WithSecure (WITH) Q2 2025 earnings summary

Executive summary

• Elements Cloud and Co-Security Services achieved up to 13% ARR growth, offsetting a 22% decline in managed services due to large UK customer churn, with new product launches and expanded partnerships in Japan, the Netherlands, and Finland.

• Cloud Protection for Salesforce (CPSF) ARR surged 54% year-over-year, driven by new customer acquisition and expansions, though sequential growth slowed due to FX impacts.

• Divestment of consulting (now Reversec) and Malaysian entity completed, with LS Systems becoming a preferred distributor in Asia.

• Strategic focus shifted to mid-market customers and partner-driven growth, with a globally aligned sales and marketing model and reorganization to accelerate the European flagship strategy.

• Gross margin improved to over 81% and profitability increased, supported by cost restructuring and efficiency gains.

Financial highlights

• Elements Cloud and Co-Security Services ARR grew 13% year-over-year; CPSF ARR rose 54% to €14.0 million with NRR at 122%.

• Managed services revenue declined 22% due to large customer churn, offsetting Elements growth; overall ARR growth was 3%.

• Group revenue increased up to 4% year-over-year, with Q2 revenue at €29.4 million and H1 at €59.5 million.

• Adjusted EBITDA for Q2 was €0.2 million, and for H1 €1.5 million, with positive profitability despite marketing investments.

• Operating expenses and R&D costs declined, with annual cost savings from restructuring targeted at €6.5 million.

Outlook and guidance

• No change to guidance: Elements ARR expected to grow 10–20% in 2025; CPSF ARR to grow 20–35%.

• Adjusted EBITDA for Elements Company segment projected at 3–7% of revenue.

• Medium-term target to achieve "Rule of 30+" (revenue growth % + adjusted EBITDA % > 30) by 2027.

• Confidence in H2 ARR acceleration based on strong sales funnel and partner pipeline; Q4 expected to be back-end loaded.