F-Secure (FSC1V) Investor Day 2024 summary

Strategy and Market Dynamics

• Focus on expanding in the consumer cybersecurity market through B2B2C partnerships, especially with CSPs, leveraging a partner-first model and embedded security solutions, and targeting new verticals like insurance and banking.

• Six of the top 10 global CSPs are now served, with security becoming a core differentiator and high consumer willingness to pay for scam protection and embedded security.

• The addressable market is expected to grow three times faster than traditional B2C, driven by CSP and telco trends, with B2B2C channels growing at over 3x the rate of direct B2C.

• Company restructuring and organizational changes aim to drive growth across all partner segments, from strategic Tier 1s to smaller commercial partners.

• Standardization in router operating systems (prpl, RDK) is expected to create an "Android moment" for home routers, enabling easier deployment of security applications.

Portfolio and Product Development

• The portfolio has shifted from point solutions to holistic, seamless offerings, with Total and Embedded Security as core products and a unique trusted companion model.

• Significant R&D investment in AI-driven scam protection, embedded security, and multi-module solutions, with 75% of 2024 investments focused on these areas.

• Embedded Security SDKs and modular solutions allow partners to build differentiated apps, supporting a wide range of use cases from fintech to smart home.

• Embedded security now delivered to 4 of the top 10 Tier 1 CSPs globally, with access to 20 million monthly paid users and strong positioning in router standardization.

• The company supports partners with UX consultancy, developer tools, and cloud-to-cloud integrations, aiming for scalability and repeatability.

Financial Guidance and Growth Outlook

• Updated medium-term targets include high single-digit CAGR growth, with significant upside from major Tier 1 deals, and an adjusted EBITA margin approaching 40% as revenue reaches €200 million.

• Dividend yield targeted at or above 50% of net profit, with flexibility if leverage exceeds the 2.5x target.

• Growth is expected from expanding within existing partners, winning new partners, and ramping up tier 1 relationships, with substantial untapped potential in current tier 1s.

• 2025 is identified as a ramp-up year, with acceleration toward targets expected thereafter; previous profitability target was above 42% EBITA margin.

• CapEx has increased due to investments in Embedded Security and R&D, but future growth is expected to leverage existing platforms for efficiency.