I won’t comment on anything else, but investments in cybersecurity are increasing all the time; I don’t believe an interest rate cut will have much significance for WS.
From my perspective, the situation is quite clear; WS is competing more and more with new entrants (Sentinel One, Crowdstrike, etc.) while Microsoft is moving like a steam train in the security sector, backed by its broad bundling.
I see potential returns in WS mainly through a possible takeover bid; I don’t believe it will succeed as an independent company. Of course, the share price could also rise along with a general market rally.
Not investment advice and must not be published in Tampere.
WithSecure’s current management and share price are convincing for a European company. The importance of being European is only growing. MS products face challenges even at the consumer level due to layers of long-established software solutions, which are often difficult for corporations to evaluate critically, let alone modernize. Of course, capital and scale help. I wouldn’t consider MS a direct alternative when there is a need and desire for European and more interactive service. Whether the rise in share value will occur through European partnerships and growth or through a merger remains to be seen. Based on brief research, product solutions and services combined with competitive pricing are factors that give WS a justified position and presence in the EU and partly outside it—even in a competitive field where choices seem to be weighed between 2–3 vendors.
I don’t have direct visibility into WS regarding customer retention. I base my views on public sources, according to which WS’s services are qualitatively at the high end in terms of key features, and the price-quality ratio is reasonably well-regarded. However, there seem to be more joiners than leavers, and everyone always has some of the latter. I wouldn’t necessarily draw far-reaching conclusions from individual discussions, but I don’t have inside information, nor would I share it here. Unlike with the previous CEO, my perception of the management is not based on personal acquaintance either, but only on publicly available information.
Regarding the smart and dynamic systems under development for the security of distributed systems and their flexibility, compared to comments about competitors, WS appears to be in a quite reasonable position in the competitive landscape and consequently in the top tier.
Would you like to elaborate a bit, perhaps through an example or something similar? There was a bit too much distribution, intelligence, and dynamism in one sentence for me to follow exactly what is being discussed here on a Sunday.
“Finland achieved a perfect 100 points in the Global Cybersecurity Index compiled by the International Telecommunication Union (ITU), ranking at Tier 1 in the comparison. In the report, 46 countries ranked at Tier 1, which is the highest of the five levels. This level is reserved for role-model countries that have demonstrated a strong commitment to all five cybersecurity pillars compared in the index.”
This is a great thing and could raise the profile of Finnish companies in the future.
I was looking at the share price development for this year. On January 2nd, the price was €1.05, and now on Oct 27th, it’s in the same situation. It hasn’t caused any major heart palpitations, but I personally believe that the next interim report will bring positive news and the share price will start to climb. Does anyone else have any thoughts on the matter?
The economy is what it is, order books are weak, and news of layoffs is heard here and there; that is simply the current situation.
Growth is under pressure in this market environment, but despite that, I believe WithSecure will keep chugging along—not strongly, but staying afloat.
For now, I think it will move relatively slowly, but we must remember that there are signs in the economy that there is light at the end of the tunnel.
Q3 might indeed already show the direction, and as soon as the economic situation improves and provides some tailwind, things will pick up. Despite the competition, I believe WithSecure will retain its European slice, and a quite potential one at that.
I assume the economic turnaround will happen soon; Q4 should give its own signs of that.
I look forward to the Q3 results and indicators with excitement. I continue to believe in growth and success.
The renewed strategy and trimmed structure do seem to be yielding results. The company seems to be on a quite healthy foundation now, and there is interest in WS services.
I have a few shares in my portfolio and I intend to top up occasionally; the valuation isn’t exactly dizzying right now, anyway.
In as a fairly new owner, with buys around the one-euro level.
With this investment, I’ve personally placed a bet that there won’t be a profit warning this side of the year. I believe that the given guidance will be met, as long as they manage to stay on the growth trend of the last 4–5 quarters.
Apparently, the biggest R&D investments are at least momentarily behind us following last spring’s Elements launches? Now, if we just get successful sales in the Elements corporate segment, this will turn into a success.
Of course, it’s always nicer if the value of your investment grows briskly. For me, WS is a medium-to-long-term investment, so I won’t be disappointed if we continue with the current “dead man’s brainwave” (flatlining) for months to come. Assuming the set goals are reached and the moderate growth trend continues, it’s only a matter of time before this takes off.
I believe the “European alternative” that management repeatedly promotes adds value here. I expect the NIS2 directive and falling interest rates to boost demand. If the company continues its solid core work, I’m sure someone will come along and buy them out within two or three years.
A little while ago there was some talk about this 0.5 million block trade. A savings bank seems to be behind it; 485,000 shares appeared to have been purchased.
Gartner’s new Magic Quadrant for endpoint protection has been published, and WithSecure has taken a step in the right direction on the chart compared to the previous report published in 11/2023:
We usually publish our preview comments about a week before the earnings release at the earliest. So, it’s worth keeping an eye on the morning report towards the end of next week
The company expects the Annual Recurring Revenue (ARR) of cloud-based Elements products and services to grow by 6–14% year-on-year (previously: 10–20%). Elements ARR at the end of 2023 was EUR 78.4 million.
Revenue from cloud-based Elements products and services is expected to grow by 8–12% year-on-year (previously: 10–16%). The previous year’s revenue from cloud-based Elements products and services was EUR 76.1 million.
Group revenue is expected to grow by 2–5% year-on-year (previously: 6–12%). The entire Group’s revenue for the previous year was EUR 142.8 million.
Adjusted EBITDA for 2024 is expected to be positive. The outlook in this respect remains unchanged.
@Atte_Riikola how was that revenue breakdown structured again, were there still others besides cloud-based software? How much do consulting and services contribute to the revenue?
If cloud software revenue grows 8-12% and total revenue 2-5%, it means that revenue is declining somewhere else. Is this still explained by the conversion of old client-server licenses to cloud-based, or is the reason elsewhere?
I believe that the given guidance will be met, as long as they manage to stay on the growth trend of the last 4–5 quarters.
