INTERIM REPORT Q2 2013, JULY 26 (UNAUDITED) Protecting the irreplaceable | f-secure.com
F-Secure celebrated its 25 th anniversary in May
Contents 1. Highlights in Q2 2. Financial performance in Q2 3. Channels 4. Products and services 5. Market review 6. Financial targets & Outlook
Mika Chief Technology Officer, Security HIGHLIGHTS IN Q2 4
Highlights in Q2 • Revenues and Profitability declined, improved cash flow • Revenues was 38.4 million (Q22012:39.6m). • EBIT 4 million, 11% of revenues (Q212: 5.8m, 15%) • Cash flow from operations 5.7 m positive (6.7 m positive); change in cash 4.6m positive (3.4 m) when excluding dividend of 9.3m (9.3m) paid in April • Internet Security • Safe Avenue, combining mobile and PC protection, gains traction • Four new Safe Avenue operator contracts in Q2 • Content Cloud progressing well • Two new content cloud contracts, two other won and several in final phase • Other • Revised annual financial guidance released on July 22, 2013 3
Karmina Senior Analyst FINANCIAL PERFORMANCE IN Q2 2. Financial performance in Q2 Protecting the irreplaceable | f-secure.com
Q2 Revenues EURm • Revenues decreased by 3% 45 • 40 Total quarterly revenues 38.4m (Q212: 39.6 m) 35 • Operator revenues 23.8m; 30 decrease of 3% (Q212: 24.4 m) 25 • Other channels 14.7m; 20 decrease of 3% (Q212:15.2 m ) 15 10 5 0 Revenues EBIT 5
Profitability 30% • Q2 profitability decreased • 25% EBIT 4 m, 11% of revenues (Q212: 5.8 m, 16%) 20% • Earnings per share EUR 0.02 (EUR 0.03) 15% 10% 5% 0% Q3'04 Q1'05 Q3'05 Q1'06 Q3'06 Q1'07 Q3'07 Q1'08 Q3'08 Q2'09 Q4'09 Q2'10 Q4'10 Q2'11 Q4'11 Q2'12 Q4'12 Q2'13 EBIT% Ave (4 qrts) 6
Q2 Costs • Total costs 33.3 +3%; (Q212:32.2 m) EURm 45 • Cost level was impacted by increased 40 depreciations from past capitalized 35 * expenses; Q213: 2.3 m (Q212: 1.9m) 30 • Capitalized R&D expenses were 0 m 25 (Q212: 1.8m) 20 • 15 Operative cost level flat, investments decreased 10 5 0 Sales & Marketing Reseach & Development Administration Restructuring * Bordeaux one-off cost ~7m 7
Q2 Deferred Revenues EURm • Deferred revenues were at 45 37.8(38m) 40 • Solid license & renewal sales 35 continues in Corporate and Direct to 30 Consumer businesses 25 20 • Deferred revenues accrued in the 15 balance sheet 10 5 • Dec 31,2012 37.8 m 0 • June 30,2012 38m 8
Q2 Cash position remains solid • Solid Cash flow Steek EURm acquisition 120 • Capital from operations 5.7m (Q212: 6.7m); repayment • 100 Change in cash 4.6m positive (Q212: 3.4m positive) excluding paid dividend of 9.3m ( 9.3) in April 80 60 40 • Market value of liquid assets 34m (Q212: 25.3 m) 20 • Dec 31, 2012 33.1m 0 Q4'07 Q1'08 Q2'08 Q3'08 Q4'08 Q1'09 Q2'09 Q3'09 Q4'09 Q1'10 Q2'10 Q3'10 Q4'10 Q1'11 Q2'11 Q3'11 Q4'11 Q1'12 Q2'12 Q3'12 Q4'12 Q1'13 Q2'13 • June 30, 2012 25.3m Cash position Dividend/ Other • Dividend of EUR 0.06 per share was paid in April, totally 9.3m 9
Q2 Number of personnel • At the end of June: 954 1200 (Q212: 990) 1000 800 600 400 200 0 Q111 Q211 Q311 Q411 Q112 Q212 Q312 Q412 Q1'13 Q2'13 Sales and Marketing Research and Development Administration 10
Regional Revenue Split 1-6/2013 1-6/2012 Rest of World; Nordic 13% North countries; America; 29% 14% 11% 30% 10% 46% Rest of Europe; 46% 11
Vesa Senior Software Engineer 3. Channels CHANNELS Protecting the irreplaceable | f-secure.com
Channels to the markets Corporate Direct to Consumer Over 200 business retail and customers around Operators in over eStore globally the world 40 countries 15
Q2 Operator business • Q2 revenues of 23.8 m (24.4 m) -3% Revenues EURm YoY 25 • New operator partnerships 20 • Telefonica Movistar launch in Argentina and Guatemala 15 • Four new Safe Avenue contracts, combining PC and Mobile security 10 • Two new content cloud contracts, two won and several in pipeline 5 0 Q2'01 Q4'01 Q2'02 Q4'02 Q2/03 Q4/03 Q2/04 Q4'04 Q2'05 Q4'05 Q2'06 Q4'06 Q2'07 Q4'07 Q2'08 Q4'08 Q2'09 Q4'09 Q2'10 Q4'10 Q2'11 Q4'11 Q2'12 Q4'12 Q2'13 Operator business includes internet service providers, 14 mobile operators and cable operators
More than 200 operator partners globally and over 250 m broadband subscribers 15
7th ANNUAL OPERATOR PARTNER MEETING ARRANGED BY F-SECURE - Held in Stockholm in May - Over 110 participants from over 60 partners and from 29 countries 18
Sarogini Quality Engineer 4. Products and Services 4. Products and Services PRODUCTS AND SERVICES Protecting the irreplaceable | f-secure.com
Across our entire portfolio Computer, Internet and Home Security Protecting millions of customers from known and emerging security threats Protection Service for Mobile Protection from mobile threats and loss of phone Online Backup service Securely store your customers irreplaceable content Content Anywhere Store, sync and share precious content on any device at anytime 20
F-Secure Safe Content Cloud • significant player in the content cloud business • millions of users globally • several petabytes of data securely stored in our cloud Content Cloud • 5 data centers globally 21
F-Secure SAFE AVENUE Converged PC and mobile security F-SECURE SOLUTION: SAFE AVENUE • An innovative delivery solution for all security products that through ease of use encourages consumer adoption and management of security services • For operators, it is a turn-key, cloud based business platform that implements the needed business logic on their behalf • As a single integration point, it caters for “coffee break integration” and hence short time to market launching multi- device security
Timo Malware Analyst 6. Financial targets & Outlook MARKET REVIEW 5. Market review Protecting the irreplaceable | f-secure.com
Market review • Internet growth continues globally • Role of internet security significant for business over the Internet • Internet Security market growing close to 10% pa Internet • People have become multi-screeners • Smartphones, tablets, computers or even TVs to get online • Many activities are performed either sequentially or in parallel on various devices which defines new New devices requirements • Demand for Content Cloud services • The need for Internet security and different kind of safe Content Cloud services is increasing • Privacy is considered important Content Cloud 32
Klas Senior Manager, New Innovation FINANCIAL TARGETS & 6. Financial targets OUTLOOK & Outlook Protecting the irreplaceable | f-secure.com
Strategy and Financial targets 2012-2014 • First priority is to drive profitable growth and market expansion • Targeting towards double digit revenue growth; supported by all three channels • The Company invests in Content Cloud business and in Internet security services • Profitability is expected to develop towards the 25% level at the end of strategy period 34
Outlook for 2013 (1/2) • The long-term business opportunity with Internet Security and Content Cloud products for multiple devices and platforms is attractive. • The Company is looking for ways to increase its revenue growth and to improve its profit margin. • The Operator channel is expected to continue to drive the revenue growth powered by Internet security sales and supported by a productized, highly-scalable Content Cloud service. • The short-term revenue growth remains at lower level mainly due to decreased Content Cloud project revenues as the project sizes are smaller. • The Company also expects good progress from the Corporate and Direct to Consumer channels 35
Outlook for 2013 (2/2) • The management’s estimation for the year has been revised; • The annual revenue is estimated to be at a level of 2012. • The annual profitability is estimated to be over 15 % of revenues. • The previous guidance was; • The annual revenue growth is estimated to be over 5% compared to 2012. • The annual profitability is estimated to be over 15 % of revenues. The estimates are based on the sales pipeline at the time of publishing, existing subscriptions, support contracts and exchange rates previous experience 36
Thank You! Forward-looking statements: Certain statements in this presentation are forward-looking, and the actual outcome could be materially different. Such forward-looking statements are based on F- Secure’s present plans, estimates, assumptions, projections and expectations and are subject to risks and uncertainties. In addition to the factors explicitly discussed, other could have a material effect on the actual outcome. Such factors include, but are not limited to, general economic and political conditions, fluctuations in exchange rates, interest rates, outcome of external research studies, technological issues, interruptions of business, products, actions of courts, regulators, government agencies, competitors, customers, suppliers, employees and all other parties. 29
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