F-Secure’s Antivirus and Intrusion Prevention Grew Fastest In The Field

For the third quarter of 2004, F-Secure reported revenues of 12.5 million euros. Anti-virus and intrusion prevention (content security) revenues increased by 50% to a record level of 10.5m. The operating result was 2.5 million euros positive, 20% of revenues (1.7m positive in 2Q04 and 0.8m positive in 3Q03). Operating result improved 212%.

Anti-virus and intrusion prevention represented 84% (68%) of the revenues, while encryption represented 16% (30%), and other products less than 1% (2%).

The split between the four business segments, corporate, service provider, consumer and wireless businesses, were as follows (revenue figures are approximate and for reference only):

Corporate customer revenues represented 70% of the anti-virus and intrusion prevention revenues and were 20.7m during the first nine months of 2004. The service provider business revenues (Security as a Service) represented 20% of the anti-virus and intrusion prevention revenues and were 5.8m in the first nine months of 2004. The consumer segment represented 9% of the anti-virus and intrusion prevention revenues and was 2.7m during the first nine months. Handheld and wireless security revenues represented less than 1% of the anti-virus and intrusion prevention business, but visibility on future business opportunities increased.

The year 2004 can be characterized as a transition period from “plain vanilla” anti-virus products to a broader approach to anti-virus and intrusion prevention. During Q3 new security functionalities, such as spam control, spyware detection and parental guidance started to be added to the latest versions of the Group’s products.

The Group’s Anti-Virus and Intrusion Prevention offerings on the Linux platform saw a number of new product and version releases for clients, servers and gateways during Q3.

One milestone was achieved coinciding with the launch of the Nokia 6670 phone in September. The Group’s F-Secure Mobile Anti-Virus product will be offered as a free one-month trial to all the buyers of the new phone, with the opportunity to purchase a continuation of the anti-virus update service later on. Another remarkable step in wireless data security is the fact that Elisa, as the first mobile operator in the world, starts offering wireless antivirus services to its smartphone customers. The service is based on the F-Secure Mobile Anti-Virus(tm) service solution.

The Group was successful in launching the Security as a Service offering in North America with a large number of significant leads. In addition the Group announced two new service provider partnerships in Europe and two in the United States.

“The Group is currently prioritizing growth before earnings and it will maintain the increased level of activities in sales and marketing. The Group’s key goal is to continue to grow the anti-virus and intrusion prevention (content security) business faster than the industry. The current focus in the corporate segment is on Europe, the Group’s home market. We will also gradually increase the research and development budget by launching new projects expanding the Group’s offering to service providers and facilities management companies”, says Risto Siilasmaa, President and CEO of F-Secure Corporation.

Financial Reporting

A press and analyst conference will be arranged today, October 26, at 11 am Finnish time at the Group’s Headquarters, Tammasaarenkatu 7, Helsinki. A conference call for international investors and analysts will be arranged at 1530 Finnish time (1430 CET, 1.30 pm UK time). Instructions can be found at http://www.europe.f-secure.com/investor-relations/

The Q4 and full year 2004 financial report will be published on February 15, 2005, and the Annual Report on March 16. Annual General Meeting will be held on March 23.

Quarterly reports for 2005 will be published on April 26 (Q1), August 2 (Q2) and October 25 (Q3). A Stock Exchange bulletin will be sent at 9 am Finnish time to the Helsinki Exchanges, a press and analyst conference will be arranged at 11 am Finnish time in Helsinki, and an international conference call will be arranged in the afternoon. Full details will be provided later on the Group’s web site.