WithSecure Half-year report 1 January – 30 June 2024: ARR growth developing favorably, consulting performance improving
WithSecure Corporation, Half-year report 1 January – 30 June 2024, 16 July 2024 at 8.00 EEST
WithSecure Half-year report 1 January – 30 June 2024: ARR growth developing favorably, consulting performance improving
Highlights of April – June 2024 (“second quarter”)
- Annual Recurring Revenue (ARR)1 for Elements Cloud2 increased by 13% to EUR 82.5 million (EUR 73.3 million)
- Elements Cloud ARR increase from previous quarter was 2%
- Net Revenue Retention for Elements Cloud was 103 %
- Revenue for Elements Cloud increased by 10% to EUR 20.5 million (EUR 18.7 million)
- ARR for Cloud Protection for Salesforce increased by 5% to EUR 9.1 million (EUR 8.6 million)
- Net Revenue Retention for CPSF was 88 %
- CPSF Revenue decreased by 2% to EUR 2.2 million (EUR 2.2 million)
- Cyber security consulting revenue increased by 12% to EUR 8.5 million (EUR 7.5 million)
- Adjusted EBITDA by segment was EUR -0.5 million (EUR -5.1 million) for Elements Company, EUR -0.4 million (EUR -1.4 million) for CPSF and EUR -0.3 million (EUR -1.4 million) for Cyber security consulting
- Adjusted EBITDA for WithSecure was EUR -1.1 million (EUR -7.9 million)
- Items affecting comparability (IAC) of EBITDA were EUR -0.5 million (EUR 1.4 million). Of this, approximately EUR -0.3 million relates to strategy projects, EUR -0.5 million to restructuring and EUR +0.3 million to valuation of earn-out from previously divested business.
1 Annual recurring revenue (ARR) of cloud products is calculated by multiplying monthly recurring revenue of last month of quarter by twelve. Monthly recurring revenue includes recognized revenue within the month excluding non-recurring revenue
2 Elements Cloud includes Elements Cloud portfolio software and services as well as the managed services
Highlights of January – June 2024 (“first half”)
- Revenue for Elements Cloud increased by 10% to EUR 41.1 million (EUR 37.4 million)
- CPSF revenue decreased by 1% to EUR 4.2 million (EUR 4.3 million)
- Cyber security consulting revenue increased by 4% to EUR 16.1 million (EUR 15.5 million)
- Adjusted EBITDA by segment was EUR 0.5 million (EUR -9.4 million) for Elements Company, EUR -0.8 million (EUR -2.6 million) for CPSF and EUR -0.8 million (EUR -2.1 million) for Cyber security consulting
- Adjusted EBITDA for WithSecure was EUR -1.1 million (EUR -14.1 million)
- Items affecting comparability (IAC) of EBITDA were EUR -0.5 million (EUR -3.2 million). Of this, approximately EUR -1.0 million relates to strategy projects, EUR +0.0 million to reversals of restructuring provisions and +0.6 million to valuation of earn-out from previously divested business.
Outlook for 2024 (unchanged)
Annual recurring revenue (ARR) for Elements Cloud products and services will grow by 10–20 % from the end of 2023. At the end of 2023, Elements Cloud ARR was EUR 78.4 million.
Revenue from Elements Cloud products and services will grow by 10–16 % from previous year. Previous year revenue from Elements Cloud was EUR 76.1 million.
Total revenue of the group will grow by 6–12 % from previous year. Previous year revenue of the group was EUR 142.8 million.
Adjusted EBITDA of full year 2024 will be positive.
Figures in this report are unaudited. Figures in brackets refer to the corresponding period in the previous year, unless otherwise stated. Percentages and figures presented may include rounding differences and might therefore not add up precisely to the totals presented.
CEO Antti Koskela
In the second quarter of 2024, WithSecure Elements Cloud ARR grew by 13% to EUR 82.5 million (EUR 73.3 million). Elements Cloud revenue grew by 10% to EUR 20.5 million (EUR 18.7 million). The growth was driven by the Elements software products, while the Managed services revenue was slightly below previous year’s level. According to the strategy, Managed Detection and Response (MDR) product Countercept is focusing its new sales on the mid-market customers. However, the new customers did not yet fully compensate for the previously churned larger accounts.
Revenue growth continued in all other markets except Japan and UK, which both had lower revenue than in previous year. Japan revenue was impacted by the currency exchange rate, while UK has been impacted by the Countercept direct business churn. France and DACH (Germany, Austria, Switzerland) countries were the strongest performing markets in revenue growth.
WithSecure held its main marketing event for the year, SPHERE, for the third time. Several new additions to the product portfolio were launched, WithSecure Exposure Management being the most important one. First agreements with the customers were signed in June. WithSecure Exposure Management offers new possibilities of shifting from reactive to proactive cyber security to our partners and end-customers.
Elements Company Adjusted EBITDA was EUR -0.5 million (EUR -5.1 million). Second quarter expenses exceeded the customary level, mostly due to the cost related to the SPHERE 24 event of EUR 1.2 million.
In June, WithSecure signed an agreement of the divestment of a business combining software and services, out of scope of the current strategy, to an external party. Closing of the divestment, pending on regulatory approvals, is planned in the second half of 2024. We were delighted to find a new owner who will continue developing the product and the related team of 10 professionals who will transfer to the buyer at closing.
Cloud Protection for Salesforce (CPSF) ARR increased by 5% to EUR 9.1 million (EUR 8.6 million). CPSF revenue remained at previous year level of EUR 2.2 million (EUR 2.2 million). The pipeline for CPSF is currently developing well and we expect that to contribute positively on revenue in the future.
Cyber security consulting developed positively. The consulting revenue increased by 12% to EUR 8.5 million (EUR 7.5 million). Consulting EBITDA was EUR -0.3 million (EUR -1.4 million).
The focus of both these businesses, subject to strategic review as announced in October 2023, has been on increasing their respective operative independence. WithSecure intends to provide further updates regarding both strategic reviews in the context of the third quarter 2024 interim report at the latest.
I was appointed as President and CEO of WithSecure with effect of 1 July 2024. I am both humbled and extremely excited of the new role. WithSecure is a company with world-class research and development, exceptional technological foundation, unique offering of products and services, as well as a talented team of people to support our future growth. In our third SPHERE event in May, I also had an excellent opportunity to meet in person many of our partners, who are an integral part of the company’s success.
Financial performance
| (mEUR) | 4-6/2024 | 4-6/2023 | Change % | 1-6/2024 | 1-6/2023 | Change % | 1-12/2023 |
| Revenue | 36.8 | 34.8 | 6% | 73.1 | 70.1 | 4% | 142.8 |
| Gross Margin | 26.5 | 24.0 | 10% | 52.1 | 48.4 | 8% | 100.2 |
| % of revenue | 71.9 % | 68.9 % | 71.4 % | 69.1 % | 70.2 % | ||
| Other operating income1 | 0.5 | 0.4 | 17% | 0.9 | 0.8 | 9% | 1.4 |
| Operating expenses1 | -28.1 | -32.0 | 12% | -54.2 | -63.3 | 14% | -117.7 |
| Sales & Marketing | -15.8 | -19.9 | 21% | -29.3 | -37.3 | 21% | -68.1 |
| Research & Development | -8.9 | -9.2 | 3% | -18.1 | -20.9 | 14% | -36.3 |
| Administration | -3.4 | -2.9 | -17% | -6.8 | -5.1 | 34% | -13.3 |
| Adjusted EBITDA2 | -1.1 | -7.9 | 86% | -1.1 | -14.1 | 92% | -16.1 |
| % of revenue | -3.1 % | -22.6 % | -1.5 % | -20.1 % | -11.3 % | ||
| Items affecting comparability (IAC) | |||||||
| Other items | -0.3 | -0.2 | -116% | -1.0 | -0.3 | -239% | -1.4 |
| Restructuring | -0.5 | 0.3 | -285% | 0.0 | -4.3 | 99% | -8.9 |
| Divestments | 0.3 | 1.3 | -80% | 0.6 | 1.4 | -60% | 1.4 |
| EBITDA | -1.7 | -6.4 | 74% | -1.6 | -17.2 | 91% | -25.1 |
| % of revenue | -4.6 % | -18.5 % | -2.2 % | -24.6 % | -17.6 % | ||
| Depreciation & amortization, excluding PPA3 | -2.4 | -2.5 | 4% | -4.8 | -5.1 | 5% | -10.2 |
| Impairment | -6.2 | ||||||
| PPA amortization | -0.6 | -0.6 | 1% | -1.2 | -1.2 | 2% | -2.4 |
| EBIT | -4.7 | -9.6 | 51% | -7.6 | -23.5 | 68% | -43.9 |
| % of revenue | -12.8 % | -27.5 % | -10.4 % | -33.6 % | -30.7 % | ||
| Adjusted EBIT2 | -3.5 | -10.4 | 66% | -5.9 | -19.1 | 69% | -26.3 |
| % of revenue | -9.6 % | -29.8 % | -8.1 % | -27.3 % | -18.4 % |
- Excluding Items Affecting Comparability (IAC) and depreciation and amortization. In 2023 excludes also costs of services provided to F-Secure under TSA and equivalent income charged for TSA services.
- Adjustments are material items outside the normal course of business associated with acquisitions, integration, restructuring, gains or losses from sales of businesses and other items affecting comparability. For reconciliation and a breakdown of adjusted costs, see Note 6 (Reconciliation of alternative performance measures)
- Amortization of intangible assets from business combinations (PPA, purchase price allocation, related amortizations).
| (mEUR) | 4-6/2024 | 4-6/2023 | Change % | 1-6/2024 | 1-6/2023 | Change % | 1-12/2023 |
| Earnings per share, (EUR)1 | -0.02 | -0.04 | 47% | -0.03 | -0.10 | 68% | -0.23 |
| Deferred revenue | 69.3 | 69.2 | 0% | 66.9 | |||
| Cash flow from operations before financial items and taxes | -2.6 | -8.2 | 68% | -5.1 | -13.5 | 62% | -19.9 |
| Cash and cash equivalents | 25.7 | 28.8 | -11% | 36.6 | |||
| ROI, % | -14.2 % | -23.9 % | 40% | -10.6 % | -29.7 % | 64% | -30.5 % |
| Equity ratio, % | 75.6 % | 79.0 % | -4% | 73.3 % | |||
| Gearing, % | -12.4 % | -28.1 % | 56% | -22.2 % | |||
| Personnel, end of period | 993 | 1,195 | -17% | 1,087 |
- Based on the weighted average number of outstanding shares during the period 175,955,491 (1-6/2024). Earnings per share has been recalculated for comparative periods using average weighted share amount after share issues.
Events after period-end
On 1 July 2024, WithSecure took over new headquarter premises in Wood City, Helsinki. The effect of the lease agreement on WithSecure's balance sheet is approximately EUR 13 million on right-of-use assets and EUR 13 million on lease liabilities. Part of the premises have been subleased.
Additional information
This is a summary of WithSecure’s Half-year report 1 January – 30 June 2024. The full report is a PDF file attached to this stock exchange release. Full report is also available on the company website.
Webcast
WithSecure’s CEO Antti Koskela and CFO Tom Jansson 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://withsecure.videosync.fi/q2-2024
Questions in written format are requested in the webcast portal. Presentation material and the webcast recording will be available on the company website
Materials | Investor Relations | WithSecure™
Financial calendar
WithSecure will publish its financial information in 2024 as follows:
- 23 October 2024: Interim Report for January–September 2024
Contact information
Tom Jansson, CFO
WithSecure Corporation
Laura Viita, VP, Controlling, investor relations and sustainability
WithSecure Corporation
+358 50 487 1044
investor-relations@withsecure.com
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