SSH COMMUNICATIONS SECURITY CORPORATION'S INTERIM REPORT, JANUARY 1 – JUNE 30, 2023
SSH COMMUNICATIONS SECURITY CORPORATION – STOCK EXCHANGE RELEASE – JULY 20, 2023, AT 09:00 A.M. EEST
Net sales increased by 9.2%, subscription ARR increased by 36.7%, and EBITDA remained positive
April–June 2023:
• Net sales increased by 9.2% to EUR 4.9 million (EUR 4.5 million)
• EBITDA was EUR 0.1 million (EUR 0.5 million), 2.9% of net sales
• Operating loss was EUR -0.7 million (EUR –0.2 million), -14.6% of net sales
• Cash flow from operations decreased by 36.5% to EUR -1.4 million (EUR -1.1 million)
• Subscription revenue, ARR increased by 36.7% to EUR 10.8 million (EUR 7.9 million)
• Recurring revenue, ARR increased by 12.3% to EUR 18.3 million (EUR 16.3 million)
January–June 2023:
• Net sales increased by 9.3% to EUR 9.6 million (EUR 8.8 million)
• EBITDA was EUR 0.3 million (EUR 1.1 million), 3.0% of net sales
• Operating loss was EUR -1.4 million (EUR –0.4 million), -14.4% of net sales
• Cash flow from operations increased by 288% to EUR 0.5 million (EUR -0.3 million)
The equity ratio was 51.6% (47.4%). Liquid assets at quarter-end were EUR 2.6 million (EUR 4.4 million).
| EUR million | 4–6/2023 | 4–6/2022 | Change % | 1–6/2023 | 1–6/2022 | Change % | 1–12/2022 |
| Net sales | 4.9 | 4.5 | 9.2 | 9.6 | 8.8 | 9.3 | 19.3 |
| EBITDA | 0.1 | 0.5 | -73.0 | 0.3 | 1.1 | -72.5 | 2.7 |
| % of net sales | 2.9 | 11.9 | -75.2 | 3.0 | 12.1 | -74.8 | 13.9 |
| Operating profit/loss | -0.7 | -0.2 | -1.4 | -0.4 | -0.4 | ||
| % of net sales | -14.6 | -5.2 | -181.1 | -14.4 | -5.1 | -2.3 | |
| Profit/loss before taxes | -0.9 | -0.1 | -1.9 | -0.3 | -0.7 | ||
| Profit/loss | -0.9 | -0.2 | -1.8 | -0.4 | -0.6 | ||
| Return on equity, % | -18.1 | -3.3 | -5.2 | ||||
| Return on investment, % | -15.1 | -2.1 | -4.7 | ||||
| Liquid assets | 2.6 | 4.4 | -40.9 | 5.7 | |||
| Gearing (%) | -2.4 | -10.6 | 77.4 | -27.9 | |||
| Equity ratio (%) | 51.6 | 47.4 | 8.9 | 46.1 | |||
| Earnings per share, EUR | -0.03 | -0.01 | -0.06 | -0.03 | -0.05 | ||
| Shareholders' equity per share, EUR | 0.25 | 0.29 | -11.0 | 0.25 | 0.27 | -5.7 | 0.28 |
| Recurring revenue, ARR | 18.3 | 16.3 | 12.3 | 18.4 | |||
| Subscription revenue, ARR | 10.8 | 7.9 | 36.7 | 9.9 | |||
| Invoicing | 4.5 | 3.2 | 41.3 | 7.7 | 7.1 | 8.1 | 24.2 |
| Deferred revenue | 12.6 | 7.4 | 70.3 | 14.1 | |||
| Current | 9.0 | 6.2 | 45.2 | 10.6 | |||
| Non-current | 3.6 | 1.2 | 3.5 |
SSH Communications Security provides alternative performance measures which are not defined by IFRS standards. Alternative performance measures should not be considered substitutes for performance measures in accordance with the IFRS. The alternative performance measures are:
EBITDA = Operating profit/loss + depreciation and amortization.
Recurring Revenue, ARR: Subscription + maintenance revenue at the end of the last month of the reported period multiplied by 12.
Subscription ARR: Subscription revenue in the last month of a reported period multiplied by 12.
Deferred Revenue: Non-recognized revenue from invoiced maintenance and subscription sales.
The complete interim report is attached to this release (pdf) and is also available on our website.
CEO review
Valued shareholders, customers, partners, and colleagues,
The second quarter of the year was affected by more uncertain economic conditions delaying customer procurement procedures and causing certain significant deals to be carried over to the next quarter or the end of the year. Yet, we closed several mid-sized deals, especially with PrivX and continued positive EBITDA. We remain confident in our business and growth potential.
Our net sales increased by 9% to EUR 4.9 million, owing primarily to the recurring business as subscription ARR grew 37%. EBITDA stood at EUR 0.1 million (EUR 0.5 million). Cash flow from operations was negative at EUR -1.4 million (EUR -1.1 million) due to typical seasonality. Recurring revenue accounted for 94% of total revenue in Q2, and Annual Recurring Revenue (ARR) grew by 12% year-on-year, reaching EUR 18.3 million, of which EUR 10.8 million is from subscription-based revenue.
Strengthening the long-term resilience of the business
By implementing a revenue model centered around subscriptions, we have enhanced the stability and predictability of our revenue streams. This strategic shift empowers us to offer continuous support to our customers while providing them with uninterrupted access to the latest features and updates and ensuring the long-term viability of SSH solutions. We have continued to invest in our marketing, engineering, and R&D teams, resulting in a 20 % year-on-year increase in employees.
Quarterly sales growth continued strong in EMEA at +18%, followed by AMER +8%. APAC region declined 28% due to ongoing changes in our go-to-market strategy.
We launched a modular software solution in the second quarter, SSH Zero Trust Suite. Based on PrivX technology our Zero Trust Suite enables our customers to improve their security posture in intranet, extranet and internet. The Suite integrates SSH's secure communication products into a passwordless, keyless, and borderless solution for our IT and OT customers, enhancing it with quantum-safe capabilities.
We also launched a support service for OpenSSH for multi-platform SSH environments. With this new offer, customers benefit from single source support both for Tectia and OpenSSH products from experienced SSH technical support.
During the quarter Finland joined NATO, which has increased interest in NQX and Zero Trust Suite. The membership enables us to achieve NATO compatibility with our offering.
We are working with new partners to grow our business as well as serve our customers better. Our focus on Zero Trust, Operational Technology, and Quantum-Safe solutions has allowed us to stay at the forefront of cybersecurity.
Business outlook for 2023 (unchanged)
Our business transition from license and support to a recurring-revenue model has continued providing a more stable revenue base. At the end of 2022, our Annual Recurring Revenue was EUR 18.4 million (EUR 15.4 million in 2021). Our net sales grew by 21% to EUR 19.3 million in 2022. Going into 2023, we will continue to focus on increasing the average deal size. We expect net sales to grow during 2023 compared to 2022. We estimate EBITDA and cash flow from operating activities to be positive for 2023.
SSH Communications Security will release its Business Review for the third quarter of the year on October 25, 2023.
SSH will organize a Capital Markets Day for investors, analysts, and the media on 29 August 2023. Read more at www.ssh.com/investors
Helsinki, July 20, 2023
SSH Communications Security Corp.
Board of Directors
Teemu Tunkelo
CEO
For further information, please contact:
Teemu Tunkelo, CEO, tel. +41 79 227 8362
Michael Kommonen, CFO, tel. +358 40 183 5836
Distribution:
NASDAQ Helsinki Ltd.
Major media
www.ssh.com
Disclaimer
The contents of this report are provided by SSH Communications Security and its third-party content providers for your personal information only and do not constitute an offer or invitation to purchase any securities nor does this report provide any form of advice (investment, tax, legal) amounting to investment advice nor make any recommendations regarding particular 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 adviser for further details and information. Past performance of SSH Communications Security shares is not indicative of future results. EXCEPT AS PROVIDED BY APPLICABLE COMPULSORY LAW SSH COMMUNICATIONS SECURITY EXPRESSLY DISCLAIMS ALL WARRANTIES, EXPRESSED OR IMPLIED. AS TO THE AVAILABILITY, ACCURACY, OR RELIABILITY OF ANY OF THE CONTENT PROVIDED, OR AS TO THE FITNESS OF THE INFORMATION FOR ANY PURPOSED, OR AS TO THE FITNESS OF THE INFORMATION FOR ANY PURPOSE.
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