Post on 31-Aug-2020
SSH COMMUNICATIONS SECURITY INVESTOR UPDATE
Kaisa Olkkonen, CEO
30.11.2017
SSH Background and Business1
Q3 Financial Update2
The Cloud Opportunity4
IPR Update3
CONTENTS
30 November 2017 SSH Communications Security 2
Our Strategy5
SSH BACKGROUND AND BUSINESS
WHAT IS SSH ABOUT
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3000+ demanding customers worldwide
Industry-leading products
100+ patents
Inventor of the SSH protocol – the backbone of Internet security1
20+ years of engineering excellence
2
3
4
5
SIMPLIFIED OVERVIEW OF OUR CURRENT OFFERING
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Simplified deployment architecture Key products
Tectia SSH1
Universal SSH Key Manager™
3
• Solution to enable encrypted connections
CryptoAuditor2
• Control and monitoring of encrypted connection
• Accounting for and administering the keys
Workstation networksInternal users
Servers and network devices
Host and cloud environments
Management network
Workstation networksExternal users
2
1
3
IF IT INFRASTRUCTURE WERE A HOTEL...
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Key products
Tectia SSH1
Universal SSH Key Manager™3
• Provide keys to allow safe entry into the rooms
CryptoAuditor2
• CCTV cameras to control and record movement
• Administer and account for the keys
THE MARKET IS GROWING
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The Economist (May 28,2016)
MARKET GROWTH CONTINUES
Zion Research: Cyber Security Market Trends and Forecast 2015-2021 (August 2016)
INSIDERS ARE THE KEY THREAT AWARENESS IS INCREASING
PwC GSISS 2015: Number of detected security incidents (millions) with sources
3,4
9,4
22,724,9
28,9
42,8
2009 2010 2011 2012 2013 2014
Top 3 sources of security incidents
24%
30%
35% Current employeesFormer employees
Hackers
Projected CAGR of 9.5% between 2016 and 2021
Q3 FINANCIAL PERFORMANCE
Q3/17 KEY FINANCIALSKey financials Comments
3Q16 4Q16 1Q17 2Q17 3Q17Sales M€ 3,7 4,1 3,1 3,7 3,0OPEX M€ 5,5 7,8 4,5 4,2 3,5EBIT M€ -2,3 -4,6 -1,7 -0,7 -0,8% EBIT % -63,8 -113,7 -53,8 -18,1 -24,8Personnel 115 84 80 86 84
Disappointing net sales• Decrease of 17% YoY• Decrease of 17% QoQ
Regional performance varied• EMEA still sluggish, invoicing better• Americas net sales weaker• APAC normalized after very strong Q2
Cost controls are working• Operating loss decrease 65% YoY• Opex decrease 17% QoQ0,0
0,5
1,0
1,5
2,0
2,5
Q316 Q416 Q117 Q217 Q317
Sales by region (M€)
Americas APAC EMEA+RoW
STRONG CASH POSITION
• Cash flow from operations improving• YTD negative• Q3 slightly positive
• Strong cash position
2014 2015 2016 YTD Q3 2017
Balance Sheet M€ 17,5 21,8 21,8 20,6
Cash and cash equivalents M€ 6,1 11,3 7,8 11,4
Cash flow from operations M€ 1,8 0,3 -8,1 -1,4
ROE % 4 -40 -112 -36
Equity ratio % 63 67 63 87
Gearing % -77 -99 -95 -99
Profit/loss per share EUR -0,00 -0,15 -0,36 -0,12
Equity per share EUR 0,25 0,36 0,24 0,30
HIGHLIGHTS FROM Q3
Improving sales fundamentals• Open pipeline increase of 40% during Q3• Strong customer interest for PrivX® On-
Demand Access Manager• sales cycles still long
• Several enterprise deals progressing• largest YTD license deal closed on October 4
Focused marketing• Use-case (GDPR, 3rd party access) driven
CryptoAuditor marketing• Release of ISACA* compliance white paper• Continued increase of web site traffic
Improving cash flow• Positive cash flow from operations during
quarter
Firewall• Good progress in certification• Good results from performance testing
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* Leading international professional association focused on IT governance
IPR UPDATE
THE IPR PICTURE
OUR PORTFOLIO PRODUCT COVERAGE VALUE CREATION• We have a strong IPR
portfolio, based on our20+ years of industry leading expertise
• 100+ patents and patent applications globally
• Strong portfolio especially in US and Europe
• Core Internet communications
• Universal Key Manager®
• CryptoAuditor®
• Firewall
• PrivX™ On-Demand Access Manager
• Active patent licensing program for revenue
• Differentiation & barrier to entry for competitors
• Freedom to operate
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PATENT LICENSING UPDATE
UK Infringement Case• Permission to appeal granted
German Infringement Case• High court overturned the first instance
non-infringement decision• Final decision awaits validity ruling
German Validity Case• Decision expected in H1/18
USPTO Inter Partes Review• Patent found invalid
Amended US Patent Granted• Covers key aspects of the above
patent, problematic issues corrected
Further patents filed for• Protection for key features of PrivX™
On-Demand Access Manager
Licensing negotiations ongoing
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CLOUD: THE BRAVE NEW WORLD
Source: Vmoksha Technologies (2017)
THE CLOUD CHANGES EVERYTHING
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“More than $1 trillion in IT spending will be directly or indirectly affected by the shift to cloud during the next five years, said Gartner, Inc. This will make cloud computing one of the most disruptive forces of IT spending since the early days of the digital age.”
-- Gartner
"Cloud-first strategies are the foundation for staying relevant in a fast-paced world”
-- Ed Anderson, Gartner
CLOUD: NOT ABOUT TECHNOLOGY, ABOUT BUSINESS
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The cloud is having a measurable impact on business
Average improvement in time to market
Average increase in company growth
Average increase in process efficiency
20.7%
19.6%
18.8%
Average reduction in operational costs
Average reduction in IT spending
-16.2%
-15.1%
Source: Vanson Bourne: “The Business Impact of the Cloud”
Average reduction in IT maintenance costs
-16.8%
THE STAKES ARE HIGH
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“Global annual cybercrime costs will grow from $3 trillion in 2015 to $6 trillion annually by 2021.”
– Cybersecurity Ventures
“Equifax’s market value, which has collapsed by a third in a few weeks as a result of the scandal, is down by $6 billion.”
– Market Watch
THE AMOUNT OF DIGITAL ASSETS GROWS EXPONENTIALLY
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“Today there are 7 billion people, about 850 million web servers online, and about 4 billion zetabytes of digital content worldwide. By 2022 there will be 8 billion people, 75-300 billion networked devices globally, and 96 zetabytes of digital content is estimated to exist.”
– David Bray, former CIO of FCC
SECURITY IS SLOWING DOWN THE CLOUD TRANSFORMATION
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Top challenges holding back cloud projects
28%
30%
34%
38%
38%
73%
Loss of control over IT services
Concern about regulatorycompliance
Concern about the security of data
Knowledge and experience of bothIT and business managers
Concern over business continuityor disaster recovery
Concern over compromisedaccounts or insider threats
Source: Cloud Security Alliance: “Cloud Adoption Practices & Priorities Survey Report” Focus areas of SSH
EXPLOITING THE OPPORTUNITY
PRIMARY DRIVERS FOR (PRIVILEGED) ACCESS MANAGEMENT
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✓ ✓ ✓ ✓
✓ ✓ ✓ ✓
CLOUD SECURITY GROWS FAST
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9.5% 26%vs.
The cloud security market grows significantly faster than the overall information security market
Sources: Zion Research 2016; MarketsandMarkets 2017
OVERALL INFORMATION SECURITY MARKET CLOUD SECURITY MARKET
OUR GROWTH EQUATION
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ELIMINATING THE SYSTEMIC PROBLEMS
INTRODUCINGDISRUPTIVE NEW TECHNOLOGIES
EXPLOITING THE CLOUD
OPPORTUNITY
ACTIVELY MONETIZING
IPRS• Reshape and widen
offering for a more strategic vendor position
• Reposition SSH into relevant segment(s)
• Expand into more customer segments
• Rapidly introduce new technologies and products to exploit the cloud opportunity
• PrivX On-Demand Access Manager is the first step
• Use SSH’s unique differentiators to establish leading position in Cloud Access Management
• Continue IPR creation and filings
• Actively pursue licensing
• Be prepared to protect our rights in courts if necessary
WIDER, MORE STRATEGIC OFFERING
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THINKING WIDERMaking SSH a strategic vendor for enterprise customers
Enabling SSH to reposition itself in a relevant category
A wider offering alone does not create disruption or unfair competitive advantage – unique differentiators are needed
CryptoAuditor®
Tectia® SSHPremium server and client
for Windows, Unix, and z/OS
Universal SSH Key Manager®
API & Connectors
CloudTransformation
Manage & Automate
Secure data-in-transit
PrivX™ On-Demand Access Manager
Monitor & Control 360° visibility and control
Access Management at the Speed of Cloud
Future-proof, no vendor lock
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FIRST DISRUPTION: PRIVX™ ON-DEMAND ACCESS MANAGER
PRIVX™ INDUSTRY FIRSTSFarewell to credentials
Once-and-forget server configuration
Adaptive role-based access control
No workflow or workstation changes
Clientless workflow
ROLEANDATTR.DATABASE(AD/LDAP/AWSIAM)
ITADMINS DEVELOPERS
1.ITadminConnects
2.Checkandvalidatetheroleandidentity
3.Createtemporaryrolebasedcredentials
4.Accessisgrantedbasedontherole
ITADMIN
DEVELOPERAUSER
CLOUDANDON-PREMINFRA
PRIVX: REVISITING OUR HOTEL
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• In our hotel in the Cloud, there may be• a nearly infinite number of rooms• a nearly infinite number of guests• checking in and out almost infinitely fast
• The traditional access management paradigm simply breaks down with the immense cloud scale• speed and scalability are crucial for Cloud
Access Management
• PrivX is the programmable, disposableelectronic key card for our Cloud hotel
1 See page 8
THE PRIVX™ ON-DEMAND ACCESS MANAGER DIFFERENCE
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THE OLD WAY THE PRIVX WAY WHY THE DIFFERENCE MATTERS• Static credentials (keys
or passwords) that must be managed and are often compromised
• Manual server configuration changes
• Workflow and client modifications required
• Access granted per individual
• On-demand, single-use credentials that are not stored and cannot be stolen
• Servers are configured once, no manual changes
• No workflow or client modifications
• Dynamic role-based access granting for simplicity and speed
• Better security
• Less administrative work both in server configuration and access granting
• Vastly better scalability
• No changes to business flow
FAST, SCALABLE, AUTOMATED, SECURE, MORE COST-EFFECTIVE
CORNERSTONES OF OUR DIRECTION
DISRUPTIVE INNOVATION
MORE RELEVANTPOSITIONING
MARKETEXPANSION
IPR MONETIZATION
• PrivX™ On-Demand Access Manager
• Wider product offering
• Upcoming technologies and products
• Disruptive PrivilegedAccess Management player
• Move upstream to Cloud IAM space
• Leveraging the cloud opportunity
• Supplement direct sales with a SaaS offering
• Increasing transtion into subscription model even in on-premises deals
• Continue aggressive value extraction to gain licensing revenue and strengthen SSH products’ market position
Most compelling offering in the industry
Significantly larger addressable market
Tap the Cloud, wider customer reach
Turn innovation and expertise into value
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Q&A