Download - Fad final print
© 2013 Websense, Inc. All rights reserved.
February 26, 2013
WEBSENSE FINANCIAL ANALYST DAY
©2013 Websense, Inc.
Agenda
TIME SPEAKER TOPIC
9:00 John McCormack, CEO Executing the TRITON Strategy
9:45 Russ Dietz, CTO Technology Leadership
10:15 break
10:30 John McCormack, CEO TRITON Security Alliance
10:45 Jason Clark, CISO
Lamont Orange, Sr. Director, Information Security The Customer Perspective
11:15 Mike Newman, CFO Financial Strategy
11:45 pick up lunches
12:00 Q&A
©2013 Websense, Inc. Page 2
© 2013 Websense, Inc. All rights reserved.
GAAP Reconciliation During this presentation references to financial measures of Websense, Inc. (“Websense”) will include
references to non-GAAP financial measures. Websense provides a reconciliation between GAAP
and non-GAAP financial information on our website at www.Websense.com under “About Us” in the
“Investors” section. www.investor.websense.com
Forward Looking Statements This presentation contains projections and other forward-looking statements regarding future events
or the future financial performance of Websense, including future operating results. These projections
and statements are only predictions. Actual events or results may differ materially from those in
the projections or other forward-looking statements. Please see Websense’s filings with the SEC,
including its most recent filings on Form 10-K, for a discussion of important risk factors that could
cause actual events or results to differ materially from those in the projections or other forward-looking
statements.
©2013 Websense, Inc. Page 3
Key Takeaways
• PROVE IT – We have the world’s best hybrid security
technology and we will prove it
• Invest in Sales Coverage – Sales capacity to expand
$625 million install base and win new customer
accounts
• Leverage Security Ecosystem – Expands our
addressable markets and our growth opportunities
©2013 Websense, Inc. Page 4
© 2013 Websense, Inc. All rights reserved.
11,000 TRITON Customers…
...AND GROWING
21% TRITON GROWTH
TRITON BILLINGS $233M
©2013 Websense, Inc. Page 5
Executing the TRITON Strategy
Technology Leadership
TRITON Security Alliance
The Customer Perspective
Financial Strategy
©2013 Websense, Inc. Page 6
© 2013 Websense, Inc. All rights reserved.
The TRITON Company Profile
11,000 TRITON CUSTOMERS NEW CUSTOMER SUCCESS
• Double-digit billings growth
each quarter of 2012
• Over 1,700 new customers in
2012
• 50%+ growth in new logo deals
over $100K in 2012
TRITON SECURITY ALLIANCE
• F5 Networks
• VMware
• Citrix
• Microsoft
• IBM
• And more…
RECOGNITION & ACHIEVEMENTS
2013 Content-Aware Data Loss
Prevention MQ: Leaders’
Quadrant
2012 Secure Email Gateway MQ:
Visionaries Quadrant
2012 Secure Web Gateway MQ:
Leaders’ Quadrant
2012 Email Content Security:
Leader, Forrester Wave
Web Security:
2012 Overall Market Share Leader
2013 NOMINATIONS
7 Nominations: RSA 2013
7 Nominations: Infosecurity Europe 2013
Vendor with most nominations
• TRITON products represent
60% of install base value
• TRITON product retention
15-20% higher than legacy
©2013 Websense, Inc.
ADVANCED threat detection
mechanisms
COMPREHENSIVE protection of network
communication channels
& endpoints
Key Differentiators
WHY customers
choose
EASE of integration with
existing network
FLEXIBLE deployment
options
TRACK &
PROTECT data ON or OFF
network
©2013 Websense, Inc. Page 8
© 2013 Websense, Inc. All rights reserved.
2013 – The Year of the TRITON Platform
Industry’s First
Real-Time
Web Security
Industry’s First
Hybrid Content
Security
Industry’s First
Integrated
Content Security
TRITON – The Best
Content Security Platform
Most Scalable
& Extensible Content
Security Solution
2009 2010 2011 2012 2013 and beyond
©2013 Websense, Inc. Page 9
The TRITON Cloud Security Advantage
TRITON Delivery Cloud
• Over 1B Web requests per day
• Processing over 1B emails/month
• Delivering over 400TB interactive
data per month; 99.99% availability
• Stopping nearly 1M malware
infections per day
THREATSEEKER Intelligence Cloud
• Analytic updates every 1.9 sec
• Over 600% increase in unique
threats detected in 2012
©2013 Websense, Inc. Page 10
© 2013 Websense, Inc. All rights reserved.
Initiatives for Sustained Growth
2014 & BEYOND
TALENT
EXECUTE 2013 PLAN
STRENGTHEN ECOSYSTEM
Sales investment
Multiple insertion points
Aggressive marketing
Customer success
Multi-year sustained
growth
Extending the
TRITON platform
Enhancing our trusted
advisor skills
Advanced training of
partner community
Create pull to amplify
our push
Strategic engagement
in the next generation
IT environment Page 11
2013
V - SERIES APPLIANCES
On-Premise TRITON
Cloud-Enabled
TRITON Legacy Filtering
TRITON ENTERPRISE
New Insertion Capability Expands Opportunity
6%
40% 32%
22% ACE-IN-THE-CLOUD
SPEAR-PHISHING APT
WSG THREAT*VISION
*Represents percent of software install base on each product segment Page 12
© 2013 Websense, Inc. All rights reserved.
$0
$1
$2
$3
$4
$5
$6
$7
$ B
illio
ns
Integrated Content Security Gateway
Data Loss Prevention
Email Security On Premise
Cloud Security (Web and Email)
Web Security Appliance
Web Security Software
Incremental opportunity
with TRITON products ~10% CAGR
Websense Addressable Market
$5.9B
$6.4B
(1) IDC "Worldwide Web Security 2012-2016 Forecast and 2011 Vendor Shares” (Doc #235515), by Phil Hochmuth, July 2012 (2) IDC "Worldwide Messaging Security 2012-2016 Forecast and 2011 Vendor Shares" (Doc #235544), by Phil Hochmuth, June 2012 (3) IDC, "Worldwide Data Loss Prevention 2012-2016 Forecast and 2011 Vendor Shares" (Doc #23657) by Phil Hochmuth. September 2012 (4) Infonetics Research, "Content Security Appliances, Software and SaaS Quarterly Worldwide Market Share and Forecasts: 3Q12", 11/27/12
2013 2014
Investing in Field Sales and Channel Capacity
Developed Markets Growth Economies New Territories • 70 50 Enterprise Accounts • Support 20+% growth • e.g., Korea, Chile, etc.
©2013 Websense, Inc. Page 14
© 2013 Websense, Inc. All rights reserved.
The Three Pillars of our PROVE-IT Initiative
TRITON STOPS MORE THREATS, WE CAN PROVE IT Page 15
Threats Stopped Across 2.2M Live Web Samples
Page 16
© 2013 Websense, Inc. All rights reserved.
Threat Assessment Scope
©2013 Websense, Inc. Page 17
Executing the TRITON Strategy
Technology Leadership
TRITON Security Alliance
The Customer Perspective
Financial Strategy
©2013 Websense, Inc. Page 18
© 2013 Websense, Inc. All rights reserved.
Transformation of IT Security
DMZ
AV IDS FW PROXY URL FILTER
Storage PCs People Applications People BYOD
Storage Applications Internet
IPS NGFW
DLP WEB SECURITY
ANTI-MALWARE
Private
Cloud Public
Cloud
TODAY
Web Server
People
Data
NG
DMZ
Consumer
Internet
TOMORROW
OU
TS
IDE
IN
SID
E
Verizon Breach Report - Compromised Assets Involving IP Theft
Page 20
© 2013 Websense, Inc. All rights reserved.
TRITON STOPS MORE THREATS. WE CAN PROVE IT.
Technology Leadership
Russ Dietz, CTO
Page 21
Infiltration is an Architectural Problem
GATEWAY
PROXY ANTI
MALWARE
ANTI
VIRUS
DATA LOSS
PREVENTION
©2013 Websense, Inc. Page 22
© 2013 Websense, Inc. All rights reserved.
PERSISTENT - Threat Protection Architecture
ADVANCED
PERSISTENT
THREATS
Threats
Data
Web
Message
©2013 Websense, Inc.
Complete Threat Protection – TRITON Architecture
GLOBAL THREAT
AWARENESS
REAL-TIME
THREAT DETECTION
PROTECTION &
DEPLOYMENT
PERSISTENT
VISIBILITY
©2013 Websense, Inc. Page 24
© 2013 Websense, Inc. All rights reserved.
THREATSEEKER – Detection Evolution
THREAT AWARENESS & EDUCATION
ACTIVE PROTECTION
APT MITIGATION
GLOBAL THREAT
AWARENESS
REAL-TIME
THREAT DETECTION
©2013 Websense, Inc. Page 25
TRITON Architecture – Protection Evolution
ENDPOINT PROTECTION
• Any OS
• Any Browser
• Anywhere
MOBILE SECURITY
ADVANCED THREAT DEFENSES PROTECTION &
DEPLOYMENT
PERSISTENT
VISIBILITY
OVERLAYS CURRENT
DEFENSES
©2013 Websense, Inc. Page 26
© 2013 Websense, Inc. All rights reserved.
Full content analysis Web, Message & Data
Encrypted visibility & prevent criminal encryption
Safe & Scalable content sandboxing
Recognize legitimate data
Validate Identities Double check TRUST
Block known compromised… Evolve…
beyond attacks
Unique, Patented, TRITON Architecture…
ADVANCED PERSISTENT THREATS
BLOCKED
Page 27
Impact on Real Protection – Today & Going Forward…
INFORMATION TECHNOLOGY & ATTACK SURFACE LANDSCAPES
EVOLVING
CYBER WARFARE ADVANCING
TECHNOLOGY
THREATS & PREDATORS ARE LONG-TERM & BUSINESS DRIVEN
Page 28
© 2013 Websense, Inc. All rights reserved.
TRITON & THREATSEEKER MOMENTUM
UNIQUE INTELLECTUAL PROPERTY
INDUSTRY LEADING PROGRESS
THE FUTURE… TODAY
©2013 Websense, Inc. Page 29
Executing the TRITON Strategy
Technology Leadership
TRITON Security Alliance
The Customer Perspective
Financial Strategy
©2013 Websense, Inc. Page 30
© 2013 Websense, Inc. All rights reserved.
Web
Websense – F5 Strategic Partnership
COMMON SECURITY SERVICES & POLICY MANAGEMENT
2014
TODAY 2014
People
People
People
Web
Web Application
Server Farm
Page 31
TRITON Security Alliance
• IMPERVA
• MICROSOFT
• HP ARCSIGHT
• IBM QRADAR
• ARUBA
• JUNIPER NETWORKS
• AEROHIVE
• WORDPRESS
• F5 NETWORKS
• VMWARE Page 32
© 2013 Websense, Inc. All rights reserved.
Executing the TRITON Strategy
Technology Leadership
TRITON Security Alliance
The Customer Perspective
Financial Strategy
©2013 Websense, Inc. Page 33
Needs Driving the Demand for the Best Security
©2013 Websense, Inc. Page 34
© 2013 Websense, Inc. All rights reserved.
35% 65%
Didn’t Give CredentialsGave Credentials
0% 25% 50% 75% 100%
Location
Outside CompanyInside Company
Real World Phishing Test – Typical Results
15% 85%
Didn’t Click LinkClicked Link
29% 71%
Not Opened EmailOpened Email
• CEO and
executive teams
are being
targeted
• Spear-Phishing
is the most
common tactic of
the bad guys to
get a door open
inside a company
• Most companies
do not have a
defense today
Real Example of Spear-Phishing in Action
URL SANDBOXED:
http://webdefence.global.blackspider.com/urlwrap/?q=AXicY
3RmuMjNwHBHhYGhKKfS0CJJr7ioTC83MTMnOT-
vpCg_Ry85P5ehyNDTLTArOMrA2NDSwoAhOTknMy_VZ
Page 36
© 2013 Websense, Inc. All rights reserved.
Spear-Phishing Attempt Blocked
Only way to successfully
protect is to leverage the
cloud to inspect /sandbox
the dangers in real-time
when the email recipient
clicks on the malicious link
©2013 Websense, Inc. Page 37
Innovative Approach in Reaching Customers
Innovating how we reach / engage with CISOs
• Building trusted advisor relationships
• Driving community best practices
Driving Results
• Growth of $100K+ deals
• Turning CISOs into evangelists
Websense CISO Team
100+ Years of Experience
Websense
Sales Force Global CISOs
©2013 Websense, Inc. Page 38
© 2013 Websense, Inc. All rights reserved.
Ways We Prove It
©2013 Websense, Inc. Page 39
Lamont Orange – CISO Charter Communications
• Uncovered compromised
network
• Significant operational
efficiencies realized
• Strong vision for current
and future security needs
©2013 Websense, Inc. Page 40
© 2013 Websense, Inc. All rights reserved.
Future Perspective
• A strategic tool for CISO
• Trusted advisor for security
intelligence and analysis
security
• Thought leader
(proven technology, process
and strategies)
©2013 Websense, Inc. Page 41
…
Executing the TRITON Strategy
Technology Leadership
TRITON Security Alliance
The Customer Perspective
Financial Strategy
©2013 Websense, Inc. Page 42
© 2013 Websense, Inc. All rights reserved.
TRITON STOPS MORE THREATS. WE CAN PROVE IT.
Financial Strategy
Mike Newman, CFO
Page 43
GAAP Reconciliation During this presentation references to financial measures of Websense, Inc. (“Websense”) will include
references to non-GAAP financial measures. Websense provides a reconciliation between GAAP
and non-GAAP financial information on our website at www.Websense.com under “About Us” in the
“Investors” section. www.investor.websense.com
Forward Looking Statements This presentation contains projections and other forward-looking statements regarding future events
or the future financial performance of Websense, including future operating results. These projections
and statements are only predictions. Actual events or results may differ materially from those in
the projections or other forward-looking statements. Please see Websense’s filings with the SEC,
including its most recent filings on Form 10-K, for a discussion of important risk factors that could
cause actual events or results to differ materially from those in the projections or other forward-looking
statements.
©2013 Websense, Inc. Page 44
© 2013 Websense, Inc. All rights reserved.
ACE-in-the-Cloud
Spear-Phishing
APT
WSG
Threat*Vision
Mobile Security
On-Premise TRITON
Cloud-Enabled
TRITON
Web Security Suite
Web Filter
2013+
TRITON
Enterprise
Transition from Websense Legacy to TRITON
~ $335M
Software
Install Base ~ $250M
Software
Install Base
Upgrade cycle began in 2H 2011 Upgrade cycle
began in 2009
In 2012, we sold $233 million of TRITON products, compared with $93 million in 2009, for a CAGR of 36%.
~ $40M
Software
Install Base
TRITON Suites TRITON Products Legacy
~$80M Appliance Install Base
©2013 Websense, Inc. Page 45
TRITON Cloud Opportunity
Addition of Cloud capabilities provides upgrade value within TRITON product set.
Cloud-Enabled TRITON
Web Security Gateway Anywhere
Email Security Gateway Anywhere
Cloud Web Security
Cloud Email Security
On-Premise TRITON
Web Security Gateway
Email Security Gateway
Data Security
~ $200M
~ $135M
~$70M Appliance Install Base
TRITON Products
~$335M Software Install Base
©2013 Websense, Inc. Page 46
© 2013 Websense, Inc. All rights reserved.
Increased Value of the Install Base
Legacy 40%
TRITON Products
53%
TRITON Suites
7%
2013
The quantity and quality of the install base continue to improve.
Legacy 50%
TRITON Products
47%
TRITON Suites
3%
2012
$600M Software Install Base
$55M Hardware Install Base
$625M Software Install Base
$80M Hardware Install Base
©2013 Websense, Inc. Page 47
Lifetime Value of a TRITON Customer
Each sales cycle generates incremental customer purchases and strengthens commitment to the TRITON security platform.
Customer off-cycle
unlocks product
upgrades or
expands coverage
At renewal:
• Unlock product
upgrades
• Renew for 1-3 years
• Refresh appliance
Customer has
strengthened
commitment to
TRITON architecture
TRITON customer
has higher renewal
rates of 85-90%
Customer signs
initial TRITON
transaction
(Typically 3-year
contract + appliance)
©2013 Websense, Inc. Page 48
© 2013 Websense, Inc. All rights reserved.
Legacy 65%
TRITON Products
34%
TRITON Suites
1%
2012
Legacy 77%
TRITON Products
23%
2011
Improved Quality of Up-for-Renewal in 2013
The improved quality of the 2013 up-for-renewal subscriptions supports more consistent billings growth opportunity.
Legacy 52%
TRITON Products
46%
TRITON Suites
2%
2013
©2013 Websense, Inc. Page 49
Mix Shift Toward TRITON
Buying Patterns Remain Stable
Customers consistently make long term commitment to TRITON products.
2010 Billings TRITON 39% / Legacy 61%
2013 Billings TRITON ~70% / Legacy ~30%
25-29 months
Legacy
20-21 months 26-28 months
Legacy
19-20 months
Average Contract Duration
22-24 months
Average Contract Duration
24-26 months ©2013 Websense, Inc. Page 50
© 2013 Websense, Inc. All rights reserved.
Sales Force Expansion Follows Transformation
The sales force investment is designed to drive both new customer acquisition and install base upgrades – when we compete, we win.
2011
Focus on
Install Base Growth
2012
Drive Double-Digit
New Customer Growth
2013
Drive Consistent
Execution on Both
Fronts
©2013 Websense, Inc. Page 51
Expense Growth Will Follow Seasonal Patterns
-4%
0%
4%
8%
12%
16%
$40
$45
$50
$55
$60
$65
$70
Q1'12 Q2'12 Q3'12 Q4'12 Q1'13E Q2'13E Q3'13E Q4'13E
Se
qu
en
tial G
row
th
Millio
ns
Non-GAAP Operating Expenses Sequential Growth
2013 sales expansion investment was front-loaded in Q4’12 and Q1’13.
2013
Impact of decline
in YoY billings
2012
Based on guidance provided 01/29/13.
©2013 Websense, Inc. Page 52
© 2013 Websense, Inc. All rights reserved.
Economics of a Sales Team Investment
In first year, a new sales team generates more billings than expense, with revenue outpacing costs in future periods.
YEAR 1
Billings
YEAR 2
Billings
YEAR 3
Billings
Fully
Loaded
Costs
Fully
Loaded
Costs
Fully
Loaded
Costs
REVENUE
©2013 Websense, Inc. Page 53
$0
$0
$0
$1
$2
$3
2012 2013 2014+
Consistent Growth Drives Subscription Model
$369M $384M*
$400M+
*Midpoint of guidance provided 01/29/13
~200 Reps ~240 Reps 240+ Reps
Our investment in sales capacity will yield billings growth in 2013, with future ability to drive billings growth through productivity improvements.
Productivity Per Rep
Install Base Billings
New Logo Billings
©2013 Websense, Inc. Page 54
© 2013 Websense, Inc. All rights reserved.
Operating Model Trends
2012 2013 Target
Billings TRITON 63% TRITON ~70% TRITON >80%
Billings-based operating
margins 21.8% 17-20% 24-26%
Revenue-based operating
margins (Non-GAAP) 19.3% 11-13% >20%
Operating cash flow $48.9M $66-76M Increasing with billings-based
EBITDA
Billings operating margins will improve as the sales expansion generates billings growth.
©2013 Websense, Inc. Page 55
Billing-Based Operating Model
Our long-term vision is to grow billings with margin improvement over time.
2012A
Guidance
2013
Long Term
Target Model
Mix as a % of Billings
Software and Services % 92% 92-93% 90-92%
Hardware % 8% 7-8% 7-9%
Costs as a % of Billings
Software COGS (incl OEM) 12.4% 11-12%
Hardware COGS 38.8% 44-45%
Total COGS 14.4% 15-16% 14-15%
Sales and Marketing 38.4% 37-38%
Research and Development 15.8% 14-15%
General and Administrative 9.6% 7.5-8.5%
Operating Expense 63.8% 65-67% 59-62%
Operating Margin 21.8% 17-20% 24-26%
©2013 Websense, Inc. Page 56
© 2013 Websense, Inc. All rights reserved.
Key Takeaways
• PROVE IT – We have the world’s best hybrid security
technology and we will prove it
• Invest in Sales Coverage – Sales capacity to expand
$625 million install base and win new customer
accounts
• Leverage Security Ecosystem – Expands our
addressable markets and our growth opportunities
©2013 Websense, Inc. Page 57
Q&A
Page 58