SSH COMMUNICATIONS SECURITY CORPORATION, STOCK EXCHANGE PUBLICATION, OCTOBER 272022 AT 9:00 AM EEST
NET SALES INCREASE 17 %, POSITIVE EBITDA
From July to September 2022 shortly
• Net sales amounted to 4.6 million euros (3.9 million euros)
• EBITDA was 0.4 million euros (0.6 million euros)
• The operating loss was -0.4 million euros (-0.3 million euros)
• The loss for the period was -0.4 million euros (-0.3 million euros)
• Profit per share was -0.02 EUR (-0.02 EUR)
Operating cash flow was -0.5 million euros (0.0 million euros). The equity ratio was 47.2% (46.3%). Liquid assets were 2.7 million euros (4.2 million euros).
| KEY FIGURES | |||||||
| millions of euros | 7–9/2022 | 7–9/2021 | % change | 1–9/2022 | 1–9/2021 | % change | 1–12/2021 |
| Net sales | 4.6 | 3.9 | 17.2 | 13.4 | 9.9 | 35.3 | 15.9 |
| EBITDA | 0.4 | 0.6 | -28.3 | 1.5 | -0.3 | 624.2 | 1.1 |
| % of net sales | 8.6 | 14.0 | -38.8 | 10.9 | -2.8 | 487.3 | 7.0 |
| Operating profit/loss | -0.4 | -0.3 | -23.0 | -0.9 | -2.2 | 61.1 | -1.5 |
| % of net sales | -8.7 | -8.3 | -5.0 | -6.3 | -22.0 | 71.3 | -9.6 |
| Profit/loss before tax | -0.4 | -0.4 | 3.7 | -0.7 | -2.5 | 72.7 | -1.8 |
| Loss of earnings | -0.4 | -0.3 | -33.4 | -0.8 | -2.7 | 71.1 | -2.3 |
| Return on capital, % | -7.0 | -27.0 | 73.9 | -22.6 | |||
| Return on investment, % | -4.9 | -18.0 | 72.8 | -14.2 | |||
| Liquid assets | 2.7 | 4.2 | -35.3 | 8.2 | |||
| Gear (%) | -3.8 | -25.8 | 85.2 | -39.8 | |||
| Capital ratio (%) | 47.2 | 46.3 | 2.0 | 44.6 | |||
| Earnings per share, EUR | -0.02 | -0.02 | -13.5 | -0.04 | -0.10 | 61.3 | -0.10 |
| Equity per share, EUR | 0.28 | 0.30 | -5.2 | 0.26 | 0.30 | -13.1 | 0.31 |
| Recurring income, ARR | 17.6 | 14.5 | 21.0 | 15.4 | |||
| Subscription revenue, ARR | 9.2 | 6.3 | 46.3 | 7.3 |
SSH Communications Security offers alternative performance measures that are not defined by IFRS. Alternative performance measures should not be considered substitutes for performance measures in accordance with IFRS. Alternative performance measures are:
EBITDA = Operating profit + depreciation and amortization
Annual recurring revenue: subscription + maintenance revenue at the end of the last month of the reported quarter multiplied by 12.
Subscription ARR (Annual Recurring Revenue): Subscription revenue for the last month of a reported quarter multiplied by 12. For a comprehensive list of alternative performance measures and formulas used, see the SSH Annual Report.
PERSPECTIVE
Our guidance for 2022 remains unchanged:
We are continuing our business transition from a license and support model to a recurring revenue model, which we anticipate will provide more stable long-term revenue while reducing our near-term annual growth rate compared to a business model perpetual license. At the end of 2021, annual recurring revenue was €15.4 million (€8.0 million), which positions us well for continued growth. We expect net sales to grow in 2022 compared to 2021. We estimate EBITDA and cash flow from operating activities to be positive for 2022.
CEO REVIEW
Dear shareholders, customers, partners and colleagues,
Our growth continued in the third quarter. Net sales increased by 17% and EBITDA reached 0.4 million euros. The slightly lower EBITDA compared to the comparison period is primarily due to the hardware component in NQX deliveries recorded as cost of goods sold. We have successfully transitioned some of our customers to the subscription model by introducing innovative editions and future-proof technologies to our portfolio. As a result, more than 90% of revenue in the third quarter is based on subscriptions.
During the third quarter, we delivered a €2.1 million order placed in June and we are securing the capacity to deliver more orders under the same contract. Due to quarter-end deliveries, the revenue recognition effect of the order was lower in the third quarter with a full impact from the start of the fourth quarter, extending over an initial contract period of three years.
Our operating cash flow was -0.5 million euros in the quarter, mainly due to the timing of the cash inflows increasing a few days right after the end of the quarter. Operating cash flow and liquid assets are expected to improve in the final quarter as most of our renewal payments, and the order delivery payment of €2.1 million will be received during the fourth quarter.
PrivX achieved significant analyst recognition for the third time
In August, the leading European market analyst firm KuppingerCole named SSH Communications Security as an overall leader in the Leadership Compass Report 2022. SSH was selected as an overall leader in the access management market privileged (PAM) and as innovation leader, Product categories, market and market champion. SSH’s fastest-growing product, PrivX, performed alongside the global cybersecurity giants, surpassing them, especially in technological development.
NQX it began to generate significant income
The National Cyber Security Center of Finland (NCSA-FI) security certification for the NQX encryption solution was granted in June, resulting in several new customer orders. SSH started NQX deliveries, the value of which exceeds 2 million euros in the third quarter for three years. Component availability is good for NQX, but global logistics and supply chain challenges resulting in long lead times may affect future delivery times.
SSH participant The suite is set new international partners
SSH Deltagon Suite continued its growth in the third quarter, driven by our Nordic partners. We are working with selected international partners to establish and grow the Suite internationally, particularly in the regulated commercial market segment and where SSH already has a strong customer footprint. A new user interface and improved user experience for the Suite is under development, and we are excited to release a new version in the fourth quarter.
Universal SSH Key Manager (UKM) updated with new features
The new UKM product release introduced discoveries and reports related to Quantum’s readiness for Tectia Secure Shell products. It also adds new options to discover private SSH keys in custom locations and advanced alert management to focus on what matters, avoid alert fatigue and improve data management. Additionally, SSHerlock, our discovery and auditing tool, is now used for self-risk assessment by our customers and prospects. We hope that SSHerlock will open up more opportunities for new customer acquisitions and upsells.
Looking to the future
Businesses, governments and federal organizations have realized the importance of the Zero Trust approach to cybersecurity. In addition, ever-increasing attacks on critical societal infrastructure and the weaponization of operational technology create a growing need for solutions like Privx OT Edition of SSH. Along with computer-resistant quantum encryption, SSH products are proven in use and future-proofed.
The functionality of all five product lines has been enhanced and investment in product development, channel sales and marketing continues. We have strengthened cooperation with our global partners and increased resources for sales through partner channels. We can respond to customers’ needs for comprehensive solutions to ensure business continuity and protection against vulnerabilities.
Financial performance
Net sales in the third quarter were €4.6 million (€3.9 million), an increase of 17% compared to the third quarter of 2021.
EBITDA for 3Q 2022 was 0.4 million euros (0.6 million euros).
The operating loss was -0.4 million euros (-0.3 million euros) and the net loss for the quarter was -0.4 million euros
(-0.3 million euros).
Operating cash flow for the quarter was -0.5 million euros (0.0 million euros).
Sales performance
Sales in the EMEA region increased 29% compared to 3Q 2021. Sales in the APAC region grew 25% compared to 3Q 2021, and sales in the AMER region remained flat.
Subscription revenue grew 35% compared to Q3 2021. PrivX subscription revenue grew 144% compared to Q3 2021.
During the quarter, recurring revenue (subscriptions and maintenance) accounted for 93% of total revenue, giving SSH a strong foundation from which to continue growing.
DISCLAIMER OF LIABILITY
The content of this report is provided by SSH Communications Security and its third party content providers for your personal information only and does not constitute an offer or invitation to purchase any security, nor does this report provide any form of advice (investment, tax , legal) that amounts to investment advice or make any recommendations about specific investments or products. SSH Communications Security does not provide investment advice or recommendations to buy or sell its shares or the shares of others. If you are interested in investing in SSH Communications Security, please contact your financial advisor for more details and information. Past performance of SSH Communications Security stock is not indicative of future results. EXCEPT AS PROVIDED BY APPLICABLE MANDATORY LAW, SSH COMMUNICATIONS SECURITY EXPRESSLY DISCLAIMS ALL WARRANTIES, EXPRESS OR IMPLIED. REGARDING THE AVAILABILITY, ACCURACY OR RELIABILITY OF ANY CONTENT PROVIDED OR THE SUITABILITY OF THE INFORMATION FOR ANY PURPOSE.
SSH Communications Security will release its financial reporting schedule for 2023 during the fourth quarter.
Helsinki, October 27
SECURITY OF SSH COMMUNICATIONS
Board of Directors
Teemu Tunkelo
CEO
For more information, please contact:
Teemu Tunkelo, CEO tel. +41 79 227 8362
Niklas Nordström, financial director tel. +358 50 541 0543
Distribution:
Nasdaq Helsinki Ltd.
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www.ssh.com
