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Introduction & Market Context
WithSecure Oyj (HEL:WITH) presented its Q1 2025 interim report on April 25, 2025, highlighting continued growth in its cloud security offerings while advancing its strategic positioning as a European cybersecurity leader. The company’s stock closed at €0.902, down 1.44% on the day of the presentation, though still trading significantly above its 52-week low of €0.698.
The cybersecurity firm emphasized how geopolitical events are supporting its strategy as the "Flagship of European cyber security," a positioning that appears increasingly relevant amid growing concerns about digital sovereignty in the region.
Quarterly Performance Highlights
WithSecure reported Q1 2025 revenue of €30.1 million, representing a 4% year-on-year increase from €28.8 million in Q1 2024. The company achieved a gross margin of €24.4 million (81.0%), up 6% from the previous year, while delivering an adjusted EBITDA of €1.3 million for the group, a significant improvement from €0.2 million in Q1 2024.
As shown in the following chart of Elements Company performance, the core business demonstrated steady improvement across key metrics:
Elements Cloud Annual Recurring Revenue (ARR) grew 8% year-on-year to €86.6 million, with cloud revenue increasing 6% to €21.9 million. The company’s Elements software and co-security services showed stronger performance with 14% ARR growth, while managed services experienced an 8% decline, primarily attributed to UK customers.
Net Revenue Retention (NRR) for Elements Cloud stood at 103%, indicating modest expansion within the existing customer base. The adjusted EBITDA for Elements Company reached €0.9 million, marking a substantial improvement from negative territory in previous quarters.
Cloud Protection for Salesforce (NYSE:CRM) Success
The standout performer in WithSecure’s portfolio was its Cloud Protection for Salesforce (CPSF) offering, which demonstrated exceptional growth metrics as illustrated in this performance chart:
CPSF achieved 70% year-on-year ARR growth to €13.9 million, with revenue increasing 63% to €3.3 million. The segment’s Net Revenue Retention rate of 133% indicates strong expansion within existing customers. WithSecure reported approximately 290 CPSF customers at quarter-end, with several new enterprise and medium-sized clients added during the period.
Notably, Q1 2025 marked the first quarter with positive adjusted EBITDA for the CPSF segment, reaching €0.4 million compared to a €1.1 million loss in Q1 2023. This performance underscores the growing importance of this business line, which the company is developing as an independent business within WithSecure while keeping strategic review options open.
Strategic Initiatives
WithSecure’s presentation highlighted several strategic moves aimed at focusing the company’s resources and market positioning:
The company is progressing with its divestment strategy, including the sale of its Malaysian entity and the transfer of its Asian business to a buyer who will become a key partner. The divestment of the cyber security consulting business is proceeding as planned, with closing expected in Q2 2025.
WithSecure is also consolidating its partner network, establishing new key partner agreements while moving smaller partners under strategic distributors. This restructuring aligns with the company’s segment reporting structure:
The new reporting structure clearly separates the Elements Company from Cloud Protection for Salesforce, providing greater transparency into the performance of these distinct business segments. Within Elements Company, the breakdown between Elements Cloud (further divided into software, co-security services, and managed services) and On-premise products helps track the company’s transition to cloud-based offerings.
Forward-Looking Statements
WithSecure provided specific guidance for 2025, projecting 10-20% growth in Elements Cloud ARR from the end of 2024 (€83.3 million) and 20-35% growth for Cloud Protection for Salesforce ARR from its 2024 year-end level of €12.8 million.
The company expects the Elements Company segment’s adjusted EBITDA to reach 3-7% of revenue in 2025. Looking further ahead, WithSecure outlined its medium-term financial target to become a "Rule of 30+" company over the next three years (2025-2027), meaning the sum of annual revenue growth percentage and adjusted EBITDA as a percentage of revenue should exceed 30.
This medium-term goal signals WithSecure’s intention to balance growth with improving profitability, though the emphasis appears to remain on expansion, particularly in its high-performing Cloud Protection for Salesforce segment.
Profitability Analysis
The Q1 2025 profitability metrics show WithSecure making progress toward sustainable profitability, with controlled operating expenses and improving margins:
While the company maintained operating expenses at the same level as Q1 2024, it noted increased investments in new customer and partner acquisition under Sales & Marketing. Research & Development saw improved efficiency through optimization of cloud usage for R&D environments, while General & Administrative expenses included some incremental costs related to ongoing projects.
The discontinued operations (consulting business) reported an adjusted EBITDA of -€1.6 million, highlighting why the divestment of this segment aligns with the company’s strategic focus on higher-margin cloud security offerings.
As WithSecure continues its strategic pivot toward European-focused cybersecurity solutions and high-growth cloud offerings, investors will be watching closely to see if the company can maintain its improved profitability while delivering on its ambitious growth targets for 2025 and beyond.
Full presentation:
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