Profit Warning: SSH Communications Security Corporation lowers its 2019 revenue estimate

SSH Communications Security Oyj, stock exchange release, November 12, 2019, 21:00 EEST

Profit Warning: SSH Communications Security Corporation lowers its 2019 revenue estimate

SSH estimates that its revenue from the software business (software fees, professional services, and recurring revenue) will decrease somewhat compared to 2018 level.

Main reasons for the lower than expected revenue include:

• We estimate that our professional services revenue will decrease more than anticipated (approximately EUR 1 million) compared to 2018. We concluded several large professional services engagements at the end of 2018, and new engagements have been smaller in 2019.
• The weakening of the Euro compared to the US Dollar has a negative impact on revenue at comparable exchange rates.
• Start of sales in the NQX® business is further delayed – although we have received clear indications of interest in the product, lengthy procurement processes postpone the start of significant sales to 2020.

Despite the decrease in revenue, our future outlook remains positive: our recurring revenue has grown, and the volume of software subscriptions has increased, which provides a good foundation for future growth. Furthermore, we have in 2019 achieved several new Universal SSH Key Manager® (UKM) customer wins, which we believe will lead to expansion orders in 2020. We are making progress in our PrivX® business across all geographic regions. We also estimate that the NQX business will start creating revenue in 2020.

The new guidance is:

For the year 2019, we expect the revenue from our software business (software fees, professional services, and recurring revenue) at comparable exchange rates to decrease somewhat compared to 2018.

In the medium term, we aim for growth that exceeds the projected annual cybersecurity market growth of approximately 10% and will also explore avenues for accelerated growth through inorganic growth opportunities. Possible significant quarterly variation in revenue growth is still to be expected due to the timing of larger deals over the financial year.

The earlier guidance, issued in the Financial Statement Release on 12 February 2019, was:

For the year 2019, we expect double-digit percentage growth from our software business (software fees, professional services, and recurring revenue) at comparable exchange rates, exceeding the projected annual cybersecurity market growth of approximately 10%. In the medium term, we expect similar or faster growth and will also explore avenues for accelerated growth through inorganic growth opportunities. Possible significant quarterly variation in revenue growth is still to be expected due to the timing of larger deals over the financial year.

SSH COMMUNICATIONS SECURITY OYJ

Kaisa Olkkonen

CEO

For further information, please contact:

Kaisa Olkkonen, CEO, tel.

Niklas Nordström, CFO, tel.

Distribution:

Nasdaq Helsinki Oy

Major media

About SSH Communications Security

SSH.COM helps organizations access, secure, and control their digital core – their critical data, applications, and services. We have over 3,000 customers around the world, including 40 percent of Fortune 500 companies, many of the world's largest financial institutions, and major organizations in all verticals. We are committed to helping our customers thrive in the cloud era with solutions that offer secure access with zero inertia, zero friction, and zero credentials risk. SSH.COM sells online; through offices in North America, Europe, and Asia; and through a global network of certified partners. The company's shares (SSH1V) are quoted on the NASDAQ Helsinki. For more information, visit