STRONG REVENUE GROWTH IN CORPORATE SECURITY

F-Secure Q1 / 2019

Key takeaways from Q1

Key figures

Business updates

Outlook

Financials

AGENDA

Revenue growth improved in both businesses

▪ Consumer security business growing again

▪ Corporate security growth improved from the previous quarter

▪ Endpoint protection business stable, strong renewals

▪ MDR revenue growing, pipeline strong and renewal rates high, new sales lower than during the previous quarter

▪ Consulting revenue in strong growth, large extension deal signed in the Nordics

▪ Adjusted EBITDA as expected

KEY TAKEAWAYS FROM Q1

KEY FIGURESEUR m 1–3/2019 1–3/2018 Change 1–12/2018

Revenue 53.4 43.1 24 % 190.7

Consumer security 24.0 23.8 1 % 94.9

Corporate security 29.4 19.4 52% 95.9

Products 17.8 14.8 21 % 63.8

Consulting 11.6 4.6 158% 32.0

Adjusted EBITDA1) 2) 5.0 3.8 31 % 17.4

% of revenue 9.4 % 8.9 % 9.1 %

M & A expenses -3.6

EBITDA 2) 5.0 3.8 31 % 13.8

Depreciation & amortization 2) -3.3 -1.5 121% -6.8

PPA amortization -1.2 -0.1 916% -2.5

EBIT 0.6 2.3 -74 % 4.6

Earnings per share (EUR) -0.01 0.00 -344 % 0.01

Deferred revenue 71.4 67.2 6% 72.9

Cash and financial assets at fair value

through P&L23.4 88.5 -74% 27.8

Personnel, end of period 1,680 1,145 47% 1,666

1) Adjustments are material items outside

normal course of business associated with

acquisitions, integration, gains or losses from

sales of businesses, and other items affecting

comparability.

2) IFRS 16 had a positive impact of EUR 1.6

million to adjusted EBITDA, while having the

negative impact of EUR -1.5 million on

depreciations & amortizations.

ADJUSTED EBITDA ACCORDING TO EXPECTATIONS

Adjustments are material items outside normal course of business associated with acquisitions, integration, gains or losses from sales of businesses and other items affecting comparability.

M€ % of revenue

▪ Profitability impacted by investments in product development as well as sales and marketing, and cyber security consulting expansion

▪ IFRS 16 had a positive impact of EUR 1.6 million to adjusted EBITDA, while having the same negative impact on depreciations & amortizations

1,52,1

4,23,7

2,3

0,5 0,4

1,40,6

1,3

1,4

1,6

1,6

1,5

1,5 1,8

2,0

1,8

0,1

1,1

1,2

1,2

0,4

2,71,6

7

14

9 9 9

0

1

2

3

4

5

6

7

8

9

10

11

12

13

14

0

1

2

3

4

5

6

7

8

9

10

12

Q218

9

Q117

0.1

Q217

0.3

Q317

0.1

6

12

Q417 Q1/19Q118

2.9

0.1

Q318

0.1

0,6

0.1

4.0

5.8

5.4

3.8

Q418

6.0

4.95.0

0,02.7

IFRS 16 impact

Depreciation & Amortization (excl. IFRS 16)

Adjusted EBITDA

PPA Amortization

M&A costs

Reported EBIT

Adjusted EBITDA, % of revenue

IMPACT OF IFRS 16 IN Q1/2019

▪ F-Secure adopted IFRS 16 Leases standard using modified approach on 1 January 2019. Comparative information has not been restated.

▪ Under IFRS 16 almost all leases are recognized on the balance sheet as the distinction between operating and finance leases was removed. Right-of-use assets (leased item) and corresponding lease liability was recognized according to the standard in opening balance sheet on 1 January 2019.

▪ For the full year 2019, the impact on adjusted EBITDA is estimated to be around EUR +6.0 million

Income statement

Cost of revenue Decreased (EUR +0.1 million)

Operating expenses Decreased (EUR +1.5 million)

EBITDA Increased (EUR +1.5 million)

Depreciation & amortization Increased (EUR -1.5 million)

Financial expenses Increased (EUR -0.1 million)

Balance sheet

Interest-bearing liabilities Increased (EUR +11.6 million)

Tangible assets Increased (+11.6 million)

Cash flow

Cash flow from operating activities Increased (EUR +1.5 million)

Cash flow from financing activities Decreased (-1.5 million)

Key figures

Adjusted EBITDA Increased (EUR +1.6 million)

Adjusted EBIT Increased (0.1 million)

Equity ratio, % Decreased (-3.1 p.p)

Gearing, % Increased (+16.8 p.p.)

CORPORATE SECURITY REVENUE GREW BY +52% IN Q1

Revenue from products increased by 21%

▪ Revenue from endpoint security increased from previous year▪ Renewals at a high level▪ New customer acquisition lower than during

previous year, but with good progress in several countries

▪ Customers are supplementing their EPP solutions with new EDR functionalities, revenue impact small but customer and partner reactions positive

▪ Revenue from MDR increased significantly from previous year

▪ Customer satisfaction and renewal rates very high, Sales pipeline continued to develop positively

▪ Significant quarterly variance in new customer acquisition, Q1/19 was lower than Q4/18 also due to seasonality

CORPORATE SECURITY PRODUCTS

Revenue from consulting increased by 158%

▪ F-Secure continued to win new deals and expand existing accounts in many demanding verticals

▪ Revenue increased in all regions with growth being especially strong in Singapore, South Africa and the Nordics

▪ In the Nordics extension to a large project deal was also signed during the quarter

CYBER SECURITY CONSULTING

88

We have beaten the following brands in the AV-TEST Best Protection category for business products in 2018:

Bitdefender Sophos

Kaspersky Lab Avast

Trend Micro G Data

Microsoft Seqrite

McAfee Palo Alto Networks

We continuously get awarded for best protection

F-Secure whitepaper on continuous response: https://img.en25.com/Web/FSecure/%7B59c4c3cc-69ac-4330-9344-bfbb8ce793d5%7D_Rethinking_Response_Whitepaper_-_F-Secure.pdf

COMPANIES ARE STRUGGLING TO DETECT AND RESPOND

Most breaches took only minutes to execute…

… but months to detect!

Gartner’s sample vendors:▪ Alert Logic, Arctic Wolf, CrowdStrike,

eSentire, mnemonic, F-Secure, Paladion, Rapid7, Red Canary

F-SECURE COUNTERCEPT IS THE ONLY MDR SOLUTION DESIGNED TO SKILL-UP YOUR TEAM

“Demand for MDR has been particularly strong in the midmarket. It provides a turnkey service that fills gaps in security expertise and 24/7 operations for incident response and threat containment. Organizations that have not yet invested in, or are underinvested in, detection and response technologies and internal capabilities should consider MDR services.”

- Gartner

CONSUMER SECURITY REVENUE GROWING AGAIN IN Q1

Revenue increased slightly from the previous year

▪ Business developed as expected, and the company continued to work closely with its broad global network of partners to increase product activation

▪ Negotiations with operators and router manufacturers to include F-Secure SENSE’s capabilities in their router offering progressed well with several partners

OPERATOR CHANNEL

Revenue increased slightly from the previous year

▪ Renewals remained at a good level

▪ F-Secure continued to focus on pushing the sales of the company’s broad consumer portfolio to increase average revenue per customer

DIRECT SALES

Endpointprotection (EPP)

(Consumer & Corporate security)

Endpoint Detection &

Response (EDR)

Managed Detection &

Response (MDR)

Cyber Security Consulting

SCALABLE SOFTWARE BUSINESS COMPLEMENTED BY EXPERT SERVICES

20152018 2016

Software business

Software business

Service center

Service business

SCALABILITY

78% of total revenue 22% of total revenue

OUTLOOK FOR 2019 UNCHANGED

▪ Revenue from corporate security is expected to

grow by over 30% compared to 2018

▪ Revenue from consumer security is expected to

stay approximately at the same level as in 2018

▪ Adjusted EBITDA is expected to be above EUR 15

million excluding the impact of IFRS 16

OUTLOOK FOR 2018-2021 UNCHANGED

▪ The demand for corporate cyber security products and services is expected to grow strongly. F-Secure aims to grow faster than the market, with revenue from corporate security expected to grow above 15% annually during our strategy period 2018-2021.

▪ Driven by the anticipated revenue growth and scalable business model, the company’s profitability is expected to improve significantly in the long-term. The board and the management continuously seek to balance growth investments and profitability to optimize long-term value creation for the shareholders.

FINANCIALSQ1 2019

All income statement figures refer to continuing operations, and figures in brackets refer to the corresponding period in the previous year, unless otherwise stated.

REVENUE

January-March

▪ Revenue increased by 24% y-o-y

▪ Total quarterly revenue 53.4m (Q118: 43.1m)

45

5

0

10

35

20

15

25

30

55

40

50

53.7

40.9

Q318Q417 Q4/18Q117 Q317 Q218Q118

50.5

Q1/19

44.4

41.243.3 43.1 43.4

53.4

Q217

+24%

Revenue

EUR m

REVENUE SPLIT January-March

▪ Revenue from corporate security increased by 52% totalling EUR 29.4 million (19.4m)

▪ Revenue from consumer security increased by 1% totalling EUR 24.0 million (23.8m)

▪ Corporate security represented 55% (45%) and consumer security 45% (55%) of total revenue

30

0

10

5

20

15

25

Q117 Q217 Q317 Q417 Q118

23.4

Q4/18 Q1/19

24.2

Q218

24.0

Q318

16.6

23.8

18.6

24.7

29.4

24.3

26.7

20.1

24.3

16.9

29.8

23.8

20.0

24.0

19.4

+52%

Corporate Total Consumer Total

EURm

PROFITABILITY

January-March

▪ Adjusted EBITDA 5.0m, 9.4% of revenue (3.8m, 8.9%)

▪ Earnings per share (EPS) EUR -0.01 (EUR 0.00)

▪ IFRS 16 had a positive impact of EUR 1.6 million to adjusted EBITDA

▪ Depreciation and amortization increased by EUR 2.8 million to 4.4 million (1.6m).

EURm

1,52,1

4,23,7

2,3

0,5 0,4

1,40,6

1,3

1,4

1,6

1,6

1,5

1,5 1,8

2,0

1,8

0,1

1,1

1,2

1,2

0,4

2,71,6

7

14

9 9 9

0

1

2

3

4

5

6

7

8

9

10

11

12

13

14

0

1

2

3

4

5

6

7

8

9

10

0.1

6.0

Q218

0,6

0,0

Q117

4.0

9

0.1

Q317 Q318

0.1

12

6

Q417

0.1

Q118

0.1

2.9

Q217

0.3

Q418 Q1/19

5.8

12

3.8

2.7

4.95.0

5.4

Adjusted EBITDA

IFRS 16 impact

M&A costs

PPA Amortization

Depreciation & Amortization (excl. IFRS 16)

Reported EBIT

Adjusted EBITDA, % of revenue

OPERATING EXPENSESEURm

January-March

▪ Operating expenses excluding depreciation and amortization increased by EUR 3.2 million to 36.0 million (32.8m) due to the inclusion of MWR InfoSecurity in the company’s financials.

0

2

4

6

8

10

12

14

16

18

20

22

24

26

28

30

32

34

36

38

40

42

1.5

23.9

8.2

10.2

8.2

23.3

8.4

Q117

3.8

8.6

Q418

3.9

22.0

3.3

8.7

19.4

Q217

3.3

Q317

21.9

Q417

21.0

Q118

3.4

25.7

Q218

3.8

9.6

26.1

3.13.8

3.4

Q318

3.2

Q1/19

8.5

9.7

34.4

23.6

31.2

33.634.4

35.6

38.7

40.4 40.41.2

35.9

+20%

Sales & Marketing

Acquisition related

Administration

Research & Development

DEFERRED REVENUE

31 March 2019

▪ Deferred revenue increased by 6% (year-on-year) to EUR 71.4 million (67.2m), driven by the inclusion of MWR InfoSecurity.

0

30

10

40

20

75

70

50

60

Q1/19

41.747.4

13.817.6

Q117

18.7

Q217

53.9

18.7

55.3

Q317

48.346.8

17.4

54.8

12.4

Q118 Q218

20.0

Q417

18.6

Q318 Q418

17.5

41.9

50.5

+6%

Deferred revenue, current Deferred revenue, non-current

EURm

January-March

▪ Revenue increased in all regions

▪ In Rest of Europe, North America and in Other regions increases were driven by the increased contribution from MWR InfoSecurity

REGIONAL REVENUE

0

2

4

6

8

10

12

14

16

18

20

22

24

23.5

16.418.5

Nordic

18.6

Rest of Europe

4.0 4.5

North America

4.1

6.9

Other Regions

+13%

+26%

+13%

+68%

Q1/18 Q1/19

EURm

NET DEBT

January-March

▪ F-Secure’s financial position remained solid

▪ The main driver behind the y-o-y change in net debt was the acquisition of MWR InfoSecurity in Q3/2018

▪ Excluding the impact of IFRS 16 net debt was EUR 13.6 million

▪ Increase in interest bearing liabilities compared to previous year-end is due to adoption of IFRS 16 Leases -standard.

▪ Cash flow from operating activities before financial items and taxes was -0.3m (1.2m)

▪ Cash flow decreased due to slower growth in deferred revenue

▪ Cash flow from operations was EUR -1.4 million (-0.3m)

▪ IFRS 16 had a positive impact of EUR 1.5 million to operative cash flow

▪ Gearing ratio was 36.5% (123.1% negative)▪ Excluding the impact of IFRS 16 gearing ratio was 19.7%

94,3-96

-81 -81-90 -88

-78

169 14

12

-100

-90

-80

-70

-60

-50

-40

-30

-20

-10

0

10

20

30

Q3/17Q1/17 Q2/18Q2/17 Q4/17 Q1/18 Q3/18 Q4/18 Q1/19

EURm

IFRS 16 impact Net debt*, MEUR

Acquisition of MWR InfoSecurity

NUMBER OF PERSONNEL

January-March

▪ At the end of the quarter, F-Secure had 1,680 employees (1,145)

▪ In Q3/18, the increase in personnel from the acquisition of MWR InfoSecurity was 391

1 0551 091 1 060

1 104

1 201

1 636 1 666 1 680

100

900

500

0

200

600

300

400

700

800

1 000

1 100

1 200

1 300

1 400

1 500

1 600

1 700

Q118 Q418Q218Q117 Q1/19Q217 Q317 Q417 Q318

1 145

Employees