WithSecure (WITH) Q3 2024 earnings summary

Executive summary

• Elements Cloud ARR grew 11% year-over-year to EUR 81.8 million, with revenue up 9% and NRR at 104%; profitability improved at the adjusted EBITDA level.

• Cloud Protection for Salesforce ARR surged 38% year-over-year to over EUR 10 million, with revenue up 20% and NRR at 108%.

• Group revenue increased 4% year-over-year to EUR 36.1 million in Q3 2024, with adjusted EBITDA of EUR 1.9 million.

• Cyber security consulting revenue declined slightly, with break-even adjusted EBITDA and a EUR 15.5 million goodwill impairment; the business is under strategic review and divestment discussions.

• A new CEO was appointed, a strategy update was completed, and headquarters relocated to Wood City, Helsinki.

Financial highlights

• Adjusted EBITDA for Q3 was EUR 1.9 million (up from EUR -2.3 million year-over-year); group EBIT for Q3 was EUR -17.2 million, impacted by goodwill impairment.

• Gross margin for Q3 was 72.6% (up from 69.5% year-over-year); operating expenses reduced by EUR 1.6 million year-over-year.

• Earnings per share for Q3 was EUR -0.10; cash and cash equivalents at period end were EUR 21.6 million, down 28% year-over-year.

• CapEx run rate was high at around EUR 2–2.4 million per quarter, mainly due to investments in new headquarters and lead-to-cash projects.

• Personnel at period end: 983 (down 14% year-over-year).

Outlook and guidance

• Updated 2024 guidance: Elements Cloud ARR expected to grow 6–14% from end-2023; Elements Cloud revenue to grow 8–12%; group revenue to grow 2–5%.

• Adjusted EBITDA for full year 2024 expected to be positive.