Withsecure Oyj

Very good afternoon. We are with Secure. Welcome to this quarter one twenty twenty five results release. My name is Laura Vita. I am the investor relations director of Secure. Today we will have our CEO Antti, who will present highlights of the strategy execution in the first quarter. And he will especially go through what it means to be a European cybersecurity company in today's world and also what has happened with our partner network. After Antti, our CFO Tom will present the highlights in numbers and talk more about the outlook and mid-term targets. We've had grand difficulties in updating our website this morning, so apologies if you had to wait for the material to update. IT has promised to fix the problem during today, so both the interim report and this presentation will become available. We will have a Q&A session at the end, and if you have questions, you can put them through... If you're watching over the webcast, you can put them through the link all the time. I will take them up with the presenters at the end. So with this, welcome and welcome to the president and CEO of VidSecure, Antti Koskelan.

Thank you, Laura. So I would like to today go through our first quarter results from 25, how we got started with the with our strategy execution this year. And we have continued our ARR growth with Elements, and we reached a fairly high ARR growth of 70% for cloud protection for Salesforce in the quarter. And like Laura promised, I would like to talk first a little bit about our strategy execution. This has been a quarter to remember from the world political landscape point of view. And so what we have seen happening in the quarter, it has intensified all these tariffs and continued war in Ukraine. They have intensified the discussion around European digital sovereignty and cybersecurity being a key part of that one. And when we talk with the partners and distributors, this clearly has been on the top of the agenda. And we also made a deal with a distributor in Asia, Asia-Pacific, and we divested our Malaysian entity. That partner becomes a strategic distributor for Whitsecure, providing European alternative for Asia, and they have a clear growth orientation in doing so. But more importantly as well, WithSecure will be a truly European company post the transaction. All our data will be handled in Europe. All our products are developed in Europe and all our services are delivered from Europe. These are the requirements customers are having in today's world. And so we believe this is a good thing for WithSecure as we move on. So you probably remember from my investor day when we shared our partner strategy, this two by two matrix. And we want to focus on the partners serving the mid-market. And we work directly with partners in our focus regions. focus regions, and we also consolidate some of the smaller partners under strategic distributors. So that has been our plan. So what we have done this quarter, I start with the distribution. So we have progressed with the distribution consolidation here in Finland. We have launched a distribution partnership with Ingram Micro in the UK. So that was made public. So we have continued strengthening our distribution in France, and we have introduced new portfolio elements there. We have agreed to launch a distribution approach to Austria during Q2, and also the whole Asia-Pacific topic we have done during Q1. So the key thing for us is that we are not only consolidating our existing existing smaller partners to these disties but we become meaningful for these strategic distributors and they of course start onboarding new partners as they go forward and we get wider opportunity for the with secure portfolio so that's the whole thinking here why we are doing things The second part of the new partner agreement. So we said we want to have a top five partner approach for our key regions. So we have progress with that one. And during quarter one, we have signed deals here in Finland that are yet to be announced. In the UK, a couple of them. So we are working with... with many companies over there. So we have been sharing some of these names in LinkedIn. And generally in the UK, we are rebuilding our motion more from direct business to channel business and that's what we are doing in the UK. Then interesting market for us has been Netherlands during Q1. So we signed earlier with a company called Escrow deal to go with this mid-market playbook to the market. So they're offering the full elements. with all its co-security services to their mid-market clients. And we signed up a new one, Reliance. There have been some questions on that in the public. Reliance is a family office-owned company, and the family office consolidates multiple MSPs, which are managed service providers, and they standardize their service on WithSecure. So these are great additions to our partner portfolio. And in our business, what we do with the partners, that we have the right partners who invest in us and we invest in them. That's the driver for the growth. So we are very much with our strategy revitalizing our channel. And that's what we shared with you in Investor Day as well. So that's only what we have done in the commercial front. And I just wanted to say to you that this consulting divestment is progressing as planned. We are closing it. We are planning to close it this quarter. But also the Malaysian entity and the related deal plans to close this quarter. So when we look at then the financials, so we have continued on the growth trend. So it's 8% year on year compared to where we started off 12 months ago. Our net revenue retention went up a little bit, 203. And our ARR growth from the previous quarter end has been 4% from the reported number. We wanted to also come back to our promise in the investor day that we give a bit more granularity on the underlying growth trend with elements. So this is the organic growth what we are doing, and this is definitely not just a replacement of legacy software to the new one. So we clearly see new customer acquisitions here behind the partners. We see new products like exposure management and elements MDR becoming meaningful, and they are key part of this new mid-market playbook, that term we have coined. But we had some challenges. We had some challenges that we have talked with you earlier, that some of the larger customers that have been using managed service, those have moved over to more this large company playbook in the UK. And then we reported a decline of 8% in the managed service. So we wanted to give this visibility for you so that you understand what's the... organic growth behind the numbers that leads to Elements Cloud ARR growth of 8%. Ton will talk more about this division, how these numbers stack up before he dives to the numbers. And then, With the work we have done with the partners and the projects during the quarter, they have required some investments. So we had an expected level of adjusted EBITDA of 0.9 million for the first quarter. So that's on the element side of the house. And so when we look at this cloud protection for Salesforce, so clearly what this tells me that the value proposition that we have in a way has been validated and is creating a pull-in effect from the market. So we grew 70%, that was 1.1 million from the previous quarter. in absolute terms, and we have won several new logos during the quarter. So we have 290 customers at the quarter end, and we also want to report this number of customers going forward so that you can get this average ARR per customer in average in your calculations, if that's of interest. And just to give a flavor, Salesforce has 150,000 customers. So we have sold 290 of them. So we are not limited by the opportunity yet here. And so we are developing this as an independent business inside with Secure. Why we keep this quote on the strategic review is that if we come to a solution where we need to accelerate this faster, then we consider these options. But so far, the growth rate has been quite satisfactory. 70% is quite decent for anybody to report. So that we are really happy with the progress here. And this meets all the rule of 40 40 expectations with flying colors. And it's quite interesting to see how this is modeled as a standalone business. We, by the way, made accidentally profit during first quarter. That's not our plan. Our plan is to, of course, invest in the growth. But we made that one. That was unintentional. But maybe with this one, Tom, I would hand over to you.

Thank you very much, Antti. Good afternoon for my part as well. Tomi Ansonman, the CFO of ItSecure. So if we start a little bit about this, as Antti mentioned, we wanted to kind of give a little bit more color around our cloud ARR. And here you can see how it's kind of divided up into different categories. So we have this elements software and call security services ARR that we mentioned as one bucket, and then we have our managed service businesses as a secondary. And that's the way we give the information going forward in terms of our cloud ARR. Of course, we have some smaller revenue streams than in other products and cloud protection for Salesforce have their own ARR. And we still, of course, in Q1 have this discontinued operations. that you can see in our financial reporting still in this quarter. But then if we look at shortly the numbers, still as said, the Elements Cloud ARR grew 8%. But within that, then this first category with Elements software and co-security grew 14%. So that continues on a strong path. And notable also, as Antti partially mentioned, was that our new products that we launched in Sphere last year, Exposure Management and the Elements MDR, really growing very quite nicely for us and the time to revenue and meaningful revenue has been probably the shortest in a very long time in the company history. So there we have managed to do some improvements also.