SSH Communications Security |

A cyber security software pioneer

| Finland

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Financial overview

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SSH - Withdraws 2020 guidance due to COVID-19

24.03.2020 | Company update

SSH announced yesterday that it estimates the COVID-19 pandemic to negatively impact its outlook and thus it withdraws its guidance for the year 2020. We’ve clearly cut our estimates for 2020 and 2021. We note that estimating future performance now is exceptionally difficult, as the depth and length of the current crisis is unknown. Based on our lowered estimates and postponed turnaround, we lower our target price to 0.70€ (prev. 1.00€) but maintain HOLD recommendation.

Guidance for 2020 withdrawn due to COVID-19

SSH announced yesterday that as a result of the COVID-19 pandemic, operating conditions in their markets have deteriorated significantly. Large enterprises globally, including some of SSH’s customers, have already announced profit warnings or cost savings programs. SSH expects this to affect customer’s investment decisions and the timing of IT project deployments. Due to the continued uncertainty of the situation, SSH’s visibility into the scope and duration of these effects is limited. SSH notes, that they are pre-emptively preparing for the effects of this situation by systematically reducing operating expenses, although details regarding this were not given.

 Estimates cut; turnaround postponed further

After a challenging 2019, SSH was guiding for clear improvement. For the year 2020, SSH was expecting revenue growth of 10-15 percent and an improving EBIT (FY’19: -1.2 MEUR), but this guidance is now withdrawn. We’ve cut our sales estimates for 2020E and 2021E roughly -16%. We estimate 2020E sales to decline -5%, resulting in -1.0 MEUR operating loss, despite measures to lower opex. Due to lower sales estimates, we estimate profit turnaround to be pushed forward to 2021E.

 HOLD maintained with TP 0.70€ (prev. 1.00€)

We note that estimating future performance is now exceptionally difficult, as the depth and length of the current crisis is unknown. Based on our lowered estimates and postponed turnaround, we lower our target price to 0.70€ (prev. 1.00€) but maintain HOLD recommendation.

SSH - Small progress, but not enough

17.02.2020 | Company update

SSH’s Q4 was broadly in line, capping off a challenging year of sales decline. Given the weak performance in FY’19, SSH’s guidance for 2020 was a small disappointment. We’ve cut our estimates for the coming years and maintain our target price of EUR 1.0, our recommendation is now HOLD (prev. SELL).

Q4 broadly as expected, capping off a disappointing year

Q4 net sales were EUR 4.1 million (vs. 4.7m our Evli). Net sales decreased by -35.8% compared to the previous year mainly due to the end of the patent licensing programme and reduced consulting revenue. Software business sales decreased -11.8% y/y due to the smaller initial project size compared to last year including a large license deal received in Q4’18. Software fees were EUR 1.8 million (2.2m Evli), Professional services were EUR 0.3 million (0.2m Evli), and Recurring revenue was EUR 2.1 million (2.3m Evli). Q4 operating loss was EUR -0.1 million (vs. 0.2m Evli). FY’19 as a whole; net sales of software business (excluding patent income in FY’18) decreased -8% y/y and EBIT was -1.2 MEUR (0.5 MEUR FY’18), attributed to lower sales (despite OPEX reduction), less larger license deals and with significant patent income received in FY’18.

2020 guidance disappointing given 2019 performance

SSH’s expectations for 2020 are revenue growth of 10-15 percent and an improving operating result (-1.2 MEUR FY'19). SSH expect clearly faster growth rates for PrivX and NQX, steady growth for UKM matching the industry growth rate, and modest growth for Tectia, which is the most mature product. The combined effect of these growth rates will result in moderate short-term growth, which SSH expects to accelerate over the next several years. Given the weak performance in SSH’s software business in FY’19, the guidance was a small disappointment and we have consequently cut our sales estimates. We now estimate 16.6 MEUR net sales for 2020E (prev. 17.5MEUR), resulting in 15% y/y growth, which is right at SSH’s guidance upper range. Reaching that level of net sales will require several larger one-off UKM license deals and/or some bigger NQX deals in 2020E. In conjunction with our estimates revision, we have also now amended our estimates regarding the 12 MEUR hybrid loan interest expenses, which as of March 30th 2020 will rise from 7.5% to 11.5%. Management did not provide any new commentary regarding hybrid loan and its possible redemption or re-financing.

Maintain EUR 1.0 target price, recommendation HOLD (prev. SELL)

Despite our estimates cut, the bigger picture remains unchanged in our view; with the underlying question in the investment case still regarding growth. SSH has made progress, but the progress is slow and given SSH’s historical and current growth profile, the question remains will growth materialize. We maintain our target price of EUR 1.0, our recommendation is now HOLD (prev. SELL). As noted before, SSH trades at a clear discount to the cyber security sector. Our target price implies an EV/Sales multiple of 2.4 on our ‘20E estimate, slightly below Nordic software peers, which we see as warranted given weaker metrics and the uncertainty to our estimates.

SSH - Q4 result broadly as expected, 2020 guidance signals confidence in turnaround

14.02.2020 | Earnings Flash

SSH Q4 result was broadly as expected. Outlook for 2020: SSH expects revenue growth of 10-15 percent and an improving operating result.

  • Q4 net sales were EUR 4.1 million (vs. 4.7m our expectation). Net sales decreased by -35.8% compared to the previous year mainly due to the end of the patent licensing programme and reduced consulting revenue.Software business sales decreased -11.8% y/y due to the smaller initial project size compared to last year including a large license deal received in Q4’18.
  • Software fees were EUR 1.8 million (2.2m Evli), Professional services were EUR 0.3 million (0.2m Evli), and Recurring revenue was EUR 2.1 million (2.3m Evli)
  • Q4 operating loss was EUR -0.1 million (vs. 0.2m our expectation)
  • EPS was -0.02 (vs. 0.00 our estimate)
  • Liquid assets were EUR 12.0m (11.6m Q3/19)
  • Business outlook for 2020: SSH expects revenue growth of 10-15 percent and an improving operating result (-1.2 MEUR FY'19)
  • SSH expect clearly faster growth rates for PrivX and NQX, steady growth for UKM matching the industry growth rate, and modest growth for Tectia, which is the most mature product. The combined effect of these growth rates will result in moderate short-term growth, which SSH expects to accelerate over the next several years.
  • CEO comment: “We are making progress with our new products, PrivX and NQX, which we expect to start having an increasing impact on our revenue and bottom line in 2020 and beyond.”

SSH - Issues profit warning

14.11.2019 | Company update

SSH lowered on Tuesday its revenue estimate for 2019. The lowered outlook did not come as a surprise as the bar was set really high for Q4. We’ve cut our sales and EBIT estimates for 2019 and coming years. Despite the estimates cut, the big picture remains unchanged in our view, with the underlying question in the investment case still being growth. We note that, SSH is making progress, but the speed of the transition is slow due to limited growth investment capacity. On the back of lowered estimates, our new target price is 1.0 euros (prev. 1.10), our recommendation remains SELL.

Lowering revenue estimate for 2019

SSH now estimates that its revenue from the software business (software fees, professional services, and recurring revenue) will decrease somewhat compared to 2018 level, which was 15.6 MEUR (excluding patent income). The previous guidance was for above 10% revenue growth. Reasons behind the lowered revenue outlook are lower professional services revenue than expected, negative FX impact from weakening euro, and postponement of significant NQX sales due to lengthy procurement processes.

Estimates cut, NQX showing signs of traction

Due to the profit warning we have cut our 2019E net sales estimates from 17.1 MEUR to 15.0 MEUR, and 2019E EBIT from 0.9 MEUR to -0.9 MEUR. Consequently, our net sales estimates for 2020-21E are also cut ~8%, while our EBIT estimates are cut even further. The lowered net sales estimates have a clear negative effect on our profitability estimates, thus postponing profit turnaround into the future. On the positive, the firewall product NQX is showing promising traction, with SSH citing that “significant sales” were now postponed to 2020. Our read is that significant would mean deals in the seven-figure range. In Q3, SSH received a request for information (RFI) by the Finnish Defence Forces Logistics Command regarding NQX.

Target price 1.0 euros, recommendation unchanged

On our renewed 2019-20E estimates, SSH is trading at EV/Sales multiples of 3.0x and 2.5x, which is clearly below the sector as noted before. Despite the estimates cut, the big picture remains unchanged in our view, with the underlying question in the investment case still regarding growth. We note that, SSH is making progress, but the speed of the transition is slow due to limited growth investment capacity. On the back of lowered estimates, our new target price is 1.0 euros (prev. 1.10), our recommendation remains SELL. Our target price implies an EV/Sales multiple of 2.2x on our ‘20E estimate, slightly below Nordic software peers, which we see as warranted given weaker metrics and the uncertainty to our estimates.

SSH - High expectations for Q4

24.10.2019 | Company update

SSH’s Q3 result missed our expectations and the company now needs a stellar Q4 in order to reach its guidance. SSH is progressing in the right direction, but the pace is slow due to limited growth investment capacity. We maintain our estimates and SELL recommendation with target price of 1.10 euros.

Result miss puts pressure on nailing Q4 to reach guidance

The Q3 result missed our expectations with sales being 3.6m vs our 5.0m estimate. SSH’s prudent cost control led to lower opex than we had anticipated. Despite this, EBIT missed our expectations due to lower sales, with Q3 EBIT being -0.2m vs. 0.7m our estimate. Software fees were 1.3m (2.4m Evli), professional services were 0.1m (0.3m Evli), and recurring revenue was 2.3m (2.3m Evli). In order to reach FY’19 guidance, SSH needs some 7m sales in Q4, which would be an all-time best quarterly result. According to management, sales pipeline for Q4 is strong and they seem confident that the necessary key deals will be closed in Q4.

Secures €2M EU Horizon 2020 funding for PrivX program

SSH successfully attained a €2m SME grant from the EU for development and marketing of PrivX over the next 24 months. Based on our discussion with management, we note that PrivX is still in a development phase and the new funding will be instrumental to accelerating PrivX’s roadmap, with most of the funding going towards R&D. The funding supports our estimates for the coming years, but we do not make any estimate changes at this point. Management sees critical applications even in sensitive fields, such as banks and financial institutions which are important clients to SSH, eventually transitioning to cloud or private cloud environments, but the transition will be over time and gradual. Therefore, PrivX is adapted for on-premise, with full SaaS version being part of the roadmap.

Maintain SELL recommendation with target price of €1.10

Post Q3 result, we have not made any changes to our estimates. Regardless of the profit warning risk, the underlying question in the investment case is still regarding growth. We note that, SSH is making progress, but the speed of the transition is slow due to limited growth investment capacity. On our ’19-20E estimates, SSH is trading at EV/Sales of 3.1x and 2.7x, which is below the sector and could prompt SSH to become an acquisition target of larger players wanting to enter the space or a consolidation play. However, as a standalone business, we’d like to see stronger growth coming through in the numbers to justify higher valuation. Our target price implies an EV/Sales multiple of 2.2x on our ‘20E estimate, broadly in line with Nordic software peers.We maintain our SELL recommendation and target price of 1.10 euros.

SSH - Q3 result misses our expectations, guidance unchanged

23.10.2019 | Earnings Flash

SSH Q3 result missed our expectations due to lower than expected software fees. As software fees fluctuate between quarters, one should not read to much of this. CEO sees reaching guidance still possible and outlook for 2019 is unchanged; SSH expects double digit percentage growth from software business (software fees, professional services, and recurring revenue) at comparable exchange rates.

  • Q3 net sales were EUR 3.6 million (vs. 5.0m our expectation)
  • Software fees were EUR 1.3 million (2.4m Evli), Professional services were EUR 0.1 million (0.3m Evli), and Recurring revenue was EUR 2.3 million (2.3m Evli)
  • Q3 operating profit was EUR -0.2 million (vs. 0.7m our expectation)
  • EPS was -0.01 (vs. 0.01 our estimate)
  • Liquid assets were EUR 11.6m (11.2m Q2/19)
  • Business outlook for 2019 unchanged: SSH expects double digit percentage growth from software business (software fees, professional services, and recurring revenue) at comparable exchange rates
  • CEO comment: “Entering the fourth quarter, our sales pipeline is strong, and we maintain our guidance despite the slightly slower than planned growth in the first nine months of the year. Achieving our full year target, however, requires some key customer wins during Q4.”

SSH - Tall order for H2

18.07.2019 | Company update

SSH delivered a decent Q2 result that was in line with our expectations. The good Q2 result sets the company up for the seasonally stronger H2, but SSH will need to execute well in order to reach its 2019 guidance. We maintain our SELL recommendation and target price of 1.10 euros.

Q2 result in line with our expectations

SSH’s Q2 result was in line with our expectations. Q2 net sales were EUR 4.0 million (vs. 4.4m our expectation), and operating profit was EUR 0.4 million (vs. 0.4m our expectation). Software fees were EUR 1.7 million (1.9m Evli), Professional services were EUR 0.1 million (0.3m Evli), and Recurring revenue was EUR 2.2 million (2.2m Evli). There were no larger UKM perpetual deals during Q2, but SSH did sign several PrivX deals with larger corporations, e.g. Western Union. Revenue impact of PrivX is however still expected to be modest this year. Noteworthy also that during Q2 SSH entered into a global partnership with Tech Mahindra, a large global IT services company.

Estimates unchanged, focus on execution in H2

In order to reach its 2019 guidance (>10% growth in software business), SSH needs to execute well in H2. Sales need to grow about 30% in H2 from last year, which is a tall order and it will depend heavily on closing larger UKM deals. Based on yesterday’s result, we have not made any changes to our estimates. We expect 2019E net sales to decline -6% to 17.2 MEUR (reaching guidance though) and 2019E EBIT to be 0.6 MEUR thanks to efficient cost control. Our estimates for the coming years are also intact, with net sales growth expectations for 2020E and 2021E at 11% and 12% and gradually improving EBIT. Our sales estimates reflect the company’s current short and mid-term guidance.

No change in recommendation

On our estimates, SSH is trading at 2019-20 EV/Sales multiples of 3.3x and 2.9x. As noted previously in our reports, we’d like to see the results of SSH’s strategy materialising somewhat in the growth figures in order to justify higher valuation multiples. We maintain SELL recommendation with target price of 1.10 euros.

SSH - Q2 in line with our expectations

17.07.2019 | Earnings Flash

SSH Q2 result was in line with our expectations. Outlook for 2019 is unchanged; SSH expects double digit percentage growth from software business (software fees, professional services, and recurring revenue) at comparable exchange rates

  • Q2 net sales were EUR 4.0 million (vs 4.4m our expectation)
  • Software fees were EUR 1.7 million (1.9m Evli), Professional services were EUR 0.1 million (0.3m Evli), and Recurring revenue was EUR 2.2 million (2.2m Evli)
  • Q2 operating profit was EUR 0.4 million (vs 0.4m our expectation)
  • EPS was 0.00 (vs. 0.00 our estimate)
  • Liquid assets were EUR 11.2m (12.3m Q1/19)
  • Business outlook for 2019 unchanged: SSH expects double digit percentage growth from software business (software fees, professional services, and recurring revenue) at comparable exchange rates

SSH - CMD notes: High ambitions

11.06.2019 | Company update

SSH held a CMD yesterday, where the company offered insight into its business and outlined its long-term ambitions. The recently announced SSH200 Growth Vision aims at EUR 200m net sales during the 2020’s, with primary growth engines being UKM and PrivX. We do not make any changes to our estimates or recommendation at this moment.

Addressable market not lacking in size or growth potential

To reach EUR 200M in sales by 2029, SSH would need to grow around 24% annually. From the underlying market’s perspective this is achievable, given the strong growth profiles in the markets. According to SSH, the Enterprise Key Management market is estimated to be USD 3.5 bln and expected to grow annually 21% by 2024. Looking at PrivX’s market, the Privileged Access Management is estimated to be USD 6 bln, with 30% annual growth expectations by 2023.

The SSH200 Growth Vision

The growth engines for the vision are UKM and PrivX. SSH estimates that there are thousands of potential customers for UKM, with deal sizes ranging from a hundred thousand up to millions of euros. PrivX poses an even bigger opportunity, but currently the number of customers is small, and sales ramp up is still very much on-going. SSH does not expect any material revenue impact from PrivX this year, nor was the company ready to give any estimate on the number of customers or ARR it expects to have from PrivX in the coming years.

No changes to estimates and recommendation

SSH maintained its 2019 guidance (>10% growth from software business) and mid-term target (similar or faster growth than market). Apart from previously announced partnerships and alliances, SSH did not specify what concrete new measures it would take to accelerate growth or what investments it requires. Based on yesterday’s CMD, we note that the vision is bold, but we’d like to see growth materializing in the figures. Thus, we have not made any changes to our estimates or recommendation. Our estimates reflect the company’s current short and mid-term guidance.

SSH - Strategy proceeding but painfully slow

18.04.2019 | Company update

SSH’s Q1 result missed our expectations due to lackluster software fees in the period. Q1 net sales were 2.7 MEUR and operating loss was -1.3 MEUR vs. our expectation of 3.6 MEUR net sales and -0.9 MEUR operating loss. We maintain SELL recommendation with revised target price of 1.10 euros (previously 1.60).

Q1 miss puts pressure on closing licensing deals

Q1 net sales missed our estimates due to the lack of larger licensing deals in the period. Software fees were EUR 0.5 million (1.1m Evli), Professional services were EUR 0.1 million (0.3m Evli), and Recurring revenue was EUR 2.1 million (2.2m Evli). Although there is still plenty of time left to catch up for the miss, this puts pressure on closing several larger licensing deals in the coming quarters to reach the guided 10% growth for 2019E. According to management UKM pipeline looks good.

Strategy proceeding but painfully slow

No material new news was provided in conjunction with result regarding sales ramp up of PrivX and NQX. PrivX remains at the heart of SSH’s growth strategy, but revenue is not expected to be material yet. We have made small downward changes to our estimates after the Q1 result. We estimate SSH’s 2019E net sales to decline -7% to 17.1 MEUR (reaching guidance though) and 2019E EBIT to be 0.2 MEUR. Our estimates for the coming years are also broadly intact, with net sales growth expectations at 12% for 2020E and 2021E and EBIT improving towards 2021E.

Risk/reward still not attractive, SELL maintained

On our estimates, SSH is trading at 2019-20 EV/Sales multiples of 3.0x and 2.6x. Given the slow growth pace, lack of profitability and uncertainty to our sales estimates, we see valuation still challenging from a risk/reward perspective. We maintain SELL recommendation with revised target price of 1.10 euros (previously 1.60). Our target price is based on EV/Sales multiples of 2.5x and 2.2x on our 2019 and 2020 estimates.

SSH - Q1 result below our expectations

17.04.2019 | Earnings Flash

SSH Q1 result was below our expectations. No larger licensing deals were announced during Q1, which led to Software fees being clearly lower than last year. Comparables were high, due to last year’s Q1 figures including 1 MEUR Sony related patent income.

  • Q1 net sales totaled EUR 2.7 million (3.6m our expectation)
  • Software fees were EUR 0.5 million (1.1m Evli), Professional services were EUR 0.1 million (0.3m Evli), and Recurring revenue was EUR 2.1 million (2.2m Evli)
  • Q4 operating loss was EUR -1.3 million (-0.9m our expectation)
  • EPS was -0.04 (vs. -0.03 our estimate)
  • Liquid assets were EUR 12.3m (vs. 12.6m Q1/18)

Business outlook for 2019 unchanged: SSH expects double digit percentage growth from software business (software fees, professional services, and recurring revenue) at comparable exchange rates

SSH - Growth remains an issue

13.02.2019 | Company update

SSH’s Q4 result missed our expectations. On a positive, the company issued an outlook for 2019 and proclaimed the end of further litigation. We see current valuation as stretched given the relatively low and uncertain sales growth, thus we downgrade to SELL with target price EUR 1.6 (prev. 1.8).

Q4 misses our expectations

SSH Q4 missed our expectations, with net sales being EUR 6.4m (7.2m Evli) and EBIT being EUR 1.3m (1.8m Evli). The miss was due to abnormally low underlying software fees (0,6m excluding 1.5m license deal in Q4). Excluding patent income (2.7m) and a few larger license deals (2.8m), growth in 2018 would have been ~10% negative.

Outlook for 2019 given

In 2019 SSH expects double digit percentage growth from its core software business exceeding the projected annual cyber security market growth of approximately 10 %. In the medium term, SSH expects similar or faster growth and will also explore avenues for accelerated growth through inorganic growth opportunities. We had previously modeled 16% growth for 2019E based on the attractive growth opportunity apparent in the PAM market.

Estimates cut, slow growth with prudent cost control ahead

We’ve cut our net sales estimates for 2019-2021. We expect net sales in 2019E to be EUR 17.5m (-4% decline y/y) due to absence of patent income. For 2021E and 2022E we model 11% and 12% net sales growth respectively. No growth this year and slight growth in the coming years coupled with less litigation costs and a prudent cost control, means SSH will slowly start reaching organic profitability. We estimate EBIT of EUR 0.8m and EUR 1.9m in 2020 and 2021.

Downgrade to SELL with TP of 1.6 (prev. 1.8)

On our revised estimates, SSH is trading at EV/Sales 2019-20 of 3.9x and 3.5x. Our DCF indicates fair value of EUR 1.6. We see valuation as stretched given the uncertainty in sales growth, thus we downgrade to SELL with target price of EUR 1.6 (prev. 1.8). Our target price represents EV/Sales of 3.4x and 3.1x for 2019 & 2020.

SSH - Q4 result below expectations, outlook provided

12.02.2019 | Earnings Flash

SSH Q4 result was below our expectations. On a positive, company is providing business outlook for 2019 and medium term.

  • Q4 net sales totaled EUR 6.4 million (7.2m our expectation)
  • Software fees were EUR 2.1 million (2.9m Evli), Professional services were EUR 2.1 million (2.0m Evli), and Recurring revenue was EUR 2.2 million (2.3m Evli)
  • Q4 operating profit was EUR 1.3 million (1.8m our expectation)
  • EPS was 0.03 (vs. 0.04 our estimate)
  • Business outlook for 2019: SSH expects double digit percentage growth from software business (software fees, professional services, and recurring revenue) at comparable exchange rates, exceeding the projected annual cyber security market growth of approximately 10 %.
  • In the medium term, SSH expects 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 timing of larger deals over the financial year.

SSH - Expecting a solid Q4

07.02.2019 | Preview

SSH will report Q4 earnings next week on Tuesday, the 12th of February. We expect a solid Q4 result driven by patent license agreement and UKM license deal. Our focus in the Q4 report will be on strategy execution and actions to further accelerate SSH´s growth in 2019. Our HOLD rating and target price of EUR 1.80 remain intact ahead of Q4.

Expecting a solid Q4 result driven by patent and UKM deals

SSH announced in the end of last year that it had entered into a patent license agreement with a leading provider of patent risk management solutions. SSH has received a one-time payment of approximately EUR 1.75m which will be recognized in Q418. In addition, SSH previously announced a UKM license deal with a major global retail company, which is expected to contribute roughly EUR 1.5m in revenue in Q4.

Raising estimates for Q418, estimates for 2019 unchanged

We raise our Q4 estimates to take into account the EUR 1.75m patent license agreement. We now expect Q4 net sales to be EUR 7.2m (prev. 5.4m) and Q4 EBIT to be EUR 1.8m (prev. 0.3m). Our estimates for 2019 and onwards remain intact. We expect FY2018E net sales to be EUR 19.1m (vs. 16.2m 2017) and EBIT to be EUR 1.0m (vs. -1.8m 2017).

HOLD rating and target price of 1.80 euros maintained

Our focus in the Q4 call will be on strategy execution and actions to further accelerate SSH´s growth in 2019. We’re also keen on hearing an update on PrivX sales development, as SSH announced several partnerships regarding PrivX during the end of last year. We do not expect SSH to give any revenue or earnings guidance for 2019 (guidance ceased in 2017). We maintain our HOLD rating and target price of EUR 1.80 ahead of Q4.

SSH - Initiate coverage with HOLD

26.03.2018 | Company report

We initiate coverage of SSH with a HOLD-recommendation and a target price of EUR 2.0. Our target price is based on our DCF value and 4.5x EV/Sales multiple on our 2019 revenue estimates. Current valuation is high, but we see compelling longer-term revenue and profitability potential which supports valuation.

Transformation in process

Under the management of the new CEO Ms. Kaisa Olkkonen, the company has taken a new strategic direction to reposition SSH into a more inclusive strategic PAM vendor for companies of all sizes operating in all IT-environments. With the launch of PrivX and further developing its PAM offering, the company intends to drive its growth by increasing its focus towards the subscription model, faster deployments and expanding into new customer segments.

Building up momentum in 2018

We expect only slight revenue growth for 2018, but see growth accelerating during towards the end of ’19-’21 period as sales of PAM offering picks up speed. We expect EBIT-margin to improve, but to remain negative during 2018-2020 due to further investments in growth. We have not included potential patent income and possible firewall related revenue in our estimates. If these projects were to materialize, they represent an upside risk to our estimates.

HOLD with a target price of EUR 2.0

On our estimates 2019E-2020E, SSH is trading at EV/Sales 4.3x and 3.7x, which is in line with the average 4.5x and 3.6x EV/Sales multiples for our small sample peer group. Current valuation is high, given that that the company is in the beginning of its transformation phase and risks are elevated, but we see compelling longer-term revenue and profitability potential which supports valuation.

SSH Communications Security company presentation 15082019

SSH - Company presentation

15.08.2019
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SSH Communications Security company presentation 15082019

Video presentation

Company Facts

Guidance

2020 guidance withdrawn due to COVID-19

Financial targets

In the medium term; growth that exceeds the projected annual cybersecurity market growth of approximately 10%

Share price (EUR)


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