F-Secure Half Year Financial Report 1 January – 30 June 2020
F-Secure Corporation, Half Year Financial Report, 16 July 2020 at 08.00 EESTF-Secure Half Year Financial Report 1 January – 30 June 2020Improved profitability in challenging market environment
Highlights of April-June (Q2)Revenue remained at previous year’s level, and was EUR 53.0 million (54.1m)Revenue from corporate security decreased by 6% to EUR 28.2 million (30.1m)Revenue from consumer security increased by 3% to EUR 24.8 million (24.0m)Adjusted EBITDA was EUR 10.2 million (4.8m), 19.3% of revenue (8.9%)EBIT was EUR 6.0 million (3.3m), 11.4% of revenue (6.1%)Earnings per share (EPS) was EUR 0.02 (EUR 0.02)Cash flow from operating activities before financial items and taxes was EUR 11.4 million (6.9m)F-Secure withdrew its financial outlook for 2020 in April due to COVID-19 related market uncertaintiesHighlights of January-June (H1)Revenue remained at previous year’s level, and was EUR 107.8 million (107.5m)Revenue from corporate security remained at previous year’s level, and was EUR 58.7 million (59.5m)Revenue from consumer security remained at previous year’s level, and was EUR 49.2 million (48.0m)Adjusted EBITDA was EUR 17.4 million (9.8m), 16.2% of revenue (9.1%)EBIT was 9.6 million (3.9m), 8.9% of revenue (3.6%)Earnings per share (EPS) was EUR 0.03 (EUR 0.01)Cash flow from operating activities before financial items and taxes was EUR 21.0 million (6.6m)F-Secure withdrew its financial outlook for 2020 in April due to COVID-19 related market uncertaintiesIn 2020 there are no changes to accounting principles impacting comparability to the previous year.Figures in this report are unaudited. Figures in brackets refer to the corresponding period in the previous year, unless otherwise stated.
CEO SAMU KONTTINENThe company has been working remotely for the whole quarter and I am happy with how well we have managed to handle our operations in these extraordinary times and keep our customers protected 24/7. In Q2 the negative topline impact related to the pandemic was limited to our consulting business and slightly to our MDR business as well, while the latter continued to grow. F-Secure’s software product businesses for both corporate and consumer markets have only been impacted by the COVID-19 to a limited extent. I was pleased to see us prudently manage costs, along with the exceptionally low sales and marketing activity also helped us to achieve strong profitability. We expect business operations to start normalizing in the coming quarters which will bring costs back to pre-pandemic levels.Managed Detection and Response (MDR) solutions continued to grow although at a slower pace due to the pandemic impacting new sales. In Q2, we won new customers in several European countries in the fields of engineering, finance, critical infrastructure, and in the public sector. The underlying demand for the managed detection and response solutions remains good, while we expect quarterly variation in new sales to continue.The endpoint security business continued to grow slightly while orders grew faster than the revenue. The second quarter was characterized by good performance in new sales across several countries. Our cloud-native products in Endpoint Protection (EPP) and Endpoint Detection and Response (EDR) are increasingly sold as a bundle because customers value a unified management interface. Cloud Protection for Microsoft Office 365 was launched to address email security challenges, which are still the main initial attack vectors in breaches. This is a nice addition to our Cloud Protection for Salesforce solution, which is gaining traction in the market.Cyber security consulting was hit by the COVID-19 pandemic, which led to a significant reduction in revenue from the previous year. We have countered the low utilization rates in impacted countries through means such as furloughs. The pandemic has often blocked access to customer sites and so put projects that require on-site work on hold. New client acquisition faced a significant slowdown as well. On the other hand, threat actors have not decreased their activity during the pandemic, which resulted in several Incident Response assignments. This is a prime example of how the demand for cyber security does not follow economic patterns. Towards the end of the quarter, our sales performance improved, but the pandemic still casts a shadow on the predictability of the business.In consumer security, the resilient operator channel has mainly been unaffected by the market uncertainties. Direct sales continued to perform well with a solid quarter in ecommerce. I was pleased to see us win three new operator partners, out of which two are in the US and one in Europe. The sales of F-Secure ID PROTECTION progressed well as we secured multiple new operator deals during the quarter and the product was launched in our own e-store in June.Despite the ongoing global pandemic, the long-term outlook of all F-Secure’s businesses remains to be attractive as the cyber security market fundaments have not changed.
Financial performanceExcluding Items Affecting Comparability (IAC) and depreciation and amortizationAdjustments 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 this report.Based on the weighted average number of outstanding shares during the period 157,995,583 (1-6/2020).Events after period-endNo material changes regarding the company’s business or financial position have materialized after the end of the quarter.WebcastF-Secure’s CEO Samu Konttinen will present the results in a webcast for analysts and investors starting at 14.00 EEST. The webcast will be held in English and can be accessed at https://f-secure.videosync.fi/2020-07-16-q2-report. 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 informationThis is a summary of F-Secure’s Half Year Report 2020. The full report is attached to this stock exchange release and it is also available on the company’s website.Financial calendarDuring the year 2020, F-Secure Corporation will publish financial information as follows:Interim report January-September 2020, October 29, 2020
Contact informationEriikka Söderström, CFO, F-Secure
+358 40 6691844Henri Kiili, Investor Relations and Treasury Director, F-Secure
+358 40 8405450
investor-relations@f-secure.comAttachmentF-Secure_Q2-2020_eng_FINAL
Highlights of April-June (Q2)Revenue remained at previous year’s level, and was EUR 53.0 million (54.1m)Revenue from corporate security decreased by 6% to EUR 28.2 million (30.1m)Revenue from consumer security increased by 3% to EUR 24.8 million (24.0m)Adjusted EBITDA was EUR 10.2 million (4.8m), 19.3% of revenue (8.9%)EBIT was EUR 6.0 million (3.3m), 11.4% of revenue (6.1%)Earnings per share (EPS) was EUR 0.02 (EUR 0.02)Cash flow from operating activities before financial items and taxes was EUR 11.4 million (6.9m)F-Secure withdrew its financial outlook for 2020 in April due to COVID-19 related market uncertaintiesHighlights of January-June (H1)Revenue remained at previous year’s level, and was EUR 107.8 million (107.5m)Revenue from corporate security remained at previous year’s level, and was EUR 58.7 million (59.5m)Revenue from consumer security remained at previous year’s level, and was EUR 49.2 million (48.0m)Adjusted EBITDA was EUR 17.4 million (9.8m), 16.2% of revenue (9.1%)EBIT was 9.6 million (3.9m), 8.9% of revenue (3.6%)Earnings per share (EPS) was EUR 0.03 (EUR 0.01)Cash flow from operating activities before financial items and taxes was EUR 21.0 million (6.6m)F-Secure withdrew its financial outlook for 2020 in April due to COVID-19 related market uncertaintiesIn 2020 there are no changes to accounting principles impacting comparability to the previous year.Figures in this report are unaudited. Figures in brackets refer to the corresponding period in the previous year, unless otherwise stated.
CEO SAMU KONTTINENThe company has been working remotely for the whole quarter and I am happy with how well we have managed to handle our operations in these extraordinary times and keep our customers protected 24/7. In Q2 the negative topline impact related to the pandemic was limited to our consulting business and slightly to our MDR business as well, while the latter continued to grow. F-Secure’s software product businesses for both corporate and consumer markets have only been impacted by the COVID-19 to a limited extent. I was pleased to see us prudently manage costs, along with the exceptionally low sales and marketing activity also helped us to achieve strong profitability. We expect business operations to start normalizing in the coming quarters which will bring costs back to pre-pandemic levels.Managed Detection and Response (MDR) solutions continued to grow although at a slower pace due to the pandemic impacting new sales. In Q2, we won new customers in several European countries in the fields of engineering, finance, critical infrastructure, and in the public sector. The underlying demand for the managed detection and response solutions remains good, while we expect quarterly variation in new sales to continue.The endpoint security business continued to grow slightly while orders grew faster than the revenue. The second quarter was characterized by good performance in new sales across several countries. Our cloud-native products in Endpoint Protection (EPP) and Endpoint Detection and Response (EDR) are increasingly sold as a bundle because customers value a unified management interface. Cloud Protection for Microsoft Office 365 was launched to address email security challenges, which are still the main initial attack vectors in breaches. This is a nice addition to our Cloud Protection for Salesforce solution, which is gaining traction in the market.Cyber security consulting was hit by the COVID-19 pandemic, which led to a significant reduction in revenue from the previous year. We have countered the low utilization rates in impacted countries through means such as furloughs. The pandemic has often blocked access to customer sites and so put projects that require on-site work on hold. New client acquisition faced a significant slowdown as well. On the other hand, threat actors have not decreased their activity during the pandemic, which resulted in several Incident Response assignments. This is a prime example of how the demand for cyber security does not follow economic patterns. Towards the end of the quarter, our sales performance improved, but the pandemic still casts a shadow on the predictability of the business.In consumer security, the resilient operator channel has mainly been unaffected by the market uncertainties. Direct sales continued to perform well with a solid quarter in ecommerce. I was pleased to see us win three new operator partners, out of which two are in the US and one in Europe. The sales of F-Secure ID PROTECTION progressed well as we secured multiple new operator deals during the quarter and the product was launched in our own e-store in June.Despite the ongoing global pandemic, the long-term outlook of all F-Secure’s businesses remains to be attractive as the cyber security market fundaments have not changed.
Financial performanceExcluding Items Affecting Comparability (IAC) and depreciation and amortizationAdjustments 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 this report.Based on the weighted average number of outstanding shares during the period 157,995,583 (1-6/2020).Events after period-endNo material changes regarding the company’s business or financial position have materialized after the end of the quarter.WebcastF-Secure’s CEO Samu Konttinen will present the results in a webcast for analysts and investors starting at 14.00 EEST. The webcast will be held in English and can be accessed at https://f-secure.videosync.fi/2020-07-16-q2-report. 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 informationThis is a summary of F-Secure’s Half Year Report 2020. The full report is attached to this stock exchange release and it is also available on the company’s website.Financial calendarDuring the year 2020, F-Secure Corporation will publish financial information as follows:Interim report January-September 2020, October 29, 2020
Contact informationEriikka Söderström, CFO, F-Secure
+358 40 6691844Henri Kiili, Investor Relations and Treasury Director, F-Secure
+358 40 8405450
investor-relations@f-secure.comAttachmentF-Secure_Q2-2020_eng_FINAL
