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F-Secure Interim Report 1 January - 31 March 2021
F-Secure Corporation, Interim Report, 29 April 2021 at 08.00 EEST
F-Secure Interim Report 1 January - 31 March 2021
Software businesses for both corporate and consumer customers growing
Highlights of January-March (Q1)
Revenue increased by 5% to EUR 57.8 million (54.8m)
Revenue from corporate security products increased by 5% to EUR 19.5 million (18.6m)
Revenue from cyber security consulting remained at the previous year’s level and was EUR 12.0 million (11.9m)
Revenue from consumer security increased by 8% to EUR 26.3 million (24.4m)
Adjusted EBITDA was EUR 9.6 million (7.2m), 16.7% of revenue (13.2%)
Earnings per share (EPS) was EUR 0.03 (EUR 0.01)
Cash flow from operating activities before financial items and taxes was EUR 6.3 million (9.6m)
Figures in this report are unaudited. Figures in brackets refer to the corresponding period in the previous year, unless otherwise stated.
Outlook (unchanged)
F-Secure’s financial outlook for 2021 is:
Revenue from corporate security products is expected to grow at a high single-digit rate.
Revenue from cyber security consulting is expected to grow but uncertainty remains due to the COVID-19 pandemic.
Revenue from consumer security is expected to grow approximately at the same rate as in 2020.
Adjusted EBITDA is expected to remain approximately at the previous year's level (EUR 35.7 million).
The COVID-19 pandemic continues to impact the predictability of cyber security consulting and can also impact the new sales of software solutions. The related risks are described in this interim report from January – March 2021.
CEO JUHANI HINTIKKA
We had a good start to 2021 as the order growth continued in software businesses for both corporate and consumer customers. The overall revenue growth and improved performance in consulting resulted in an adjusted EBITDA margin of 17%.
In cloud-native business security software (endpoint protection platform, EPP), the growth in orders clearly outpaced revenue growth in Q1. The start of the year was strong in terms of new orders which was backed up by a good renewal performance. I was particularly happy to see that this development derives from all our focus countries and on a product level, across the whole portfolio. As a result of an increase in contract duration year-on-year for business security software, there will be a corresponding delay in converting the positive order intake development to revenue. Also supporting the future growth in corporate security products, Managed Detection and Response (MDR) solutions gained several new customers across Europe within customer verticals such as technology, finance and professional services.
The revenue from cyber security consulting was at the previous year’s level even though the market is still impacted by the COVID-19 pandemic as many locations are experiencing lockdown measures. Strategically important is that the constant need for advanced cyber security was again emphasized by strong demand for Incident Response assignments.
Consumer security continued on a growth path with the Q1 revenue growing by 8% which was driven by the sales of our core products: F-Secure SAFE in the operator channel and F-Secure TOTAL in the direct channel. The growth stems from increased subscriptions and a solid renewal performance. Also new product commercialization developed as several partners rolled out F-Secure ID PROTECTION and SENSE to their customer base during the quarter.
Notably from a technological point of view, our endpoint protection products for both businesses and consumers received best-in-class awards from the AV-TEST institute. F-Secure is the only company with products that have won an AV-TEST Best Protection award in 7 of the last 10 years, which is the most consistent track record in the industry. This recognition and the increasing sales of our new software solutions is a testament to our successful R&D investments.
After a good start to the year, we strive for growth across all our businesses with the increased deferred revenue balance backing up the gradual acceleration of revenue growth in corporate security products during the coming quarters.
Financial performance
EUR m | 1-3/2021 | 1-3/2020 | Change % | 1-12/2020 |
Revenue | 57.8 | 54.8 | 5 % | 220.2 |
Consumer security | 26.3 | 24.4 | 8 % | 100.1 |
Corporate security | 31.5 | 30.4 | 3 % | 120.1 |
Products | 19.5 | 18.6 | 5 % | 74.3 |
Consulting | 12.0 | 11.9 | 1 % | 45.8 |
Cost of revenue | -12.2 | -12.4 | -2 % | -48.0 |
Gross Margin | 45.6 | 42.4 | 8 % | 172.2 |
of revenue, % | 78.9 % | 77.3 % | 78.2 % | |
Other operating income | 0.5 | 0.5 | -11 % | 2.1 |
Operating expenses 1) | -36.4 | -35.7 | 2 % | -138.5 |
Sales & Marketing | -22.4 | -23.7 | -6 % | -89.4 |
Research & Development | -9.8 | -8.9 | 11 % | -35.9 |
Administration | -4.2 | -3.1 | 36 % | -13.2 |
Adjusted EBITDA 2) | 9.6 | 7.2 | 33 % | 35.7 |
of revenue, % | 16.7 % | 13.2 % | 16.2 % | |
Restructuring | 0.4 | 0.0 | ||
EBITDA | 9.6 | 7.6 | 26 % | 35.7 |
of revenue, % | 16.7 % | 13.9 % | 16.2 % | |
Depreciation & amortization | -2.7 | -3.2 | -14 % | -12.6 |
Impairment | -0.3 | |||
PPA amortization | -0.8 | -0.9 | -14 % | -3.2 |
EBIT | 6.2 | 3.6 | 73 % | 19.7 |
of revenue, % | 10.6 % | 6.5 % | 8.9 % | |
Adjusted EBIT 2) | 6.9 | 4.0 | 71 % | 22.9 |
of revenue, % | 11.9 % | 7.4 % | 10.4 % | |
Earnings per share, (EUR) 3) | 0.03 | 0.01 | 136 % | 0.08 |
Deferred revenue | 84.0 | 73.7 | 14 % | 81.0 |
Cash flow from operations before financial items and taxes | 6.3 | 9.6 | -34 % | 48.3 |
Cash and financial assets at fair value through P&L | 47.1 | 26.3 | 80 % | 51.4 |
ROI, % | 22.5 % | 15.9 % | 41 % | 18.5 % |
Equity ratio, % | 54.0 % | 49.2 % | 10 % | 52.5 % |
Gearing, % | -14.2 % | 19.5 % | -173 % | -14.1 % |
Personnel, end of period | 1,670 | 1,688 | -1 % | 1,678 |
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 5 of the Table Section of this report.
Based on the weighted average number of outstanding shares during the period 158,253,892 (1-3/2021).
Events after period-end
No material changes regarding the company’s business or financial position have materialized after the end of the quarter.
Webcast
F-Secure’s CEO, Juhani Hintikka, and CFO, Eriikka Söderström, 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/2021-04-29-fsecureinterimreportq1. 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 information
This is a summary of F-Secure’s Interim Report 1 January - 31 March 2021. The full report is a PDF file attached to this stock exchange release and it is also available on the company's website.
Financial calendar
During the year 2021, F-Secure Corporation will publish financial information as follows:
Half year financial report January-June 2021, July 15, 2021
Interim report January-September 2021, October 21, 2021
Contact information
Eriikka Söderström, CFO, F-Secure Corporation
Henri Kiili, Investor Relations and Corporate Finance Director, F-Secure Corporation
+358 40 8405450
investor-relations@f-secure.com
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