ssh communications security investor update · 2017. 12. 13. · the market is growing 30 november...

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SSH COMMUNICATIONS SECURITY INVESTOR UPDATE Kaisa Olkkonen, CEO 30.11.2017

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Page 1: SSH COMMUNICATIONS SECURITY INVESTOR UPDATE · 2017. 12. 13. · THE MARKET IS GROWING 30 November 2017 SSH Communications Security 9 The Economist (May 28,2016) MARKET GROWTH CONTINUES

SSH COMMUNICATIONS SECURITY INVESTOR UPDATE

Kaisa Olkkonen, CEO

30.11.2017

Page 2: SSH COMMUNICATIONS SECURITY INVESTOR UPDATE · 2017. 12. 13. · THE MARKET IS GROWING 30 November 2017 SSH Communications Security 9 The Economist (May 28,2016) MARKET GROWTH CONTINUES

SSH Background and Business1

Q3 Financial Update2

The Cloud Opportunity4

IPR Update3

CONTENTS

30 November 2017 SSH Communications Security 2

Our Strategy5

Page 3: SSH COMMUNICATIONS SECURITY INVESTOR UPDATE · 2017. 12. 13. · THE MARKET IS GROWING 30 November 2017 SSH Communications Security 9 The Economist (May 28,2016) MARKET GROWTH CONTINUES

SSH BACKGROUND AND BUSINESS

Page 4: SSH COMMUNICATIONS SECURITY INVESTOR UPDATE · 2017. 12. 13. · THE MARKET IS GROWING 30 November 2017 SSH Communications Security 9 The Economist (May 28,2016) MARKET GROWTH CONTINUES

WHAT IS SSH ABOUT

30 November 2017 SSH Communications Security 4

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

Page 5: SSH COMMUNICATIONS SECURITY INVESTOR UPDATE · 2017. 12. 13. · THE MARKET IS GROWING 30 November 2017 SSH Communications Security 9 The Economist (May 28,2016) MARKET GROWTH CONTINUES

SIMPLIFIED OVERVIEW OF OUR CURRENT OFFERING

30 November 2017 SSH Communications Security 5

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

Page 6: SSH COMMUNICATIONS SECURITY INVESTOR UPDATE · 2017. 12. 13. · THE MARKET IS GROWING 30 November 2017 SSH Communications Security 9 The Economist (May 28,2016) MARKET GROWTH CONTINUES

IF IT INFRASTRUCTURE WERE A HOTEL...

30 November 2017 SSH Communications Security 8

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

Page 7: SSH COMMUNICATIONS SECURITY INVESTOR UPDATE · 2017. 12. 13. · THE MARKET IS GROWING 30 November 2017 SSH Communications Security 9 The Economist (May 28,2016) MARKET GROWTH CONTINUES

THE MARKET IS GROWING

30 November 2017 SSH Communications Security 9

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

Page 8: SSH COMMUNICATIONS SECURITY INVESTOR UPDATE · 2017. 12. 13. · THE MARKET IS GROWING 30 November 2017 SSH Communications Security 9 The Economist (May 28,2016) MARKET GROWTH CONTINUES

Q3 FINANCIAL PERFORMANCE

Page 9: SSH COMMUNICATIONS SECURITY INVESTOR UPDATE · 2017. 12. 13. · THE MARKET IS GROWING 30 November 2017 SSH Communications Security 9 The Economist (May 28,2016) MARKET GROWTH CONTINUES

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

Page 10: SSH COMMUNICATIONS SECURITY INVESTOR UPDATE · 2017. 12. 13. · THE MARKET IS GROWING 30 November 2017 SSH Communications Security 9 The Economist (May 28,2016) MARKET GROWTH CONTINUES

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

Page 11: SSH COMMUNICATIONS SECURITY INVESTOR UPDATE · 2017. 12. 13. · THE MARKET IS GROWING 30 November 2017 SSH Communications Security 9 The Economist (May 28,2016) MARKET GROWTH CONTINUES

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

30 November 2017 SSH Communications Security 11

* Leading international professional association focused on IT governance

Page 12: SSH COMMUNICATIONS SECURITY INVESTOR UPDATE · 2017. 12. 13. · THE MARKET IS GROWING 30 November 2017 SSH Communications Security 9 The Economist (May 28,2016) MARKET GROWTH CONTINUES

IPR UPDATE

Page 13: SSH COMMUNICATIONS SECURITY INVESTOR UPDATE · 2017. 12. 13. · THE MARKET IS GROWING 30 November 2017 SSH Communications Security 9 The Economist (May 28,2016) MARKET GROWTH CONTINUES

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

30 November 2017 SSH Communications Security 13

Page 14: SSH COMMUNICATIONS SECURITY INVESTOR UPDATE · 2017. 12. 13. · THE MARKET IS GROWING 30 November 2017 SSH Communications Security 9 The Economist (May 28,2016) MARKET GROWTH CONTINUES

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

30 November 2017 SSH Communications Security 14

Page 15: SSH COMMUNICATIONS SECURITY INVESTOR UPDATE · 2017. 12. 13. · THE MARKET IS GROWING 30 November 2017 SSH Communications Security 9 The Economist (May 28,2016) MARKET GROWTH CONTINUES

CLOUD: THE BRAVE NEW WORLD

Page 16: SSH COMMUNICATIONS SECURITY INVESTOR UPDATE · 2017. 12. 13. · THE MARKET IS GROWING 30 November 2017 SSH Communications Security 9 The Economist (May 28,2016) MARKET GROWTH CONTINUES

Source: Vmoksha Technologies (2017)

THE CLOUD CHANGES EVERYTHING

30 November 2017 SSH Communications Security 16

“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

Page 17: SSH COMMUNICATIONS SECURITY INVESTOR UPDATE · 2017. 12. 13. · THE MARKET IS GROWING 30 November 2017 SSH Communications Security 9 The Economist (May 28,2016) MARKET GROWTH CONTINUES

CLOUD: NOT ABOUT TECHNOLOGY, ABOUT BUSINESS

30 November 2017 SSH Communications Security 17

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%

Page 18: SSH COMMUNICATIONS SECURITY INVESTOR UPDATE · 2017. 12. 13. · THE MARKET IS GROWING 30 November 2017 SSH Communications Security 9 The Economist (May 28,2016) MARKET GROWTH CONTINUES

THE STAKES ARE HIGH

30 November 2017 SSH Communications Security 18

“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

Page 19: SSH COMMUNICATIONS SECURITY INVESTOR UPDATE · 2017. 12. 13. · THE MARKET IS GROWING 30 November 2017 SSH Communications Security 9 The Economist (May 28,2016) MARKET GROWTH CONTINUES

THE AMOUNT OF DIGITAL ASSETS GROWS EXPONENTIALLY

30 November 2017 SSH Communications Security 19

“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

Page 20: SSH COMMUNICATIONS SECURITY INVESTOR UPDATE · 2017. 12. 13. · THE MARKET IS GROWING 30 November 2017 SSH Communications Security 9 The Economist (May 28,2016) MARKET GROWTH CONTINUES

SECURITY IS SLOWING DOWN THE CLOUD TRANSFORMATION

30 November 2017 SSH Communications Security 20

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

Page 21: SSH COMMUNICATIONS SECURITY INVESTOR UPDATE · 2017. 12. 13. · THE MARKET IS GROWING 30 November 2017 SSH Communications Security 9 The Economist (May 28,2016) MARKET GROWTH CONTINUES

EXPLOITING THE OPPORTUNITY

Page 22: SSH COMMUNICATIONS SECURITY INVESTOR UPDATE · 2017. 12. 13. · THE MARKET IS GROWING 30 November 2017 SSH Communications Security 9 The Economist (May 28,2016) MARKET GROWTH CONTINUES

PRIMARY DRIVERS FOR (PRIVILEGED) ACCESS MANAGEMENT

30 November 2017 SSH Communications Security

✓ ✓ ✓ ✓

✓ ✓ ✓ ✓

Page 23: SSH COMMUNICATIONS SECURITY INVESTOR UPDATE · 2017. 12. 13. · THE MARKET IS GROWING 30 November 2017 SSH Communications Security 9 The Economist (May 28,2016) MARKET GROWTH CONTINUES

CLOUD SECURITY GROWS FAST

30 November 2017 SSH Communications Security 23

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

Page 24: SSH COMMUNICATIONS SECURITY INVESTOR UPDATE · 2017. 12. 13. · THE MARKET IS GROWING 30 November 2017 SSH Communications Security 9 The Economist (May 28,2016) MARKET GROWTH CONTINUES

OUR GROWTH EQUATION

30 November 2017 SSH Communications Security 24

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

Page 25: SSH COMMUNICATIONS SECURITY INVESTOR UPDATE · 2017. 12. 13. · THE MARKET IS GROWING 30 November 2017 SSH Communications Security 9 The Economist (May 28,2016) MARKET GROWTH CONTINUES

WIDER, MORE STRATEGIC OFFERING

30 November 2017 SSH Communications Security 25

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

Page 26: SSH COMMUNICATIONS SECURITY INVESTOR UPDATE · 2017. 12. 13. · THE MARKET IS GROWING 30 November 2017 SSH Communications Security 9 The Economist (May 28,2016) MARKET GROWTH CONTINUES

30 November 2017 SSH Communications Security 26

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

Page 27: SSH COMMUNICATIONS SECURITY INVESTOR UPDATE · 2017. 12. 13. · THE MARKET IS GROWING 30 November 2017 SSH Communications Security 9 The Economist (May 28,2016) MARKET GROWTH CONTINUES

PRIVX: REVISITING OUR HOTEL

30 November 2017 SSH Communications Security 27

• 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

Page 28: SSH COMMUNICATIONS SECURITY INVESTOR UPDATE · 2017. 12. 13. · THE MARKET IS GROWING 30 November 2017 SSH Communications Security 9 The Economist (May 28,2016) MARKET GROWTH CONTINUES

THE PRIVX™ ON-DEMAND ACCESS MANAGER DIFFERENCE

30 November 2017 SSH Communications Security 28

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

Page 29: SSH COMMUNICATIONS SECURITY INVESTOR UPDATE · 2017. 12. 13. · THE MARKET IS GROWING 30 November 2017 SSH Communications Security 9 The Economist (May 28,2016) MARKET GROWTH CONTINUES

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

30 November 2017 SSH Communications Security 29

Page 30: SSH COMMUNICATIONS SECURITY INVESTOR UPDATE · 2017. 12. 13. · THE MARKET IS GROWING 30 November 2017 SSH Communications Security 9 The Economist (May 28,2016) MARKET GROWTH CONTINUES

Q&A

Page 31: SSH COMMUNICATIONS SECURITY INVESTOR UPDATE · 2017. 12. 13. · THE MARKET IS GROWING 30 November 2017 SSH Communications Security 9 The Economist (May 28,2016) MARKET GROWTH CONTINUES