F Secure Oyj

Welcome everybody to F-Secure's financial statement release for last year and for quarter four. Good to have you with us. My name is Timo Laaksonen. I'm hosting the event together with my colleague Sari Sommerkallio. So without further ado, let's kick off. So we ended the year on a positive note. It's always good to be able to do so, and that was really the case for us in quarter four. Our revenue growth was slightly over 30%, organic growth 2.9%, currency neutral was slightly over 4%, partner business steady performer, as well as direct business starting to show clear signs of improving situation in the last months of the year. Especially renewal was strong. New sales still facing some challenges. Our execution was very much focused on migrating our end customers on direct business side as well as on partner business side into Total, our one single app for all things consumer security. In the fourth quarter, we signed up three completely new partners, and we signed up nine of our existing partners to convert their offering into multi-module Total. the total of partners who have made this move to multi-module total is about 70, 69 to be precise. We acquired Lookout Life from the US at the turn of May and June, and I'm very, very proud and glad to say that the integration is now completed. So we have one single organization, we have one single product program, and we have common business support systems across the line. So we are truly one company now. What remains in place, which is natural, is that when we acquired the business, there are technology transfer service agreements, which are still in place until we migrate customers into one single technology platform for Lookout Life customers and partners. We're making a proposal to the annual general meeting that we will be paying a dividend of seven cents per share to be paid into installment, but naturally that is pending AGM approval. Now, with regards to market sentiment, it's a bit of a mixed bag. For much of the year, especially in Europe, the sentiment was very challenging. Whereas in North America, it was clearly better. Asia has been going relatively fine all this time. Towards the end of the year, we saw some signs that these fortunes are changing a little bit. There were some signs from the US or North America that the sentiment may be getting a bit tighter, whereas in Europe, we saw that there is a little bit of sun showing up between the clouds. So that's still a bit uncertain. What comes to our business, you know that roughly 80% of our business is through partners, and many of our partners actually a majority of our partners are broadband providers. They make massive investments into network infrastructure worth hundreds of millions, if not billions of euros or dollars. And when interest rates are high, they tend to be a bit risk averse in going out with any kind of new services. and especially when consumer sentiment is low and interest rates are high. So that most likely has made our partners a little bit more reticent in going out with new propositions, and especially with propositions which may be coming with a higher price tag to consumers than what they did before. So that quickly on the quarter four, but I have to say that after several quarters of of headwinds in direct business, we are super happy about the fact that we are starting to see stronger performance also on that side. Now, in the fourth quarter, just some further details. So on the left, increasing average revenue per user. This is a reality that is happening in our direct business that we know for sure. In terms of our partner business, the same applies. Our theory has been that as we move from disparate applications where many customers have only had one F-Secure application in the past going into multi-module total offering is going to be increasing the average revenue per user. The theory holds. All the proof that we have is showing that that is true. We signed up, for instance, a couple of major Nordic telecommunication service providers for total conversion or upgrade, as well as a couple of Central European CSPs. So in all, we now have a good number of partners running on total, multi-module total, And as stated earlier at our investor day, there is a whole lot of more additional partners who actually have already only endpoint security activated in their total. So for them, the road is open to expand into a wider offering than they currently have. So on top of these, about 70 who have already signed up, there are a good number which could start enhancing their offering. In the middle there, we came out with a good number of initiatives and this pace you will see pick up from now on also in 24. So developing current and offering current offering and new products so we launched a completely new capability in total we call it trusted shopping so people can now When entering an e-commerce site, they will get guidance on, is this site a trustworthy one? So this is, in a way, one of our steps towards providing holistic scam protection for consumers online. So this was welcomed widely and created tons and tons of PR buzz, for instance, in the UK, Germany, and in our home country here in Finland. we launched what we call flexible client for Total, which means that Total consists of several different modules, such as endpoint protection, identity protection, password management, VPN. And now users and our partners can take any combination thereof that they want to go with. From sales and business perspective, this means that we can enter know using one module as the entry point into a consumer or a partner and then over time as people grow accustomed to the service and want to expand we can easily do that within the same app. We also signed up two new partners for DNS security or network level security. And we launched two first partners, or sorry, these were maybe number two and three that we launched in live services. And we have continued actively working on tier one partnerships, the ones that we already have and new ones to enhance our footprint within that market segment or partner segment. And then expanding into new channels, we have active development of fintech, insurance, banks, payment provider sector, We have added new capabilities inside the company on this front to open doors for our sales. We have specialist business developers now dedicated for this market segment. So our activity level has clearly been ramped up in the last quarter in this area. And finally, we set up a partner program about one and a half years ago for Sense. our connected home security, and since then we've roughly signed up 10 partners. Some of them are reseller partners also, so they have the capability to take sense to their broadband provider or mobile service provider partners. They can take it as part of their own Wi-Fi router that they are providing. And on this front, we're expecting to see first deals during the course of 24. But we've been working actively on this front. Change negotiations. We ran change negotiations in the fourth quarter. initiated at the end of October, completed around mid-December. We concluded those, and as a result, 56 roles in F-Secure were terminated, of which 39 in Finland. Our estimated annual saving from these exercises is roughly 9 million, and as mentioned, at our earlier sessions, part of that money is going back to investment into our growth. So that's not something that we're only doing to make room for more profitability, but we're making room for future oriented growth investments. And secondly, we also tightened up our organizational structure in a way that we around our new strategy and our post-integration with Lookout Life, we now have a better structure to support our future operations and strategic growth. Our one-off costs estimated to be at 1.8 million. So this is IAC that was caused by the change negotiations. In terms of total conversion, on the left side we're looking at signed partners, on the right we're looking at launched partners. Darker blue 22, lighter blue 23, and the black ones are depicting progress we made in quarter four of 23. So this is only conversion, this is only looking at the partners we already had who are now converting their offering into total. This excludes completely new partners that we've signed up. So if you count the numbers together, you see that we've signed 69 partners so far for a conversion, nine out of those in the fourth quarter, and we have 61 who have already launched, and out of those, six launches took place during quarter four. Now, we were counting to sign up more partners and we were counting to launch more partners. There was clearly an air of carefulness amongst our partners for the reasons that I mentioned earlier in going for total conversions. So far, I would say that The only question among our partners has been more, when do we do it, rather than if we'll do it. We now have seven wins for DNS security, and two of those were signed up in quarter four. So that's starting to be a reasonable number. And these DNS security deals, we are focusing on opportunities where the coexistence of sense on connected home security, total on the endpoint side, and DNS security on the network side complement each other as an offering. And then finally, from my part, in 2024, what is it that we're focusing on? We're focusing on strengthening our partner business even further. We have four top priorities that are driving everything we do in the company. Number one is that we're accelerating profitable growth to fund further growth investments. And if you look at the strategic initiatives, total conversion is smack in the center of this activity. Secondly, we are... converging our product roadmaps from F-Secure and the old F-Secure and the old Lookout Life. And in the second half of this year, at the turn of third and fourth quarter, we're launching our next generation evolution of Total, which is a new offering that combines the best of both worlds. Second priority is delivering on the number one security experience vision, At the center of that is the value proposition that we have towards consumers and towards partners. So the trusted companion experience that we're talking about there for consumers, it is precisely, you know, how can we be more engaging? How can we keep people safe from scams? How can we be more engaging and personalized for specific consumers who are using our services? And then how can we give them guidance and tips and hints how they could actually be in a better position with regards to their security posture? With regards to partners, our trusted companion vision means security business as a service. We want to be the partner of choice for all service providers out there as a trusted companion when they want to go for security business as a service. In terms of hardcore cybersecurity, scam protection is at the center of it all. Scam protection takes many shapes and sizes. If you think of consumer security, traditionally people talk about precisely password management, VPN, endpoint protection and so forth. But that's not talking to the actual thing that a regular person does on the web. People go browsing, they go messaging, they go banking, they go shopping and so forth. Those are the kinds of potential vulnerable digital moments that we need to secure. And that's where the scams are happening. And that's where we are focusing our research development and product planning efforts. And finally, we are working very actively currently, enhancing our embedded security portfolio, aiming at having a very rich portfolio capabilities at the end of this year. The third priority is to enhance our partner business focus to cover also tier one partnerships, the biggest service providers in the world. And on that one, Our clear initiative that takes many shapes and sizes is that we are extending our service level to meet the specific requirements of these massive partners. You know, may have to do with service level, that we can provide availability times, quality, worldwide 24-7 support, and so on and so forth. Finally, we're optimizing direct business for revenue and profit. This is not news, if you have been attending our sessions before. And we are focusing there on experience retention and upsell. And on this front, what we've done in the past five, six months seems to be bearing fruit, as we clearly saw a jump in the renewal figures in the fourth quarter. So that's all from me. I will now hand over to our chief financial officer, Sari Sommerkallio, to go through the figures. Here you go. Thanks.

Good to see you here today. So let's look at the numbers. Nice to be talking about a little bit more positive numbers than the previous quarters. So compared to the earlier quarters this year, so Q4 was quite good. Revenue was up by a bit over 30%. That is obviously thanks to the Lookout acquisition. Lookout life size was around a third of our size. And if we take into account the fair value adjustment, so the increase we see here is now on the expected level. Organic growth was 2.9%, but we had some headwinds from FX, so currency neutral organic growth was 4.2%. So clearly the best quarter this year. If we look at the regions and the currency neutral part, you see that America is growing by 154%. So that's really where the lookout impact is. And similarly, it's visible in the rest of the world. So in Japan, we had had significant lookout life business. If we look at more organically, so in Europe, Netherlands is a strong market. In APAC, it's Japan, Singapore, Hong Kong, where we have the best business development. And then on the negative side, in partner business, Poland continues to be a challenging market. It was started, we talked about this for already a year ago, with regulation changes, which has really changed the Polish market. So now it's not only the regulation, but it's things that have followed from this. So, challenging market, but we are continuing to fight and are a big player in that market. And Germany is also a market where we have challenges and that's maybe not the market situation, but related to our customers and how it's developing there. On direct business side, so we still have organically it's negative numbers, close to 3%, but really we said at the end of third quarter that we see positive signs. And actually in Billings it was a positive quarter, but it's because of the revenue recognition and the historical deferred revenue in this quarter. So the revenue number is negative, but really, really positive signs compared to how it's been for way beyond a year from now. And it's related to the renewal performance and in general the higher ARPU that we see in the channel. In this picture, it's basically the same message about partner and direct business. You see also the lookout numbers. When you look at lookouts, remember to take into account the deferred revenue impact. So this is not like totally comparable to history. Of course, that impact will gradually start to decline, but it will be visible in the partner business still for some time, but getting smaller. But I think the good news here is how you see the deferred revenue has increased by more than 12% since end of Q3. And there is no lookout life impact there because that was already included in Q3. So it really tells about the billings in that quarter. And looking at that pie chart, you see the increase in direct business. So that's really a change to the picture that we've seen in the previous quarters. Looking at the expenses, I think pretty similar picture to how it was in Q3. So admin costs have decreased from a year ago when we still had the TSAs and some double costs with TSAs and on-prem. own internal services and now we are on our own. So that continues to be visible. And now you see here how sales and marketing costs and the technology side are up. Impacted, of course, also by the Lookout Life acquisition, because it was people in those functions that we got, but also our internal investments. TSAs here, I'm not going to talk through the numbers here. You can see them. Here the good news is that now we don't have going forward any with secure TSAs anymore. So we are out of that. You will just see them in the past comparison numbers. We still do have commercial agreements with Secure, but that's something that should be regarded just as normal business. It's commercial agreements, vendors like we have many other vendors in the technology area. And with Lookout Live, so we have some TSAs ending in the spring and some will then which are visible in the cost of revenue so will be there for still a longer period. And also here good to remember that of course for all of these costs we also get services and these are now sort of fairly priced so should not expect any major deviations. But of course more control in our own hands then at the time when they come to our own site. Looking at the profitability, gross margin 86.2%. It's on the same level as previous quarter. So no drama there. If we compare, it's lower than it was a year ago. And reasons there, it's lookout life had lower level. There is a fair price adjustment and also a product mix that is higher. has a little bit lower gross margin than earlier. And on the EBITDA side, again, big drop from Q3, but we remember that Q3 is always the best quarter where business runs as usual, but costs are not on the same level. And if we compare how now the profitability dropped from Q3 to Q4, so actually last year the drop was even bigger. So in that sense, I think from seasonality point of view, this is quite OK. But of course, you know that our ambition is much higher, but this turned out quite OK. And of course, the reasons for the lower level compared to previous years is investments that we are doing partly to our independence, but really a lot to build the future growth opportunities. About cash flow. Here I'd like to highlight the really awesome cash conversion that we had in Q4. In both Q2 and Q3, we said that we had some issues with processes related to accounts receivables. In Q2, it was more on our own internal processes. In Q3, it was related to the Lookout Life integration. But as we said, they were temporary and now we have sort of caught up with all of that. So now those problems are behind us. So from cash point of view, an excellent quarter. Timo already mentioned the dividend, so same dividend than last year, 7 cents per share. Of course, it's low in the sense that last year it was referring to just half year's result and now it's a full year. But it's still fully in line with our dividend policy where we say that we pay around or above 50%. So this is maybe both above and around that 50%. So this is now close to 55%. And of course, the situation is different to where we were a year ago. So now, of course, we need to amortize our loan and pay interest. And there are costs that we did not have. So now that we have needs for those funds, so we are paying less. So we see fully in line with the policy. And it's paid now into installments, which is also a new thing for us. So just evening out the cash flow throughout the year. And nowadays there are quite many companies who do this. Then about the leverage, which is a KPI that we are since we took the loan, so following up carefully, we are now at the level of 3.6, which is same as last month, and net debt is coming gradually down. And we have also started amortizing on the loan, so there was a 10 million amortization in the fourth quarter and you see it in our short-term debt that during the next year we are going to amortize 30 million, according to our loan agreement. And the dividend we already talked about, so last year paid most of the half-year result and now paying approximately half of the VEPS. And of course, in dividend, we are following the actual EPS, but if we take into account the PPA amortization, so sort of the cash EPS is higher, it's 15 cents. But dividend goes according to the actual one. Just a few words about the full year, so 17% growth. And there, again, acquisition was fueling that. Acquisition had a seven-month impact, and of course, next year is still having impact as we add the five remaining months. And in EBITDA, percentages is lower, as we already discussed, but in absolute terms, just a bit higher. With the bigger business, slightly higher EBITDA. Then about the outlook for 2024, we expect the market to grow. It is sort of a mid-single-digit type of growth that we see in the market. But all these things that Timo mentioned, where we see questions in the consumer sentiment, we see that our partners are still considering their own investments. And like we saw in 2023, many things happened as we planned, but just later. So the sort of what was correct, but when was delayed. So due to that kind of things, we still see that there can be slowness and uncertainty in the market. For our profitable growth, the biggest driver is total conversion and really starting to convert the base as well. Direct business is an area where we are also really changing the way we are operating, so we are really lowering our investments and focusing on the sort of organic renewals through PR and through social media and so on. And that helps short-term profitability. And then it remains to be seen that how much growth or what sort of rate it then gives us as we are really changing the way we are operating. And in terms of future investment, so we are still believing in our strategy and future growth and we are investing in that and which is also visible in the cost structure. And with these premises, so the growth that we expect or where we believe our Revenue will be, it's from 142 to 152 million euros. And if we think about the pro forma numbers of this year, so the lower end is actually a decline and the top end is growth. And it's clear that we are planning for growth. That's where our ambition is. But having that DB uncertainty and we have the growing customers, but there are also some customers which are declining due to like legacy type of reasons. We've talked about this sticky business where even if you lose a customer, so it's there for years and we have some of those cases. So now it's a question of the balance of that and how fast we can get our customers to this total conversion and other new opportunities that we have. And EBITDA expectation then accordingly from 48 to 54 million euros. And there, of course, growth will have then a big impact. Most of our costs continue to be fixed costs, so top line has a big impact on the EBITDA. And here, this is a familiar slide, but of course now 23 is delivered as we just went through and outlook we went through and we have not touched the 26 The mid-term targets, of course, looking at the current level, they might look ambitious, but also what our view about the revenue is not that it's not going to be a linear development. We have talked about focusing on these tier one opportunities, and we know that if we gain them, so they can be actually quite big jumps then when they develop. So this is what we are working on. So, this was the presentation and now we are happy to take questions with Timo.

Hi, it's Atte Riikola from Indus. But first about those tier one customers. So you have negotiations going on. So if you can say anything, if there's like lag in those, because we know that the economic situation is not that good and some of those operators are a little bit cautious. So is that impacting the negotiations? And maybe also you just mentioned that huge potential on those clients. So what kind of revenue potential we're talking about on those?

So, does the economic outlook affect our business development activities? I wouldn't call negotiations, but business development activities with Tier 1s? No. These are players whose size allows them to make moves you know, independent practically of the economic conditions. And they are market makers. They are not followers. They are market makers. So I'd say that those are moving on at the pace that these kind of relationship building typically takes, which is relatively slow. Secondly, you asked about what kind of value can these be? You know, if we are entering a new one, it may be anything from, hundreds of thousands to millions to begin with, and then naturally grow to numbers which are, you know, mid to high single digit millions. This is what we're thinking of as a general rule. We have bigger ones, yes, but I would say that those are maybe not the mean value that we could go with, but that's more or less what we're looking at.

All right. Then about deferred revenue growth, quarter on quarter. Can you remind us if there is like some kind of seasonality between Q3 and Q4? I think Q4 might be typically like better quarter for you on sales perspective.

Yes, typically direct business is bigger in Q4, so it's not like a huge seasonality as like in some other businesses, but yeah, for DB it is a good quarter. So that has some impact, but otherwise the seasonality is not such a big thing.

All right, so there's clear improvement under the hood. Then about, we know that you're still investing in R&D, so if you think about the capex levels for this year, is it going to increase or stay the same as in 2023?

probably similar level. So in general, we don't sort of look to capitalize everything. We are in a business where most of the investments are through the P&L, but there are some of these initiatives which have a long-term impact and then we do capitalize.

And, you know, I'd say that especially the kind of capex that we were seeing in the second half is a pretty good measure for how we see this year.

All right. Then if you look at last year, you had to do those change negotiations, which are always, of course, pretty rough for the organization. So how is the overall feeling at F-Secure at the moment? And how has the employee attrition developed last year?

First of all, how is the mood? Maybe I'm not the person that is the best one to answer, but you asked me and Sari. So I think that people have not only shown character in working very efficiently and focused during fourth quarter when we had the negotiations ongoing, and we still came up with a result which was the best quarter for us in the year. I think it's a big testament to the commitment that people have towards the company. Naturally, it was a very hard feeling to let go of so many people in roles that we've had. Right now, I would say that the sentiment is forward-looking. very much forward-looking. You know, never completely without certain challenges, but I'd say that the sentiment has rebounded, you know, as quickly as one could wish. That's my view. And your second question was about attrition. Looks good. It actually looks very good. compared to similar companies in the field, if not slightly even lower, you know, voluntary attrition. So from that point of view, I think we're in a good place.

Maybe adding about that sentiment in the organization. If you look at the sustainability statement there, you see the ENPS measurements, which we do twice a year. And we run the last one in the middle of the change negotiations. And it went from all-time high to all-time low by far. And next time we measure in the spring, so sort of that metric we get twice a year. And of course, we really would like to go back to the levels where we were, but it went really low during the change negotiations, which is not a surprise, obviously.

And we take nothing for granted that, you know, good things will happen by itself. So we have a whole host of things going on in the organization. And, you know, these are basic things. a proper understanding of the strategy and the foundations and reasons thereof. What are the priorities and focus areas and how does each unit and team and individual link to that bigger picture? You know, it's this kind of clarity that is very important after a big shakeup as we did in quarter four. And I think we're making good progress on that front, but we'll see later in the spring what our, as we call them, fellows will say.

Last question from me about your competitive landscape. Now in a tougher market situation, have you noticed that the competition has tightened or is there like some players that are trying to win new customers pricing or anything? News from the competitive side.

Yeah. On the direct business side, you know, the usual suspects. No clear difference. What comes to the partner business side, I would say no difference in the traditional field that we're played in. What comes to tier ones, there's fierce battles taking place. It is a tough place. Very few players who are vying for business, but it's very tough competition. It's a highly, highly competitive field. Somebody is always the one who is currently serving a certain service provider. So, you know, nobody lets go easily these, in a way, crown jewels.

Maybe one comment is about the retail business, which is sort of between the direct and partner business, and it's included in our partner numbers. So that's an area where we are also internally discussing a lot that what is the price that we use towards the retail partners, because there is a lot of like selling through low prices.

Yeah, that's a good addition. Retail is maybe where the real game is on.

All right, thank you.

Hi, good afternoon. It's Matt Rikkonen Carnegie. A couple of questions, first an educational one. Could you explain the difference between a DNS security customer and then total customer? So what was the DNS business all about?

Yeah. So domain name service is used, as you could say, the address directory of the Internet. All traffic... is referring to DNS services to understand where is this package supposed to go. It holds also a certain level of information of where is the data coming from? Where is it going? So Matti Riikonen clicks on a certain link, you know, it's checking that, okay, this is the link that he wants to get to. Is this good or bad? Do we know that this is let's say a risk, we may stop you right there. So you're still, your traffic is being routed through the network. So there are a certain number of things that we can do on the DNS level that stop you already right there. And we don't even need to apply, even if you don't have endpoint security in use, then that protects you. So in a way, you could say that URL protection is the easiest, in a way, example of what you can do on DNS level. So then you don't need total at all. So if you want to give like a thinner blanket of security to a wide... group of users in a network, maybe even all of them, then URL protection is something that you can implement on network level at a relatively low cost, relatively simple to implement. But then the scope of the service, how holistically it protects you, no, it doesn't. But it does it in a way cost efficiently for a large group of people to give a thin layer of security.

and it's simple for them because the consumer does not need to do anything, but it's also a lower level of protection.

So, a very strong strength and a relatively weak weakness, right?

I'm just trying to kind of understand that that is a corporate business, right? So the customer is a DNS provider. So some, let's say, telecom operator, somebody who's operating the network. And then, of course, the customers or the users in the network, they are probably consumers, but they are not paying anything for the service.

They may be paying. So all service providers define, do they provide this for free or do they charge for it? And typically they do charge, but it's a lower fee because it's a narrower service.

or it could be bundled into something that when you buy this, you get also this DNS. In that sense, it's similar to all our partner businesses. It's a partner who is actually physically our customer, and they have services for their consumers.

So this is the same group of people who define you know, endpoint-focused services, router-focused services, network-focused services. You know, if you typically look at how can we as a broadband provider, for instance, service 100% of our customers, not everyone will ever take an app. This is a way to reach them.

Right. But the monetization towards you, is then what the kind of operator is willing to pay for, right? Or do you get the share of how many subscribers for the DNS service in the network are actually paying for it? Do you get the share of that? So is it the revenue share? How does the kind of micromechanism actually work? How do you monetize?

Typically, it is per subscribers that they have. It's similar to that we have in our other services. Typically, it's not the revenue share, but we say we get X cents or euros per end user.

And you get that money from all end users?

We get it from the partner. Partner tells how many subscribers they have or who have that service.

Okay. So a partner may have two million subs. Out of those, 600,000 take the DNS security service. Then those would be the ones that the partner would pay for to us.

Right. But the end customer needs to kind of give consent that they have to subscribe for the service.

It depends on the partner's decision. So the partner may decide that, you know, like Sari gave an example, You take a certain service offering from the partner, then they bundle it. Then you don't need to push any buttons. If you ask for 399 euros or dollars per month, certainly somebody needs to click, yes, I accept and I'll take the service into use. But then you don't need to download any application or do anything else. You are recognized based on your identity in the network.

Excellent. Thank you for this educational tour. Our pleasure. Going forward, the investments, the growth investments that you talked about, have you quantified them in any way? I was just wondering that how big a role do they play in your guidance for 24, particularly the EBIT-A side? So in what kind of context should we think about those?

Yeah, of course, it's all included in those plans and we have the savings, the 9 million, which is partly organization, partly it's also, for example, this DB marketing that we are taking down. And then we are adding costs in our, especially in our technology. That's the main area. Some additions also in sales.

But we don't disclose the precise investments we're making into growth specifically, but we are doing major product programs around embedded security right now. And we are doing a very extensive program to build that converged product offering of Lookout Life and F-Secure. So those are, you could say that those are clearly, you know, you could say that, but isn't that normal R&D cost? Isn't that normal product development? Well, it's in a completely different scale than we've had before. And it is clearly in terms of aspiration level, how differentiated we want to be in the market. These are both the new total evolution version as well as embedded security. It's taking the aspiration several clicks higher than before.

Right. So we probably are talking about millions of euros, some low millions of euros in costs.

Sounds reasonable.

It is millions. Okay. good Then regarding the pace of growth during 2024, I'm just looking at thinking about different quarters, how the recovery or pace of growth would land. Should we expect that the second half would be clearly kind of better than the first half, or should actually first half be also relatively good because the comparisons are so low, at least in Q2?

Of course, this depends a lot on when these launches and new things happen. But of course, we had a few launches in Q4. So of course, they are already also generating growth for Q1. So totally dependent. The run rate business is sort of fairly stable. And then it depends on when we do get the additions.

And, you know, should we extend our current tier one partnerships or sign up new ones, they are naturally going to be very, you know, digital. Either it's a zero or a null or a one. So it's very difficult to say where they land. Naturally, there's a slightly higher possibility that the second half will be bigger. If we sign something, say in May, then that will be bigger. I mentioned that we will be launching our next evolution version of Total at the turn of quarter three and four. We will naturally start commercial activities around it much earlier than that. We don't expect it to, in a way, crack a jackpot immediately, but it should definitely give more motivation once again for partners to take multi-module Total and expand the current offering that they have. Also, in quarter one now, we're launching a new module into Total called Scam Protection. So that is yet another reason for partners who may be hesitating still to go for the offering.

All right, good. That's all from me. Thank you.

Anything on the lines? Yes, we have three questions from Valtteri Rossi. The first one is, any details on the Lookout Go Live schedule?

I wonder what that refers to.

There are no further questions. Maybe it is our new, the combined.

Combined, yeah. Turn of quarter three and four.

OK, thank you. Basically, we are taking our current total and including their features from the Lookout side.

And in a way, enhancing the security experience based on the vision that we both had, which was very coinciding. But yeah, it's six, seven months away.

Thank you. The second one, partner channel should typically reflect improving outlook with a lag compared to the direct channel. What explains the still weak direct channel compared to the partner channel?

Well, yes, in Q4, DB was negative revenue. And it's because it is a sum of what we are selling there and the revenue recognition from the previous quarters, where it's been very negative. Billings development has been negative for many, many quarters. And now it was positive. And as you saw, the deferred revenue grew. So that is like a positive sign for the future. So the DB revenue numbers come with the lag compared to these billings that we see internally. So that's why we also show that deferred revenue, because it's the missing part of the story.

Okay, thank you. And then one follow-up from Felix Henriksson on the previous question. Should we expect R&D investment to taper off after H2 in 2024 once you have launched the new Converge product?

Very difficult to say right now. So our ambition in terms of building further differentiation and going for leadership in providing the the trusted companion experience both on the consumer side as well as on the partner side, I would expect that we will keep on pushing hard on the differentiation side. How that affects then the precise investment level is yet to be defined.

There are many things that we are working on now, which should be finished during this year, partly OPEX, partly CAPEX. But I'm sure we come up with new things because we are all the time building for the future. Maybe you could expect that in relationship to revenue. It could decline at some point, but absolute decline is maybe not likely, at least not significantly.

We do see that research and R&D are absolutely crucial in strengthening our competitive position, especially in the partner field, but also in the direct business.

Then one final question from Valtteri Rossi. Was the improvement in partner channel driven more by value or price increases slash total conversions?

It was mostly total conversions that was causing the improvement. Thank you. And total conversions are about average revenue per user.

Thank you. Thanks for all the questions.

Thank you, Ina. Thank you. Any final questions from the room? I assume not. So thanks, Sari. Thanks, everybody who has been with us. Thanks for all the good questions. Thank you to everybody who has joined us here online in this stream. It was good to have you with us. We'll see you the next time at the AGM, potentially our annual general meeting. If not, then in April when we have our quarter one results release. Thank you for joining. Have a great day.

Thank you.