F-secure Oyj · OMXHEX:FSECURE
F-secure Oyj — Q1 2024 Earnings Presentation
32 slides from F-secure Oyj's earnings presentation, May 2024
Slide 1: F-Secure Investor Presentation May 2024
F-Secure Corporation Timo Laaksonen, President & CEO Sari Somerkallio, CFO Investor Presentation May 2024
Slide 2: F-Secure in 2023
F-Secure in 2023 Revenue by channel, %* Revenue by geography, %* 6% 19% 31% Nordic countries 25% Partner Rest of Europe channel North America Direct channel Rest of World 81% 38% 2
Slide 3: Our purpose, vision and mission
Our purpose We exist to make every digital moment more secure, for everyone Our vision To become the #1 security experience company in the world Our mission Continuously deliver brilliantly simple, frictionless security experiences to our customers and partners 3
Slide 4: What are the problems we solve?
What are the problems we solve? Consumers Partners How do we drive adoption? Can we create strategic value? Complex Confined Impersonal Tactical service Low corporate impact Poor time to value 4
Slide 5: Our #1 security experience vision
Our #1 security experience vision Consumer Partner Trusted companion Security business as-a-service Holistic Contextual & Business Flexibility Protection Personalized Outcomes Empowered Engagement 5
Slide 6: F-Secure consumer security portfolio
F-Secure consumer security portfolio Protecting your customers’ digital moments in a holistic way. Internet Privacy Browsing & Privacy Protection Security Phishing Protection Protection Trusted Device companion Identity Monitoring Protection & Breach alerts Identity Protection Family Password Rules
Slide 7: Comprehensive portfolio across platforms, devices & networks
Comprehensive portfolio across platforms, devices & networks All-in-one security and privacy app Embedded security SDK and API based security and privacy protection F-Secure Total capabilities AT&T Active Armor Fintech Carrier apps with mobile app Superapp router management Device Security Scam Prot
Slide 8: Our target partner channels
Our target partner channels Go-to-market and value proposition focus Focus growth areas Additional growth areas Communication Fintech & Router & WiFi Channel Tier 1s Insurance Banks Service Providers Superapps providers Value Differentiation vs. Increasing revenue & proposition competitors with uniq
Slide 9: Monthly, per user based subscription business model
Monthly, per user based subscription business model Security Suite Embedded Security F-Secure Total – F-Secure security assets embedded in partner Offering All-in-one security and privacy app applications, routers and networks as SDKs and/or APIs Tier 1s Tier 2+ F-Secure services and Low Medium to L
Slide 10: Expanding market reach
Expanding market reach 1 Billion+ Partner Business Addressable Consumers by 2026 Communication Service Providers Tier 1 Tier 2 + New Verticals Fintech and Banking and Insurtech Insurance Direct Business eCom AppStores 10
Slide 11: Journey to becoming the security experience leader
Journey to becoming the security experience leader 2023 2024 2025 2026 Total Agility No.1 Security Experience Tier 1 Partner Excellence Growth through Total and 2x Customer base with service Double-digit revenue growth Leader among Tier 1 partners replacing stand-alone products that talks to people
Slide 12: Consumer cyber security is a large, growing market
Consumer cyber security is a large, growing market Several market drivers accelerating growth Global cyber security market (EURbn)* 22-26E CAGR Increasing digitalization affects 10.3 6.8% consumer behavior 1.6 9.5% 7.9 Consumers’ increasing willingness 1.1 2.4 3.8% to pay is increasing 2.0 Cyb
Slide 13: Q1/2024: Revenue up by 30.8%, organic growth 3.2%
Q1/2024: Revenue up by 30.8%, organic growth 3.2% Currency neutral organic growth 3.8% Revenue by geography • Partner Channel: Revenue increased by 33.6% to EUR 29.4 million (EUR 22.0 million), organic growth EURm was 4.7%. Currency +30.8% Change % neutral % • Revenue increased in Japan, Singapore a
Slide 14: Q1/2024: Gross margin and adjusted EBITA development
Q1/2024: Gross margin and adjusted EBITA development Lower gross margin the main driver for lower profitability Gross margin Adjusted EBITA and adjusted EBITA margin EURm EURm 45,0 93,6% 20 36,7% 36,4% 40,0% 92,0% 89,4% 89,4% 34,9% 40,0 85,7% 90,0% 18 32,4% 35,0% 31,7% 33,0 16 35,0 31,4 30,0% 31,2 8
Slide 15: Towards medium-term financial targets 2026
Towards medium-term financial targets 2026 Key growth levers Evolving go-to-market 1. Total conversion 2. 3. Best partner experience channels and offering Net debt / adjusted After initial growth Dividend yield EBITDA ratio below Financial targets 2026 Revenue of more than investments, adjusted arou
Slide 16: Delivering sustainable security experiences
Delivering sustainable security experiences Our ESG Commitments 2024 sustainability priorities 1 Legislative compliance 2 Transparency and value to stakeholders 3 Talent development, retention and acquisition 4 DEI and Fellow wellbeing 16
Slide 17: Focus areas in 2024
Focus areas in 2024 A leading security experience Accelerate profitable Deliver on #1 Security Stronger focus on Partner Optimize Direct Business growth to fund further Experience vision on Business and Tier 1 revenue and profit growth investments product and service offering partnerships as a new f
Slide 18: Thank you!
Thank you! Next up: Half Year Financial Report: July 18, 2024 Silent period begins on June 18, 2024
Slide 19: (: F-Secure
(: F-Secure
Slide 20: Appendix: Q1 2024: Solid start to the year
Appendix: Q1 2024: Solid start to the year Interim Report 1 January–31 March 2024
Slide 21: Q1/2024: Solid start to the year
Q1/ 2024: Solid start to the year Market cautiously recovering Revenue growth 30.8%, thanks to Lookout Life acquisition – organic growth in Partner Business, strong renewal performance and increased ARPU in Direct Business. Gross margin burdened by some additional costs related to lost synergies pos
Slide 22: Q1/2024: Focus on Partner Business
Q1/2024: Focus on Partner Business Increase average Developing current offering Expand into new revenue per user (ARPU) and new products channels Strategic focus: Accelerate the roll-out Expand market coverage and Replicate our proven business of F-Secure Total the accessible market model Progress:
Slide 23: Scam Protection module launched
Scam Protection module launched Comprehensive set of scam protection capabilities SMS Scam Protection with AI Shopping Protection Banking Protection Browsing and Phishing Protection WiFi Protection Ad Blocker 23
Slide 24: F-Secure corporate culture – launched in March 2024
F-Secure corporate culture – launched in March 2024 The values of Fellowship we live by every day, in every interaction and every decision We exist to make every digital moment secure, for everyone. Our vision is to be the number one security experience company on earth. Keep I make a focus differen
Slide 25: Financials
Financials Sari Somerkallio, CFO F-Secure changed the calculation method for gross margin in its income statement as of 1 January 2024. Comparative figures for 2023 are also revised.
Slide 26: Q1 2024: Group revenue up by 30.8%
Q1 2024: Group revenue up by 30.8% Revenue growth attributable to the acquisition of Lookout Life consumer business Partner channel revenue Direct channel revenue Deferred revenue* EURm EURm EURm +9.0% +33.6% 27,9 30,1 25,6 29,4 +20.3% 28,5 23,4 22,8 7,4 21,2 5,8 6,9 6,6 6,8 6,4 6,4 6,7 3,8 6,0 24,5
Slide 27: Operating expenses in Q1 2024
Operating expenses in Q12024 OPEX* development Q1 EURm • R&D costs increased mainly as +4.7% OPEX, Lookout consumer security business % of revenue R&D expenses have been included. 18.5 • Sales and marketing costs increased 10% (11%) 15.8 also due to actions for stronger sales 3,8 operations and exce
Slide 28: Transitional services agreements ended with WithSecure
Transitional services agreements ended with WithSecure • Transitional services agreements (“TSA”) between F- 1-3/2023 1-3/24 1-3/24 1-12/2023 Secure and WithSecure terminated at the end of 2023. EURm Total1) Lookout TSA TSA TSA (WithSecure) • TSAs entered between F-Secure and Lookout Cost of revenue
Slide 29: Revenue increased by 30.8%, Opex efficiency improving
Revenue increased by 30.8%, Opex efficiency improving Revenue and cost components (MEUR), share of revenue +30.8% • Gross margin burdened by some additional costs related to lost 27.8 36.4 synergies post-TSA period. Cost of revenue 14,3% • Financial expenses in the first OPEX (incl. other operating
Slide 30: Q1 2024: Cash flow impacted by dividend payment
Q12024: Cash flow impacted by dividend payment Operating cash flow and cash conversion (QTD) 20,0 141,2% 160,0% • Cash flow from operations was EUR 18,0 7.9 million. 108,1% 16,0 110,0% • Cash conversion rate decreased to 82,5% 78,8% 63,3% 14,0 66,1% 13,2 63.3% (78.8%), following the first dividend p
Slide 31: Net debt to adjusted EBITDA above mid-term target level
Net debt to adjusted EBITDA above mid-term target level Net Debt / Net cash and Leverage1) Equity ratio, % 26,5% 325 5,0 3,6 3,6 3,7 3,5 4,0 275 11,7% 12,0% 9,3% 10,0% Leverage target: 2.5x 3,0 225 191,3 187,7 2,0 177,4 179,6 175 1,0 Q1/23 Q2/23 Q3/23 Q4/23 Q1/24 125 -0,6 0,0 -1,0 Earnings per share
Slide 32: (: F-Secure
(: F-Secure