F-Secure Corporation - Financial Statements Release 2024: Solid end to the year with focus on future growth
F-Secure Corporation | Stock Exchange Release | 6 February 2025 at 08:00:00 EET
Solid end to the year with focus on future growth
This is a summary of F-Secure Corporation's Financial Statements Review 2024. The full report is a PDF file attached to this stock exchange release and also available on the company website at www.investors.f-secure.com.
F-Secure Corporation organize a webcast today at 14:00, details of the event and how to participate can be found at the end of this release.
Highlights of October-December (Q4) 2024
- Revenue was at previous year level and was EUR 37.0 million (EUR 36.9 million). Organic growth was 0.4%.
- Revenue from Partner Channel was at previous year level and was EUR 30.0 million (EUR 30.1 million), organic growth was 0.5%.
- Revenue from Direct Channel increased by 2.2% to EUR 7.0 million (EUR 6.8 million), organic growth was 0.1%.
- Adjusted EBITA was EUR 11.8 million (EUR 11.7 million), 31.8% of revenue (31.7%).
- Items affecting comparability (IAC) were EUR -1.7 million (EUR -1.9 million) related to organization restructuring.
- Earnings per share (EPS) was EUR 0.02 (EUR 0.02). Earnings per share excluding PPA amortization was EUR 0.03 (EUR 0.03).1
- Cash flow from operating activities before financial items and taxes was EUR 11.9 million (EUR 17.4 million).
- During the fourth quarter F-Secure conducted change negotiations to reorganize its operations. As a result of the completed change negotiations, 33 employments in F-Secure will be terminated, of which 19 in Finland.
Highlights of January-December 2024
- Revenue increased by 12.2% to EUR 146.3 million (EUR 130.4 million). Organic growth was 1.8%.
- Revenue from Partner Channel increased by 12.5% to EUR 118.2 million (EUR 105.1 million), organic growth was 2.4%.
- Revenue from Direct Channel increased by 11.0% to EUR 28.0 million (EUR 25.2 million), organic growth was -0.5%.
- Adjusted EBITA was EUR 52.2 million (EUR 44.6 million), 35.7% of revenue (34.2%).
- Items affecting comparability (IAC) were EUR -1.4 million (EUR -8.0 million) related to organization restructuring.
- Earnings per share (EPS) was EUR 0.12 (EUR 0.13). Earnings per share excluding PPA amortization was EUR 0.16 (EUR 0.15). 1)
- Cash flow from operating activities before financial items and taxes was EUR 53.9 million (EUR 37.6 million).
- Net debt amounted to EUR 163.6 million (177.4 million) and leverage was 3.1x.
- The Board of Directors proposes a dividend of EUR 0.04 per share (33% of the group January-December 2024 net profit), to be paid in two instalments.
- From the third quarter of 2023, F-Secure has reported also earnings per share excluding purchase price allocation amortization (PPA) due to amortization following the acquisition of Lookout Life.
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 financial statements release are unaudited.
As announced on 20 March 2024, F-Secure changed the calculation method for gross margin in its income statement. Some of the costs previously recorded in F-Secure income statement as Cost of revenue have been included in Research and development and Sales and marketing costs. F-Secure applies the new calculation method for gross margin as of 1 January 2024. Comparative figures are also revised.
Outlook for 2025
Growth: F-Secure expects mid-single digit revenue growth for 2025.
Profitability: The group's adjusted EBITA is expected to be approximately on the same level as in 2024 (EUR 52.2 million).
Background for the outlook:
- F-Secure expects the core consumer cyber security market to grow mid-single digit CAGR mid- to long-term1. F-Secure sees the potential to grow faster than the market focusing on partner channel and its offering around Embedded security and Scam Protection. The growth may be moderated due to the uncertainties around consumer sentiment in certain markets.
- Partner business and especially Embedded services are expected to drive F-Secure growth during 2025. Growth is expected to accelerate throughout the year as new partners and services gradually start to generate revenue.
- Direct business revenue development is expected to be negative due to continued strategy of refraining from paid customer acquisition.
- Gross margin is expected to be slightly lower than in 2024 (86.2%) due to growth of strategic partners with embedded solutions, as these typically have a lower gross margin level than F-Secure Total business.
- F-Secure continues to develop its service, operations and production capabilities further to meet Tier 1 partner requirements. These efforts are still reflected in the higher cost base. As business scales we expect to leverage continued service level investments across a wider partner base, leading to positive Adjusted EBITA % development over time.
- Capex level is expected to remain on similar level as in 2024. However, new product development projects related to partner demand can have an impact on the outcome.
- Industry analyst views such as Gartner and IDC, and F-Secure management estimates
Financial targets
F-Secure's medium-term financial targets and dividend policy for the company was published on 19 November 2024. The targets reflect the company's growth ambitions and strategic direction. 2025 is still a business ramp-up year, after which the journey towards achieving the financial targets is expected to accelerate.
- Growth: High single digit growth (CAGR) with additional significant upside from major Tier 1 deals
- Profitability: Adjusted EBITA margin approaching 40% as revenue reaches EUR 200 million
- Dividend Yield: Around or above 50% of net profit; which can be adjusted as long as leverage is higher than the targeted level
- Leverage: Net debt / adjusted EBITDA ratio below 2.5x, excluding temporary impact from acquisitions
F-Secure Corporation follows the Rule of 40 metric as internal performance measurement and guiding principle, according to which the combined revenue growth rate and profitability margin should be equal to or greater than 40%.
Financial performance
| EUR million | 10-12/2024 | 10-12/2023 | Change % | 1-12/2024 | 1-12/2023 | Change % |
|---|---|---|---|---|---|---|
| Revenue | 37.0 | 36.9 | 0.4% | 146.3 | 130.4 | 12.2% |
| Gross Margin1 | 32.1 | 33.0 | -2.8% | 126.0 | 118.6 | 6.3% |
| % of revenue | 86.7% | 89.4% | 86.2% | 90.9% | ||
| Adjusted EBITDA2 | 12.1 | 12.0 | 1.1% | 53.5 | 45.7 | 17.1% |
| % of revenue | 32.7% | 32.4% | 36.6% | 35.0% | ||
| Adjusted EBITA2 | 11.8 | 11.7 | 0.7% | 52.2 | 44.6 | 17.2% |
| % of revenue | 31.8% | 31.7% | 35.7% | 34.2% | ||
| Items affecting comparability (IAC)3 | -1.7 | -1.9 | -1.4 | -8.0 | -81.9% | |
| PPA amortization | -2.0 | -2.0 | -7.8 | -4.7 | ||
| EBIT | 6.7 | 7.1 | -4.8% | 38.4 | 29.5 | 30.3% |
| % of revenue | 18.1% | 19.1% | 26.3% | 22.6% | ||
| Earnings per share (EUR)4 | 0.02 | 0.02 | 6.3% | 0.12 | 0.13 | -5.8% |
| Earnings per share, adjusted for PPA amortization (EUR)4 | 0.03 | 0.03 | 3.6% | 0.16 | 0.15 | 4.7% |
| Shareholder's equity per share | 0.27 | 0.19 | ||||
| Operating cash flow | 9.1 | 13.2 | -31.0% | 38.8 | 30.1 | 28.9% |
| Cash conversion % | 99.4% | 141.2% | 80.5% | 81.2% | ||
| Deferred revenue | 28.5 | 25.6 | 11.1% | |||
| Net debt (+) / Net cash (-) | 163.6 | 177.4 | -7.8% | |||
| Net debt/Adjusted EBITDA | 3.1 | 3.55 | ||||
| Gearing, % | 356.0% | 547.2% | ||||
| Equity ratio % | 17.4% | 12.0% | ||||
| Personnel at the end of the period | 530 | 524 | 1.1% |
- As announced on 20 March 2024, F-Secure changed the calculation method for gross margin in its income statement. Some of the costs previously recorded in F-Secure income statement as Cost of revenue have been included in Research and development and Sales and marketing costs. F-Secure applies the new calculation method for gross margin as of 1 January 2024. Comparative figures are also revised.
- Excluding Items Affecting Comparability (IAC) and depreciation and amortization.
- A reconciliation and breakdown of items affecting comparability is presented at the end of this report.
- Based on the average number of shares for the reporting period.
- 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.
Timo Laaksonen, President and CEO
F-Secure's fourth quarter revenue was slightly above the level of the previous year. Overall market sentiment was relatively stable. We won two new Communication Service Provider (CSP) partner deals in Asia-Pacific, along with several service extensions and renewals with key partners globally. We also signed a frame agreement with a European CSP group for F-Secure Sense and an agreement for DNS Security services with a Central European CSP. The positive impact of these contracts will start during the course of 2025.
The collaboration with a Tier 1 CSP for embedded security that was announced in March, was launched according to plan in December with service marketing expected to start during the first quarter of 2025. During this delivery process, we have built the broadest embedded security portfolio in the market, offering the highest degree of flexibility to our current and prospective Tier 1 partners.
According to a study published by Global Anti-Scam Alliance1 in October, more than two billion people fell victim to a scam during the year, and more than one trillion US dollars were lost worldwide. This confirms that we were clearly in the right place at the right time with our launch of Scam Protection module in F-Secure Total already in June.
In October, Omdia - an Informa Group company - ranked F-Secure as a leader in the heat map for vendors providing Telcos with consumer cyber security solutions2. The independent research firm gave F-Secure the highest possible rating in all six categories: Internet Security, Identity Protection & Privacy, Device & Network Protection, Professional Services, Mobile Apps, and Market Impact. F-Secure also won the best use case of AI for customer experience for its AI-based SMS Protection at the AI Gala in Finland in October. The feature forms part of F Secure's recently launched scam protection capabilities. The award celebrates an innovation that has significantly improved customer experience with the help of AI. The award serves as further endorsement to F-Secure's vision to become the #1 in consumer security experience company in the world.
F-Secure received ISO 27001 certification3 in November. This certificate covers all company operations and represents the values and practices we are and have been committed to; implementing robust security policies, risk management measures, and data protection protocols to ensure our customers' and partners' information is handled with utmost care.
During the fourth quarter, we implemented a transformation to drive growth and better serve our partners in each segment. As a result of the conducted change negotiations, we achieved the targeted organization, operational model and growth strategy alignment as well as cost savings with fewer redundancies than initially indicated. These savings will be invested back into the company's growth initiatives during 2025.
Our new Leadership team has been fully operational since last quarter. The team's combined expertise, experience and vision are invaluable assets as we drive transformation, growth and operational excellence at F-Secure. We remain committed to driving innovation and excellence in consumer cyber security, and the well-being, dedication and expertise of our personnel remains an absolute focus for our leadership as we enter 2025. My sincere thanks to all our Fellows for taking meaningful strides forward in executing our growth strategy.
- https://www.gasa.org/research
- https://www.f-secure.com/en/partners/insights/f-secure-ranked-as-leader-among-cyber-security-solutions-for-telcos
- ISO/IEC 27001:2022 certification is recognized worldwide standard in information security management and is based on the standard set by the International Organization for Standardization (ISO) and the International Electrotechnical Commission (IEC).
Change negotiations
On 17 October, F-Secure Corporation and its subsidiaries announced its plans for targeted restructuring of its operations. To discuss the planned changes, the company started change negotiations on possible redundancies in Finland and in other countries. The scope of the change negotiations concerned approximately 360 F-Secure employees globally. On 2 December 2024, F-Secure concluded the change negotiations. As a result, 33 positions will be terminated, of which 19 in Finland.
The estimated annual cost savings of EUR 4 million will be reinvested back into the company to support growth and improve sales and service maturity. One-off costs related to the changes amounted to EUR 1.5 million, and this was recorded as items affecting comparability (IAC) in the fourth quarter of 2024.
Board of Directors' proposal for the distribution of profit
According to the company's dividend policy, F-Secure aims to pay around or above 50% of net profit as dividend on an annual basis, which can be adjusted as long as leverage is higher than the targeted level. On 31 December 2024 distributable funds of F-Secure Corporation were EUR 13.7 million. As the leverage (3.1x) is above the target level, the Board of Directors proposes to the Annual General Meeting 2024 that a dividend of EUR 0.04 per share to be paid. Earnings per share (EPS) for the period January-December 2024 was EUR 0.12, and the proposed dividend is 33.2% of the group January- December 2024 earnings. The dividend is proposed to be paid in two installments.
No material changes have occurred in the company's financial position since the end of the financial year.
Annual General Meeting 2025
F-Secure Oyj's Annual General Meeting 2025 is planned to be held on Tuesday 1 April 2025 at 12:00 pm EET as a hybrid meeting in Helsinki. The Board of Directors will summon the meeting separately with the stock exchange release later.
Additional information
This is a summary of F-Secure Corporation's Financial Statements Review 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.
Webcast
F-Secure will organize a webcast today at 14:00. In the webcast, F-Secure's CEO Timo Laaksonen and CFO Sari Somerkallio will present the results and after the presentation there will be time for questions. The event can be followed at https://fsecure.videosync.fi/q4-2024
Analysts following F-Secure are invited to the presentation at Studio Stage, Itämerentori 2 (in the street level), Helsinki, Finland.
Financial reporting in 2025
In 2025, F-Secure Corporation will publish financial information as follows:
- Annual Report 2024 on Thursday, 27 February 2025
- Interim Report for January-March 2025 on Tuesday, 29 April 2025
- Half-year Financial Report for January-June 2025 on Friday, 18 July 2025
- Interim Report for January-September 2025 on Tuesday, 28 October 2025
For further information, please contact:
Sari Somerkallio, Chief Financial Officer
tel. +358 40 3569251
investor.relations@f-secure.com
F-Secure in brief
F-Secure is Finland headquartered and globally operating consumer cyber security company. F-Secure offers award-winning security and privacy products and services that make every digital moment more secure, for everyone. F-Secure operates in over 100 countries, has ~200 Service Provider partners and is the global leader providing security through Communication Service Providers. F-Secure Corporation is listed on Nasdaq Helsinki Ltd. Read more: www.f-secure.com.
