F-Secure (FSC1V) Q2 2024 earnings summary

Executive summary

• Revenue grew 24.9% year-over-year to EUR 72.9 million in H1 2024, mainly driven by the Lookout Life acquisition; organic growth was 2.6%.

• Profitability remained strong, with adjusted EBITA up 28.6% to EUR 25.8 million and operational improvements supporting margins.

• Integration of Lookout Life completed, achieving technology independence and major product milestones, including a new Total release.

• Partner channel showed mixed performance: ARPU and subscriber numbers increased, but some large partners faced customer churn.

• Leadership team changes and product/technology advancements were highlighted.

Financial highlights

• Q2 2024 revenue was EUR 36.5 million, up 19.6% year-over-year; organic growth 1.9%.

• Adjusted EBITA margin in Q2 2024 improved to 36.4% from 31.7% in Q2 2023.

• Gross margin for H1 was 85.8%, down from 92.8%, impacted by Lookout Life's lower margin and purchase price allocation.

• Cash and cash equivalents at end of June 2024 were EUR 16.9 million, up 41.8% year-over-year.

• Net debt at end of June 2024 was EUR 166.6 million; leverage ratio at 3.2x adjusted EBITDA.

Outlook and guidance

• 2024 revenue expected between EUR 142–152 million; adjusted EBITA guidance EUR 48–54 million.

• Medium-term targets: revenue above EUR 200 million by 2026, adjusted EBITA margin above 42%, leverage below 2.5x, and dividend yield around or above 50% of net profit.

• Rule of 40 (revenue growth + profitability margin ≥ 40%) remains a guiding principle.

• Consumer cybersecurity market expected to grow at mid-single digit CAGR through 2026, but growth may be moderated by consumer sentiment and cautious service provider investments.

• Deferred revenue fair value adjustment from Lookout acquisition to negatively impact 2024 revenue by EUR 1.5 million and EBITA by EUR 0.5 million.