SSH Communication Security Company: Business Review

SSH COMMUNICATIONS SECURITY CORPORATION, issued by the stock exchange, October 272022 9:00AM EST

just increased sales
17 %, EBITDA is positive

July-September 2022 in the letter

• Net sales totaled EUR 4.6 million (EUR 3.9 million)
• EBITDA of EUR 0.4 million (EUR 0.6 million)
• Operating loss of -0.4 million euros (-0.3 million euros)
• Period loss of -0.4 million euros (-0.3 million euros)
• Earnings per share of -0.02 euros (-0.02 euros)

Operating cash flow was EUR -0.5 million (EUR 0 million). The equity ratio was 47.2 % (46.3 %). Current assets were EUR 2.7 million (EUR 4.2 million).

key figure
million euros 7–9/2022 7–9/2021 Change% 1–9/2022 1–9/2021 Change% 1–12/2021
just sell 4.6 3.9 17.2 13.4 9.9 35.3 15.9
EBITDA 0.4 0.6 -28.3 1.5 -0.3 624.2 1.1
% or net sales 8.6 14.0 -38.8 10.9 -2.8 487.3 7.0
Operating profit and loss -0.4 -0.3 -23.0 -0.9 -2.2 61.1 -1.5
% or net sales -8.7 -8.3 -5.0 -6.3 -22.0 71.3 -9.6
Profit and loss before tax -0.4 -0.4 3.7 -0.7 -2.5 72.7 -1.8
loss of profit -0.4 -0.3 -33.4 -0.8 -2.7 71.1 -2.3
Return on Equity, % -7.0 -27.0 73.9 -22.6
Return on investment, % -4.9 -18.0 72.8 -14.2
current assets 2.7 4.2 -35.3 8.2
Leverage(%) -3.8 -25.8 85.2 -39.8
Equity ratio (%) 47.2 46.3 2.0 44.6
Earnings per share, EUR -0.02 -0.02 -13.5 -0.04 -0.10 61.3 -0.10
Shareholders’ equity per share, EUR 0.28 0.30 -5.2 0.26 0.30 -13.1 0.31
recurring revenue, ARR 17.6 14.5 21.0 15.4
Subscription revenue, ARR 9.2 6.3 46.3 7.3

SSH communication security provides alternative performance indicators not defined by the IFRS standard. Alternative performance measures should not be considered as substitutes for performance measures under IFRS. Alternative performance measures are:

EBITDA = operating profit/loss + depreciation and amortization
Annual recurring revenue: Subscription + maintenance revenue at the end of the last month of the reporting quarter multiplied by 12.
Subscription ARR (Annual Recurring Revenue): Subscription revenue in the last month of the reporting quarter multiplied by 12. For an exhaustive list of alternative performance measures and formulas used, see SSH’s annual report.


Our current 2022 guidance remains unchanged:

We continue to transition our business from a licensing and support model to a recurring revenue model, which we expect will provide more stable revenue over the long term while reducing our short-term annual growth rate compared to the perpetual licensing business model. Annual recurring revenue of EUR 15.4 million (EUR 8 million) by the end of 2021 positions us for continued growth. We expect net sales to increase in 2022 compared to 2021. We estimate EBITDA and cash flow from operating activities to be positive in 2022.

CEO Review

Valued shareholders, customers, partners and colleagues,

We continued to grow in the third quarter. Net sales increased by 17% and EBITDA reached EUR 0.4 million. The slightly lower EBITDA in the comparative period was primarily due to the hardware components in NQX deliveries being recorded as cost of goods sold. We have successfully transitioned many of our customers to a subscription model by introducing innovative releases and future-proof technologies into our portfolio. As a result, over 90% of Q3 revenue was subscription-based.

In the third quarter, we delivered the €2.1 million order placed in June, and we are securing the ability to deliver more orders under the same contract. The order had a lesser revenue recognition impact in the third quarter due to deliveries at the end of the quarter, with a full impact from the fourth quarter, extending the initial contract period of three years.

Our operating cash flow for the quarter was -0.5 million euros, mainly due to the timing of significant cash receipts in the days following the end of the quarter. Operating cash flow and current assets are expected to improve in the final quarter as the majority of our renewal payments and delivery of the €2.1 million order will be received in the fourth quarter.

PrivX receives third analyst endorsement

In August, KuppingerCole, a leading European market analysis firm, named SSH communication security an overall leader in the 2022 Leadership Compass report. SSH was selected as the Overall Leader and Innovation Leader in the Privileged Access Management (PAM) Market, Product, Market and Market Champion categories. SSH’s fastest growing product, PrivX, is doing well alongside global cybersecurity giants, especially when it comes to technology development.

NQX start generate meaningful income

Encryption solutions NQX’s National Cyber ​​Security Centre of Finland (NCSA-FI) security certification was approved in June, bringing in several new customer orders. SSH began delivering NQX, which was valued at over €2 million in the third quarter of three years. Component availability is a good thing for NQX, but global supply and logistics chain challenges that lead to long lead times may affect future lead times.

SSH delta Kit build new international partners

The SSH Deltagon Suite continued to grow in the third quarter, driven by our partners in the Nordics. We are working with selected international partners to build and grow the suite internationally, especially in regulated business market segments and where SSH already has a strong customer footprint. A new user interface and improved user experience for the suite are in development and we are excited to launch the new version in Q4.

Universal SSH Key Manager (UKM) upgraded with new features

The new UKM product release introduces findings and reports related to the Quantum readiness of the Tectia Secure Shell product. It also adds new options for private SSH key discovery in custom locations and advanced alert management to focus on what’s important, avoid alert fatigue, and improve data management. Additionally, our discovery and auditing tool, SSHerlock, is now used by our customers and prospects for self-risk assessments. We expect SSHerlock will open up more opportunities for new customer acquisition and additional sales.

Move forward

Businesses, governments, and federal organizations have recognized the importance of a zero-trust approach to cybersecurity. In addition, the increasing attacks on society’s critical infrastructure and the weaponization of operational technologies have increased demand for solutions such as the Privx OT version of SSH. Combined with quantum computer-resistant encryption, SSH’s products are use-ready and future-proof.

Functionality has been improved across all five product lines, and investments in product development, channel sales and marketing continue. We strengthen cooperation with global partners and increase sales resources through partner channels. We can respond to customer needs for comprehensive solutions to ensure business continuity and vulnerability protection.

Financial Performance

Net sales in the third quarter were EUR 4.6 million (EUR 3.9 million), an increase of 17% compared to the third quarter of 2021.

EBITDA for the third quarter of 2022 was EUR 0.4 million (EUR 0.6 million).

Operating loss was -0.4 million euros (-0.3 million euros), net loss for the quarter was -0.4 million euros
(-300,000 euros).

Operating cash flow for the quarter was EUR -0.5 million (EUR 0 million).

Sales Results

Sales in the EMEA region increased 29% compared to the third quarter of 2021. Sales in the Asia Pacific region increased 25% compared to the third quarter of 2021, while sales in the AMER region were flat.

Subscription revenue grew 35% compared to the third quarter of 2021. PrivX subscription revenue grew 144% compared to the third quarter of 2021.

Recurring revenue (subscriptions and maintenance) accounted for 93% of total revenue during the quarter, providing SSH with a solid foundation for further growth.


The content of this report is provided by SSH Communications Security and its third-party content providers for your personal information only and does not constitute an offer or invitation to purchase any securities, nor does it provide any form of advice (investment, tax, legal) that constitutes investment advice, Nor does it make any recommendations regarding specific investments or products. SSH Communications Security does not provide investment advice or advice to buy or sell its stock or the stock of others. If you are interested in investing in SSH communication security, please contact your financial advisor for more details and information. Past performance of SSH Communications Security stock is not indicative of future results. Unless otherwise provided by applicable mandatory law, SSH Communication Security expressly disclaims all warranties, express or implied. Regarding the availability, accuracy or reliability of any content provided, or regarding the suitability of the information for any purpose.

SSH Communications Security will release its 2023 financial reporting calendar in the fourth quarter.

Helsinki, October 27, 2022

SSH communication security

Board of Directors

Tim Tunklow

For more information, please contact:
Teemu Tunkelo, CEO, tel. +41 79 227 8362
Niklas Nordström, Chief Financial Officer, tel. +358 50 541 0543

Nasdaq Helsinki Ltd.
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