F-Secure Financial Statement Release 1 January - 31 December 2019

F-Secure Corporation, Financial Statement Release 2019, 12 February 2020 at 08.00 EET

F-Secure Financial Statement Release 1 January - 31 December 2019

Corporate security revenue grew 10% organically in fourth quarter


Highlights of October-December (Q4)

Highlights of January-December

1) F-Secure has adopted the new Leases standard (IFRS 16) on 1 January 2019 using the modified approach. Comparative information has not been restated. The impact of IFRS 16 on adjusted EBITDA is EUR +1.7 million for the fourth quarter and EUR +6.6 million for January-December. Impact on operative cash flow is EUR +1.5 million for the fourth quarter and EUR 6.0 million for January-December.

Figures in this report are unaudited. Figures in brackets refer to the corresponding period in the previous year, unless otherwise stated.

 

Outlook

The company's outlook for 2020 is:

This outlook disclosed on the 12 December 2019 replaced previously disclosed forecasts and forward looking statements.

 

CEO SAMU KONTTINEN

In the final quarter of 2019 F-Secure’s revenue increased by 4% to EUR 56.1 million, with corporate security growing by 10%. Revenue from consumer security remained at the previous year’s level. In terms of profitability, the quarter was in line with our expectations with adjusted EBITDA margin of 12%.

In Managed Detection and Response (MDR) solutions we continued to win new deals. Examples of these customers include a leading European logistics company, a large Nordic financial institution and a Nordic critical infrastructure company. In October F-Secure achieved the highest score among vendors in the MITRE ATT&CK evaluation based on a scoring code created by Forrester1). This demonstrates F-Secure’s exceptional capability to detect advanced threats. Overall, Managed Detection and Response is one of our top focus areas, while long sales cycles and varying deal sizes can cause significant quarterly variations in new sales.

F-Secure’s endpoint security business continued slight and steady growth driven by good performance in renewals. Our cloud-native EDR and EPP combination is a good fit for SME-sized customers and for our partners offering them services. In October, F-Secure’s industry-leading ability to cooperate with the partner network was awarded as the Channel Sales Program of the Year by SiriusDecisions of Forrester Research. Competitive rivalry in this market has intensified as several non-traditional endpoint security companies also now offer endpoint solutions.

Cyber security consulting grew strongly, while we continued to see variation in country performances. As an example of growing locations, Singapore had yet another exceptional quarter as customers were successfully served by cross-country resourcing. This demonstrates our increasing global reach that enables execution of large projects worldwide and, thus, we can tap into full potential of the market growth.

Revenue from consumer security remained at the previous year’s level. In Q4, the positive sentiment around ID PROTECTION started to materialize as we closed first deals with operator partners in Asia, Europe and US. Overall the operator channel delivered according to our expectations. Direct business had the strongest quarter of the year which is a good starting point for 2020.

After completion of restructuring and MWR InfoSecurity integration in December, F-Secure can now focus on better serving different customer segments in versatile business areas. This sets us well for successful 2020.

 

1)The Forrester MITRE ATT&CK Evaluation Guide, An Objective Analysis Of Round 1 And How To Interpret The Results by Josh Zelonis, with Stephanie Balaouras, Joseph Blankenship, Benjamin Corey, Peggy Dostie, and Diane Lynch, November 20, 2019


 

Financial performance

EUR m 10-12/2019 10-12/2018 Change % 1-12/2019 1-12/2018 Change %
Revenue 56.1 53.7 4 % 217.3 190.7 14 %
  Consumer security 23.4 24.0 -2 % 94.8 94.9 0 %
  Corporate security 32.7 29.8 10 % 122.5 95.9 28 %
Products 18.3 17.4 5 % 72.5 63.8 14 %
Consulting 14.4 12.4 16 % 50.0 32.0 56 %
Cost of revenue -12.9 -12.5 3 % -50.5 -39.4 28 %
Gross Margin 43.2 41.3 5 % 166.8 151.4 10 %
Other operating income 1) 0.4 0.6 -22 % 1.5 2.3 -31 %
Operating expenses 1) -37.0 -37.0 0 % -145.1 -136.2 7 %
  Sales & Marketing -25.5 -24.9 2 % -99.4 -90.7 10 %
  Research & Development -8.7 -9.0 -4 % -33.2 -33.6 -1 %
  Administration -2.9 -3.0 -4 % -12.4 -11.9 4 %
Adjusted EBITDA 2) 6.64) 4.9 36 % 23.24) 17.4 34 %
of revenue, % 11.8 % 9.0 %   10.7 % 9.1 %  
Adjustment to operating income 3.4     12.5    
Restructuring -4.6     -4.6    
M&A expenses   -0.3     -3.6  
EBITDA 5.44) 4.5 19 % 31.14) 13.8 126 %
of revenue, % 9.7 % 8.5 %   14.3 % 7.2 %  
Depreciation & amortization -3.54) -2.0 74 % -13.64) -6.8 96 %
Impairment -0.3     -6.3    
PPA amortization -0.9 -1.2 -22 % -4.1 -2.5 63 %
EBIT 0.84) 1.4 -46 % 7.24) 4.5 58 %
of revenue, % 1.3 % 2.6 %   3.3 % 2.4 %  
             
Adjusted EBIT 2) 3.14) 2.8 10 % 9.64) 10.6 -10 %
of revenue, % 5.6 % 5.3 %   4.4 % 5.6 %  
             
Earnings per share, (EUR) 3) 0.00 0.00 -235 % 0.02 0.01 298 %
Deferred revenue       73.9 72.9 1 %
Cash flow from operations before financial items and taxes   8.7 4)  10.5 -18 % 19.0 4) 13.8 38 %
Cash and financial assets at fair value through P&L       25.5 27.9 -9 %
ROI, % 2.7% 6.2% -56 % 4.5% 7.9% -43 %
Equity ratio, %       49.0 % 42.7% 15%
Gearing, %       20.8 %4) 13.9 % 50%
Personnel, end of period     1,696 1,666 2%
  1. Excluding items affecting comparability (IAC) as defined in note 7 of the Table Section of this report.
  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 7 of the Table Section of this report.
  3. Based on the weighted average number of outstanding shares during the period 157,719,368 (1-12/2019).
  4. IFRS 16 increased Adjusted EBITDA and EBITDA by EUR 1.7 million during Q4 and EUR 6.6 million during January-December. Impact on adjusted EBIT and EBIT was EUR 0.1 million during Q4 and EUR 0.3 million during January-December. Depreciation and amortization increased by EUR 1.6 million during Q4 and by EUR 6.3 million during January-December. Positive impact on cash flow from operations before financial items and taxes was EUR 1.5 million during fourth quarter and EUR 6.0 million during January-December. Gearing excluding IFRS 16 impact is 6.3%.

 

Events after period-end

Dividend proposal 

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.

The Board of Directors has decided to propose to the Annual General Meeting that no dividend will be paid  for 2019. Based on F-Secure’s dividend policy the resulting dividend would have remained minimal. Taking into account the transaction costs related to the distribution, the Board of Directors considers it not in the shareholders’ interests to pay dividends for fiscal year 2019.

 

Webcast

A webcast for investors and analysts will be held in English at 14.30 EET.

The material will be available at the company's website before the call begins.

Additional information

This is a summary of F-Secure’s Financial Statements. The full report is a PDF file attached to this stock exchange release and is also available on the company's website.

Financial calendar

During the year 2020, F-Secure Corporation will publish financial information as follows:

Annual General Meeting

More information is available at https://www.f-secure.com/en/investors/governance.


 

Contact information:

Eriikka Söderström, CFO, F-Secure
+358 40 669 1844

Henri Kiili,  Investor Relations and Treasury Director, F-Secure
+358 40 840 5450
investor-relations@f-secure.com


 


 


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