F-Secure Financial Statement Release 1 January -
Corporate security revenue grew 10% organically in fourth quarter
Highlights of October-December (Q4)
- Revenue increased by 4% to
EUR 56.1 million (53.7m) - Revenue from corporate security increased by 10% to
EUR 32.7 million (29.8m) - Revenue from consumer security decreased by 2% to
EUR 23.4 million (24.0m) - Deferred revenue increased by 1% to
EUR 73.9 million (72.9m) - Adjusted EBITDA was
EUR 6.6 million (4.9m), 11.8% of revenue (9.0%)1) - EBIT was
EUR 0.8 million (1.4m), 1,3% of revenue (2.6%) - EBIT includes
EUR 3.4 million positive impact related to revaluation of MWR InfoSecurity contingent consideration, andEUR 4.6 million costs from restructuring. Final contingent consideration to be paid in the first quarter of 2020 isEUR 3.7 million . - Earnings per share (EPS) was
EUR 0.00 (EUR 0.00 ) - Cash flow from operating activities before financial items and taxes was
EUR 8.7 million (10.5m)1)
Highlights of January-December
- Revenue increased by 14% to
EUR 217.3 million (190.7m) - Revenue from corporate security increased by 28% to
EUR 122.5 million (95.9m) - Revenue from consumer security remained at previous year’s level and was
EUR 94.8 million (94.9m) - Deferred revenue increased by 1% to
EUR 73.9 million (72.9m) - Adjusted EBITDA was
EUR 23.2 million (17.4m), 10.7% of revenue (9.1%)1) - EBIT was
EUR 7.2 million (4.5m), 3.3% of revenue (2.4%) - EBIT includes
EUR 6.5 million positive net impact from revaluation of MWR InfoSecurity acquisition related items, andEUR 4.6 million costs from restructuring. Final contingent consideration to be paid in the first quarter of 2020 isEUR 3.7 million . - Earnings per share (EPS) was
EUR 0.02 (EUR 0.01 ) - Cash flow from operating activities before financial items and taxes was
EUR 19.0 million (13.8m)1)
1)
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:
- Organic revenue growth in corporate security is expected to continue in 2020 although slower than in 2019. The negative impact of terminated non-strategic products in growth rate is estimated to be a few percentage points in 2020.
- Revenue from consumer security is expected to be approximately at the same level as in 2019.
- Adjusted EBITDA is expected to clearly increase compared to 2019.
This outlook disclosed on the
CEO
In the final quarter of 2019 F-Secure’s revenue increased by 4% to
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
Cyber security consulting grew strongly, while we continued to see variation in country performances. As an example of growing locations,
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
After completion of restructuring and MWR InfoSecurity integration in December,
1)The Forrester MITRE ATT&CK Evaluation Guide, An Objective Analysis Of Round 1 And How To Interpret The Results by
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% |
- Excluding items affecting comparability (IAC) as defined in note 7 of the Table Section of this report.
- 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.
- Based on the weighted average number of outstanding shares during the period 157,719,368 (1-12/2019).
- IFRS 16 increased Adjusted EBITDA and EBITDA by
EUR 1.7 million during Q4 andEUR 6.6 million during January-December. Impact on adjusted EBIT and EBIT wasEUR 0.1 million during Q4 andEUR 0.3 million during January-December. Depreciation and amortization increased byEUR 1.6 million during Q4 and byEUR 6.3 million during January-December. Positive impact on cash flow from operations before financial items and taxes wasEUR 1.5 million during fourth quarter andEUR 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.
- To participate in the online meeting, please click on the link: https://meet.f-secure.com/henri.kiili/S2RJF91H
- To participate via phone, please dial in to +358975110100 (FI). The conference ID is 6385683
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,
- Interim report January-
March 2020 ,April 30, 2020 - Half year financial report January-
June 2020 ,July 16, 2020 - Interim report January-
September 2020 ,October 29, 2020
Annual General Meeting
- The Annual General Meeting is scheduled for
Tuesday, March 24, 2020 at14:00 EET . - The Annual Report for 2019 will be published on the Company's website on
12 February 2020 .
More information is available at https://www.f-secure.com/en/investors/governance.
Contact information:
Eriikka Söderström, CFO,
+358 40 669 1844
Henri Kiili, Investor Relations and Treasury Director,
+358 40 840 5450
investor-relations@f-secure.com
Attachment
- F-Secure_Q4_2019_eng_FINAL
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