Translation: Original published in Finnish on 10/07/2026 at 07:00 am EEST

We reiterate our Accumulate recommendation for F-Secure, but lower our target price to EUR 1.7 (was EUR 2.0) on the back of decreased estimates. The surprising major customer loss (AT&T) creates a regrettably large dent in the company's revenue for next year, and the planned operating model change and significant cost savings will largely go toward offsetting this. F-Secure still aims for earnings growth next year, relative to which the share valuation (2026e adj. P/E 9, 4x-8x) will be low. Following a significant setback, however, the short-term upside may be limited unless other positive news regarding the progress of the Tier 1 strategy emerges.

A software company focused on consumer security

F-Secure's product portfolio includes, e.g., solutions related to endpoint security, scam protection, privacy protection, and password and digital identity management. New solutions for the AI era are also under development (F-Secure Trust). Products are sold primarily through a partner network consisting of operators, with the partner channel accounting for 82% of revenue last year. Within the partner channel, the focus has shifted from the Total security suite to Embedded Security (Q2’26: 25% of revenue), where the company's solutions are embedded into partner applications or routers via Software Development Kits (SDKs) and APIs.

An unfortunate setback for the Tier 1 strategy just as growth was starting to accelerate

F-Secure has for years had a clear ambition to accelerate its growth, for which embedded security solutions in the partner channel for Tier 1 operators offer the greatest opportunities. The Lookout Life acquisition and subsequent investments in growth areas have, in recent years, been reflected mainly in weakened profitability, but the foundation for long-term sustainable earnings growth is now starting to be in place. After years of waiting, growth began to accelerate this year (Q2’26: +8%) with the help of the major Verizon contract. Now, however, the unexpected loss of the AT&T customer relationship (annual revenue 16 MEUR) makes a big dent in revenue starting next year, and the growth of already won partners will go towards offsetting this. F-Secure is still well-positioned to grow its earnings next year, supported by the announced operating model change and 13 MEUR in cost savings. Without the loss of AT&T, the slope of earnings growth would have been significantly stronger.

The loss of AT&T and cost savings included in estimates

In connection with this report, we have factored in the likely customer loss of AT&T, which translates to a quarterly revenue loss of 4 MEUR starting from Q2'27. At the same time, we have slightly raised our expectations regarding other Tier 1 partners, resulting in a net decrease in our revenue forecast for 2027 of 11 MEUR and for 2028 of around 13 MEUR. The change negotiations initiated by F-Secure also cushion the dent caused by the loss of AT&T, and overall, our earnings estimates for the coming years decreased by 5-7%. We emphasize, however, that the risk level associated with the estimates is now higher than before, as earnings growth in the coming years relies increasingly on growth driven by other Tier 1 partners, for which visibility is still weak.

Expected return is good, provided that earnings growth materializes

F-Secure's share has fallen sharply recently due to the loss of AT&T, and with our 2026 estimates, the valuation of the share (adj. P/E 9.4x, EV/EBIT 9.6) is low. Thus, we still consider the expected return as good if the company can deliver earnings growth in the coming years. We estimate that a more significant upside in the multiples would require the company to demonstrate accelerating growth and/or significant new customer wins in Embedded Security, as the loss of AT&T will now overshadow F-Secure's investment story for the next year or so.