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F-Secure Interim Report 1 January - 30 September 2021

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F-Secure Corporation, Interim Report, 21 October 2021 at 08.00 EET

F-Secure Interim Report 1 January - 30 September 2021

Solid growth in corporate security products

Highlights of July-September (Q3)

  • Revenue increased by 8% to EUR 58.7 million (54.5m)

  • Revenue from corporate security products increased by 13% to EUR 21.0 million (18.5m)

  • Revenue from cyber security consulting increased by 2% to EUR 11.2 million (10.9m)

  • Revenue from consumer security increased by 6% to EUR 26.5 million (25.0m)

  • Adjusted EBITDA was EUR 11.0 million (11.0m), 19% of revenue (20%)

  • Earnings per share (EPS) was EUR 0.04 (EUR 0.03)

  • Cash flow from operating activities before financial items and taxes was EUR 3.9 million (7.9m)

 

Highlights of January- September

  • Revenue increased by 8% to EUR 174.6 million (162.3m)

  • Revenue from corporate security products increased by 9% to EUR 60.7 million (55.5m)

  • Revenue from cyber security consulting increased by 7% to EUR 34.8 million (32.6m)

  • Revenue from consumer security increased by 7% to EUR 79.2 million (74.2m)

  • Adjusted EBITDA was EUR 28.8 million (28.4m), 16% of revenue (18%)

  • Strategic reviews resulted in items affecting comparability (IAC) of EUR 2.7 million

  • Earnings per share (EPS) was EUR 0.07 (EUR 0.06)

  • Cash flow from operating activities before financial items and taxes was EUR 23.1 million (28.9m)

 

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


 


 

Outlook (unchanged)

F-Secure’s financial outlook for 2021 is:

 

  • Revenue from corporate security products is expected to grow at a high single-digit rate.

  • Revenue from cyber security consulting is expected to grow but uncertainty remains due to the COVID-19 pandemic.

  • Revenue from consumer security is expected to grow approximately at the same rate as in 2020.

  • Adjusted EBITDA is expected to remain approximately at the previous year's level (EUR 35.7 million).

 

The COVID-19 pandemic continues to impact the predictability of cyber security consulting and can also impact the new sales of software solutions. The related risks are described in Interim Report 1 January - 30 September 2021.

 

Financial Targets

 

F-Secure published financial targets on 31 August 2021. The mid-term financial targets derived from the strategy of F-Secure Corporation are:

 

  • Revenue from corporate security products to grow at a double-digit rate

  • Revenue from cyber security consulting to grow at a high single-digit rate

  • Revenue from consumer security to grow at a mid-single-digit rate

  • Adjusted EBITDA margin improving towards 20%

 

F-Secure’s financial targets are mid-term ambitions and should not be viewed as an outlook for the ongoing fiscal year 2021.

 

CEO JUHANI HINTIKKA

F-Secure’s revenue grew by 8% which combined with our scalable business model resulted in adjusted EBITDA margin of 19% during the third quarter.

 

The revenue growth from corporate security products accelerated to 13% year-on-year.  In business security software demand for our cloud-native solutions translated into strong order growth for EDR (Endpoint Detection and Response) and Cloud Protection for Salesforce. In Managed Detection and Response (MDR) our focus on key verticals resulted in deals with several new customers from manufacturing, technology and financial service industries. While our MDR business is still in an investment phase, our position as the trusted partner to solve complex cyber security challenges combined with the increasing market demand presents a great opportunity.

 

The cyber security consulting revenue grew by 2% year-on-year. Regional variations in business performance continued, as COVID-19 related restrictions still had a negative impact during Q3 in some markets. I was pleased to see good demand for subscription-based services where customers appreciate our outcome-based approach. Additionally, customers’ technology-driven business strategies create demand for high-value services that require deep expertise from cloud environments. Attracting and developing talent with the right skillsets is the key to success in this business.

 

Consumer security continued on a growth path with the Q3 revenue growing by 6% year-on-year which was driven by the sales of our whole portfolio, across the service provider channel. Device activations increased and renewal performance was solid. In addition, our partnership approach resulted in some existing service providers signing new deals to add more F-Secure products to their offering.

 

F-Secure builds and sustains trust in the digital society. To further this mission, we are working to improve the trustworthiness of artificial intelligence in the cyber security industry. F-Secure is a key industrial partner in the SPATIAL project by the European Commission where this collaborative effort unites academia and industry to increase the reliability and security of artificial intelligence and data management in cyber security applications.

 

At the Capital Markets Day, we announced the new strategy that is based on having three growing business areas brought together by technology. In September we started a strategic review that aims at finding a company structure that enables optimal capital allocation for both corporate and consumer security businesses and maximizes shareholder value in the long term. This evaluation will be completed latest by the end of H1/2022. Based on the current progress we continue to see the possible listing of consumer security business as one alternative.

 

 

  

 

Financial performance

EUR m

7-9/2021

7-9/2020

Change %

1-9/2021

1-9/2020

Change %

1-12/2020

Revenue

                   58.7  

                   54.5  

8 %

               174.6  

                 162.3  

8 %

          220.2  

     Consumer security

                        26.5  

25.0

6 %

79.2

74.2

7 %

100.1

     Corporate security

                        32.1  

29.5

9 %

95.5

88.1

8 %

120.1

Products

21.0

18.5

13 %

60.7

55.5

9 %

74.3

Consulting

11.2

10.9

2 %

34.8

32.6

7 %

45.8

Cost of revenue

-12.4

-11.8

5 %

-36.8

-35.8

3 %

-48.0

Gross Margin

46.3

42.7

8 %

137.8

126.5

9 %

172.2

of revenue, %

78.9 %

78.3 %

 

78.9 %

77.9 %

 

78.2 %

Other operating income

0.4

0.4

8 %

1.3

1.7

-19 %

2.1

Operating expenses 1)

-35.7

-32.0

11 %

-110.4

-99.6

11 %

-138.5

     Sales & Marketing

-22.4

-20.9

7 %

-68.8

-64.7

6 %

-89.4

     Research & Development

-9.8

-8.0

22 %

-29.6

-25.5

16 %

-35.9

     Administration

-3.5

-3.1

11 %

-11.9

-9.3

28 %

-13.2

Adjusted EBITDA 2)

11.0

11.0

0 %

28.8

28.4

1 %

35.7

of revenue, %

18.8 %

20.2 %

 

16.5 %

17.5 %

 

16.2 %

Items affecting comparability (IAC) 2)

-0.4

 

 

-2.7

 0.4

 

 

EBITDA

10.6

11.0

-4 %

26.1

28.8

-10 %

35.7

of revenue, %

18.1 %

20.2 %

 

14.9 %

17.8 %

 

16.2 %

Depreciation  & amortization

-2.7

-3.1

-11 %

-8.2

-9.6

-14 %

-12.6

Impairment

 

-0.3

 

 

-0.3

 

-0.3

PPA amortization

-0.7

-0.7

-8 %

-2.1

-2.4

-11 %

-3.2

EBIT

7.2

6.9

4 %

15.7

16.5

-5 %

19.7

of revenue, %

12.3 %

12.7 %

 

9.0 %

10.2 %

 

8.9 %

 

 

 

 

 

 

 

 

Adjusted EBIT 2)

8.3

7.7

8 %

20.6

18.6

11 %

22.9

of revenue, %

14.1 %

14.0 %

 

11.8 %

11.4 %

 

10.4 %

 

 

 

 

 

 

 

 

Earnings per share, (EUR) 3)

0.04

0.03

10 %

0.07

0.06

16 %

0.08

Deferred revenue

 

 

 

81.5

72.0

13 %

81.0

Cash flow from operations before financial items and taxes

3.9

7.9

-51 %

23.1

28.9

-20 %

48.3

Cash and financial assets at fair value through P&L

 

 

 

43.7

42.8

2 %

51.4

ROI, %

24.2 %

24.2 %

0 %

17.9 %

20.3 %

-12 %

18.5 %

Equity ratio, %

 

 

 

61.2 %

49.2 %

24 %

52.5 %

Gearing, %

 

 

 

-13.8 %

8.4 %

-265 %

-14.1 %

Personnel, end of period

 

 

 

1,689

1,693

0 %

1,678

 

  1. Excluding Items Affecting Comparability (IAC) and depreciation and amortization

  2. Adjustments are material items outside normal course of business associated with acquisitions, integration, restructuring, gains or losses from sales of businesses and other items affecting comparability.  Reconciliation and a breakdown of adjusted costs is in note 5 of the Table Section of the report.

  3. Based on the weighted average number of outstanding shares during the period 158,342,807 (1-9/2021).

 

Events after period-end

No material changes regarding the company’s business or financial position have materialized after the end of the quarter.

 

Webcast

F-Secure’s CEO, Juhani Hintikka, and CFO, Tom Jansson, will present the results in a webcast starting at 14.00 EEST. The webcast will be held in English and can be accessed at https://f-secure.videosync.fi/2021-10-21-fsq3ir. Questions are requested in written format in the webcast portal.

 

The presentation material and the webcast recording will be available on the company’s website.

 

Additional information

This is a summary of F-Secure’s Interim Report 1 January - 30 September 2021. The full report is a PDF file attached to this stock exchange release and it is also available on the company's website.


 

Financial calendar

F-Secure Corporation will publish its financial calendar for 2022 later this year.


 

Contact information

Tom Jansson, CFO, F-Secure Corporation

Henri Kiili, Investor Relations and Corporate Finance Director, F-Secure Corporation

+358 40 8405450

investor-relations@f-secure.com

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