SSH Communications Security (SSH1V) Q2 2024 earnings summary

Executive summary

• Net sales grew by 4.1% year-over-year in Q2 2024 to EUR 5.1 million, with EBITDA improving to EUR 0.5 million from EUR 0.1 million a year ago, driven by efficiency gains and cost controls.

• Subscription-based sales now represent 95.5% of total business, with PrivX subscription sales up 21.2% and Tectia subscriptions up 110%.

• Significant organizational restructuring was completed, including management changes, new managerial positions, and a reduction of seven employees, with full cost impact expected in Q4.

• Achieved ISO/IEC 27001:2022 certification and renewed Finnish Defence Forces facility security clearance.

• New product launches included SalaX for secure collaboration and PrivX 35, the largest update since its inception, with first customer wins and ongoing trials in Central Europe.

Financial highlights

• Subscription ARR grew 8.2% year-over-year, while overall subscription sales increased 10.9% in Q2.

• Deferred revenues declined to EUR 11.3 million, mainly due to invoicing timing.

• EBIT remained negative at EUR -0.5 million; cash flow from operations was negative EUR 0.8 million, reflecting seasonal weakness but improved from prior year.

• H1 2024 net sales reached EUR 10.1 million, up 5.0% year-over-year; EBITDA was EUR 0.7 million, up from EUR 0.3 million.

• Recurring revenue (ARR) grew 3.7% to EUR 19.0 million; subscription ARR up 8.2% to EUR 11.7 million.

Outlook and guidance

• 2024 outlook is unchanged: net sales expected to grow versus 2023, with positive EBITDA and operating cash flow anticipated.

• Full impact of recent cost reductions will be seen in Q4 2024.

• Full-year recurring revenue and subscription revenue expected to continue increasing.