2016-08-04 08:00:02 CEST
2016-08-04 08:00:02 CEST
SÄÄNNELTY TIETO
F-Secure Oyj - Half Year financial report
F-Secure Half Year Report 1 January – 30 June 2016
F-Secure Corporation, Half year financial report, 4 August 2016 at 09.00 EEST
SECOND QUARTER REVENUES INCREASE BY 11% FROM PREVIOUS YEAR
Highlights in April-June (Q2)
-- Revenues from continuing operations increased by 11% year-on-year to EUR
39.3 million (35.5 m)
-- Revenues from corporate security increased by 26% totaling EUR 15.4 million
(12.2 m) and representing 39% (34%) of all revenues
-- Revenues from consumer security increased by 3% and amounted to EUR 23.9
million (23.3m)
-- EBIT (IFRS) was EUR 4.6 million, representing 12% (4.0 m, 11%) of revenues
and reflecting investments in sales growth and product development
-- Earnings per share (EPS) for continuing operations was EUR 0.03 (0.02) and
EUR 0.03 (0.02) for the Group including discontinued operations.
-- Deferred revenues increased by 14% and amounted to EUR 51.1 million (44.8m)
at the end of the quarter
-- Cash flow from operations was EUR 6.6 million (4.3 m)
-- Samu Konttinen was appointed F-Secure’s President and CEO as of 1 August
2016 following Christian Fredrikson’s resignation in June
Highlights in January-June (H1)
-- Revenues from continuing operations increased by 8% year-on-year, totaling
EUR 77.1 million (71.4 m)
-- Revenues from corporate security increased by 26% totaling EUR 30.0 million
(23.7 m)
-- Revenues from consumer security decreased by 1% and amounted to EUR 47.1
million (47.7m), reflecting temporary challenges in the operator business
during the first quarter
-- EBIT (IFRS) was EUR 7.8 million, representing 10% (9.0 m, 13%) of revenues
and reflecting investments in sales growth and product development
-- Earnings per share (EPS) for continuing operations was EUR 0.04 (0.06) and
EUR 0.04 (0.12) for the Group including discontinued operations.
-- Cash flow from operations was EUR 5.5 million (8.9 m), reflecting the
repayment of foreign tax credits on withholding taxes from 2009-2011 based
on debit decisions by the Finnish tax authority
The reporting currency is Euro. This interim report is unaudited. Figures in
brackets refer to the corresponding period in the previous year.
F-Secure acquired nSense in June 2015 and has consolidated it into the F-Secure
Group accounts since Q2 2015. F-Secure’s personal cloud storage business
(younited) was sold to Synchronoss Technologies in February 2015 and is
reported as discontinued operations.
Outlook for 2016
The Company’s outlook for 2016 remains unchanged.
-- F-Secure anticipates its overall security revenues to grow in 2016 compared
to the year before (2015: EUR 148 million)
-- EBIT for continuing operations is estimated to be EUR 17-21 million (2015:
EUR 20 million)
Key figures
Key figures 2016 2015 Change 2016 2015 Change 2015
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(Eur million) 4-6 4-6 1-6 1-6 1-12
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Revenues 39.3 35.5 11% 77.1 71.4 8% 147.6
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Operating profit (IFRS) 4.6 4.0 15% 7.8 9.0 -13% 20.0
--------------------------------------------------------------------------------
% of revenues (IFRS) 12% 11% 10% 13% 14%
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Profit before taxes 5.7 3.9 46% 8.6 11.0 -22% 20.7
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Earnings per share (Eur)* 0.03 0.02 0.04 0.12 0.14
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Earnings per share for 0.03 0.02 0.04 0.06 0.08
continuing operations
(Eur)*
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Depreciation 1.4 1.3 2.7 2.9 5.9
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At the end of period:
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Deferred revenues 51.1 44.8 14% 48.1
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Liquid assets, total 80.9 76.3 94.3
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ROI% 26.4% 53.3% 52.1%
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Equity ratio, % 69.7% 68.4% 64.1%
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Debt-to-equity ratio, % -120.9% -102.2% -122.4%
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Personnel 982 901 9% 926
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*Based on the average adjusted number of shares during the period 155.822.686
CEO Samu Konttinen
As F-Secure’s new CEO I’m pleased that the results from the second quarter
confirm F-Secure is now clearly on a path of sustained growth. In recent years,
we have been increasingly investing in new product development and effective
commercialization. As a result, we now saw accelerated revenue growth in
corporate security, where demand for cyber security solutions remains strong. I
am confident this growth trend in the market will continue over the next years.
We also saw modest growth in consumer security over the quarter, despite the
market being essentially flat or even declining. Our corporate security and
consumer security businesses both won market share by outpacing the market
growth, signaling of solid go-to-market execution as well as strong products
and services.
The investments we are making are inevitably impacting our short-term
profitability, but they are justified to enable profitable growth in the longer
term through our scalable business model. We intend to continue our growth
investments for the foreseeable future and we are also looking for attractive
acquisition targets to support our ambition to become the leading European
cyber security company.
Overall, F-Secure had a solid second quarter and our performance year-to-date
is in line with our full year plans. Our revenues increased by 11% compared to
the previous year, amounting to EUR 39.3 million. Revenues from corporate
security increased by 26%, with product sales through the reseller channel and
cyber security services both performing very well. Consumer security revenues
grew by 3%. Despite investments in growth, our profitability remained healthy
at 12% of revenues, with operating profit amounting to EUR 4.6 million.
In corporate security, we expanded our product and service offering in May by
launching Rapid Detection Service. The new service combines effective sensors
along with 24/7 expert service to detect and respond to complicated cyber
attacks quickly and accurately. We have already signed the first contracts
since launching, proving a clear market need for this solution. Through our
service partnerships we will be able to offer Rapid Detection Service along
with our end-point protection and vulnerability management solutions to a wide
range of medium sized businesses as well as large enterprises.
The demand for security services and consulting remains very strong across
multiple industry verticals. We have been successful in increasing our security
consultancy team’s headcount to meet the growing demand. We have also
regionally expanded the Company’s operations in Norway and Sweden, as well as
diversified into new verticals such as aviation.
In consumer security, our operator business recovered from the temporary
challenges experienced in the first quarter and achieved quarter-on-quarter
growth in all regions. We are focusing on operational excellence and on further
improving cooperation with our partners, and remain confident we will maintain
the business at last year’s levels, as expected.
Financials
As of Q4 2015, F-Secure reports its revenue divided into consumer security
revenue (including operator and direct-to-consumer businesses) and corporate
security revenue (including corporate reseller and cyber security services
business).
Consumer security and corporate security:
Revenue (EURm) 4-6 4-6 2015 Change 1-6 2016 1-6 2015 Change FY2015
2016
--------------------------------------------------------------------------------
Corporate 15.4 12.2 26 % 30.0 23.7 26 % 52.1
security
Consumer 23.9 23.3 3 % 47.1 47.7 -1 % 95.5
security
--------------------------------------------------------------------------------
Total 39.3 35.5 11 % 77.1 71.4 8 % 147.6
APRIL-JUNE (Q2)
In the second quarter, F-Secure’s overall revenues grew by 11% year-on-year,
totaling EUR 39.3 million (35.5 m). Organic revenues grew by 7% year-on-year.
Revenues from corporate security increased by 26% totaling EUR 15.4 million
(12.2 m) and representing 39% (34%) of F-Secure’s total revenues. Revenues from
both product sales through the reseller channel and from cyber security
services continued to grow strongly. In the comparison period, revenues
relating to cyber security services were only included for the month of June
following the acquisition of nSense.
Revenues from consumer security increased by 3% and amounted to EUR 23.9
million (23.3m), representing 61% (66%) of F-Secure’s total revenues.
Direct-to-consumer sales continued to grow faster than the underlying market in
April-June, with positive contribution from the steadily increasing sales of
F-Secure Freedome. Revenues from the operator channel remained at previous
year’s levels, but increased from the previous quarter.
The geographical breakdown of revenues in the second quarter was as follows:
Finland and Scandinavia EUR 14.1 million (11.6 m), Rest of Europe EUR 16.3
million (15.7 m), North America EUR 3.7 million (3.3 m) and Rest of the World
EUR 5.3 million (4.9 m).
Deferred revenues increased by 14% and amounted to EUR 51.1 million (44.8m) at
the end of the quarter, driven primarily by growth in the sale of corporate
security products and services with contracts extending to one year or beyond.
Total fixed costs were EUR 34.3 million (31.0 m), an increase of 11% from the
previous year. The increase largely reflects costs incurred by corporate
security as a result of successful recruiting as well as expenses relating to
product development and marketing. In the comparison period, costs relating to
cyber security services were only included for the month of June following the
acquisition of nSense. Depreciations (capitalized R&D, software, hardware) were
EUR 1.4 million (1.3 m). The capitalized development expenses for the quarter
were EUR 1.0 million (0.5 m).
EBIT (IFRS) including the allocation of the nSense acquisition related costs
(earn-out and deferred payment) was EUR 4.6 million, representing 12% (4.0 m,
11%) of revenues. The acquisition-related costs for the period amounted to EUR
0.7 million.
Earnings per share (EPS) for continuing operations was EUR 0.03 (0.02) and EUR
0.03 (0.02) for the Group including discontinued operations.
Cash flow from operations was EUR 6.6 million (4.3 m), impacted partly by the
release of the EUR 4.5 million escrow account relating to the sale of the
personal cloud storage business to Synchronoss and the residual tax payment of
EUR 6.1 million resulting from the positive net impact of said divestment and
the nSense acquisition in 2015.
JANUARY-JUNE (H1)
In the first half of the year, F-Secure’s overall revenues grew by 8%
year-on-year, totaling EUR 77.1 million (71.4 m). Organic revenues grew by 3%
year-on-year.
Revenues from corporate security increased by 26% totaling EUR 30.0 million
(23.7 m) and representing 39% (33%) of F-Secure’s total revenues. The growth
stemmed both from product sales through the reseller channel and from cyber
security services. In the comparison period, revenues relating to cyber
security services were only included for the month of June following the
acquisition of nSense.
Revenues from consumer security decreased by 1% and amounted to EUR 47.1
million (47.7m), representing 61% (67%) of F-Secure’s total revenues. The
decrease in revenues year-on-year was caused by temporary challenges in the
operator business during the first quarter. Direct-to-consumer sales continued
to grow faster than the underlying market, with positive contribution from the
steadily increasing sales of F-Secure Freedome.
The geographical breakdown of revenues in the first quarter was as follows:
Finland and Scandinavia EUR 27.9 million (23.1 m), Rest of Europe EUR 31.7
million (31.9 m), North America EUR 7.3 million (6.4 m) and Rest of the World
EUR 10.2 million (10.1 m).
Deferred revenues increased by 14% and amounted to EUR 51.1 million (44.8m) at
the end of the period, driven primarily by growth in the sale of corporate
security products and services with contracts extending to one year or beyond.
Total fixed costs were EUR 68.2 million (61.6 m), an increase of 11% from the
previous year. The increase largely reflects costs incurred by corporate
security as a result of successful recruiting as well as expenses relating to
product development and marketing. In the comparison period, costs relating to
cyber security services were only included for the month of June following the
acquisition of nSense. Depreciations (capitalized R&D, software, hardware)
decreased to EUR 2.7 million (2.9 m). The capitalized development expenses for
the first half were EUR 1.4 million (1.0 m).
EBIT (IFRS) including the allocation of the nSense acquisition related costs
(earn-out and deferred payment) was EUR 7.8 million, representing 10% (9.0 m,
13%) of revenues. The acquisition-related costs for the period amounted to EUR
1.4 million.
Earnings per share (EPS) for continuing operations was EUR 0.04 (0.06) and EUR
0.04 (0.12) for the Group including discontinued operations.
Cash flow from operations was EUR 5.5 million (8.9 m), reflecting the repayment
of foreign tax credits on withholding taxes from 2009-2011 based on debit
decisions by the Finnish tax authority. F-Secure has appealed the decisions
with the Tax Administration's Board of Adjustment. In addition, cash flow was
impacted by the release of the EUR 4.5 million escrow account relating to the
sale of the personal cloud storage business to Synchronoss and the residual tax
payment of EUR 6.1 million resulting from the positive net impact of said
divestment and the nSense acquisition in 2015.
Financing and Capital Structure
On 30 June the market value of F-Secure’s liquid assets, including cash and
cash equivalents and short term investments in interest rate funds classified
as Available-for-sale assets, was EUR 80.9 million (31 December 2015: 94.3 m).
In January-June the Company’s capital expenditure amounted to EUR 3.2 million
(12.7 m). The capitalized development expenses were EUR 1.4 million (1.0 m).
F-Secure’s financial position remained solid. The Company’s equity ratio on 30
June was 70% (68%) and its gearing ratio was 121% negative (102% negative).
Shares, Shareholders' Equity, Own Shares
The total number of Company shares is currently 158,798,739. The Company’s
registered shareholders’ equity is EUR 1,551,311.18. The Company currently
holds 2,639.627 of its own shares.
Acquisitions and disposals
F-Secure acquired nSense, a privately held Danish company providing security
consultation and vulnerability assessment services and products primarily to
large enterprises, in June 2015. nSense has been consolidated into F-Secure
Group accounts as of the second quarter of 2015. For more information, see Note
3 in the table section.
F-Secure sold its personal cloud storage business to Synchronoss Technologies
in February 2015. As of the beginning of 2015, the personal cloud storage
business is reported as discontinued operations. For more information, see Note
2 in the table section.
Market overview
The growing number and variety of connected devices as well as digital services
continues to create security challenges for both businesses and individuals.
Combined with the increasing complexity of IT systems, these trends are driving
demand for security services. While dedicated cyber attacks are becoming more
prevalent and advanced, criminals are targeting companies of all sizes along
with consumers by taking advantage of vulnerabilities in popular software and
online services. Apart from pure criminal activity, governments and hacktivists
are abusing vulnerabilities and malware e.g. for espionage and surveillance.
Companies and other organizations increasingly seek for managed security
services and cloud-based delivery to help them maintain control of their
security. Larger organizations are interested in securing their mobile device
fleets and the demand for incident detection and response services remains very
high, as attacks often remain unnoticed for months.
The consumer security software market continues to be impacted by the changing
device landscape. Global PC shipments declined by 5.2% in the second quarter of
2016 (Gartner, July 2016). The decline is anticipated to be reflected in the
market for security products, but there are nonetheless opportunities to
capture market share from the competition. Furthermore, the number of connected
smart home devices is growing rapidly. It is expected that there are over 4
billion connected “things” in the consumer market by the end of 2016, which
opens opportunities for new innovative security products (Gartner, November
2015).
In 2015, the worldwide security software market was worth USD 22.9 billion. The
consumer security software market was worth USD 5.1 billion in 2015, and it is
expected to grow by 2.8% annually in 2015-2020. The security services market
for enterprises was worth USD 49.6 billion in 2015, and it is expected to grow
by 9.9 % annually in 2016-2019. Within this, the IT outsourcing market
including managed security services was worth USD 15.6 billion in 2015 and it
is expected to grow by 14.9 % annually in 2015-2020. All expected growth rates
are in constant US dollars. (Gartner, May 2016)
Business in April-June
CORPORATE SECURITY
In corporate security, F-Secure provides a broad offering of cyber security
products and managed services through a large network of resellers and service
partners. Whilst the partner network already provides for a scalable business
model, F-Secure invests in further expanding the network to enable efficient
and geographically broad distribution of its end point protection solutions
(Protection Service for Business and Business Suite) as well as the solutions
targeted at detecting and responding to advanced attacks (Rapid Detection
Service) and vulnerability management (F-Secure Radar).
At present, the majority of revenues comes from the sale of end-point
protection solutions through the reseller channel. In the second quarter,
revenues from end point protection continued to show strong growth,
significantly outpacing the market and reaching an all-time-high for a second
quarter. The main part of the absolute growth came from the focus markets of
Germany, France and Japan, where also the majority of the sales and marketing
investments have been made. The Company is also making good progress in many
other markets including North America and several countries in Europe. Both new
customer acquisition and renewals with existing customers developed favorably
during the quarter.
F-Secure continued to invest in strengthening its regional sales teams. This
included setting up a new local corporate security sales team in Spain.
Overall, the Company expects to add around 50 new sales people in 2016,
increasing the sales headcount by over a third compared to the previous year.
The increased salesforce will serve the reseller channel and focus on growing
the number of active resellers from the present level of approximately 3,500.
New reseller contracts for distributing F-Secure Radar were signed in Germany
adding to the previous contracts in the Nordics. Additionally, a consortium
comprising of F-Secure and Kupari Data signed a multi-year contract with
Valtori, the Finnish government’s ICT Center.
In May, F-Secure launched the new Rapid Detection Service (RDS) for detecting
and responding to advanced threats (for further information see the Product and
services highlights section). The service has been well received and at the
time of this announcement the first customer contracts have already been
signed, which proves that there is clear market need for a solution that
swiftly addresses the most complicated cyber attacks.
With the introduction of RDS, F-Secure is now successfully selling cyber
security products and managed services generating six figure revenues per
customer annually. The Company continues to invest significantly in related
product and service development.
The demand for security services and consulting remained strong across multiple
industry verticals. In the quarter, F-Secure was able to attract talented new
consultants to support the services business and enabling expansion of
operations in Norway and Sweden. Sales increased both to existing and new
customers, and were successfully diversified into new verticals such as
aviation. The majority of consulting revenues continued to come from Finland
and Denmark.
CONSUMER SECURITY
In consumer security, the majority of revenue comes from the sales of end-point
protection products (mainly F-Secure SAFE) through the operator channel, with
F-Secure Freedome and the password manager F-Secure Key increasingly being part
of the offering. The Company also sells consumer products through various
online and retail partners as well as F-Secure’s own webshop.
In the operator channel, F-Secure focuses on operational excellence and further
improvement of cooperation with key partners, including joint activities aimed
at improving the customer experience. Consequently, sales improved in all
regions from the previous quarter, especially in North America, which has now
shown a consistent positive sales trend for several quarters. Overall, the
operator business outlook remains stable.
The roll-out of the Company’s multi-device security solution, F-Secure SAFE,
continued with several operators, including Elisa/Appelsin (Finland), XS4ALL
(Netherlands) and Voo (Belgium). New partnership deals were also signed during
the quarter, including NetCologne (Germany) and Vinaphone (Vietnam).
The direct-to-consumer business continued to develop positively, outpacing the
underlying market growth. Particularly, online sales and sales through
previously announced Nordic retail partnerships made good progress. F-Secure
SAFE delivered the majority of revenues in the direct-to-consumer channel
supported by steadily increasing revenues from F-Secure Freedome. F-Secure
continued to sign new partnerships for distributing Freedome.
Preparations for the first deliveries of F-Secure Sense, a new security product
for connected home devices, continued as planned. As previously communicated,
first deliveries are expected to take place by the end of the year.
Product and services highlights
During the quarter, F-Secure continued to invest in security excellence,
go-to-market activities and product development for both consumer and corporate
products and services.
In May, F-Secure introduced the new Rapid Detection Service (RDS) aimed at
businesses with critical IT systems. RDS is a managed security service that
combines best-in-class cyber security experts, the latest threat intelligence
and new security technology to allow for customers to be notified within 30
minutes of a breach detection. The service includes a manned 24/7 monitoring
center with a team of cyber security experts to ensure both the elimination of
false positives as well as rapid response. More information is available at
https://www.f-secure.com/en/web/business_global/rapid-detection-service
Updates for corporate security products:
-- F-Secure Business Suite (end-point security solution) was updated with new
security features in June, including Botnet Blocker which stops criminals
from getting control of compromised assets. The solution helps prevent
network activity relating to known botnets by blocking access to malicious
domains.
Updates for consumer security products:
-- F-Secure Key (password manager) received a new browser extension allowing
better auto-fill capabilities for popular browsers in April. The new
version also allows for easy storage of different types of data beyond
passwords, including credit card information.
Additionally, in June, the UK Internet Industry Awards awarded F-Secure SAFE
for offering customers the most secure internet experience. This was the second
year in a row F-Secure SAFE received the award.
Customer satisfaction for key products in both corporate and consumer security
improved significantly compared to the previous year. Satisfaction scores (Net
Promoter Score, NPS) for F-Secure SAFE (the multi-device security solution)
increased to 43% (34% in 2015) and for Protection Service for Business to 47%
(40% in 2015) demonstrating customer appreciation for improvements made over
the past year. The improved scores also support the Company’s operator partners
and other resellers in increasing sales of the products.
Organization and leadership
At the beginning of the year, F-Secure stated a target of recruiting over a
hundred new employees in 2016 to support the Company growth. At the end of
June, F-Secure had 982 employees (950 on 31.3.2016; 926 on 31.12.2015), which
shows a net increase of 56 (6%) since the beginning of the year. F-Secure
continues to actively recruit highly skilled security professionals, rising
cyber security talents and capable sales personnel especially in corporate
security.
In June, the F-Secure Board of Directors appointed Samu Konttinen as the
Company’s President and CEO as of 1 August 2016. Samu Konttinen joined F-Secure
in 2005 and has held a wide range of senior management positions in the
Company, including Executive Vice President of Sales and Marketing, and
Executive Vice President of Consumer Business. Most recently he served as
Executive Vice President of Corporate Security Business. Since 2009 he has been
a member of the Leadership team. F-Secure’s former President and CEO Christian
Fredrikson resigned to pursue a leadership role outside the Company.
At the time of publication of this interim report the composition of the
Leadership Team is the following:
Samu Konttinen (CEO, additionally interim responsibility for Corporate
Security), Mari Heusala (HR & Office Services), Kristian Järnefelt (Consumer
Security), Saila Miettinen-Lähde (CFO), Jari Still (Information & Business
Services), Mika Ståhlberg (Security Research & Technologies), Jens Thonke
(Cyber Security Services) and Jyrki Tulokas (Strategy & Corporate Development).
Corporate Governance
F-Secure’s corporate governance practices comply with Finnish laws and
regulations, F-Secure’s Articles of Association, the rules of NASDAQ Helsinki
Oy and the Finnish Corporate Governance Code 2015 issued by the Securities
Market Association of Finland as explained on the Company website. The code is
publicly available at http://cgfinland.fi/en/. F-Secure’s Corporate Governance
Statement for 2015 as well as up-to-date information about the Company’s
governance are available on the Company website.
Annual General Meeting
The Annual General Meeting (AGM) of F-Secure Corporation was held on 7 April
2016. The Meeting confirmed the financial statements for the financial year
2015. The members of the Board of Directors and the President and CEO were
granted discharge from liability.
The AGM re-elected the following members to the Board of Directors: Mr. Jussi
Arovaara, Mr. Pertti Ervi, Mr. Matti Heikkonen, Ms. Anu Nissinen and Mr. Risto
Siilasmaa. Mr. Bruce Oreck and Mr. Janne Pirttilahti were elected as new
members of the Board. The Board elected in its organizational meeting Mr.
Siilasmaa as the Chairman of the Board. The Board nominated Mr. Siilasmaa as
the Chairman of the Executive Committee and Mr. Heikkonen and Ms. Nissinen as
members of the Executive Committee. Mr. Ervi was nominated as the Chairman of
the Audit Committee and Mr. Arovaara, Mr. Oreck and Mr. Pirttilahti were
nominated as members of the Audit Committee.
The Annual General Meeting decided to distribute a dividend of EUR 0.06 per
share and an extra dividend of EUR 0.06 per share to be paid to those
shareholders that on the record date of 11 April 2016 were registered in the
Register of Shareholders held by Euroclear Finland Ltd. The dividend was paid
on 19 April 2016.
The AGM approved all proposals made by the Board as described in the Notice to
the AGM published on 10 March 2016. The resolutions of the AGM can be found in
the Company’s stock exchange release of 7 April 2016 and on the Company web
site.
Risks and uncertainties
The most significant risks for F-Secure are related to the following factors:
-- Volatility of the economic environment and its potential impact on business
volumes
-- Security market transformation and changes in customer demand
-- Changes in the competitive environment
-- Potential loss of key customers and partnerships
-- Competitiveness of F-Secure’s product portfolio in the rapidly changing
market
-- Intellectual property (IPR) claims against F-Secure
-- Risk exposure from contractual liability requirements
-- Failure to successfully complete acquisitions or divestments
-- Failure of new product launches
-- Potential security threats related to F-Secure’s products and services
-- Credit risk due to regional political or financial climate and regulation
-- Tax risk relating to changing laws and regulations and interpretations of
said regulations by the relevant authorities
Strategy 2016-18
F-Secure aims to capitalize on the next phase of the internet and connected
world. The Company’s strategy reflects the fast growing number of
internet-connected devices, the changes in the ways business is done amid
increasing digitalization, and the concurrent increase in cybercrime. Execution
of the strategy will further speed up F-Secure’s transformation from an
end-point antivirus company to a broader provider of cyber security products
and services.
The key driver behind the strategy is F-Secure’s aspiration for growth.
F-Secure is continuing to increase its investments in the fastest growing
markets within corporate security. These include managed endpoint security
services sold through the reseller channel as well as the cyber security
services business. Investments in consumer security are continued at a level
that targets profitable growth.
F-Secure also aims to maximize the commercial impact of its technical expertise
and multiple sales channels for further growth in its chosen key market
segments. These include cyber security offerings to large enterprises in
Northern Europe and in selected verticals comprising financial industry, gaming
and gambling companies, aviation, defence, law enforcement, and certain global
brands. In corporate security the focus is on the reseller channel in Europe
and Japan. In consumer security, F-Secure continues with its existing sales
channels through operators, e-commerce and retail partners.
To enable execution of the growth strategy, F-Secure is actively recruiting
highly skilled security professionals, rising cyber security talents and
capable sales personnel. The Company also aims at growing through M&A.
The overall key strategic target for F-Secure is to become the leading European
cyber security company.
The Company has communicated its strategy in the Q4 interim stock exchange
release (5 February 2016). Further details of the strategy can be found on the
Company’s web pages at:
http://www.f-secure.com/en/web/corporation_global/company/vision-and-strategy
Outlook for 2016
The Company’s outlook for 2016 remains unchanged.
-- F-Secure anticipates its overall security revenues to grow in 2016 compared
to the year before (2015: EUR 148 million)
-- EBIT for continuing operations is estimated to be EUR 17-21 million (2015:
EUR 20 million)
In 2015 F-Secure gave its profitability guidance as EBIT (non-IFRS), in which
the cost impact of the deferred payment and earn-out elements of the nSense
acquisition were excluded. In 2016, the EBIT guidance includes an estimated EUR
3 million cost impact from these elements, hence the guided figure is not
directly comparable to that given in 2015.
Revenue growth is expected to continue especially in the Company's cyber
security services, corporate security products (in particular Protection
Service for Business) sold through the reseller channel, and direct-to-consumer
sales of F-Secure’s multi-device security offering SAFE and the privacy product
Freedome. Sales of consumer security through the operator channel are expected
to remain largely flat. The revenue outlook is based on the sales pipeline at
the time of this outlook, existing subscriptions and contracts, as well as
current exchange rates.
F-Secure is actively investing in the development and commercialization of
several new products. The cost of development as well as expenses relating to
commercial launches are likely to have an impact on the Company’s overall
profitability in the short to medium term while the revenues from new products,
including Sense for the protection of smart homes and Rapid Detection Service
for enterprises, are difficult to estimate and may remain low. This cost impact
has been taken into account in the Company’s profitability guidance and is in
line with the Company’s principle to prioritize growth over short-term
profitability.
Events after period end
No material changes regarding the Company's business or financial position have
occurred after the end of the second quarter.
News conference and webcast
A news conference for analysts and media will be held (in Finnish) at the
Company's headquarters (address: Tammasaarenkatu 7, 00180 Helsinki) on Thursday
4 August 2016 at 11.00-12.00 a.m. (EEST).
A webcast for international investors and analysts will be held (in English) on
the same day at 14.30 p.m. (EEST). To participate in the online meeting via
web, please click on the link: https://meet.f-secure.com/tapio.pesola/TY5D3TRJ
To join via phone, please dial in to +358975110100. The conference ID is
507694. The presentation material including live video is only available via
the online webcast.
The material will be available at the company's website before the call begins:
www.f-secure.com/investors.
F-Secure Corporation
Additional information
Samu Konttinen, CEO, F-Secure Corporation
+358 9 2520 0700
Saila Miettinen-Lähde, CFO, F-Secure Corporation
+358 9 2520 0700
Tapio Pesola, IR Manager, F-Secure Corporation
+358 44 3734693
Financial calendar
F-Secure Corporation will publish its interim reports during 2016 as follows:
-- Q3/2016: 3 November 2016
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