F-Secure is a Finnish consumer-cybersecurity/SaaS franchise selling security through telco/CSP partner channels (76% of revenue, currency-neutral +4.6% in Q1) plus a deliberately shrinking direct book. Adjusted ROIC of 10.6% against an 8% WACC clears the cost of capital and generates positive but thin economic profit (~EUR 4.9m) — genuine value creation, modest for software.
The balance sheet is dominated by the 2023 Lookout consumer acquisition: goodwill EUR 87m + acquired intangibles EUR 99m = 3.5x equity, funded by a EUR 202m term loan maturing 2028. Our adjusted EBIT (EUR 24.3m) keeps PPA amortization (EUR 7.9m/yr) and SBC in opex, so it sits far below the company's Adjusted EBITA (EUR 48.7m LTM) — the two are structurally non-comparable and the headline flatters cash economics.
The swing factor is the Tier-1 CSP embedded launch (expected Q2 2026), the lever behind the medium-term Rule-of-40 / EUR 200m-revenue target. Until it converts to revenue, mix shift to lower-margin Embedded, FX drag and a EUR 1.7m restructuring charge are pushing margins the wrong way (Q1 EBIT margin 15.9% vs 25.3%).
Capitalizing adjusted NOPAT of EUR 19.7m at WACC-minus-g and bridging through EUR 142.3m net debt and 174.7m shares, per-share fair value runs ~EUR 0.60 (zero growth), ~EUR 1.07 (GDP ~2%) and ~EUR 2.01 (4% growth). The EUR 1.95 price is only justified at ~4% perpetual growth — i.e. the market is paying for the Tier-1 embedded ramp and the Rule-of-40 trajectory, not for trailing conservative NOPAT.
Base EUR 2.00 (roughly flat) assumes GDP-plus growth with the embedded ramp offsetting direct-channel decline; bull EUR 2.70 if Tier-1 deals scale toward the EUR 200m / ~40% Adjusted-EBITA-margin target and leverage falls; bear EUR 1.35 if the launch slips, mix compresses margins further and covenant/refinancing pressure builds into the 2028 maturity.
At today’s enterprise value the constant-ROIC reverse-DCF maxes out: even at its sustainable-growth ceiling (~-50.0%, limited by ROIC 11% ≈ WACC 8%) it cannot reach the current EV. No-growth value is €1,544/share (79185% of price); the market prices in growth and/or a higher ROIC than booked — richly valued on this lens. Read the sensitivity grid.
| Scenario | 24m target | Impl. g | Upside | Prob. | Driver |
|---|---|---|---|---|---|
| Bull | €3 | ≥-50% | +38% | 30% | Tier-1 embedded scales toward EUR 200m / ~40% margin; leverage falls |
| Base | €2 | ≥-50% | +3% | 45% | GDP-plus growth; embedded offsets direct decline; ~flat vs price |
| Bear | €1 | ≥-50% | -31% | 25% | Embedded launch slips; margin compression; covenant/2028 refi pressure |
| Prob-weighted | €2 | — | +5% | 100% | Scenario-weighted expected value |
| WACC \ g | 0% | 3% | 5% | 8% | 10% | 15% |
|---|---|---|---|---|---|---|
| 6.50% | 2,082 | 2,237 | 2,345 | 2,515 | 2,634 | 2,950 |
| 7.25% | 1,771 | 1,879 | 1,954 | 2,069 | 2,148 | 2,350 |
| 8.00% (base) | 1,544 | 1,620 | 1,671 | 1,746 | 1,796 | 1,918 |
| 8.75% | 1,371 | 1,423 | 1,456 | 1,502 | 1,532 | 1,594 |
| 9.50% | 1,235 | 1,268 | 1,287 | 1,312 | 1,325 | 1,343 |
Green = fair value above the current price of €1.95. The reverse-DCF conclusion is dominated by WACC and growth — see the whole surface, not a single fair value.
⤓ Download the full model (.xlsx) — formula-driven sheets; flex the blue input cells and the model cascades in Excel.
Adjusted ROIC 10.6% vs 8% WACC with positive EP ~EUR 4.9m — value-creating, if thinly.
Security embedded in telco/CSP subscriber bases; currency-neutral partner revenue +4.6% in Q1.
Q2 2026 CSP embedded ramp is the swing factor for the Rule-of-40 / EUR 200m-revenue target.
LTM FCF EUR 30.8m supports deleveraging and a >=50%-of-net-profit dividend policy.
Net debt down to EUR 142.3m (2.8x) from EUR 157.1m YoY — leverage trending the right way.
F-Secure is a value-creating consumer-cyber franchise (ROIC 10.6% > WACC 8%, EP +EUR 4.9m, FCF EUR 30.8m) but the EUR 1.95 price already discounts the Tier-1 embedded growth story, and a Lookout-heavy, 2.8x-levered balance sheet with negative near-term margin momentum leaves no clear margin of safety. HOLD, medium conviction; base target EUR 2.00.
The upgrade trigger is evidence the Tier-1 CSP embedded deals are converting to revenue and lifting margins toward the Rule-of-40 target while leverage falls; the downgrade trigger is a launch slip with continued margin compression into the 2028 debt maturity.
Every adjustment traces to the cited note/page in the source filing — click to open it there. Annual report / 10-K: 📄 open · Latest interim: 📄 open
| Adjustment / figure | Value | Source | Why mttssn treats it this way |
|---|---|---|---|
| Revenue (FY2025 anchor) | 145,739 | Statement of comprehensive income 📄 p.47 | FY revenue anchor for LTM; reported flat YoY (-0.4%), currency-neutral +0.6%. |
| EBIT (FY2025 anchor) | 35,538 | Statement of comprehensive income 📄 p.47 | FY operating profit before net financial items; LTM EBIT recomputed = 31,919 after swapping Q1 2025 for Q1 2026. |
| Capitalized development additions (FY2025) | 11,707 | Note 14 Non-current assets — Capitalized development, Additions 📄 p.49 | Core software adjustment: F-Secure capitalizes development under IAS 38; mttssn expenses these additions (reverses the capitalization). |
| Amortization of capitalized development (FY2025) | 4,047 | Note 14 — Capitalized development, Depreciation for the period 📄 p.49 | Only this prior-capitalization amortization is added back; net R&D reversal is negative because additions >> amortization. |
| PPA amortization (FY2025) | 7,919 | APM bridge Adjusted EBITA → EBIT; Note 14 acquired intangibles 📄 p.6 | Lookout technology + customer-relationship amortization; mttssn KEEPS this in opex (does not add back), unlike the company's Adjusted EBITA. |
| Q1 2026 EBIT | 5,768 | Income Statement 1-3/2026 📄 p.16 | Latest-quarter EBIT added to LTM; fell -38.5% YoY on mix shift to lower-margin Embedded + EUR 1.7m restructuring IAC. |
| Q1 2026 restructuring IAC | -1,700 | Items affecting comparability (IAC) 📄 p.8 | Organizational restructuring in sales/services; normalized (added back) net of FY2025 EUR +75k credit. |
| Total equity (Q1 2026) | 53,484 | Statement of financial position 31 Mar 2026 📄 p.17 | IC equity base from latest quarter snapshot; no NCI. |
| Interest-bearing liabilities (Q1 2026) | 156,086 | Statement of financial position — IB liabilities non-current 124,490 + current 31,596 📄 p.17 | Bank loans EUR 151.4m + lease liabilities EUR 4.7m; net debt EUR 142.3m after cash. |
| Cash and equivalents (Q1 2026) | 13,808 | Statement of financial position — Cash and cash equivalents 📄 p.17 | Excess cash (cash − 2% revenue operational) removed from IC. |
| Capitalized development carrying (Q1 2026 proxy) | 17,300 | Note 14 — Capitalized development 11,406 + Advance payments & incomplete development 5,906 (FY-end) 📄 p.49 | Removed from IC to mirror R&D expensing in NOPAT; Q1 2026 carrying approximated from FY-end book value. |