. The market potential remains very attractive, while there is a lot of competition. Due to long sales cycles, we expect to see quarterly fluctuation in closing of new deals.

Cyber security consulting continued strong growth. I was particularly pleased with the performance in our largest markets, UK and Nordics. Many customers chose us for critical incident response assignments which is a great testimony to our know-how and reputation in this field. During the second half of the year, we will further integrate the consulting units of F-Secure and MWR to fully leverage the combined capabilities.

F-Secure’s consumer security business continued on a growth track. During the second quarter our unique operator channel performed well. One of the highlights was a new operator deal in North America as the customer selected F-Secure SENSE for their router security and also replaced competitor’s endpoint offering with F-Secure SAFE. Our latest consumer product announcement, Identity Protection, has been well perceived by the market, and we believe it complements our existing suite of consumer security solutions.

The MWR acquisition has proven to be the right strategic step for F-Secure. It complements our strategy with powerful detection and response technologies, gives us global reach in consulting practice, and has driven growth and scale across those strategic initiatives. In Q2 we reduced 10 million GBP from the maximum purchase price as the very ambitious earn-out milestones related to cyber security consulting were not reached.

During the first half, all of our businesses grew. We strive to support our customers in the fight against the most advanced attacks with our cyber security products and services.


Financial performance

EUR m4-6/20194-6/2018Change %1-6/20191-6/2018Change %1-12/2018
Revenue 54.143.425 %107.586.524 %190.7
  Consumer security24.023.43 %48.047.12 %94.9
  Corporate security30.120.050 %59.539.451 %95.9
Products18.015.119 %35.829.920 %63.8
Consulting12.14.9146 %23.79.5148 %32.0
Cost of revenue-12.5-7.859 %-25.1-15.166 %-39.4
Gross Margin41.635.617 %82.471.415 %151.4
Other operating income 1)0.50.5-2 %0.71.4-49 %2.3
Operating expenses 1)-37.3-33.412 %-73.3-66.111 %-136.2
  Sales & Marketing-26.5-23.214 %-50.6-43.317 %-90.7
  Research & Development-7.8-7.71 %-16.5-16.7-1 %-33.5
  Administration-3.0-2.520 %-6.2-6.03 %-11.9
Adjusted EBITDA 2)4.84)2.794 %9.84)6.652 %17.4
of revenue, %8.9 %6.3 % 9.1 %7.6 % 9.1 %
Adjustment to operating income9.1  9.1   
M&A expenses -0.6  -0.6 -3.6
EBITDA13.94)2.1574 %18.94)6.0213 %13.8
of revenue, %25.7 %4.9 % 17.6 %6.9 % 7.2 %
Depreciation & amortization-3.44)-1.5131 %-6.74)-3.0125 %-6.8
Impairment-6.0  -6.0   
PPA amortization-1.1-0.1 -2.3-0.2 -2.5
EBIT3.34)0.5564 %3.94)2.741 %4.6
of revenue, %6.1 %1.1 % 3.6 %3.2 % 2.4 %
        
Adjusted EBIT 2)1.44)1.121 %3.14)3.6-13 %10.6
of revenue, %2.5 %2.6 % 2.9 %4.2 % 5.6 %
        
Earnings per share, (EUR) 3)0.02-0.00 0.010.00 0.01
Deferred revenue   71.066.76%72.9
Cash flow from operations before financial items and taxes  6.94)    3.2  118 %  6.64)    4.3  52 %13.8
Cash and financial assets at fair value through P&L   25.579.8-68 %27.8
ROI, % 7.5%0.6% 4.5%10.3% 7.9%
Equity ratio, %    44.3%70.0% 42.7%
Gearing, %    30.0%-112.7% 13.9%
Personnel, end of period    1,7101,20142%1,666

1Excluding M&A related items, depreciation and amortization
2Adjustments are material items outside normal course of business associated with acquisitions, integration, gains or losses from sales of businesses and other items affecting comparability.  Reconciliation and a breakdown of adjusted costs is in note 7 of the Table Section of this report.
3Based on the weighted average number of outstanding shares during the period 157,650,239 (1-6/2019).
4IFRS 16 increased Adjusted EBITDA and EBITDA by EUR 1.7 million during Q2 and EUR 3.2 million during first half. Impact on adjusted EBIT and EBIT was EUR 0.1 million during Q2 and EUR 0.1 million during first half . Depreciation and amortization increased by EUR 1.6 million during Q2 and by EUR 3.1 million during first half. Positive impact on cash flow from operations before financial items and taxes was EUR 1.5 million during second quarter and EUR 3.0 million during first half.


Events after period-end

No material changes regarding the company’s business or financial position have materialized after the end of the quarter.

Webcast

A webcast for investors and analysts will be held in English at 13.30 EEST.

The material will be available at the company's website before the call begins: www.f-secure.com/investors

Additional information

This is a summary of F-Secure’s Half Year Report 2019. The full report is attached to this stock exchange release and it is also available on the company's website: www.f-secure.com/investors

Financial calendar

F-Secure Corporation will publish its interim reports during 2019 as follows:

  • Q3/2019: 30 October 2019

Contact information

Eriikka Söderström, CFO, F-Secure
+358 44 3734693

Henri Kiili, Investor Relations Manager, F-Secure
+358 40 840 5450
investor-relations@f-secure.com

Attachment

  • F-Secure Q2-2019 eng

© OMX, source OMX

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Financials (EUR)
Sales 2019 221 M
EBIT 2019 8,18 M
Net income 2019 4,26 M
Debt 2019 11,2 M
Yield 2019 -
P/E ratio 2019 86,5x
P/E ratio 2020 37,1x
EV / Sales2019 1,90x
EV / Sales2020 1,71x
Capitalization 409 M
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Number of Analysts 2
Average target price 3,45  €
Last Close Price 2,60  €
Spread / Highest target 54,1%
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NameTitle
Samu Konttinen President & Chief Executive Officer
Risto Kalevi Siilasmaa Chairman
Eriikka Söderström Chief Financial Officer
Jari Still Chief Information Officer & VP-Information
Mika Ståhlberg Chief Technology Officer
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