Highlights of January–March 2024 (Q1)
- Revenue increased by 30.8% to
EUR 36.4 million (EUR 27.8 million ). Organic growth was 3.2%.- Revenue from Partner Channel increased by 33.6% to
EUR 29.4 million (EUR 22.0 million ), organic growth was 4.7%. - Revenue from Direct Channel increased by 20.3% to
EUR 6.9 million (EUR 5.8 million ), organic growth was -2.3%.
- Revenue from Partner Channel increased by 33.6% to
- Adjusted EBITA was
EUR 12.7 million (EUR 10.2 million ), 34.9% of revenue (36.7%). - Purchase price allocation (PPA) amortizations were
EUR -1.9 million . - Earnings per share (EPS) was
EUR 0.03 (EUR 0.04 ). Earnings per share excluding PPA amortization wasEUR 0.04 (EUR 0 .04)1). - Cash flow from operating activities before financial items and taxes was
EUR 11.8 million (EUR 9.3 million ). - Net debt amounted to
EUR 179.6 million (-24.2) and leverage was 3.7x.2)
1) From the third quarter of 2023,
2) Leverage (Net debt/Adjusted EBITDA) for the last 12 months includes Lookout consumer business unit EBITDA on an illustrative basis as if the acquisition had been made on the first day of the period in question.
Figures in brackets refer to the corresponding period in the previous year, unless otherwise stated. Percentages and figures presented herein may include rounding differences and therefore may not add up precisely to the totals presented. Figures in this interim report are unaudited.
As announced on
Outlook for 2024 (unchanged)
Growth:
Profitability: The group’s adjusted EBITA is expected to be in the range of EUR 48–54 million.
Background for the outlook:
F-Secure expects the consumer cyber security market to grow mid-single digit CAGR between 2024-2026*. The growth may be moderated due to uncertainties we see around consumer sentiment in certain markets resulting also Service Providers, especially Communication Service Providers being cautious in their investment priorities.- Biggest organic growth driver is Total and Total conversion within the partner channel; within Direct Business focus will be on retention, and marketing investments for paid customer acquisition will be lower than previously.
F-Secure continues investing (both OPEX and CAPEX) in Embedded Security capabilities including Tier 1 capabilities and - relationships, which are expected to boost growth in medium term.- Lookout consumer BU is now included for the full year, compared to June to December (7 months) in 2023.
- Lookout consumer BU post-acquisition related deferred revenue is fair valued according to IFRS reporting and will be lower compared to revenue recognised by Lookout consumer BU for those advance payments. The negative revenue impact included in the outlook is estimated to be approximately
EUR 1.5 million in 2024, and negative EBITA-level impact in the outlook approximatelyEUR 0.5 million , respectively.
* Industry analyst views such as Gartner and IDC, and
Financial targets
Medium term financial targets of
- Growth: Total revenue of more than
EUR 200 million by 2026 - Profitability: After initial growth investments, adjusted EBITA margin of above 42%
- Dividend Yield: Around or above 50% of net profit on an annual basis
- Leverage: Net debt/adjusted EBITDA ratio below 2.5x, excluding temporary impact from acquisitions
Financial performance
EUR million | 1−3/2024 | 1−3/2023 | Change % | 1–12/2023 |
Revenue | 36.4 | 27.8 | 30.8% | 130.4 |
Gross Margin1) | 31.2 | 26.0 | 19.7% | 118.6 |
% of revenue | 85.7% | 93.6% | 90.9% | |
Adjusted EBITDA2) | 13.0 | 10.5 | 23.9% | 45.7 |
% of revenue | 35.6% | 37.6% | 35.0% | |
Adjusted EBITA2) | 12.7 | 10.2 | 24.2% | 44.6 |
% of revenue | 34.9% | 36.7% | 34.2% | |
Items affecting comparability (IAC)3) | 0.2 | -1.3 | -113.8% | -8.0 |
PPA amortization | -1.9 | - | -4.7 | |
EBIT | 10.0 | 8.3 | 19.7% | 29.5 |
% of revenue | 27.4% | 30.0% | 22.6% | |
Earnings per share ( | 0.03 | 0.04 | -18.3% | 0.13 |
Earnings per share, excluding PPA amortization ( | 0.04 | 0.04 | 4.7% | 0.15 |
Shareholders’ equity per share, EUR | 0.16 | 0.11 | 0.19 | |
Operating cash flow | 7.9 | 7.3 | 7.8% | 30.1 |
Cash conversion % | 63.3% | 78.8% | 81.2% | |
Deferred revenue | 27.9 | 21.2 | 31.8% | 25.6 |
Net debt (+) / Net cash (-) | 179.6 | -24.2 | 177.4 | |
Net debt/Adjusted EBITDA5) | 3.7 | -0.6 | 3.6 | |
Gearing, % | 654.3% | -108.2% | 547.2% | |
Equity ratio, % | 10.0% | 26.5% | 12.0% | |
Personnel at the end of the period | 497 | 414 | 20.0% | 524 |
1) As announced on
2) Excluding Items Affecting Comparability (IAC) and depreciation and amortization.
3) A reconciliation of items affecting comparability is presented at the end of this report.
4) Based on the average number of shares during the reporting period.
5) Net debt/Adjusted EBITDA for the last 12 months includes Lookout consumer business unit EBITDA on an illustrative basis as if the acquisition had been made on the first day of the period in question.
Revenue development in the first quarter of 2024 was positively supported by organic growth in Partner Business, as well as strong renewal performance and increased ARPU in Direct Business. Profitability grew in absolute numbers but declined slightly in relative terms. First quarter gross margin was burdened by some additional costs related to lost synergies post-
Throughout the first quarter, we continued to execute on our growth strategy with primary focus on Partner Business. We strengthened our capabilities to win and serve Tier 1 partners. In March we announced a major deal with one of the world’s leading Communication Service Providers (CSP). In the collaboration, we work closely with the CSP enabling them to develop completely new cybersecurity services powered by our expanding suite of embedded security products and services. The announced partnership is an important milestone for
In the first quarter we saw significant growth in Total, with quarterly billings almost tripling from the first quarter of 2023. F-Secure Trusted Shopping – a solution that shows the trustworthiness rating for online stores – has been well received by the market.
The steps taken in the Direct Business already during the fourth quarter of 2023 to boost profitability, such as price adjustments, launch of free tools to drive traffic, and content driven activities across non-paid channels have borne fruit. Improved renewal performance was supported by high customer satisfaction scores and subscription experience improvements implemented already during the previous quarters. Positive ARPU development was powered by pricing measures and upsell to Total full feature offering. This year’s focus in the Direct Business will continue to be on consumer experience, retention and upsell.
We started the year 2024 with a new organization set-up after the change negotiations that took place in the fourth quarter of 2023. The new organization is now fully up and running. We started a new chapter in March with the launch of our renewed corporate culture. It builds on the best of
With the first quarter of 2024 behind us, we remain well positioned to deliver increased value to our customers and partners and accelerate our business growth to become the number one security experience company in the world.
Significant events after the review period
As announced on
Financial calendar in 2024
In 2024,
- Half-year Financial Report for January–June 2024 on Thursday
18 July 2024 - Interim Report for January–September 2024 on Thursday
24 October 2024
Additional information
This is a summary of F-Secure Corporation’s Interim Report January 1–March 31, 2024. The full report is a PDF file attached to this stock exchange release. Full report is also available on the company website at www.investors.f-secure.com.
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For further information, please contact:
Sari Somerkallio, Chief Financial Officer
tel. +358 40 3569251
investor.relations@f-secure.com
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