F-Secure (FSC1V) Q1 2025 earnings summary

Executive summary

• Revenue grew 2.0% year-over-year in Q1 2025 to EUR 37.1 million, supported by favorable USD/EUR exchange rates and commercial achievements.

• Profitability exceeded expectations, with adjusted EBITA up 3.5% to EUR 13.1 million, driven by lower OPEX and strong operational efficiency.

• Strategic partnerships expanded, notably with Orange Group, SoftBank, and a major Nordic partner, expected to drive future growth.

• AI adoption accelerated, with over 25% of workforce using AI tools daily, driving innovation and operational efficiency.

• Organization restructured for customer-centricity; new Board members bring expertise in technology, telecom, and growth markets.

Financial highlights

• Security suite revenue grew 2.9% year-over-year to EUR 24.5 million, with positive developments in Poland, Switzerland, and Sweden.

• Embedded revenue was flat due to a one-off €300,000 revenue correction; excluding this, embedded would have grown 5.4%.

• Direct channel revenue rose 0.9% to EUR 7.1 million, with high ARPU and renewal rates, despite no paid customer acquisition.

• Gross margin remained stable at 85.4% year-over-year; adjusted EBITA improved to EUR 13.1 million.

• Operating cash flow was EUR 9.7 million, with a cash conversion rate of 66.5%; cash at end of March was EUR 6.1 million.

Outlook and guidance

• Guidance for mid-single digit revenue growth for the full year remains unchanged; Q1 expected to be the lowest growth quarter.

• Growth is expected to accelerate as new partnerships ramp up and embedded services expand.

• Direct business revenue expected to decline due to strategy of refraining from paid customer acquisition.

• Gross margin anticipated to be slightly lower due to growth in embedded solutions.

• Capex to remain similar to 2024, with possible increases for new partner-driven product development.