WithSecure Reports Strong Growth in Cloud Protection Services

WithSecure Interim Report Overview

WithSecure Corporation recently released its interim report for the first quarter of the year, showcasing a notable 8% increase in Annual Recurring Revenue (ARR) for Elements Cloud products and services. This growth translates to a total ARR of EUR 86.6 million, a significant rise from EUR 80.5 million during the same period last year.

Financial Highlights of Q1

During this quarter, WithSecure saw a consistent increase in revenue across its cloud offerings. The revenue from Elements Cloud products climbed by 6%, reaching EUR 21.9 million, compared to EUR 20.6 million a year earlier. One particularly impressive achievement was the 70% increase in ARR for Cloud Protection for Salesforce, which surged to EUR 13.9 million from EUR 8.2 million.

Annual Recurring Revenue Growth

Alongside the rapid revenue growth, WithSecure reported a Net Revenue Retention (NRR) rate of 103% for Elements Cloud, indicating high customer retention and satisfaction. Additionally, the ARR for Cloud Protection for Salesforce boasted an NRR of 133%, further emphasizing its success and market demand.

Adjusted EBITDA Performance

The Adjusted EBITDA for WithSecure’s Elements Company segment reached EUR 0.9 million, up from a restated EUR 0.7 million. This improvement is indicative of ongoing efforts to streamline operations and enhance profitability, despite an operative cash flow of EUR -2.6 million for the quarter, reflecting investments in growth and strategic initiatives.

Strategic Outlook for 2025

Looking ahead, WithSecure maintains its outlook for ARR growth for its Elements Cloud products at 10-20% for the year. The expected growth in ARR for Cloud Protection for Salesforce is set between 20-35%, evidencing strong confidence in the demand for its cybersecurity solutions.

Medium-Term Financial Targets

WithSecure has ambitious financial targets set for the medium term, expecting to achieve a combined growth sum exceeding 30% by integrating annual revenue growth with adjusted EBITDA percentage. The company aims for significant improvements in operational efficiency and revenue generation.

CEO’s Commentary

CEO Antti Koskela highlighted the resilience of WithSecure amidst global challenges, noting significant advancements in their cybersecurity offerings. He emphasized that elements of their strategy involve positioning WithSecure as a leader in European cybersecurity technology, with strong interest from partners for solutions rooted in Europe.

Key Developments

In a significant strategic move, WithSecure is divesting its cybersecurity consulting business this year to concentrate on growing its core software and cloud services. Additionally, the transition of their Malaysian operations to the European arm will enable them to deliver all products and services from Europe exclusively.

Market Position and Product Innovation

The Elements Cloud segment's ARR surged by 14%, being driven primarily by the introduction of new services like Exposure Management and Elements MDR, launched in May of the previous year. This is evidence of WithSecure's commitment to innovation and meeting the evolving needs of its customers.

Financial Performance Review

In examining WithSecure's financial performance, total revenue during the quarter was reported at EUR 30.1 million, marking a 4% increase compared to EUR 28.8 million the previous year. The company achieved a gross margin of 81%, reflecting effective cost management practices.

Operational Insights

Despite a focus on growth, the first quarter experienced some challenges, resulting in an operational cash flow drop compared to the previous quarter. However, the executive team continues to navigate these challenges while capitalizing on opportunities in the market.

Upcoming Events

Looking ahead, WithSecure is committed to transparency and communication with its stakeholders. The company will hold a webcast presentation where CEO Antti Koskela and CFO Tom Jansson will discuss the results and outlook for the future. The webcast is scheduled for a date later this month and will be accessible in English.

Frequently Asked Questions

What is the Annual Recurring Revenue (ARR) for WithSecure?

WithSecure’s ARR for Elements Cloud products is EUR 86.6 million, reflecting an 8% increase compared to last year.

How is Cloud Protection for Salesforce performing?

Cloud Protection for Salesforce reported a remarkable 70% ARR growth, contributing significantly to WithSecure's overall performance.

What are WithSecure's financial goals for 2025?

The company aims for a 10-20% growth in ARR from its Elements Cloud products and a 20-35% increase for Cloud Protection for Salesforce.

What is the role of CEO Antti Koskela in the report?

Antti Koskela highlights the growth and strategic direction of WithSecure amidst global challenges in his quarterly commentary.

Are there any planned divestitures for WithSecure?

Yes, WithSecure plans to divest its cybersecurity consulting business in order to focus more on its core software and cloud services.

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