F-Secure Corporation, Financial statement release, 9 February 2018 at 09.00 EET
CORPORATE SECURITY REVENUE GROWTH ACCELERATED TO 16%
This is a summary of F-Secure’s Financial Statements. The full report is a PDF file attachment to this stock exchange release and is also available on the company's website at the address: www.f-secure.com/ir.
Highlights of October–December(Q4)
- Revenue increased by 5% year-on-year to EUR 44.4 million (42.4m)
- Revenue from corporate security increased by 16% to EUR 20.2 million (17.4m), representing 45% (41%) of all revenue
- Revenue from consumer security decreased by 3% to EUR 24.2 million (25.0m), representing 55% (59%) of all revenue
- EBIT was EUR 3.9 million, representing 9% of revenue (6.9m, 16%) and reflecting significant investments in growth
- Earnings per share (EPS) was EUR 0.02 (EUR 0.04, EUR 0.04 including discontinued operations)
- Deferred revenue increased by 13% to EUR 61.1 million (54.3m) at the end of the quarter, reflecting strong order intake in corporate security
- Cash flow from operations was EUR 11.4 million (8.3m).
Highlights of the full year 2017
- Revenue increased by 7% year-on-year to EUR 169.7 million (158.3m)
- Revenue from corporate security increased by 16% to EUR 72.6 million (62.5m), representing 43% (39%) of all revenue
- Revenue from consumer security increased by 1% to EUR 97.1 million (95.8m), representing 57% (61%) of all revenue
- EBIT was EUR 11.1 million, representing 7% of revenue (19.2m, 12%)
- Earnings per share (EPS) was EUR 0.07 (EUR 0.10, EUR 0.10 including discontinued operations)
- Cash flow from operations was EUR 26.0 million (21.9m)
- The Board of Directors is proposing a dividend of EUR 0.04 per share for 2017
Figures in this Financial Statement Release are audited. All income statement figures refer to continuing operations, and figures in brackets refer to the corresponding period in the previous year, unless otherwise stated. F-Secure’s personal cloud storage business (younited) was sold to Synchronoss Technologies in February 2015 and is reported as discontinued operations 2015–2016.
Outlook for 2018
F-Secure continues to invest in the growth of the corporate business, both the development of cyber security products and services as well as sales and marketing of these solutions.
The company’s outlook for 2018:
- Revenue from corporate security is expected to grow by over 15% compared to 2017
- Revenue from consumer security is expected to stay at the same level as in 2017.
- EBIT is expected to be in the range of 8-12M€
Outlook for strategy period 2018–2021
The demand for corporate cyber security products and services is expected to grow strongly. F-Secure aims to grow faster than the market, with revenue from corporate security expected to grow above 15% annually during our strategy period 2018-2021.
Driven by the anticipated revenue growth and scalable business model, the company’s profitability is expected to improve significantly in the long-term. The board and the management continuously seek to balance growth investments and profitability to optimize long-term value creation for the shareholders.
CEO Samu Konttinen
In the fourth quarter, F-Secure’s corporate security business grew 16%. The main growth drivers were our managed detection service business (F-Secure Rapid Detection Service, RDS) and cyber security services. In consumer business, our direct sales to consumers continued to show good growth, but the loss of a single operator customer in Latin America caused the overall consumer revenue to decline by 3% in the fourth quarter.
In the full year 2017, our total revenue increased by 7% to EUR 169,7 million. Revenue from corporate security grew by 16% and from consumer security by 1%. Our operating profit EUR 11.1 million, continued to reflect our investments in sales and marketing as well as product development.
Last year we took important steps forward in our transformation from an endpoint protection company into a provider of a broad offering of cyber security products and services. We signed the first RDS deals in several new key markets in Europe. The demand for detection solutions is strong as only a fraction of companies currently have sufficient capabilities to counter targeted attacks. I’m very pleased with RDS, and how it has enabled us to make a successful entry into this rapidly growing market.
In 2017, our revenue from endpoint protection continued growing slightly above market growth, but below our expectations. The mixed performance between countries is an issue we continue to address. In 2018, we will launch a new fully automated solution for endpoint detection and response (EDR), building on the existing artificial intelligence and machine learning capabilities of RDS. Whereas RDS is a detection service aimed at larger companies, EDR will allow us to scale our sales to a much broader base of corporate customers. The new solution is designed to be compatible with endpoint protection solutions – F-Secure’s or third-party solutions – to allow customers to add an additional layer of security to their existing infrastructure.
Cyber security consulting services business had another very strong year. We continue to serve the most demanding verticals where security is absolutely critical. Our deal sizes are increasing, and in the fourth quarter we signed our largest single deal in cyber services. We also see an increasing share of customers buying our services continuously. During the final quarter of the year, our ability to recruit cyber security experts clearly improved.
Revenue from consumer security was at the previous year’s level in 2017, as expected. The good growth in our direct consumer business continued, both online and in retail channels. In direct sales, growth continued to be driven by increased renewal rates and cross selling of the broad consumer portfolio. Consumers are now increasingly buying endpoint protection, privacy and VPN solutions bundled together. In the operator business, revenue slightly declined due to the loss of a single customer. We expect this loss to continue to be visible in our Latin American consumer business in the first half of 2018. Elsewhere the operator business remained stable. Operators are very satisfied with our services, as reflected by best-in-class Net Promoter Scores (NPS) from partners. Overall, the operator channel continues to be a strategic asset for F-Secure.
Together with all of our fellows, I look forward to taking more important steps in our transformation in 2018. In a rapidly changing industry it is crucial to stay innovative, and for 30 years F-Secure has shown it can be a front runner in technology. Just last month, we were positioned as a Visionary in Gartner’s 2018 Magic Quadrant for Endpoint Protection Platforms. We will continue to drive innovation in cyber security. Our comprehensive portfolio of products and services, along with F-Secure’s unique combination of man and machine provides a clear competitive advantage for us.
Key figures
Key figures are for continuing operations unless otherwise stated.
| EUR m | 10–12/2017 | 10–12/2016 | Change | 1–12/2017 | 1–12/2016 | Change |
| Revenue | 44.4 | 42.4 | 5 % | 169.7 | 158.3 | 7 % |
| Operating profit (EBIT) | 3.9 | 6.9 | -43 % | 11.1 | 19.2 | -42 % |
| % of revenue | 9 % | 16 % | 7 % | 12 % | ||
| Profit before taxes | 3.6 | 7.6 | -53 % | 11.9 | 20.8 | -43 % |
| Earnings per share, continuing operations (EUR) 1) 3) | 0.02 | 0.04 | -56 % | 0.07 | 0.10 | -32 % |
| Earnings per share, (EUR) 1) 2) 3) | 0.02 | 0.04 | -55 % | 0.07 | 0.10 | -30 % |
| Deferred revenue | 61.1 | 54.3 | 13 % | |||
| Cash and available-for-sale financial assets | 90.2 | 92 .7 | -3 % | |||
| ROI, % 2) | 30.3 % | 44 .7% | 19.7 % | 28.6 % | ||
| Equity ratio, % 2) | 61.3 % | 66 .7% | ||||
| Gearing, % 2) | -129.9 % | - 122,1 % | ||||
| Personnel, end of period 2) | 1,104 | 1,026 | 8 % |
1) Based on the weighted average number of outstanding shares during the period 156,713,710 (10–12/2017) and 156,502,983 (1–12/2017)
2) Includes both continuing and discontinued operations
3) Earnings per share (EPS) excluding returned withholding taxes was EUR 0.05 for 1–12/2017.
Events after period-end
Dividend proposal
The Board proposes to the AGM the distribution of a EUR 0.04 dividend per share for 2017. The Company's dividend policy is to pay approximately half of its profits as dividends. Subject to circumstances, the Company may deviate from this policy.
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) today at 09.30–10.30 a.m. (EET).
A webcast will be held (in English) at 15.00 p.m. (EET ).
- To participate in the online meeting, please click on the link: https://meet.f-secure.com/tapio.pesola/GJNN0T7Z
- To participate via phone, please dial in to +358975110100. The conference ID is 8103472.
The material will be available at the company's website before the call begins: www.f-secure.com/investors.
F-Secure Corporation
Additional information
This is a summary of F-Secure’s Financial Statements. The full report is a PDF file attachment to this stock exchange release and is also available on the company's website at the address: www.f-secure.com/ir.
Contact information
Samu Konttinen,
CEO, F-Secure
+358 9 2520 0700
Eriikka Söderström,
CFO, F-Secure
+358 40 669 1844
Tapio Pesola,
IR Manager, F-Secure
+358 44 3734693
Financial calendar
F-Secure Corporation will publish its interim reports during 2018 as follows:
- Q1/2018: 4 May 2018
- Q2/2018: 8 August 2018
- Q3/2018: 2 November 2018
Annual General Meeting
- The Annual General Meeting (AGM) is scheduled to be held on Wednesday, 4 April 2018
- The Annual Report for 2017 will be published on the Company's website latest on 14 March 2018
More information is available at www.f-secure.com/agm.
