Solid growth in corporate security products
Highlights of July-September (Q3)
- Revenue increased by 8% to
EUR 58.7 million (54.5m) - Revenue from corporate security products increased by 13% to
EUR 21.0 million (18.5m) - Revenue from cyber security consulting increased by 2% to
EUR 11.2 million (10.9m) - Revenue from consumer security increased by 6% to
EUR 26.5 million (25.0m) - Adjusted EBITDA was
EUR 11.0 million (11.0m), 19% of revenue (20%) - Earnings per share (EPS) was
EUR 0.04 (EUR 0.03 ) - Cash flow from operating activities before financial items and taxes was
EUR 3.9 million (7.9m)
Highlights of January- September
- Revenue increased by 8% to
EUR 174.6 million (162.3m) - Revenue from corporate security products increased by 9% to
EUR 60.7 million (55.5m) - Revenue from cyber security consulting increased by 7% to
EUR 34.8 million (32.6m) - Revenue from consumer security increased by 7% to
EUR 79.2 million (74.2m) - Adjusted EBITDA was
EUR 28.8 million (28.4m), 16% of revenue (18%) - Strategic reviews resulted in items affecting comparability (IAC) of
EUR 2.7 million - Earnings per share (EPS) was
EUR 0.07 (EUR 0.06 ) - Cash flow from operating activities before financial items and taxes was
EUR 23.1 million (28.9m)
Figures in this report are unaudited. Figures in brackets refer to the corresponding period in the previous year, unless otherwise stated. Percentages and figures presented herein may include rounding differences and therefore may not add up precisely to the totals presented.
Outlook (unchanged)
F-Secure’s financial outlook for 2021 is:
- Revenue from corporate security products is expected to grow at a high single-digit rate.
- Revenue from cyber security consulting is expected to grow but uncertainty remains due to the COVID-19 pandemic.
- Revenue from consumer security is expected to grow approximately at the same rate as in 2020.
- Adjusted EBITDA is expected to remain approximately at the previous year's level (
EUR 35.7 million ).
The COVID-19 pandemic continues to impact the predictability of cyber security consulting and can also impact the new sales of software solutions. The related risks are described in Interim Report 1 January -
Financial Targets
- Revenue from corporate security products to grow at a double-digit rate
- Revenue from cyber security consulting to grow at a high single-digit rate
- Revenue from consumer security to grow at a mid-single-digit rate
- Adjusted EBITDA margin improving towards 20%
F-Secure’s financial targets are mid-term ambitions and should not be viewed as an outlook for the ongoing fiscal year 2021.
CEO
F-Secure’s revenue grew by 8% which combined with our scalable business model resulted in adjusted EBITDA margin of 19% during the third quarter.
The revenue growth from corporate security products accelerated to 13% year-on-year. In business security software demand for our cloud-native solutions translated into strong order growth for EDR (Endpoint Detection and Response) and Cloud Protection for Salesforce. In Managed Detection and Response (MDR) our focus on key verticals resulted in deals with several new customers from manufacturing, technology and financial service industries. While our MDR business is still in an investment phase, our position as the trusted partner to solve complex cyber security challenges combined with the increasing market demand presents a great opportunity.
The cyber security consulting revenue grew by 2% year-on-year. Regional variations in business performance continued, as COVID-19 related restrictions still had a negative impact during Q3 in some markets. I was pleased to see good demand for subscription-based services where customers appreciate our outcome-based approach. Additionally, customers’ technology-driven business strategies create demand for high-value services that require deep expertise from cloud environments. Attracting and developing talent with the right skillsets is the key to success in this business.
Consumer security continued on a growth path with the Q3 revenue growing by 6% year-on-year which was driven by the sales of our whole portfolio, across the service provider channel. Device activations increased and renewal performance was solid. In addition, our partnership approach resulted in some existing service providers signing new deals to add more
At the Capital Markets Day, we announced the new strategy that is based on having three growing business areas brought together by technology. In September we started a strategic review that aims at finding a company structure that enables optimal capital allocation for both corporate and consumer security businesses and maximizes shareholder value in the long term. This evaluation will be completed latest by the end of H1/2022. Based on the current progress we continue to see the possible listing of consumer security business as one alternative.
Financial performance
EUR m | 7-9/2021 | 7-9/2020 | Change % | 1-9/2021 | 1-9/2020 | Change % | 1-12/2020 |
Revenue | 58.7 | 54.5 | 8 % | 174.6 | 162.3 | 8 % | 220.2 |
Consumer security | 26.5 | 25.0 | 6 % | 79.2 | 74.2 | 7 % | 100.1 |
Corporate security | 32.1 | 29.5 | 9 % | 95.5 | 88.1 | 8 % | 120.1 |
Products | 21.0 | 18.5 | 13 % | 60.7 | 55.5 | 9 % | 74.3 |
Consulting | 11.2 | 10.9 | 2 % | 34.8 | 32.6 | 7 % | 45.8 |
Cost of revenue | -12.4 | -11.8 | 5 % | -36.8 | -35.8 | 3 % | -48.0 |
Gross Margin | 46.3 | 42.7 | 8 % | 137.8 | 126.5 | 9 % | 172.2 |
of revenue, % | 78.9 % | 78.3 % |
| 78.9 % | 77.9 % |
| 78.2 % |
Other operating income | 0.4 | 0.4 | 8 % | 1.3 | 1.7 | -19 % | 2.1 |
Operating expenses 1) | -35.7 | -32.0 | 11 % | -110.4 | -99.6 | 11 % | -138.5 |
Sales & Marketing | -22.4 | -20.9 | 7 % | -68.8 | -64.7 | 6 % | -89.4 |
Research & Development | -9.8 | -8.0 | 22 % | -29.6 | -25.5 | 16 % | -35.9 |
Administration | -3.5 | -3.1 | 11 % | -11.9 | -9.3 | 28 % | -13.2 |
Adjusted EBITDA 2) | 11.0 | 11.0 | 0 % | 28.8 | 28.4 | 1 % | 35.7 |
of revenue, % | 18.8 % | 20.2 % |
| 16.5 % | 17.5 % |
| 16.2 % |
Items affecting comparability (IAC) 2) | -0.4 |
|
| -2.7 | 0.4 |
|
|
EBITDA | 10.6 | 11.0 | -4 % | 26.1 | 28.8 | -10 % | 35.7 |
of revenue, % | 18.1 % | 20.2 % |
| 14.9 % | 17.8 % |
| 16.2 % |
Depreciation & amortization | -2.7 | -3.1 | -11 % | -8.2 | -9.6 | -14 % | -12.6 |
Impairment | -0.3 |
|
| -0.3 |
| -0.3 | |
PPA amortization | -0.7 | -0.7 | -8 % | -2.1 | -2.4 | -11 % | -3.2 |
EBIT | 7.2 | 6.9 | 4 % | 15.7 | 16.5 | -5 % | 19.7 |
of revenue, % | 12.3 % | 12.7 % |
| 9.0 % | 10.2 % |
| 8.9 % |
|
|
|
|
|
|
|
|
Adjusted EBIT 2) | 8.3 | 7.7 | 8 % | 20.6 | 18.6 | 11 % | 22.9 |
of revenue, % | 14.1 % | 14.0 % |
| 11.8 % | 11.4 % |
| 10.4 % |
|
|
|
|
|
|
|
|
Earnings per share, (EUR) 3) | 0.04 | 0.03 | 10 % | 0.07 | 0.06 | 16 % | 0.08 |
Deferred revenue |
|
|
| 81.5 | 72.0 | 13 % | 81.0 |
Cash flow from operations before financial items and taxes | 3.9 | 7.9 | -51 % | 23.1 | 28.9 | -20 % | 48.3 |
Cash and financial assets at fair value through P&L |
|
|
| 43.7 | 42.8 | 2 % | 51.4 |
ROI, % | 24.2 % | 24.2 % | 0 % | 17.9 % | 20.3 % | -12 % | 18.5 % |
Equity ratio, % |
|
|
| 61.2 % | 49.2 % | 24 % | 52.5 % |
Gearing, % |
|
|
| -13.8 % | 8.4 % | -265 % | -14.1 % |
Personnel, end of period |
|
|
| 1,689 | 1,693 | 0 % | 1,678 |
- Excluding Items Affecting Comparability (IAC) and depreciation and amortization
- Adjustments are material items outside normal course of business associated with acquisitions, integration, restructuring, gains or losses from sales of businesses and other items affecting comparability. Reconciliation and a breakdown of adjusted costs is in note 5 of the Table Section of the report.
- Based on the weighted average number of outstanding shares during the period 158,342,807 (1-9/2021).
Events after period-end
No material changes regarding the company’s business or financial position have materialized after the end of the quarter.
Webcast
F-Secure’s CEO,
The presentation material and the webcast recording will be available on the company’s website.
Additional information
This is a summary of F-Secure’s Interim Report 1 January -
Financial calendar
Contact information
+358 40 8405450
investor-relations@f-secure.com
Attachment
- F-Secure_Q3-2021_eng_FINAL
© OMX, source