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F-Secure: Solid Growth And Strong Profitability Continued

The Software as a Service (SaaS) business model continues to deliver great value to our customers and partners. During the first quarter our main businesses delivered good results. Even in this time of economic uncertainty, the Software as a Service business model is gaining further momentum. We are pleased with the continued strength with our global Internet Service Provider partners protecting a large share of the daily Internet users. Over time we anticipate that new services such as online backup will also be attractive under the SaaS business model.
  • 24 April, 2009 14:54

<p>Highlights in Q1</p>
<p>* Total revenue growth was 15% reaching revenues of 30.6 million (Q108: 26.6m)</p>
<p>* Revenues from the Internet Service Provider (ISP) business grew by 30% from Q108, reaching revenues of 14.2 million (10.9m)</p>
<p>* EBIT reached 6.1 million; representing 20% of revenues (5.3m)</p>
<p>* Earnings per share was EUR 0.03 (EUR 0.03)</p>
<p>* Cash flow was 3.1 million positive (6.1m positive)</p>
<p>CEO Kimmo Alkio: "The Software as a Service (SaaS) business model continues to deliver great value to our customers and partners. During the first quarter our main businesses delivered good results. Even in this time of economic uncertainty, the Software as a Service business model is gaining further momentum. We are pleased with the continued strength with our global Internet Service Provider partners protecting a large share of the daily Internet users. Over time we anticipate that new services such as online backup will also be attractive under the SaaS business model".</p>
<p>F-Secure business in Q1</p>
<p>For the first quarter of 2009 the total revenues were 30.6 million (Q108: 26.6m), representing growth of 15%. Growth continued solid in the business through the traditional channels, up 5%, and in the Service Provider business, 30% from Q108. The EBIT was 6.1 million (5.3m), representing 20% of revenues; 14% higher than in Q108. Earnings per share were EUR 0.03 (EUR 0.03). Cash flow from operations was 3.1 million positive (6.1m). The Group deferred revenues increased to 37.8 million at the end of March (37.2 million at the end of 2008).</p>
<p>The financial results for the first quarter of 2009 were in line with the guidance given in January (revenues 29.5-31.5 million, cost level below 22.5 million).</p>
<p>The Group total costs were 22.3 million (19.5m), 14% higher than in Q12008. The Group also capitalized some of its R&amp;D expenses according to accounting rules, totaling 0.2 million in the first quarter.</p>
<p>The geographical breakdown of the revenues remained as follows: Finland and Scandinavia 34% (39%), Rest of Europe 45% (43%), North America 10% (9%) and Rest of the World 11% (9%). Anti-virus and intrusion prevention products represented close to 100% of the total revenues.</p>
<p>Service Provider channel in Q1</p>
<p>The Group’s Internet Service Provider (ISP) business continued solid as anticipated. In the first quarter of 2009, the revenues through the ISP business partners totaled 14.2 million (Q108: 10.9m), representing 46% of the total revenues (41%) and a growth of 30% compared to previous year.</p>
<p>The Group’s position in the ISP business remained strong with its over 180 partners in more than 40 countries with an addressable market of over 50 million consumer customers. The new service provider partnerships comprise Vodafone Italy and UPC Romania. The Group has not lost any of its existing partnerships, however the number of partners may vary subject to merger activity in the operator market. While the Group is selectively looking for signing new operator agreements, the aggregate number of partnerships is not a primary measure for the business. The most essential revenue drivers of this business are price per subscriber, subscriber base and take-up rate. The subscriber base grows together with the increase of broadband connections and new operators. The main growth driver is the increase of take-up rates within the existing partners. Therefore, the Group has enforced its account management and other resources to help the operators to reach new Security as a Service customers.</p>
<p>In addition to the Security as a Service sales, the Group is looking for other augmenting value added services to consumer customers through ISPs. The expansion of online back-up services, which complement the F-Secure’s existing portfolio of data security services continued. The online back-up service has been launched in several countries. However, reaching volumes takes time, as with the traditional security services.</p>
<p>The total number of the Group’s ISP partners is significantly larger than that of any other security service vendor. At the end of 2008 the Group’s ISP partners held approximately 39% (37%) market share of total broadband consumer connections in Europe, approximately 10% (10%) in North America and approximately 13% (9%) in APAC excluding China (Source: estimates by Dataxis and F-Secure).</p>
<p>Other channels in Q1</p>
<p>The traditional sales channels a whole continued to perform well and delivered steady growth as anticipated. Also the renewal rates in the business through the traditional sales channels have remained strong.</p>
<p>During Q1, the revenues through these channels were 16.5 million (15.7 million). This represented 54% of the Group’s total revenues (59%), a growth of 5% from the corresponding period in 2008.</p>
<p>Mobile security in Q1</p>
<p>Close co-operation with major handset manufacturers, including Nokia, and operators such as Vodafone Group, TeliaSonera Group, T-Mobile International, Swisscom and Elisacontinued well during Q1. Currently, there are mobile operator partnerships with more than 20 operators worldwide.</p>
<p>The Group’s Mobile Security 5 product has been well received among customers and the number of trial users continues to increase. In addition to the antivirus functionality, the new Mobile Security also includes new lock &amp; wipe capabilities for smartphones. The product was launched to the customers in February and it comes preinstalled in several smartphone models including touch-based solutions.</p>
<p>The revenues from the Mobile Security business are included in the above mentioned channels and were about 3% of total Q1 revenues.</p>
<p>Products &amp; Services</p>
<p>In February, F-Secure launched its F-Secure Mobile Security 5, which enables smartphone users to experience the full potential of their devices without fear of mobile threats. F-Secure Mobile Security includes combined real-time antivirus functionality with a firewall, antitheft and antispyware for S60 5th and 3rd Edition smartphones.</p>
<p>This report is unaudited. Unless otherwise stated the comparisons refer to the corresponding period a year ago. The currency is euro.</p>
<p>About F-Secure Corporation</p>
<p>Innovation, reliability and speed of response - these are the qualities that have made F-Secure one of the world’s leading IT security providers since the company was founded in 1988. Today F-Secure’s award-winning and easy-to-use products are trusted in millions of homes and businesses around the world. We provide powerful real-time protection that works quietly and smoothly in the background, so computer and smartphone users can enjoy the benefits of connected life to the full. F-Secure’s solutions are available as a service subscription through more than 180 Internet service providers and mobile operator partners around the world, making F-Secure the global leader in this market. F-Secure has been listed on the NASDAQ OMX Helsinki Ltd since 1999. The company has consistently been one of the fastest growing publicly listed companies in the industry. The latest news on real-time virus threat scenarios is available at the F-Secure Data Security Lab weblog at http://www.f-secure.com/weblog/.</p>

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