F-secure Oyj · OMXHEX:FSECURE
F-secure Oyj — Q4 2022 Earnings Presentation
31 slides from F-secure Oyj's earnings presentation, December 2022
Slide 1: F-Secure Corporation Investor Presentation
F-SECURE CORPORATION INVESTOR PRESENTATION October–December 2022
Slide 2: Agenda
AGENDA 1. F-SECURE IN BRIEF 2. OPERATING ENVIROMENT AND BUSINESS MODEL 3. STRATEGY AND FINANCIAL TARGETS 4. OUTLOOK FOR 2022 5. SUMMARY: F-SECURE AS AN INVESTMENT 7. SHAREHOLDERS 7. APPENDIX
Slide 3: F-Secure: A Strong Consumer Focused Company
F-SECURE: A STRONG CONSUMER FOCUSED COMPANY • Finland headquartered and globally operating consumer cyber security company • Global market leader position in 106 MEUR Operates in over ~170 Service Provider providing security through revenue in 2021 100 countries partners Communication Service Provid
Slide 4: On the Road to Independence
ON THE ROAD TO INDEPENDENCE 2023 H2/2022 1st fiscal year as an independent company 1 JULY 2022 • Building up independent R&D Ramp-up of own business capabilities. Developing own security operations cloud platform and ramp-up own research roadmap First day as an independent • R&D TSAs planned to term
Slide 5: Consumer Security Is a Large, Growing Market Supported by Several Trends
CONSUMER SECURITY IS A LARGE, GROWING MARKET SUPPORTED BY SEVERAL TRENDS An increasing portion of time is spent online whether momentarily INCREASING DIGITALIZATION AFFECTS CONSUMER BEHAVIOR or hours of browsing, online gaming, streaming, or on hybrid work. CONSUMER’S INCREASING WILLINGNESS TO PAY C
Slide 6: All-in-One Integrated Security Experience
ALL-IN-ONE INTEGRATED SECURITY EXPERIENCE F-Secure TOTAL 21% Partner channel REVENUE BY CHANNEL* Direct channel CONSUMER VPN FOR IDENTITY MULTI-DEVICE CONNECTED HOME PRIVACY PROTECTION PROTECTION SECURITY (SAFE) SECURITY (SENSE) (FREEDOME) 79% Two primary sales channels 5% DIRECT PARTNER CHANNEL (~1
Slide 7: Go-to-Market Models with Different Earnings Logic
GO-TO-MARKET MODELS WITH DIFFERENT EARNINGS LOGIC Sales & Marketing Pricing Payment Deferred revenue B2B2C Global network of Partner F-Secure Partner ~170 channel Price Margin Monthly partners B2C E-Commerce F-Secure Price Upfront 7
Slide 8: Three Strategy Pillars for Profitable Growth
THREE STRATEGY PILLARS FOR PROFITABLE GROWTH Increase Average Developing current Expand into new Revenue Per User offering and new channels (ARPU) products Insurance F-Secure SAFE F-Secure SENSE Banking F-Secure TOTAL F-Secure Retail F-Secure FREEDOME F-Secure ID PROTECTION ID PROTECTION 8
Slide 9: Medium-Term Financial Targets (by 2025)
MEDIUM-TERM FINANCIAL TARGETS (BY 2025) Growth Profitability Dividend yield After initial growth F-Secure aims to pay around High single-digit organic investments, Adjusted EBITA or above 50% of net profit as revenue growth. margin of above 42%. dividend on annual basis. TARGET TO CONSISTENTLY OUTPE
Slide 10: Outlook for 2022
OUTLOOK FOR 2022 (UNCHANGED) REVENUE GROWTH “We expect F-Secure revenue to grow by 4−6% year-on-year.” PROFITABILITY “Due to necessary investments into establishing our independence and ensuring future growth, we will see lower profitability during the rest of the year compared to Q1/2022. Thus, we
Slide 11: Largest Shareholders and Split of Shareholding
LARGEST SHAREHOLDERS AND SPLIT OF SHAREHOLDING Shareholder Number of shares % of total shares Split of shareholding 1. Risto Siilasmaa 60,022,804 34.39% 2. Nordea Nordic Small Cap Fund 11,557,976 6.62% 16% 3. Mandatum Henkivakuutusosakeyhtiö 8,234,187 4.72% 1% 4. Keskinäinen Eläkevakuutusyhtiö Ilmar
Slide 12: F-Secure as an Investment
F-SECURE AS AN INVESTMENT CONSUMER CYBER SECURITY IS A LARGE AND GROWING MARKET 1 OPPORTUNITY GLOBAL LEADER IN COMMUNICATION SERVICE PROVIDER (“CSP”) 2 CHANNEL AND GROWING 3 REPLICATING CSP PROVEN BUSINESS MODEL IN NEW CHANNELS HIGHLY PROFITABLE SAAS BUSINESS MODEL, 4 OUTPERFORMING MARKET GROWTH AND
Slide 13: Q&A
Q&A 13
Slide 14: Appendix
Appendix 14
Slide 15: We Are Off to a Good Start
WE ARE OFF TO A GOOD START Q3 2022 Interim Report Timo Laaksonen, CEO Sari Somerkallio, CFO 31 October 2022
Slide 16: Highlights of Q3 2022
HIGHLIGHTS OF Q3 2022 • First quarter as an independent company commenced well in terms of both revenue and profitability development • Market environment turned more challenging and consumer sentiment slightly weaker – the cyber security space has proven to be resilient in economic downturns • Exec
Slide 17: Q3 2022: Good Performance in a More Challenging Market
Q3 2022: GOOD PERFORMANCE IN A MORE CHALLENGING MARKET Revenue breakdown Q3 2022 • Revenue increased by 5.3% to EUR 27.9 million, driven by good 21% demand for our strategic growth products, F-Secure TOTAL, SENSE and ID Protection Partner channel • Both Partner and Direct Channel contributed to the
Slide 18: On the Road to Independence
ON THE ROAD TO INDEPENDENCE 2023 H2/2022 1st fiscal year as an independent company 1 JULY 2022 • Building up independent R&D Ramp-up of own business capabilities. Developing own security operations cloud platform and ramp-up own research roadmap First day as an independent • R&D TSAs planned to term
Slide 19: Our Strategy Is Focused on Profitable Growth
OUR STRATEGY IS FOCUSED ON PROFITABLE GROWTH INCREASE AVERAGE DEVELOPING CURRENT EXPAND INTO NEW REVENUE PER USER OFFERING AND NEW CHANNELS (ARPU) PRODUCTS STRATEGIC FOCUS: Accelerate the roll-out of Expand market coverage and Replicate our proven business F-Secure TOTAL the accessible market model
Slide 20: Financials
FINANCIALS Q3/2022 Financial review Sari Somerkallio, CFO
Slide 21: Revenue Up by 5.3% – Both Channels Contributed
REVENUE UP BY 5.3% – BOTH CHANNELS CONTRIBUTED Partner channel revenue Direct channel revenue Deferred revenue EURm EURm EURm +5.5% +4.2% 22.1 20.2 20.6 19.7 19.8 19.0 3.2 3.3 21.7 21.7 3.1 3.4 3.1 21.6 +4.7% 21.0 16.6 17.0 17.3 16.4 5.7 5.7 5.8 15.9 5.5 5.5 Q3/21 Q4/21 Q1/22 Q2/22 Q3/22 Q3/21 Q4/21
Slide 22: Q3: Revenue Grew Especially in North America and Nordic Countries
Q3: REVENUE GREW ESPECIALLY IN NORTH AMERICA AND NORDIC COUNTRIES Revenue by geography EURm • Partner Channel: revenue increased +5.3% across several regions 27.9 • Sales increased especially in North 26.5 +24.8% 1.6 America and Nordic countries. Growth 1.3 in North America mainly attributable to 3.
Slide 23: Operating Expenses in Q3
OPERATING EXPENSES IN Q3 OPEX development Q3 EURm • Administration costs increased due to +19.7% the ongoing ramp-up process as we OPEX, are strengthening and developing 14.5 % of revenue our internal operations after the 12.1 demerger. 4.9 18% 1.4 • Figures for previous period are not fully compara
Slide 24: Transitional Services Agreements Leading to Independent F-Secure
TRANSITIONAL SERVICES AGREEMENTS LEADING TO INDEPENDENT F-SECURE • In connection with the demerger from WithSecure, F-Secure and WithSecure entered into transitional EURm 7-9/2022 7-9/2022 services agreements (“TSA”) to support the Total TSA continuous operations of F-Secure. Cost of revenue 2.2 1.0
Slide 25: Adjusted EBITA and Gross Margin Development
ADJUSTED EBITA AND GROSS MARGIN DEVELOPMENT Gross margin Adjusted EBITA and adjusted EBITA margin EURm EURm 40.0 92.2% 92.0% 20 46.4% 46.3% 50.0% 91.8% 90.8% 90.5% 35.0 90.0% 18 41.5% 40.8% 45.0% 16 36.7% 40.0% 30.0 80.0% 24.6 25.2 24.9 25.7 14 12.3 12.7 35.0% 24.3 25.0 12 11.2 11.4 30.0% 70.0% 10.1
Slide 26: Balance Sheet Overview
BALANCE SHEET OVERVIEW Assets at 30.9.2022 Equity and liabilities at 30.9.2022 EURm EURm • Solid cash position 56.0 56.0 • Receivables and interest-bearing 1.4 3.9 liabilities due to forming the legal standalone subsidiary structure. F- 9.9 18.2 Secure payables totaled in EUR 5.7 million and the rec
Slide 27: F-Secure Q1-Q3/2022 in Brief
F-SECURE Q1-Q3/2022 IN BRIEF Revenue by geography Revenue by channel Adjusted EBITA EURm EURm EURm +4.6% +4.6% -5.0% 36.0 34.2 82.8 79.2 82.8 45.4% 79.2 41.3% 4.4 +15.9% 3.8 12.5 17.2 +4.0% 10.7 16.6 +16.6% 12.3 11.4 37.2 36.4 -2.0% 11.8 10.1 +4.7% 62.6 65.5 27.5 29.4 +7.2% 12.7 11.8 Q1-Q3 2021 Q1-Q
Slide 28: Outlook for 2022
OUTLOOK FOR 2022 (UNCHANGED) REVENUE GROWTH “We expect F-Secure revenue to grow by 4−6% year-on-year.” PROFITABILITY “Due to necessary investments into establishing our independence and ensuring future growth, we will see lower profitability during the rest of the year compared to Q1/2022. Thus, we
Slide 29: Medium-Term Financial Targets (by 2025)
MEDIUM-TERM FINANCIAL TARGETS (BY 2025) (UNCHANGED) Growth Profitability Dividend yield High single-digit organic After initial growth F-Secure aims to pay around or revenue growth. investments, adjusted EBITA above 50% of net profit as margin of above 42%. dividend on annual basis. TARGET TO CONSIS
Slide 30: Q&A
Q&A
Slide 31: F-Secure
—_ od F-Secure.