Release Date: October 23, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- WithSecure Corp (FRA:DTV0, Financial) reported a 11% year-on-year growth in Elements Cloud ARR, indicating strong performance in their cloud software segment.
- The company achieved a net revenue retention rate of 104%, showcasing effective customer retention and upselling strategies.
- WithSecure Corp improved its position in the Gartner Magic Quadrant, reflecting enhanced execution capabilities and vision completeness.
- The DACH region (Germany, Austria, Switzerland) showed consistent growth, highlighting the company's strong market presence in Europe.
- The company successfully launched new products, including exposure management and a generative AI assistant, expanding its service offerings.
Negative Points
- Managed services revenue declined due to churn of larger customers, impacting overall growth.
- Consulting revenue was below expectations, attributed to financial constraints and cautious spending by key accounts.
- The company impaired goodwill by EUR15.5 million, reflecting adjustments in revenue outlook and market risk factors.
- There is ongoing uncertainty regarding the potential divestment of the consulting segment, with no decisions made yet.
- The company faces challenges in maintaining growth momentum, particularly in the DACH region, due to economic slowdowns.
Q & A Highlights
Q: Could you talk about the impact of the new EU directive on cybersecurity demand?
A: Antti Koskela, CEO, explained that the directive requires companies to adopt proactive risk management and extended detection and response capabilities. This is expected to increase demand for WithSecure's offerings, particularly in Europe, as companies will need to budget for compliance.
Q: Were there any changes in cost allocation affecting consulting profitability?
A: Antti Koskela, CEO, confirmed there were no changes in cost allocation between segments.
Q: Why did you decide to write down the goodwill now?
A: Antti Koskela, CEO, stated that the decision was based on updated revenue outlooks and market risk assessments, which led to a reevaluation of the goodwill's value.
Q: How is the Elements Cloud growth affected by large customer churn?
A: Antti Koskela, CEO, noted that while Elements Cloud software is growing, the churn of large managed services customers has impacted overall growth. The company is focusing on the mid-market to offset this.
Q: What are the growth prospects for the Elements business over the next few years?
A: Antti Koskela, CEO, highlighted that growth will be driven by expanding partnerships, improving customer success, and exploring digital channels. The focus is on cross-selling and upselling to existing clients and acquiring new partners.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
