WithSecure Oyj - Financial Statement Release

WithSecure Financial Statement Release 1 January - 31 December 2024: Strong growth in Cloud Protection for Salesforce, improving profitability and cash flow, divestment of Cyber security consulting

WithSecure Corporation, Financial Statement Release 1 January – 31 December 2024, 12 February 2025 at 8.00 EET

WithSecure Financial Statement Release 1 January – 31 December 2024: Strong growth in Cloud Protection for Salesforce, improving profitability and cash flow, divestment of Cyber security consulting

Highlights of October – December 2024 (“fourth quarter”)

• Annual Recurring Revenue (ARR)¹ for Elements Cloud products and services² increased by 6% to EUR 83.3 million (EUR 78.4 million)
• Elements Cloud ARR increase from previous quarter was 2%
• Net Revenue Retention for Elements Cloud was 99%
• Revenue for Elements Cloud increased by 9% to EUR 21.5 million (EUR 19.7 million)
• ARR for Cloud Protection for Salesforce increased by 52% to EUR 12.8 million (EUR 8.4 million)
• Cyber security consulting revenue declined by 15% to EUR 8.6 million (EUR 10.2 million). Cyber security consulting divestment agreement was signed in January 2025. Business is reported as Discontinued operations. A goodwill impairment of EUR 13 million was recognized in the fourth quarter to reflect the impact of the divestment
• Adjusted EBITDA (Continuing and discontinued operations) for WithSecure was EUR 2.4 million (EUR 0.2 million)
• Operative cash flow of the fourth quarter was EUR 7.7million (EUR 2.7 million) 

1. Annual recurring revenue (ARR) of cloud products is calculated by multiplying monthly recurring revenue of last month of quarter by twelve.  Monthly recurring revenue includes recognized revenue within the month excluding non-recurring revenue
2. Elements Cloud includes Elements Cloud portfolio software and services as well as the managed services

Highlights of January – December 2024

• Revenue for Elements Cloud products and services increased by 9% to EUR 83.3 million (EUR 76.1 million)
• CPSF revenue increased by 14% to EUR 9.4 million (EUR 8.3 million)
• Cyber security consulting revenue declined by 3% to EUR 32.3 million (EUR 33.4 million)
• Adjusted EBITDA (Continuing and discontinued operations) for WithSecure was EUR 3.1 million (EUR -16.1 million)

Outlook for 2025

Annual Recurring Revenue (ARR) for Elements Cloud products and services will grow by 10-20% from the end of 2024.
At the end of 2024, Elements Cloud ARR was EUR 83.3 million.

Elements Company segment's Adjusted EBITDA will be 3-7% of revenue.

Annual Recurring Revenue (ARR) for Cloud Protection for Salesforce (CPSF) will grow by 20-35% from the end of 2024.
At the end of 2024, CPSF ARR was EUR 12.8 million.

Cyber security consulting business will be divested in 2025. Elements company and CPSF will have their own guidance going forward. Both are recurring, subscription-based businesses, which is reflected in the new guidance.

Medium-term financial target (for Elements Company segment)


Over the next three years (2025-2027), WithSecure will become a “Rule of 30+” company.

The components of the target are

• Annual revenue growth as percentage
• Adjusted EBITDA as percentage of revenue

WithSecure is targeting to reach a sum of the components that exceeds 30.

Figures in this release are unaudited. Figures in brackets refer to the corresponding period in the previous year, unless otherwise stated. Percentages and figures presented may include rounding differences and might therefore not add up precisely to the totals presented.

CEO Antti Koskela

In the last quarter of 2024, WithSecure Elements Cloud ARR grew by 6% from previous year to EUR 83.3 million (EUR 78.4 million). Elements Cloud revenue grew by 9% to EUR 21.5 million (EUR 19.7 million). Cloud Protection for Salesforce, reported as a separate segment, performance was strong, ARR grew by 52% to EUR 12.8 million (EUR 8.4 million).

In the Elements Company, Elements software continued to perform with a strong year-on-year growth. In the Managed services and Co-security, revenue declined slightly from the fourth quarter of 2023, due to the customer churns reported in the quarter and earlier in 2024. Of the geographic regions, Elements Cloud ARR and revenue decreased slightly in UK and North America, mainly impacted by the Managed services customer churns during the year 2024. In all other regions, a steady growth of cloud ARR and revenue continued. December revenue includes a higher than customary volume of discounts, timing of which is partly dependent on the customers. Due to the timing issues, the Cloud ARR growth was negatively impacted by approximately 3 percentage points. Our intention is to review and improve the recognition process to avoid ARR volatility caused by timing in the future. 

In January 2025, our Elements Identity Security reached General Availability. It will increase protection of the users from business email compromise attacks and provide easy-to-use identity response features. Two significant product recognitions were received at the end of 2024. We were identified as one of 15 global vendors in the 2024 Gartner® Magic Quadrant™ for Endpoint Protection Platforms³, recognising our ability to execute and completeness of vision. In the 2024 MITRE ATT&CK® Evaluations, our Endpoint Detection and Response solution set new standards for detection-to-alert ratios, reinforcing our position as a European mid-market leader in cyber security.

Elements Company Adjusted EBITDA in the fourth quarter was EUR 1.5 million (EUR -1.0 million). Full WithSecure Adjusted EBITDA of EUR 2.4 million (EUR 0.2 million) in the fourth quarter shows that our continuous work on improving profitability is giving results despite some lower revenue in 2024 than planned.

In Cloud Protection for Salesforce (CPSF), systematic efforts in the past year to improve sales efficiency are generating strong results. ARR grew by 52% year-on-year to EUR 12.8 million (EUR 8.4 million). The growth is driven by both new customers and expansions to existing customers, while the customer churn remained at a controlled level. We continue to develop the CPSF as an independent business inside WithSecure, while keeping the strategic review options open.

On 23 January 2025, we signed an agreement intending to divest our Cyber security consulting business to Neqst, a Swedish investment firm focusing exclusively on technology and technology-enabled companies. In the segment reporting, consulting is presented according to the previously applied calculation principles. In other parts of the financial reporting, consulting result is included in the result of discontinued operations. Cyber security consulting revenue declined by 15% to EUR 8.6 million (EUR 10.2 million). Adjusted EBITDA of the fourth quarter was EUR 0.9 million (EUR 2.0 million).

After reaching some important milestones during the year, we are confidently heading for a new year of profitable growth. I would like to thank WithSecure personnel, partners, customers and other stakeholders for their great collaboration in the past year and going forward.

Financial performance

(mEUR)	10-12/2024	10-12/2023	Change %	1-12/2024	1-12/2023	Change %
Continuing operations
Revenue	29.9	28.0	7%	116.0	109.9	6%
Cost of revenue	-5.9	-5.7	3%	-23.4	-23.1	1%
Gross Margin	24.0	22.3	8%	92.6	86.8	7%
% of revenue	80.4 %	79.7 %		79.8 %	79.0 %
Other income, adjusted1	0.4	0.4	11%	2.0	1.4	41%
Operating expenses1	-23.0	-24.3	-5%	-92.6	-103.1	-10%
Sales & Marketing	-12.2	-13.1	-7%	-47.9	-57.2	-16%
Research & Development	-8.5	-8.8	-3%	-35.0	-36.3	-4%
Administration	-2.3	-2.4	-5%	-9.7	-9.5	2%
Adjusted EBITDA2	1.4	-1.6	188%	2.0	-14.8	113%
% of revenue	4.7 %	-5.7 %		1.7 %	-13.5 %
Items affecting comparability (IAC)
Other items	0.0	-1.0	99%	-1.0	-1.4	33%
Divestments	0.1	0.0	0%	1.2	1.4	10%
Restructuring	-0.1	-4.5	99%	-1.1	-8.9	87%
Costs under TSA	0.0	-1.4	100%	0.0	-6.9	100%
Income for costs under TSA	0.0	1.4	100%	0.0	6.9	100%
EBITDA	1.4	-7.2	120%	1.1	-23.8	105%
% of revenue	4.7 %	-25.6 %		1.0 %	-21.6 %
Depreciation & amortization, excluding PPA3	-2.0	-2.5	-19%	-9.0	-9.5	-6%
PPA amortization	-0.5	-0.6	-17%	-2.2	-2.4	-7%
EBIT	-1.1	-10.2	89%	-10.1	-35.7	72%
% of revenue	-3.7 %	-36.6 %		-8.7 %	-32.5 %
Adjusted EBIT2	-0.6	-4.1	85%	-7.0	-24.3	71%
% of revenue	-2.0 %	-14.5 %		-6.0 %	-22.1 %
Discontinued operations
Revenue	8.3	10.0	-17%	31.4	32.9	-5%
Adjusted EBITDA2	1.0	1.8	-45%	1.1	-1.3	187%
% of revenue	12.0 %	18.1 %		3.6 %	-4.0 %
Items affecting comparability (IAC)
Divestments	1.1			1.1
EBIT	-13.6	1.6	-927%	-29.3	-8.2	-258%
% of revenue	-164.1 %	16.5 %		-93.6 %	-24.9 %
Combined operations
Revenue	38.1	38.0	0%	147.4	142.8	3%
Adjusted EBITDA2	2.4	0.2	1070%	3.1	-16.1	119%
% of revenue	6.3 %	0.5 %		2.1 %	-11.3 %
Earnings per share, (EUR)4	-0.08	-0.07	-25%	-0.22	-0.23	5%
Deferred revenue				67.7	66.9	1%
Cash flow from operations before financial items and taxes	7.7	2.7	191%	2.1	-19.9	110%
Cash and cash equivalents				27.3	36.6	-25%
ROI, %	-52.3 %	-27.5 %	-90%	-34.1 %	-30.5 %	-12%
Equity ratio, %				59.1 %	73.3 %	-19%
Gearing, %				0.4 %	-22.2 %	102%
Personnel, end of period				961	1,087	-12%

1. Excluding Items Affecting Comparability (IAC) and depreciation and amortization. In 2023 excludes also costs of services provided to F-Secure under TSA and equivalent income charged for TSA services. 

2. Adjustments are material items outside the normal course of business associated with acquisitions, integration, restructuring, gains or losses from sales of businesses and other items affecting comparability. For reconciliation and a breakdown of adjusted costs, see Note 6 (Reconciliation of alternative performance measures)

3. Amortization of intangible assets from business combinations (PPA, purchase price allocation, related amortizations). 

4. Based on the weighted average number of outstanding shares during the period 175 986 422 (1-12/2024).

Events after period-end
After the end of the financial year, on 23 January 2025, WithSecure announced the sale of its Cyber security consulting business to Swedish investment firm Neqst. The transaction is executed by the sale of shares of the parent company of a to-be-established WithSecure cyber security consulting group, to which the consulting business will be transferred prior to the completion of the transaction. As a result of the agreement, total of approximately 250 employees located in Finland, UK, Sweden, Denmark, Singapore, Italy, and US are expected to transfer to the buyer.

Additional information
This is a summary of WithSecure’s Financial Statement Release 1 January – 31 December 2024. The full report is a PDF file attached to this stock exchange release. Full report is also available on the company website.

Webcast
WithSecure’s CEO Antti Koskela and CFO Tom Jansson will present the results in a webcast on 12 February starting at 14.00 EET. The webcast will be held in English and can be accessed at

https://withsecure.events.inderes.com/q4-2024

Questions in written format are requested in the webcast portal. Presentation material and the webcast recording will be available on the company website

Materials | Investor Relations | WithSecure™

Financial calendar
During the year 2025, WithSecure Corporation will publish financial information as follows:

• 25 April 2025: Interim Report for January–March 2025
• 16 July 2025: Half-Year Report for January–June 2025
• 22 October 2025: Interim Report for January–September 2025

WithSecure observes at least a three-week (21 days) silent period prior to publication of financial reports, during which it refrains from engaging in discussions with capital market representatives or the media regarding WithSecure’s financial position or the factors affecting it.

The Annual General Meeting is scheduled for Tuesday, 18 March 2025. The Board of Directors will convene the meeting.

Contact information
Tom Jansson, CFO
WithSecure Corporation

Laura Viita
VP, Controlling, investor relations and sustainability
WithSecure Corporation
+358 50 487 1044
investor-relations@withsecure.com

Attachment

• Financial Statement Release 1 January - 31 December 2024

Attachments:

Financial Statement Release 1 January - 31 December 2024.pdf