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Inside information, profit warning: WithSecure’s Cloud Annual Recurring Revenue (ARR) growth did not reach the outlook; WithSecure estimates to meet other areas of the 2023 outlook

Written by Customer Service on . Posted in Public Companies.

WithSecure Corporation, Inside information, 18 January 2024 at 19:00 EET 

Inside information, profit warning: WithSecure’s Cloud Annual Recurring Revenue (ARR) growth did not reach the outlook; WithSecure estimates to meet other areas of the 2023 outlook

According to preliminary, unaudited figures, WithSecure estimates that the ARR growth of cloud products will be approximately 8 % from the previous year.

Outlook for 2023 for cloud ARR growth was 18 – 24%. At the end of 2022, cloud ARR was EUR 80.2 million.

Rationale for not meeting the cloud ARR outlook

WithSecure cloud revenue is based on recurring subscriptions. The company collected a high volume of new subscriptions in the end of 2022, leading to a very high December 2022 ARR. Although the fourth quarter 2023 revenue was higher than in the other quarters of the year, a similar year-end increase of net new subscriptions in December 2023 did not materialize as expected.  

Estimate for full year 2023 financial results – WithSecure will meet the other parts of financial outlook

According to preliminary, unaudited figures, WithSecure estimates the following outcomes for other part of its financial outlook for 2023 (issued on 11 July 2023):

Revenue from cloud products is estimated to grow by approximately 19%.  2023 outlook for cloud products revenue growth was 18 – 24% from previous year. Previous year (2022) revenue from cloud products was EUR 68.7 million.

Total revenue of the group is estimated to grow by approximately 6%. 2023 outlook for total revenue growth was 6 – 12% from previous year. Previous year (2022) revenue was EUR 134.7 million.

Adjusted EBITDA of 2023 is estimated to be approximately EUR -16.1 million. Fourth quarter adjusted EBITDA is estimated to be approximately EUR +0.2 million.

2023 outlook for adjusted EBITDA was the following: Adjusted EBITDA will improve from previous year. Previous year’s Adjusted EBITDA (Estimated comparable EBITDA for two first quarters) was EUR -23.2 million. Adjusted EBITDA of fourth quarter will be between EUR -4 million and EUR +1 million.

In addition, WithSecure estimates its fourth quarter cash flow to be positive.

Estimate for financial result of cyber security consulting business subject to strategic review

Fourth quarter revenue of the cyber security consulting business in scope of the strategic review is estimated to be approximately EUR 10 million. Gross margin for the same period is estimated to reach approximately the level of 55%. The increase of gross margin is estimated to significantly improve the profitability of the consulting business. The business will start 2024 with a strong order backlog.  

The financial information stated in this release is preliminary and unaudited, as the company’s financial statements process is still in progress.

Full Financial statement release and Annual Report 2023 will be published on 13 February 2024.

Contact information:

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

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