With Secure Interim Report 1 January - 31 March 2022
WithSecure Corporation, Interim Report January - March
2022, 27 April 2022 at 08.00 EET
With Secure Interim Report 1 January - 31 March 2022
Revenue growth in all businesses, consumer security
business demerger progressing
WithSecure Board of Directors announced on 17 February 2022 its
decision to pursue towards the separation of its Consumer Security
business through a partial demerger. It is planned that the
Consumer Security business will be transferred into a new
independent company to be named F-Secure
Corporation (“F-Secure”). WithSecure will
continue the Corporate Security business under the new name
(“WithSecure”). Reflecting the progress of the
demerger plans, WithSecure is presenting consumer security business
as Discontinued operations under IFRS 5 from first quarter of 2022.
Previous quarters’ income statements are restated accordingly. In
this interim report, certain performance indicators are presented
on a Combined operations basis, including both WithSecure
(Continuing operations) and F-Secure (Discontinued operations).
Highlights of January–March (Q1)
WithSecure (Continuing operations)
- Revenue of
WithSecure increased by 3% to EUR 32.4 million (EUR 31.5 million)
- Revenue from
cloud-native corporate security solutions [1] increased by 29%
to EUR 15.2 million (EUR 11.8 million)
- Revenue from
on-premise corporate security solutions decreased by 7% to EUR 7.1
million (EUR 7.7 million)
- Revenue from cyber
security consulting decreased by 17% EUR to 10.0 million (EUR 12.0
million). Comparable revenue excluding divestments remained at
previous year’s level
- Annual recurring
revenue (ARR) [2] of cloud-native corporate security solutions
grew by 36% to EUR 64.1 million (EUR 47.0 million). ARR growth from
previous quarter was 5%
- Estimated comparable
EBITDA [3] of WithSecure decreased to EUR -5.2 million (EUR
-1.5 million)
- Items affecting
comparability (IAC) for Adjusted EBITDA were EUR -4.4 million (EUR
0.0)
F-Secure (Discontinued operations)
- Revenue of F-Secure
increased by 4% to EUR 27.4 million (EUR 26.3 million)
- Revenue from partner
channel increased by 4% to EUR 21.7 million (EUR 20.8 million)
- Revenue from direct
channel increased by 3 % to EUR 5.7 million (EUR 5.5 million)
- Estimated comparable
EBITDA of F-Secure increased by 17% to EUR 13.0 million (EUR 11.2
million)
- Items affecting
comparability (IAC) for Adjusted EBITDA were EUR -2.7 million (EUR
0.0)
- Rule of 40 metric
[4] exceeded, as the figure was 52%
Combined operations
- Revenue for Combined
operations increased by 3% to EUR 59.7 million (EUR 57.8 million);
on a comparable basis the revenue growth was 8%
- Adjusted EBITDA for
Combined operations decreased by 18% to EUR 7.9 million (EUR 9.6
million)
- Earnings per share
(EPS) were EUR -0.02 (EUR 0.03)
- Cash flow from
operating activities before financial items and taxes was EUR 1.1
million (EUR 6.3 million)
Figures in this report are unaudited. Figures in brackets refer
to the corresponding period in the previous year, unless otherwise
stated. Comparative period figures related to income statement have
been restated due to application of IFRS 5. Percentages and figures
presented herein may include rounding differences and therefore may
not add up precisely to the totals presented.
[1] Corporate security products excluding on-premise
(Business Suite). Cloud Portfolio includes Elements Cloud, Cloud
Protection for Salesforce and Countercept.[2] Annual recurring
revenue (ARR) of corporate security products is calculated by
multiplying monthly recurring revenue of last month of quarter by
twelve. Monthly recurring revenue includes recognized revenue
within the month excluding non-recurring revenues.[3] For
explanation of the Estimated comparable EBITDA, see paragraph in
the end of Highlights section.[4] Rule of 40 is calculated as
the sum of Estimated comparable EBITDA margin and revenue growth
rate.
Starting from the first quarter of 2022, future F-Secure
financials are presented as Discontinued operations according to
IFRS 5 standard, reflecting the status of the demerger process. The
operating expenses are split according to actual ownership of
assets, liabilities and resources after the demerger. The resulting
figures do not fully reflect the profitability of either business
on a stand-alone basis. WithSecure (Continuing operations) expenses
include the cost of resources allocated to supporting F-Secure
during the transition period. WithSecure will receive compensation
for such expenses under the Transitional Service Agreements
(“TSA”). Estimated comparable EBITDA is presented
as alternative performance measure (“APM”) for profitability to
improve comparability between periods. It excludes (for
Discontinued operations: includes) activities related to research
and development, and cost of facilities held by WithSecure.
Comparative periods are adjusted accordingly. For a full bridge
between the different performance measures, please refer to Note 6
Reconciliation of alternative performance measures.
EUR million |
WithSecure (Continuing operations) |
F-Secure (Discontinued operations) |
Adjusted EBITDA Q1 2022(calculated on the basis of IFRS 5) |
-6.9 |
14.8 |
Research and development |
1.3 |
-1.3 |
Facilities held by WithSecure |
0.4 |
-0.4 |
Estimated comparable EBITDA Q1 2022 |
-5.2 |
13.0 |
Outlook
WithSecure will share more specific outlook for 2022 later when
the demerger process has progressed further.
Medium term financial targets (unchanged)
Medium term financial targets for the corporate security
business WithSecure:
- Growth Target: To double revenue organically by the end of
2025
- Profitability Target: Adjusted EBITDA break-even by the end of
2023 and adjusted EBITDA margin of some 20% by 2025
Medium term financial targets for the consumer security business
F-Secure:
- Growth Target: High single digit organic revenue growth
- Profitability Target: After initial growth investments,
adjusted EBITA margin of above 42%
CEO Juhani Hintikka WithSecure started the
first quarter of 2022 with growing orders and revenue in both
corporate security and consumer security businesses. Starting from
this quarter, the consumer security profitability figures are
presented separately, reflecting the progress of our demerger
plans.
Annual recurring revenue (ARR) for our cloud-native corporate
security products grew by 36% to EUR 64 million (EUR 47 million).
Increasing number of customers are expanding the scope of their
cyber security solutions to include more than one of the products
of WithSecure Elements portfolio.
The Managed Detection and Response (MDR) continued strong growth
and ended the quarter with a landmark contract with a Fortune 500
customer. In the first quarter, the growth was particularly strong
in Germany, Finland and the US, but we are also seeing good
progress in other European markets.
We are also pleased with the significantly increasing demand of
Cloud Protection for Salesforce, especially among the US and
Japanese Salesforce users.
In summary, our journey towards a SaaS (Security-as-a-Service)
company is progressing well: cloud-native corporate security
products are now representing nearly 50% of WithSecure’s corporate
security revenue.
Revenue from our cyber security consulting decreased slightly.
Comparability is impacted by the divestments of the UK public
sector consulting in December 2021, as well as the divestment of
our subsidiary in South Africa in February 2022. On a comparable
basis, the cyber security consulting remained at previous year’s
level. The demand for the Cyber Security Consulting is currently
strong and we are working hard with recruiting and in-house
activities to enable growth through developing our pool of experts
for our clients’ needs.
Consumer security continued good performance with a 4% revenue
growth. In the end of the first quarter, we started to roll out the
new user interface through the partner channel, combining all
products seamlessly into one application. The increased demand for
TOTAL offering will enable growth from increased average
revenue per user, which is a key lever in F-Secure's growth
strategy.
We are following with shock and sadness the war in Ukraine. It
is likely to have long, profound impacts on many areas of life. One
of its consequences is an increased awareness of the importance of
cyber security.
I would like to thank all our WithSecure colleagues who have
been supporting Ukraine by either hosting refugees or in other
ways.
Our plan to separate consumer security business through a
partial demerger, as announced in February, has progressed as
planned. Based on the decision by the Annual General Meeting on 16
March, company’s name was changed from F-Secure to WithSecure,
followed by a successful launch of a new WithSecure™ brand. In
March, we also completed an equity issue of EUR 77 million,
demonstrating the trust that the investors have in our growth
strategy and plans on future. The demerger is still subject to
approval by an Extraordinary General Meeting (EGM) on 31 May. The
planned completion of the demerger is on 30 June, and trading on
the consumer security company F-Secure’s shares is expected to
start on 1 July.
Financial performance
EUR m |
1-3/2022 |
1-3/2021 |
Change
% |
1-12/2021 |
WithSecure (Continuing operations) |
|
|
|
|
Revenue |
32.4 |
31.5 |
3 % |
130.0 |
Cloud-native corporate security solutions |
15.2 |
11.8 |
29 % |
52.7 |
On-premise corporate security solutions |
7.1 |
7.7 |
-7 % |
30.0 |
Cyber security consulting |
10.0 |
12.0 |
-17 % |
47.2 |
Cost of revenue |
-11.1 |
-10.1 |
10 % |
-41.5 |
Gross Margin |
21.3 |
21.4 |
-1 % |
88.5 |
of revenue, % |
65.8 % |
68.0 % |
|
68.1 % |
Other operating income |
0.5 |
0.4 |
6 % |
2.5 1) |
Operating expenses 1) |
-28.7 |
-24.9 |
15 % |
-107.6 |
Sales & Marketing |
-18.8 |
-16.1 |
17 % |
-68.0 |
Research & Development |
-7.9 |
-6.5 |
22 % |
-28.5 |
Administration |
-2.0 |
-2.3 |
-17 % |
-12.7 |
Adjusted EBITDA 2) |
-6.9 |
-3.2 |
118 % |
-17.2 |
of revenue, % |
-21.4 % |
-10.1 % |
|
-13.3 % |
Items affecting comparability (IAC) |
|
|
|
|
Divestments |
-3.1 |
|
|
0.5 |
Strategy |
-1.3 |
|
|
|
EBITDA |
-11.4 |
-3.2 |
257 % |
-16.7 |
of revenue, % |
-35.1 % |
-10.1 % |
|
-12.8 % |
Depreciation & amortization, excluding PPA 3) |
-2.5 |
-2.4 |
7 % |
-9.6 |
Impairment |
|
|
|
-1.0 |
PPA amortization |
-0.7 |
-0.8 |
-10 % |
-2.8 |
EBIT |
-14.6 |
-6.3 |
131 % |
-30.1 |
of revenue, % |
-45.0 % |
-20.0 % |
|
-23.2 % |
|
|
|
|
|
Estimated comparable EBITDA |
-5.2 |
-1.5 |
247 % |
-11.3 |
of revenue, % |
-16.1 % |
-4.8 % |
|
-8.7 % |
Adjusted EBIT 2) |
-9.4 |
-5.5 |
70 % |
-26.8 |
of revenue, % |
-29.2 % |
-17.6 % |
|
-20.6 % |
Deferred revenue |
67.9 |
63.5 |
7 % |
66.4 |
|
|
|
|
|
F-Secure (Discontinued operations) |
|
|
|
|
Revenue |
27.4 |
26.3 |
4 % |
106.3 |
Partner channel |
21.7 |
20.8 |
4 % |
84.2 |
Direct channel |
5.7 |
5.5 |
3 % |
22.1 |
Adjusted EBITDA |
14.8 |
12.8 |
15 % |
53.7 |
of revenue, % |
54.0 % |
48.7 % |
|
50.6 % |
Items affecting comparability (IAC) |
|
|
|
|
Strategy |
2.7 |
|
|
4.3 |
EBIT |
11.6 |
12.4 |
-6 % |
47.8 |
of revenue, % |
42.5 % |
47.3 % |
|
45.0 % |
|
|
|
|
|
Estimated comparable EBITDA |
13.0 |
11.2 |
16 % |
47.8 |
of revenue, % |
47.5 % |
42.6 % |
|
45.0 % |
|
|
|
|
|
Deferred revenue |
20.2 |
20.5 |
-1 % |
19.7 |
|
|
|
|
|
Combined operations (including Continuing and Discontinued
operations) |
|
|
|
|
Revenue |
59.7 |
57.8 |
3 % |
236.3 |
Adjusted EBITDA |
7.9 |
9.6 |
-18 % |
36.5 |
of revenue % |
13.1 % |
16.7 % |
|
15.4 % |
Earnings per share, (EUR) 4) |
- 0.02 |
0.03 |
-173 % |
0.08 |
Dividend, EUR per share |
|
|
|
|
Deferred revenue |
88.1 |
84.0 |
5 % |
86.1 |
Cash flow from operations before financial items and taxes |
1.1 |
6.3 |
-82 % |
38.7 |
Cash and financial assets at fair value through P&L |
121.5 |
47.1 |
158 % |
53.0 |
ROI, % |
-6.2 % |
22.5 % |
-128 % |
15.6 % |
Equity ratio, % |
73.4 % |
54.0 % |
36 % |
59.5 % |
Gearing, % |
-53.7 % |
-14.2 % |
277 % |
-25.8 % |
Personnel, end of period |
1,589 |
1,670 |
-5 % |
1,656 |
- Excluding Items Affecting Comparability (IAC) and depreciation
and amortization
- 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 6 of the Table Section of this report.
- Amortization of intangible assets from business combinations
(PPA, purchase price allocation, related amortizations).
- Based on the weighted average number of outstanding shares
during the period 161,314,834 (1-3/2022).
Events after period-end
No material changes regarding the company’s business or
financial position have taken place after the end of the
quarter.
Additional information
This is a summary of WithSecure’s interim report 1 January – 31
March 2022. The full report is a PDF file attached to this stock
exchange release. Full report is also available on the company
website.
Webcast
WithSecure’s CEO Juhani Hintikka and CFO Tom Jansson, as well as
Timo Laaksonen, CEO of future F-Secure and Sari Somerkallio, CFO of
future F-Secure, 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/q1-ir/
Questions in written format are requested in the webcast portal.
Presentation material and the webcast recording will be available
on the company’s website.
Financial calendar
During the year 2022, WithSecure Corporation will publish
financial information as follows:
- Half-Year Financial Report for January-June 2022, July 20,
2022
- Interim Report for January-September 2022, October 27,
2022
Contact information
Tom Jansson, CFO, WithSecure Corporation
Laura Viita, Investor Relations Director, WithSecure Corporation
+358 50 487 1044 investor-relations@f-secure.com
- WithSecure_Q1_2022_eng_final
F-secure Oyj (LSE:0EIE)
Historical Stock Chart
From Aug 2024 to Sep 2024
F-secure Oyj (LSE:0EIE)
Historical Stock Chart
From Sep 2023 to Sep 2024