SSH Communications Security Corporation, Stock Exchange Release; October 272022, at 9:00 AM EEST
Net sales increased. 17 %, EBITDA positive
July – September 2022 in short
• Net sales reached EUR 4.6 million (EUR 3.9 million).
• EBITDA was 0.4 million euros (0.6 million euros).
• Operating loss was EUR -0.4 million (EUR -0.3 million).
• Loss for the period was EUR -0.4 million (EUR -0.3 million).
• Earnings per share were EUR -0.02 (EUR -0.02).
Operating cash flow was EUR -0.5 million (EUR 0.0 million). Equity ratio was 47.2% (46.3%). Liquid assets were €2.7 million (€4.2 million).
| Key images | |||||||
| million 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 |
| Profit/Loss | -0.4 | -0.3 | -33.4 | -0.8 | -2.7 | 71.1 | -2.3 |
| Return on Equity, % | -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 | |||
| Equity 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 |
| Shareholders’ 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 communication security provides alternative performance metrics that are not defined by IFRS standards. Alternative performance measures should not be considered a substitute for performance measures under IFRS. Optional performance metrics are:
EBITDA = operating profit/loss + depreciation and amortization
Annual Recurring Revenue: Subscription + Maintenance Revenue multiplied by 12 at the end of the last month of the reporting quarter.
Subscription ARR (Annual Recurring Revenue): Subscription revenue in the last month of the reporting quarter multiplied by 12. For a comprehensive list of alternative performance metrics and formulas, see the SSS Annual Report.
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Our current 2022 guidance remains unchanged:
We continue to transition our business from a license and support model to a recurring revenue model, which we anticipate will reduce our short-term annual growth and generate more stable revenue compared to a perpetual license business model. In the year 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 expect 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 and the comparative period were primarily due to the cost of goods sold for the hardware component of the NQX offerings. We have successfully transitioned many of our customers to a subscription model by introducing new releases and future proof technologies to our portfolio. Therefore, more than 90% of Q3 revenue was subscription based.
During the third quarter, we placed an order of 2.1 million euros in June, and we are confirming the ability to deliver additional orders under the same contract. Due to late delivery in the quarter, the revenue recognition effect of the order was minimal in Q3 and had full impact from early Q4, extending the three-year initial contract period.
Our operating cash flow was EUR -0.5 million in the quarter, primarily due to large cash receipts being held within a few days of the quarter end. As with most of our renewal payments, operating cash flow and liquid assets are expected to improve in the final quarter, and a €2.1 million order payment will be due in Q4.
PrivX received significant analyst recognition for the third time
In August, leading European market analyst Cuppinger Cole named SSH Communications Security an overall leader in its Leadership Compass Report 2022. Product, market and market champion categories. SSH’s fastest-growing product, PrivX, has excelled with global cyber security giants, especially in technological advancements.
NQX He started To generate meaningful income
The National Cyber Security Center of Finland (NCSA-FI) was awarded security certification for its encryption solution NQX in June, resulting in several new customer orders. SSH begins delivery of NQX, valued at more than €2 million over three years in Q3. Spare parts availability is good for NQX, but global supply and logistics chain challenges resulting in long lead times may affect future delivery times.
SSH Participant Suite will be created. New international partners
SSH Deltagon Suite continued its growth during Q3, led by our partners in the Nordics. We are working with select global partners to establish and grow the suite globally, particularly in the regulated business market segment and where SSH already has a strong customer footprint. A new user interface and improved user experience are under development for the Suite, and we are excited to launch a new version during Q4.
Universal SSH Key Manager (UKM) has been improved with new features.
A new UKM product release introduces findings and reports related to quantum readiness for Tectia Secure Shell products. It also adds new options for accessing private SSH keys with custom environments and advanced alert management to focus on what’s important, eliminate alert fatigue, and improve data management. Additionally, SSHerlock – our discovery and auditing tool – is now used by our customers and prospects for self-risk assessment. We expect SSHerlock to open up more opportunities for new customer acquisition and additional sales.
Moving forward
Businesses, governments, and federal organizations are realizing the value of a zero-trust approach to cybersecurity. Additionally, the ever-increasing number of attacks on society’s critical infrastructure and the weaponization of operational technologies creates a growing need for solutions like SSH’s Privx OT Edition. With Quantum Computing’s secure encryption, SSH products are used and future-proofed.
Functionality across the five product lines has improved, and investment in product development, channel sales and marketing has continued. We have strengthened cooperation with our global partners and increased sales resources through partner channels. We can respond to customer needs with comprehensive solutions to ensure business continuity and protect against exposure.
Financial performance
Net sales for the third quarter were 4.6 million euros (€3.9 million), an increase of 17 percent compared to Q3 2021.
EBITDA for Q3 2022 was EUR 0.4 million (EUR 0.6 million).
The operating loss was EUR -0.4 million (EUR -0.3 million) and the net loss for the quarter was EUR -0.4 million.
(EUR -0.3 million).
Operating cash flow for the quarter was EUR -0.5 million (EUR 0.0 million).
Sales performance
Sales in the EMEA region increased 29 percent compared to Q3 2021. Sales in the APAC region increased 25 percent compared to Q3 2021, and AMER region sales were flat.
Subscription revenue grew 35% compared to Q3 2021. PrivX’s subscription revenue grew 144% compared to Q3 2021.
During the quarter, recurring revenues (subscriptions and maintenance) accounted for 93 percent of the total revenue, which provided a solid foundation for SSH to build further growth.
Disclaimer
The content of this report is provided by SSH Communications Security and its third-party content providers for your personal information only and is not an offer or invitation to purchase any securities, nor does this report provide any advice (investment, tax, legal) regarding investment advice or specific investments or products. Do not offer any recommendations. 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 further details and information. Past performance of SSH Communications Security shares is not indicative of future results. SSH COMMUNICATION SECURITY DISCLAIMS ALL WARRANTIES, EXPRESS OR IMPLIED, EXCEPT AS PROVIDED BY APPLICABLE STATUTORY LAW. ABOUT ANY AVAILABILITY, ACCURACY OR RELIABILITY OF THE CONTENT PROVIDED OR THE ACCURACY OF THE INFORMATION FOR ANY PURPOSE.
SSH Communications Security will release its financial reporting calendar for 2023 during Q4.
Helsinki, October 27.
SSH communication security
board of directors
Teemu Tunkelo
General manager
For more information please contact:
Teemu Tunkelo, CEO tel. +41 79 227 8362
Niklas Nordström, CFO Tel +358 50 541 0543
Distribution:
Nasdaq Helsinki Ltd.
Mainstream media
www.ssh.com
