Nixu Corporation’s growth ambition for 2020-2024

Nixu Corporation Press release on August 28, 2019 at 8.50 AM (EEST)

European cybersecurity company, Nixu has announced today its growth ambition for the next five years, 2020 to 2024.

In 2018, Nixu refreshed its strategy, according to which the company aims to be 1) the best workplace for cybersecurity professionals and 2) the trusted, go-to partner for cybersecurity services for digitalization in Northern Europe. Since its stock exchange listing in 2014, Nixu has grown with a compound annual growth rate of 27% from EUR 12 million to EUR 40 million over the five years. At the same time, Nixu has developed to be a service provider with a growing share of continuous services, from 15% to 39% of revenue. Nixu’s customer base has become more international, with revenue outside Finland increasing from EUR 0.8 million to EUR 14.6 million. (Comparative figures: 2013-2018 financial statements).

The company is now announcing its financial ambition for the next five years, 2020 to 2024. The growth ambitions are announced today so they can be disclosed to Nixu employees at an all hands meeting, nixucon19-event. The growth ambition, and the strategy behind them, will be explained to investors in more detail on Thursday, September 26 at Nixu’s Capital Markets Day event. A separate invitation and registration instructions can be found on the Nixu Investor website at www.nixu.com/investors.

• Nixu believes its revenue growth will be strong, both organically and with the support of selected acquisitions. Revenue is aimed to achieve organic growth of 15% to 25% per annum. In addition, acquisitions are expected to generate an average annual growth rate of 10% during the strategy period. Through a combination of organic and inorganic growth, Nixu aims to reach a revenue level of EUR 100 million in 2021.
• During a period of strong growth, Nixu will continue growth investments that weaken its annual result. As operational efficiency improves with scalability and the cost of the relative share of growth efforts reduces in the future, the company aims its EBITDA to reach 15% of revenue in 2024.
• Development of personnel competence and new recruitment are key to Nixu's growth, although with the development of scalable services, revenue per person is estimated to grow by the end of the period. Nixu estimates that the 1,000-employee threshold will be reached in 2023.
• The stronger growth of technology-based managed continuous services in comparison with consulting services is expected to lead to a higher share of Nixu's revenue from managed continuous services than from consultancy in 2024.
• Nixu is expanding its operations in existing and new markets so that at least five market areas have revenue of EUR 25 million. In the existing markets, Nixu aims to consolidate the market through acquisitions, as has been done in Sweden.

The growth targets defined above are intended to illustrate the ambition set by the company and its Board of Directors. They do not, however, replace the company's financial guidance on an annual basis. The company's outlook for 2019 remains unchanged. Nixu estimates its revenue to grow by more than 40% in 2019 and its EBITDA to improve significantly from the year 2018.

The cybersecurity market is growing with digitalization

The rapid digitalization of society is a megatrend pushing the growth of the cybersecurity market. Companies and organizations are deploying digital solutions that streamline their operations and enable new business. Growth in the use of cloud services, digital transactions and increased use of industrial remote access, among others, has made cyber-attacks more effective and fueled the growth of both cybercrime and increased state involvement. New digital business models will not be sustainable without comprehensive cybersecurity and reliable digital identities. The cybersecurity market is likely to grow strongly in the next few years due to the acceleration of digitalization. Widespread data breaches will also lead to increased regulation, which will, in turn, necessitate increased cybersecurity investments.

The global cybersecurity market is expected to grow at an annual rate of around 8-20% in 2018-2023 (Gartner). Most of the market is comprised of cybersecurity services and technology products. The share of services is estimated to be well over half of the total market, but this is expected to grow more strongly in the coming years. Professional services and outsourced information security are predicted to grow rapidly (8-13%). Managed information security services (cloud security and managed security services) will be a particularly fast-developing area in the cybersecurity market.

The cybersecurity market is still very fragmented and immature. The company expects the market to consolidate and mature over the next five years so that clients will increasingly place their trust in limited number of larger companies. To keep up with this development as the market continues to grow, Nixu needs to build up itself to become a much bigger entity by growing faster than the market.

Customers need holistic expertise

Nixu's clients are typically large, internationally operating companies or government organizations. These companies are facing digital transformation on many fronts. The emergence of new digital businesses and the transformation of old business models, in particular, such as the utilization of Industrial Internet (Industrial IoT), will lead to a widespread need for cybersecurity expertise within the organization even beyond IT departments. Nixu strives to respond to this customer need by providing a broad range of holistic services to best help our clients to address and eliminate the challenges and risks of digitalization. This is done through the provision of reliable, technology agnostic consultancy and design services, from cyberlaw expertise to the incident response of security breaches, as well as a variety of managed services based on the best technologies to ensure the functioning of digital business models.

Nixu has gained the position as a trusted partner for many of its clients. With this position, its customers’ wish Nixu to solve more and diverse challenges. Hence, Nixu’s holistic services expand the average size of a customer relationship. Typically, Nixu's customer base is very stable and its customers are served by Nixu for a long time, allowing building of customer-specific expertise.

Main themes of Nixu’s strategy

Reflecting the company’s mission, “we keep the digital society running", the Nixu growth strategy will focus particularly on cybersecurity services for digital business transformation. Nixu is increasingly developing its cybersecurity services that enable clients to leverage the Industrial Internet of Things and use of digital identities in business.

The growth strategy is based on five development areas.

1. Cybersecurity talent community
   As an expert organization, Nixu’s success in its strategic targets will rely on its ability to retain, recruit and train the best cybersecurity specialists in the business. In addition, the company's reputation must be enhanced among the international cybersecurity community.
   
   
2. Cybersecurity partner for digitalization
   Nixu provides its customers with a holistic variety of services to serve as a long-time cybersecurity partner. New services are being developed specifically to address the security of industrial internet platforms.
   
   
3. Data-driven services on global platforms
   Nixu wants to transition into a digital business model, that it relies on data on shared systems. Not only can the data collected in these systems be used for serving clients, it will also allow the company to develop its operations. Nixu’s services rely on the solutions of global technology partners.
   
   
4. Expanding market presence
   Strategic acquisitions to open new markets are a key factor to expand Nixu's market presence. Acquisitions are financed in a manner that optimizes shareholder value, using either debt or equity. Nixu wants to serve its clients globally, however, its primary network of experts will be established across Europe North of Alps.
   
   
5. Profitable, scalable growth
   Despite its growth investments, Nixu is building its growth to be scalable. As the size of the business grows, relative profitability continues to improve.

Impact of the world economic situation

The growth ambitions announced by Nixu are based on the premise that the global market remains relatively stable. Any escalation of a global trade war or a general recession may affect Nixu customers’ purchasing behavior and potentially weaken growth prospects. The company's view is that the cybersecurity market is reasonably defensive, as most customer operations are already largely digital. Cybersecurity is yet under-invested, and cyber threats are not likely to diminish during a recession. A concrete example of this is the way Nixu managed to increase its revenue even through the 2008-2009 financial crisis.


Nixu Corporation

Further information:
Chief Executive Officer Petri Kairinen, Nixu Corporation
telephone +358 40 832 1832, e-mail: petri.kairinen@nixu.com

Distribution:
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www.nixu.com

Nixu in Brief:
Nixu is a cybersecurity services company on a mission to keep the digital society running. Our passion is to help organizations embrace digitalization securely. Partnering with our clients we provide practical solutions for ensuring business continuity, an easy access to digital services and data protection. We aim to provide the best workplace to our team of nearly 400 cybersecurity professionals with a hands-on attitude. With Nordic roots we serve enterprise clients worldwide. Nixu shares are listed on the Nasdaq Helsinki stock exchange.
www.nixu.com