2012-07-25 08:00:00 CEST
2012-07-25 08:00:05 CEST
REGULATED INFORMATION
F-Secure Oyj - Interim report (Q1 and Q3)
F-Secure Corporation-Interim Report January 1-June 30, 2012
July 25, 2012 at 9.00
F-Secure Corporation-Interim Report January 1-June 30, 2012
Solid revenue growth continued driven by the operator channel,
good Internet security sales, profitability satisfactory
Highlights in Q2
- Total revenues grew by 12% reaching 39.6 million (Q2 2011: 35.3m).
- Revenue in the operator channel grew by 20%, reaching 24.4 million (20.3m).
Revenue growth was driven by healthy Internet Security sales and supported by
Content Cloud subscriber sales.
- EBIT was 5.8 million representing 15% of revenue (4.6m, 13% of revenue).
- Earnings per share was 0.03 (0.02).
- Cash flow from operations was 6.7 million positive (0.8m).
Outlook for 2012 - the management's estimation for the year remains unchanged:
- Annual revenue growth is expected to be between 5% and 10% and EBIT is
expected to be around 15% of revenues.
(This report is unaudited. Unless otherwise stated the comparisons refer to the
corresponding period a year ago. The currency is euro. The Content Cloud
business is included in the Operator channel figures.)
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Key figures 2012 2011 Change 2012 2011 Change 2011
(Eur Million) 4-6 4-6 % 1-6 1-6 % 12m
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Revenues 39.6 35.3 +12% 77.9 69.4 +12% 146.0
Operating profit 5.8 4.6 +26% 11.2 10.1 +11% 23.6
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% of revenues 15% 13% 14% 15% 16%
Profit before taxes 5.7 4.6 +24% 10.9 9.9 +10% 23.5
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Earnings per share (Eur) 0.03 0.02 0.05 0.04 0.11
At the end of period: 38.0 36.8 38.0 36.8 38.3
Deferred revenues
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Equity ratio, % 72% 68% 72% 68% 68%
Debt-to-equity ratio, % -43% -48% -43% -48% -47%
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Personnel 990 873 990 873 942
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President and CEO Christian Fredrikson:"The second quarter was financially satisfactory. A total revenue growth of 12%
was driven by good performance in the operator channel, where a revenue growth
of 20% was driven by robust Internet security sales supported by content cloud
subscription sales.
Operators' interest in new content cloud services has remained at high level.
However, due to global financial uncertainty and some tardiness in contract
negotiations, the revenue growth is delayed. On the other hand, our entry into
the Latin American market with Internet security sales has progressed well, and
we are now opening two sales offices in Chile and Colombia.
While this year's growth and profitability expectations are not satisfactory to
us due to delays in the content cloud business and investments in new services,
the long-term opportunities seem good in both Internet security and content
cloud businesses. We are looking for ways to improve our performance to meet
our long-term financial targets. As of July 1, our new organization structure
aims to improve our time-to-market with customer and market-centricity, to
support innovativeness and to better execute our strategy. We believe that the
new organization structure will support improvement of our operational
efficiency and our ability to utilize new business opportunities in the
future."
F-Secure business during January-June 2012
Total revenues for January-June 2012 were 77.9 million, representing a growth
of 12% (69.4m, 9%). Revenue growth through the operator channel remained solid
with a growth of 20% from the previous year reaching revenues of 47 million
(39m). Revenues through the other channels grew by 2% totaling 30.9 million
(30.4m). EBIT was 11.2 million (10.1m), representing 14% of revenues (15%).
Earnings per share were EUR 0.05 (EUR 0.04). Cash flow from operations was 14.3
million positive (7.9m positive). Deferred revenues were 38.0 million at the
end of June (36.8m) due to good license sales.
Total fixed costs were 63.6 million (56.3m), 13% higher than in the previous
year. The cost increases were allocated to geographic expansion in Latin
America and in R&D to increase the competitiveness of security and Content
Cloud solutions. The cost level was also affected by increased depreciations
from past capitalized expenses (R&D activations, software, and hardware); 1H12
3.8m (1H11 3.0m) F-Secure also capitalized the development costs of Content
Cloud and platform development, totaling 3.6m (2.6m). During Q2, a write-off of
0.8m related to an obsolete sales tool was made. The Company has changed its
vacation accrual accounting due to operational reasons, which balances costs
between Q2 and Q3 by decreasing Q2 costs and increasing Q3 costs by
approximately 400k.
At the end of June, the geographical breakdown of revenues was as follows:
Finland and Scandinavia 31% (33%), Rest of Europe 45% (45%), North America 10%
(10%) and Rest of the World 14% (12%).
Operator channel and its performance in Q2
The Operator channel, which includes Internet service providers, mobile
operators and cable operators, is the main channel through which F-Secure
services are delivered. F-Secure has more than 200 partners in over 40
countries with an addressable market of over 250 million fixed and mobile
broadband customers. The total number of F-Secure's operator partners is
significantly larger than that of any other security service vendor.
F-Secure provides, through Operators, security and Content Cloud services that
are easy and intuitive to use for mainstream consumers. This channel utilizes
Operators' presence and brand to reach millions of consumers in a cost
efficient and scalable way. F-Secure provides its Operator partners with
services that enable them to compete with other Internet players. By selling
and offering security and Content Cloud services, the Operator can improve its
ARPU (average revenue per user) and margins and reduce churn.
F-Secure currently generates a majority of its revenues from the Security as a
Service business where Operators sell security service subscriptions to protect
their customers against Internet threats. Revenue growth in this area has been
driven by increasing security subscriber numbers within the existing and new
operator partner customer base. This has been supported by the growth of fixed
and mobile broadband connections, natural demand for security services as well
as relatively low take-up rates. Internet security services for smartphones and
tablet devices currently generate a small portion of F-Secure and market wide
volumes. The mobile security landscape continues to change due to growing sales
of smartphones and tablets.
Content Cloud services, for example cloud-based storage, sharing and
synchronization, are expected to become a major business opportunity for the
software industry. The use of social media is increasing and people seek
services for sharing, storing and organizing their personal data. In the
future, nearly every device that creates or stores data, including desktop and
laptop computers, tablets, smartphones and digital cameras, will be backed up
over the Internet. The overall interest in Content Cloud services among
Operators is prominent as they have realized the business opportunity. To
compete with other Internet players, Operators are looking for services that
match the demand. Operators' advantage is their ability to manage the
continuously diverging multi-device, multi-OS environment. Also, they are able
to bring services to the masses and provide support for these services.
F-Secure's entry into Content Cloud services has strengthened the Company's
position as a strategic partner to the Operators. Overall interest in the
Content Cloud business among Operators is high. Currently, F-Secure has tens of
Operators that are offering Content Cloud services, mostly standard on-line
backup. In addition, with regard to more advanced cloud services like file
synchronization and sharing, F-Secure has several prospects in the pre-sales
phase. This business model is evolving. Usually the Operator offers limited
capacity for free to the end user and charges for premium services. F-Secure
charges the Operator a per-user fee for subscribers to the services. In
addition to subscriber based revenues, additional revenue streams originate
from optional features and functionalities, capacity usage, project deliveries
and related customizations. F-Secure's revenues from Content Cloud subscriber
services is at a relatively low level, but the management expects revenues to
gradually increase as a growing number of operators will offer Content Cloud
services to their customers together with increasing take-up rates.
F-Secure has increased its investments, mostly in the Content Cloud business
but also in security services. In addition to new mainstream operating systems,
such as Android, iOS and Windows, the Company is investing in platform
development. These investments ensure the scalability and competiveness of
these services and allow Operators to offer F-Secure services, both PC and
mobile, to a wide subscriber base.
The content cloud business opportunity is attractive in the longer term. The
overall interest in these services among operators has remained at a high
level, and there are several prospects in the pre-sales phase. However,
financial uncertainty and some tardiness in contract negotiations have delayed
revenues. The content cloud delivery with one of Europe's major operators,
signed in the first quarter, progresses as expected. The service is expected to
be publicly launched during the latter half of 2012. Q2 financials include some
revenue recognition from this project. The Company's co-operation with AT&T is
working well, although the content cloud service launch has not yet taken
place. The subscriber based revenues, like the initial commitment from AT&T and
back-up services, supported the revenue growth while project revenues were at
lower level than year ago.
During the quarter, Internet security sales performed very well in several
European countries and in Latin America, showing robust, double-digit revenue
growth. In Latin America, F-Secure is now opening two new sales offices, Chile
and Colombia, to take advantage of the rapidly growing business opportunity and
to support Telefonica partnership outside Brazil. In Europe, F-Secure signed
new operator partnerships with some mid-sized operators (for example, VOO -
Belgium, Primacom - Germany) and also expanded the partnership with KPN
(Netherlands) to deliver mobile security in addition to PC security services.
In May, F-Secure hosted the annual conference called Species for its operator
partners. This year, the conference was held in Milan and approximately 60
operator partners from 25 different countries participated in the conference.
The main objective of Species is to share best practices in selling and
promoting F-Secure Value Added Services, as well as to enable networking among
operator partners.
In the second quarter of 2012, sales through operator business partners was
24.4 million (20.3m), currently representing 62% of F-Secure's total revenues
(58%). Revenue growth was 20% compared to the corresponding quarter in 2011 and
8% to the previous quarter.
Other channels in Q2
Other channels consist mainly of traditional license sales to consumers through
eStore and retail, i.e. new licenses and renewals of Internet security and
online backup for PCs and mobile devices. The other channels business also
includes a wide range of Internet security services to corporate customers
through the global reseller network. Sales in traditional channels continued
slightly better than anticipated; especially eStore business grew well.
Customer satisfaction in security services continued at a high level, which was
visible in healthy license renewal sales.
During the second quarter, revenues by other channels remained solid reaching
15.2 million (15m). These other channels represented 38% of F-Secure's total
revenues (42%).
Products, services and technologies
F-Secure develops and sells Internet security and Content Cloud services that
support personal computers, servers and an increasing set of major smartphone
and tablet operating systems. Services include a wide range of Internet
security products like anti-virus, anti-theft, browsing protection and parental
control as well as Content Cloud services like online backup, synching and
sharing.
F-Secure is investing further in the Content Cloud business and in security
services. In addition to mainstream operating systems, such as Android, iOS and
Windows, the Company is investing in platform development. These investments
ensure the scalability and competiveness of services and allow Operators to
offer F-Secure services, both PC and mobile, to a wide subscriber base.
For the past few years, cloud computing has been at the center of the company's
technology strategy and choices. F-Secure uses the cloud for two purposes: for
Real-time Protection Network and for Content Cloud. Real-time Protection
Network moves certain processing and memory intensive functions from the
end-user device to the cloud, making the client software one of the fastest in
the industry. Furthermore, by harnessing the collective intelligence of client
systems, the real-time protection network is able to detect and react to new
emerging threats significantly faster, and to provide protection to different
device categories, such as smartphones. This technology provides reputations of
files, sites and URLs and is widely utilized in F-Secure solutions.
F-Secure has made significant investments in Content Cloud technology.
F-Secure's carrier-grade cloud storage platform gives F-Secure the scalability
and flexibility to tackle even the most complex requirements of the largest
operators in the world, while at the same time making small deployments
feasible to enable new solutions to be trialed in a fast and incremental
manner.
The combination of Internet security and Content Cloud-based technologies will
in the future allow F-Secure to create new and innovative solutions for
personal computers, smartphones and other devices.
F-Secure puts emphasis on user experience design when developing services. User
experience designers, marketers and developers utilize consumer research, focus
groups and usability tests to explore consumer needs and validate new product
and service prototypes with consumers, thereby ensuring that they are appealing
and usable when introduced to the public. User experience combined with
technical performance, is crucial for the commercial success of solutions and
services.
During the January-June 2012 the key product announcements were as follows:
In May, F-Secure released an updated version of its security-as-a-service
solution F-Secure Protection Service for Business, which now includes
protection for smartphones and tablets. Businesses can now have all of their
devices, including smartphones and tablets, protected with a single service
solution. The release is a solution for today's workplace where mobile devices
are increasingly used to access e-mail and other business-sensitive
information. F-Secure's Protection Service for Business provides protection
against malware specifically designed for smartphones, for example billing
scams or spy-tools that steal contacts for spam lists. F-Secure protection
tracks lost devices, giving business the power to remotely lock the device or
delete all confidential information.
In April, F-Secure introduced the Email and Server Security solution for
businesses. The e-mail and server protection now includes F-Secure DeepGuard,
which is based on advanced behavioral analysis and cloud-based white lists and
black lists. The solution also includes F-Secure's other award-winning
protection technologies, for example Browsing Protection with web site
reputation rating and Exploit Shield. F-Secure's Email and Server Security
solution offers the same protection for both physical and virtual servers. The
solution is compatible with Citrix terminal solutions including the latest
XenApp 6.5.
In March, F-Secure introduced Safe Infinity, which is offered through operator
partners. F-Secure Safe Infinity safeguards irreplaceable content while
enabling a secure online life. Safe Infinity covers all the functionalities
available from F-Secure's Internet security service such as anti-virus,
firewall, spam protection and parental control as well as backup and restore
functionality via the cloud.
In March, F-Secure launched Safe Anywhere, a unique offering which allows
consumers to obtain full protection for their computers, smartphones and
tablets in a single service through their local operators. Safe Anywhere
includes F-Secure's protection from viruses, spam, phishing and other kinds of
malware and cyber attacks. F-Secure Safe Anywhere combines F-Secure Protection
Service for Consumers and F-Secure Mobile Security. Safe Anywhere supports PCs,
Macs and mobile devices running Android, Blackberry, iOS and Symbian.
In February, F-Secure introduced its entry into the Content Cloud space:
F-Secure Content Anywhere. F-Secure Content Anywhere synchronizes a user's
content in the cloud, making it accessible on any device including PC's,
smartphones, tablets and connected digital TVs, anywhere and anytime.
Consumers' ease of use is paramount when accessing their content from more than
one device and therefore the user interface will be uniform across all
connected devices. Operators will be able to offer a safe personal cloud to
their customers to save, synchronize and share their digital content.
Awards
F-Secure's products and services succeeded well in tests run by various test
reviewers. In April, F-Secure Internet Security 2012 received the "AV-TEST
Certified" seal for home user products and F-Secure Client Security received
the "AV-TEST Approved Corporate Endpoint Protection" award for business
products. In April, F-Secure Anti-Virus 2012 received an Advanced+ award in On
Demand Detection of Malicious Software (AV Comparatives, March 2012). F-Secure
also got excellent results in AV-TEST's Malware Protection for Android -test
run in March 2012. F-Secure Client Security received the AV-TEST Best
Protection 2011 award in the corporate product category in January 2012.
F-Secure Internet Security 2012 received the AV-Comparatives Top Rated award in
January 2012.
Market situation
During the quarter the Internet security space experienced no significant
changes in the competitive landscape or in pricing levels. Usual signs of price
competition are evident in some countries in the security market, especially in
the traditional license business. Commercial interest in the Content Cloud
business is picking up with the introduction of new cloud services to the
market. Many of F-Secure's traditional competitors are also entering the
Content Cloud business.
F-Secure's competitive position in the Operator channel has remained strong.
The growth of fixed and mobile broadband access supports the position of
Operators in providing Internet security and Content Cloud services.
Personnel and organization
F-Secure's personnel totaled 990 at the end of Q2 (873). In the second quarter,
the number of personnel has continued to increase especially in respect to
Content Cloud business.
F-Secure has revised its organizational structure as of July 1, 2012. With this
organizational change, F-Secure aims to improve its operational efficiency as
well as time-to-market and market centricity. The main sales channels remain
the same; operator channel with Internet security and Content Cloud services,
and other channels with traditional license sales to businesses and consumers.
Currently, the Leadership Team consists of the following persons: Christian
Fredrikson (President and CEO and Content Cloud Business (acting role)), Ari
Alakiuttu (Human Resources & Facilities), Samu Konttinen (Customer and Market
Operations), Maria Nordgren (Consumer Security Business), Pirkka Palomäki
(Chief Strategy Office), Jari Still (R&D Operations), Pekka Usva (Corporate
Security Business) and Taneli Virtanen (Chief Financial Officer).
Financing and capital structure
F-Secure's financial position remained solid. F-Secure's equity ratio at the
end of June was 72% (68%) and gearing ratio was 43% negative (48% negative).
Cash flow from operations for January-June was 14.3 million positive (7.9m
positive). For the first six months of 2012 the net financial income was
slightly negative 0.3m, impacted by low interest income and exchange rates
losses (negative 0.3m). Dividends of 9.3m were paid in April.
The Company's cash position has developed according to the longer term
efficient capital management objectives. The market value on June 30, 2012 of
the liquid assets of F-Secure was 25.3 million (23.5m). Changes in USD and JPY
exchange rates had a slight positive impact on profitability.
Capital expenditure
F-Secure's capital expenditure for January-June was 6.4 million (9.2m),
consisting mainly of IT hardware and software as well as capitalization of
development expenses of 3.6m (2.6m).
Capital management and own shares
The objective of F-Secure's capital management is to achieve an efficient
capital structure that ensures the functioning of business operations and
promotes the increase of shareholder value.
Currently, the total number of own shares held at the end of June 2012 was
3,732,390 shares, corresponding to approximately 2.4% of the Company's shares
and voting rights. The own shares will be purchased to be used as part of the
incentive compensation plan, to improve the Company's financial structure, to
be used for the purpose for making acquisitions or implementing other
arrangements related to the Company's business, or otherwise assigning or
cancelling the shares.
In January 2012, the company assigned a total of 274,923 shares to the 21
participants of the
F-Secure share-based incentive program as a reward payment.
Shares, shareholders' equity and option programs
During the second quarter, there were no shares subscribed with options.
The total number of Company shares is currently 158,798,739. The corresponding
number of shares diluted is 160,940,348 including all stock option programs.
The Company's registered shareholders' equity is EUR 1,551,311.18. More
information on the stock option programs and share-based incentive program is
available on the Company's Investors web pages.
Corporate Governance
F-Secure complies with the Corporate Governance recommendations for public
listed companies published by the Securities Market Association, a body
established by the Confederation of Finnish Industries EK, the Central Chamber
of Commerce and NASDAQ OMX Helsinki Ltd., as explained on F-Secure's web pages.
F-Secure published its corporate governance statement for 2011 in the annual
report and on the Company website in March 2012.
Risks and uncertainties
F-Secure has not seen material changes in risks and uncertainties during the
reporting period. Uncertainty in the economic environment may impact on the
growth of broadband connections and on Operators' willingness to invest in new
services and may also create pricing pressure. These may have negative impact
on F-Secure's security and Content Cloud sales. The Company continues to
monitor closely the development in the economic and financial markets.
F-Secure's risks and uncertainties are related to, among other things, the
competitiveness of F-Secure's product portfolio, competitive dynamics in the
industry, pricing models (e.g. free services, cost of Content Cloud services),
impact of changes in technology, timely and successful commercialization of
complex technologies and new products and solutions, the ability to protect own
intellectual property (IPR) in F-Secure's solutions as well as the use of third
party technologies on reasonable commercial terms, subcontracting
relationships, regional development in new growth markets, sustainability of
partner relationships, compromising stored personal data, service quality
related penalties, risk exposure from increasing contractual liability
requirements and forming of the new business areas.
Due to the longevity and complexity of project deliveries in the Content Cloud
business, project completion timelines and related revenues are more
unpredictable by nature than in the traditional security services business.
This may cause risks for delivery delay penalties and may cause more
variability in revenue forecasts.
Events after period-end
No material changes regarding the Company's business or financial position have
materialized after the end of June 2012.
Market view
The long term market opportunities are attractive for F-Secure. The growth of
Internet users and Internet connected devices will drive demand for security
and Content Cloud services.
The number of Internet users is growing and has passed 2 billion. The global
Internet penetration has kept growing and is now over 30%; in Asia 24%, in
Europe close to 60%, and in North America close to 80% (source: Internet World
Stats, U.S. Census Bureau, estimated in Mar. and Dec.2011). The growth of
smartphones and other Internet connected devices is expected to accelerate to
tens of billions during next 10 years (source: gigaom/ Ericson).
The security software revenues in 2011 were $17.7 billion worldwide, and the
market grew 7.5% in 2011 (Gartner, April 2012). The forecasted growth for the
overall global security software market remains solid at around 10% (CAGR),
although significant differences can be seen between regions due to continuing
uncertainty regarding the overall economic situation (Gartner, July 2011). The
growth of the security market is mostly organic but new delivery models and
emerging technologies are also driving industry consolidation (Gartner, April
2012).
The volume of user generated digital content is expected to continue to
increase rapidly during coming years, driven by digital photos and music. The
use of social media is increasing and people look for services to share, store
and control of their personal data. Parks Associates forecasts that operators
providing security, storage and sharing value-added services have a revenue
opportunity of $1.03b 2012, increasing to $4.82b during 2015.
Based on several industry analyst estimates, the Software as a Service business
model is expected to continue to grow strongly and to gain more market share
over traditional license sales. For Operators the Software as a Service model
is a natural expansion to their other service offerings. The SaaS business
offers Operators the opportunity to replace revenues lost from the provision of
commoditized services and to increase loyalty in the face of competitive
threats from over-the-top providers and third parties.
Long-term objectives and strategy summary for 2012-14
F-Secure's first priority is to drive growth and market expansion. F-Secure is
a pioneer in Security as a Service (SaaS) business with Operators. This channel
has been driving the Company's revenue growth over 10 years. Based on the
company's strong technology assets in security, cloud computing and Content
Cloud, F-Secure continues to create new innovative offerings to augment
traditional security services, especially in the Content Cloud space. F-Secure works together with Operators by providing security and Content Cloud
services with which Operators can compete with Internet players. The Company's
large operator network covers over 200 operator partners in over 40 countries
with an addressable market of over 250 million fixed and mobile broadband
customers. In addition, F-Secure's close co-operation with major mobile phone
vendors and mobile phone operators provides good opportunities to benefit from
the growth of the mobile Internet.
F-Secure focuses on increasing the penetration within the current operator base
and continues to selectively seek partner expansion globally, especially in
emerging markets. The penetration rates vary by operator; overall penetration
levels are relatively low leaving substantial opportunity for growth.
The Company revised its strategy for the next three years, announced in
February 1, 2012. The strategy forms solid ground for continuous growth and
improving profitability.
Operators, including Internet service providers, mobile operators and cable
operators, are the main channel for F-Secure services. F-Secure provides,
through Operators, security and Content Cloud services that are easy and
intuitive to use for mainstream consumers. This channel utilizes the presence
and brand of Operators to reach millions of consumers in a cost efficient and
scalable way.
Operators are competing with other Internet players and device manufacturers
for consumers' share of mind. Operators' advantage is their ability to manage
the continuously diverging multi-device, multi-OS environment. Also, they are
able to bring services to masses and are able to support them.
The sources of F-Secure's competitive advantage include the existing operator
and service provider network and relationships built over the years. Key assets
include security research, experience in service provisioning in the Operator
network environment and Operators' growing user base. Differentiation builds on
top of the ability to combine security into storage and the Operator channel at
large. By helping operators to establish local, secure and trustworthy Internet
services the Company enhances its position as Operators' long-term partner.
During the strategy period the Company is aiming for double digit revenue
growth (CAGR), driven by the Operator channel. The growth is expected to come
from the western world and some emerging markets like Latin America.
The Company will continue its investments in the Content Cloud business and
also in security services. In addition to mainstream operating systems, such as
Android, iOS and Windows, the Company is investing in platform development.
These investments ensure the scalability and competiveness of the services and
allow Operators to offer F-Secure services, both PC and mobile, to a wide
subscriber base. Profitability is targeted to develop towards the 25% level at
the end of strategy period due to improving scalability in Content Cloud
business. F-Secure's longer term profitability level continues to be driven by
revenue growth and scalable operations.
Outlook for 2012
The Operator channel is expected to continue its revenue growth, driven by
solid Internet security sales and supported by subscriber based content cloud
revenues. The project-based content cloud revenues in H2 will be substantially
lower than in 2011. The traditional license business is expected to decline
slightly, as in 2011.
As overall uncertainty in the global economy and financial markets is expected
to continue, this may have an impact on Operators' interest to invest in new
services, especially in new content cloud projects.
F-Secure has several content cloud prospects in the pre-sales phase. However,
some tardiness in content cloud contract negotiations and in ramping up
subscriber volumes is likely to delay the revenue growth.
The management's estimation for the year is unchanged; the annual revenue
growth is estimated to be between 5% and 10% compared to 2011. The annual
profitability is estimated to remain around 15% of revenues.
The revenue growth is estimated to temporarily slow down in H2 and especially
in Q4 primarily due to decreasing project revenues impacting on especially Q4
profitability. The Company has changed its vacation accrual accounting due to
operational reasons, which balances costs between Q2 and Q3 by decreasing Q2
costs and increasing Q3 costs by approximately 400k.
In the Q1 interim report published on April 27, 2012, the management revised
the guidance as follows; the annual revenue growth is estimated to be between
5% and 10% compared to 2011. The annual profitability is estimated to remain
around 15% of revenues. The guidance given at the beginning of the year was the
following: The annual revenue growth is estimated to be around 10% and the
annual profitability is expected to be around 15% of revenues and is expected
to follow the usual seasonality with a better second half.
The revenue estimate is based on the sales pipeline at the time of publishing,
existing subscriptions and support contracts as well as current exchange rates.
The Company continues to prioritize growth over short-term profitability and
plans to invest the majority of the improved earnings in growth opportunities
in its core business.
The actual operational cost increases are fairly limited, and they are targeted
at driving product portfolio competitiveness, building the scalability of the
content cloud services and supporting geographical expansion. A notable part of
the annual cost increase is due to the end of development activations for new
platforms and increased depreciations.
News conference today at 11 am
A news conference for analysts and press is arranged today, on July 25, at 11
am Finnish time at F-Secure's Headquarters, address: Tammasaarenkatu 7,
Ruoholahti, Helsinki. In the news conference, President & CEO Christian
Fredrikson will present the Q2 financial results. A conference call for
international investors and analysts is arranged at 14.00 Finnish time (EEST)
(13.00 CEST, 12.00 UK time). To participate in the call, please dial in and
register 5-10 minutes prior to the event through the following number: +44 20
7162 0077, password: F-Secure. The Q2 financial results presentation material
will be available on our Investors web pages at www.f-secure.com under About
F-Secure, Investors before the call begins.
Financial calendar for 2012
F-Secure will publish its interim report for the third quarter on October 25.
On the publication date a stock exchange release will be published at
approximately 9 am Finnish time on the NASDAQ OMX Helsinki Ltd., a press and
analyst conference will be arranged at 11 am Finnish time in Helsinki, and an
international conference call will be arranged in the afternoon.
F-Secure Corporation
Additional information
F-Secure Corporation
Christian Fredrikson, President and CEO
tel. +358 9 2520 0700
Taneli Virtanen, CFO
tel. +358 9 2520 5655
Mervi Pohjoisaho, IR
tel. +358 40 535 8989
This interim report is prepared in accordance with IAS 34 standard Interim
Financial Reporting and with accounting principles stated in the annual report
2011.
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Key figures (unaudited):
Euro million
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INCOME STATEMENT 2012 2011 2012 2011 Chge 2011
4-6 4-6 1-6 1-6 % 1-12
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Revenues 39.6 35.3 77.9 69.4 12 146.0
Cost of revenues 2.1 1.9 3.9 3.8 3 8.0
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Gross margin 37.5 33.4 74.0 65.7 13 138.1
Other operating income 0.5 0.4 0.8 0.8 3 1.4
--------------------------------------------------------------------------------
Sales and marketing 17.9 16.2 34.9 30.9 13 64.7
Research and development 11.4 9.9 22.9 19.4 18 39.3
--------------------------------------------------------------------------------
Administration 2.9 3.0 5.9 6.0 -1 11.9
Operating result 5.8 4.6 11.2 10.1 11 23.6
--------------------------------------------------------------------------------
Financial net -0.1 0.0 -0.3 -0.3 -0.1
Result before taxes 5.7 4.6 10.9 9.9 23.5
--------------------------------------------------------------------------------
Income taxes -1.7 -1.5 -3.1 -3.1 -7.1
Result for the period 4.0 3.0 7.8 6.8 16.4
--------------------------------------------------------------------------------
Other comprehensive income:
Exchange diff. on translating 0.1 0.0 0.1 -0.1 0.0
foreign operations
--------------------------------------------------------------------------------
Available-for-sale fin.assets -0.1 0.0 0.1 0.1 0.1
Income tax rel. to components of other 0.0 0.0 0.0 0.0 0.0
comprehensive income
--------------------------------------------------------------------------------
Total compr.income (owners) 4.0 3.1 8.0 6.8 16.4
Earnings per share, e 0.03 0.02 0.05 0.04 0.11
--------------------------------------------------------------------------------
EPS diluted. e 0.02 0.02 0.05 0.04 0.10
--------------------------------------------------------------------------------
-----------------------------------------------------------------------
BALANCE SHEET 30/06/2012 30/06/2011 31/12/2011
ASSETS
Intangible assets 26.6 21.3 25.3
-----------------------------------------------------------------------
Tangible assets 9.5 8.2 9.1
Goodwill 19.4 19.4 19.4
-----------------------------------------------------------------------
Other financial assets 5.1 6.2 5.5
Non-current assets total 60.7 55.1 59.2
-----------------------------------------------------------------------
Inventories 0.2 0.2 0.4
Other receivables 33.4 30.6 37.9
-----------------------------------------------------------------------
Available-for-sale financial assets 16.3 16.0 16.0
Cash and bank accounts 9.1 7.7 12.2
-----------------------------------------------------------------------
Current asset total 59.0 54.5 66.4
Total 119.7 109.6 125.7
-----------------------------------------------------------------------
-----------------------------------------------------------------
SHAREHOLDERS' EQUITY 30/06/2012 30/06/2011 31/12/2011
AND LIABILITIES
Equity 58.4 49.4 59.6
-----------------------------------------------------------------
Other non-current 1.5 1.9 1.6
Deferred revenues 8.1 7.9 8.4
-----------------------------------------------------------------
Non-current liabilities total 9.6 9.8 10.1
Other current 21.7 21.6 26.2
-----------------------------------------------------------------
Deferred revenues 30.0 28.8 29.8
Current liabilities total 51.7 50.4 56.1
-----------------------------------------------------------------
Total 119.7 109.6 125.7
-----------------------------------------------------------------
--------------------------------------------------------------------------------
CASH FLOW STATEMENT 30/06/2012 30/06/2011 31/12/2011
Cash flow from operations 14.3 7.9 20.8
--------------------------------------------------------------------------------
Cash flow from investments -7.9 -7.8 -16.7
Cash flow from financing -9.3 -9.3 -9.1
activities 1)
--------------------------------------------------------------------------------
Change in cash -2.9 -9.3 -5.0
Cash and bank at 1 Jan 28.1 32.5 32.9
--------------------------------------------------------------------------------
Change in net fair value of 0.1 0.1 0.1
Available-for-sale
Cash and bank at end of period 25.3 23.5 28.1
--------------------------------------------------------------------------------
Statement of changes in shareholders' equity
--------------------------------------------------------------------------------
Share Share Unrestrict Treasur Retaine Assets Transl Total
capita premium ed equity y d avail. .
l fund reserve shares earnin f.sale diff.
gs
Equity 1.6 0.2 5.1 -9.0 61.8 0.1 -0.2 59.6
on:
31.12.20
11
--------------------------------------------------------------------------------
Total 7.8 0.1 0.1 8.0
comprehe
nsive
income
for the
year
Dividend -9.3 -9.3
--------------------------------------------------------------------------------
Cost of 0.2 0.2
share
based
payment
s
Equity 1.6 0.2 5.1 -9.0 60.5 0.2 -0.1 58.4
on
30.6.201
2
--------------------------------------------------------------------------------
NOTES
1. Cash flow from financing
Dividend for year 2011 0.06 euro per share totaling 9,303,980.94 euro was paid
on 17th April 2012. In 2011, paid dividend totaled 9,253,915.80 euro.
----------------------------------------------------
Key ratios 2012 2011 2011
6 m 6 m 12 m
----------------------------------------------------
Operating result. % of revenues 14.4 14.6 16.2
ROI, % 40.1 41.8 44.3
----------------------------------------------------
ROE, % 26.4 27.1 29.5
Equity ratio, % 71.5 67.8 68.1
----------------------------------------------------
Debt-to-equity ratio, % -43.3 -47.6 -47.1
Earnings per share (EUR) 0.05 0.04 0.11
----------------------------------------------------
Earnings per share diluted 0.05 0.04 0.10
Shareholders' equity 0.37 0.31 0.38
per share. e
----------------------------------------------------
P/E ratio 14.3 27.8 19.0
Capitalized expenditures (Me) 6.4 9.2 18.7
----------------------------------------------------
Contingent liabilities 17.8 15.5 18.7
Personnel, average 973 847 878
----------------------------------------------------
Personnel, end of period 990 873 942
----------------------------------------------------
Segment information
The Group has only one segment; data security.
----------------------------------------------------------
Quarterly development 1/11 2/11 3/11 4/11 1/12 2/12
Revenues 34.1 35.3 36.6 40.0 38.4 39.6
----------------------------------------------------------
Cost of revenues 1.8 1.9 2.0 2.2 1.9 2.1
Gross margin 32.3 33.4 34.6 37.8 36.5 37.5
----------------------------------------------------------
Other operating income 0.4 0.4 0.2 0.4 0.3 0.5
Sales and marketing 14.8 16.2 15.8 18.0 16.9 17.9
----------------------------------------------------------
Research and 9.4 9.9 9.4 10.5 11.5 11.4
development
Administration 3.0 3.0 2.8 3.1 3.0 2.9
----------------------------------------------------------
Operating result 5.5 4.6 6.9 6.5 5.4 5.8
Financial net -0.2 0.0 0.0 0.1 -0.2 -0.1
----------------------------------------------------------
Result before taxes 5.3 4.6 7.0 6.6 5.2 5.7
----------------------------------------------------------
Geographical information
---------------------------------------------------------
Revenue 4-6/2012 4-6/2011 1-6/2012 1-6/2011
Nordic countries 11.6 11.7 23.6 23.1
---------------------------------------------------------
Rest of Europe 18.4 16.1 35.7 31.4
North America 4.0 3.5 7.7 7.0
---------------------------------------------------------
Rest of the world 5.6 4.0 10.9 7.9
Total 39.6 35.3 77.9 69.4
---------------------------------------------------------
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