4/24/2024

speaker
Laura Viita
Investor Relations Director, VidSecure

Hello and good afternoon from VidSecure. Here in Helsinki, Finland, we are just through what we hope was the last snowstorm before the summer. A couple of brave individuals made their way through the snowy streets to the room, and we have lots of others on the webcast. So welcome wherever you are to this first quarter 2024 results release. My name is Laura Viita. I am the investor relations director of VidSecure. As you might know, we had a sudden change of CEO just a few weeks ago. Today we have our interim CEO Antti Koskela joining us for the first time. Antti is our chief product officer. He has been with the company as part of the global leadership team since 2021. More about Antti you can find on our website. And I believe that Antti's deep knowledge of our products will also be beneficial for our investor communications. For example, everything I know about cybersecurity is largely thanks to Antti and his team. So looking forward to that. Our CFO Tom Jansson, whom you know, was attacked by a virus, not a computer virus, because we are well protected here, but a real life virus. And therefore he's attending us today online. And he will go through the first quarter financials and talk about the 24 outlook. We will take questions and answers at the end. If you're following us over the webcast, please post the questions anytime. I will pick them up at the end and ask them to these gents. So now, a warm welcome to the interim CEO of Witsecure, Antti Koskela. The floor is yours.

speaker
Antti Koskela
Interim CEO & Chief Product Officer, VidSecure

So thank you, Laura, for the introduction and welcome from my part to VidSecure. This is my first time in the quarter one briefing, and I tried to do honor for the company and to Tom as well there. So what I would like to go through first is the first quarter highlights. I have two slides. I will go through them. The important thing here is that we started started with our strategy to become partner-led, mid-market centric SaaS company in cybersecurity. And then we concluded as a part of our strategy that we have consulting business and cloud protection for Salesforce that are slightly different. So our strategy is unchanged. We go full ahead with elements-driven company and we continue the strategic reviews. But what we did is that as we are operating the business in three segments, so you will now have access to the segments which we published on Monday. Hopefully that gives greater visibility for the business in terms of opportunity and profitability, and it answers some of the questions that have been previously asked in these sessions. Elements Company We faced, of course, the normal macroeconomic situation in Europe and some of the seasonality in Q1 and slow decision making. But despite that, we are reasonably happy that we clocked in third consecutive growth quarter in ARR terms. Our ARR grew 10% year on year, 3% in the quarter. and our cloud revenue grew 10%. Important to note here, when I'm using the term cloud, I'm using the new definition Elements Cloud Product and Services. That's the reference to the word cloud in this presentation. Elements company revenue grew 6%. And when we look at deeper what's underneath the numbers, Within the Elements Cloud, we have a capability called Detection and Response, EDR, that is driving the growth quite a bit. MDR, our counter set offer, is at the previously level. And when we look at the regions, so we saw the German-speaking Europe, the DAH region, Finland and France driving the growth. We had some challenges in the UK and Japan. We had quite many renewals in these countries. And these are key countries, we call them regions in our operational model, where we develop our business and especially develop our channel business, partner business, with regards to Elements Cloud. So I'm quite positive about Outlook, and that's the reason why we chose these two markets. Then going to a familiar area of mine, which is, of course, the products. And mid-market, which is our chosen segment in the strategy, these customers are chronically underserved and they don't have access to the resources that are needed against of these automated digital cyber criminals. So it doesn't matter whether you are small or large, you are faced with the same automated attacks. So what these small companies need to do then, Of course, they need to have a good endpoint strategy. And when we say endpoint, it's not just the endpoint protection and detection. We actually already have cloud detection, identity detection coming in the systems. That's one part of it. But the key thing here is that That's not the only thing that is needed. What's opening a new opportunity for WeedSecure, and I believe every mid-market customer needs to buy this, is because you need to understand what are your weak spots in your digital infrastructure, how potential attackers come in, and how you proactively manage that risk. That is exposure management. Large companies are doing that because they have skills and resources. Small companies need to do it because they are faced with the same attacks. So we signed an early access program for this one. We have a good partner uptake on that one, and we will officially launch this in our Sphere event. Also happy to report that we have now 600 people coming to the sphere. We believe we will sell out still the event as we move on. So we have capacity for 650. So it's a platform where we talk with our partners and customers and hopefully see some of you over there as well. So when we look at these two other businesses, these are the businesses which are under strategic review and they continue to be under the strategic review. So first let's remind what cloud protection for Salesforce is all about. So when you are working as a Salesforce customer, especially when you are using community cloud or service cloud, you are having your third parties in the system. So you are exposing yourself. So we have proven that value prop and we have a solution for that. So we grew quite steadily to this level, but we have hit some growth pains here in the business. And some customers have adjusted their license usage And our ARR is roughly at the previous level. So it has been relatively flat, but we have stabilized the business now. And when I double click inside the business, the value prop is proven. I believe there's still a growth opportunity there going forward. And that's why we are driving the business further. And Tom will comment a little bit on the NRR trend, which is NRR 87. It's one part of the story. Some part of that we will recover later this year. Tom will talk more about that one, which is an important metric for us. In cybersecurity consulting, I think some of you were here in the Q4, Q3 events with us. And we have clearly said we have a strong backlog for Q1. So we have a strong backlog. So what then happened? So what happened is that few customers, especially one very large customer, decided to delay the start of the projects. So we are not obviously satisfied with the consulting performance during Q1. but we believe the value prop is sound and we have ability to improve that during the year. We continue with the strategic review as planned. So the strategy we have in the company is to move company to, Partner-driven SaaS company that in the cybersecurity field focus on the mid-market. Unchanged, strategy unchanged. And I would like to thank Juhani, Juhani for leading the company until this point driving all the transformation and so me and Tom and rest of the team we will drive now company further with the strategy we have and it's really about strategy execution now as we move further so I want to remove any doubt about the focus and the strategy and remove any doubt about our strategy to conduct strategic reviews for these two businesses. So with this one, maybe I turn over you to Tom, so that why don't you go through the financials?

speaker
Tom Jansson
Chief Financial Officer, VidSecure

Thank you, Antti. And as we have moved to segment reporting, We are going to go through the numbers in the future also by segment. So first of all, the Elements Company, just checking that we have the right slide on the screen there also.

Disclaimer

This conference call transcript was computer generated and almost certianly contains errors. This transcript is provided for information purposes only.EarningsCall, LLC makes no representation about the accuracy of the aforementioned transcript, and you are cautioned not to place undue reliance on the information provided by the transcript.

-

-