Creating a safe and private world for everyone Avast annual report 2019 © 2019 Friend Studio Ltd File name: FC_Mission_AboutUs_OurImpact_v69 Modification Date: 25 February 2020 2:21 pm Strategic report Governance Financial statements Avast annual report 2019 We are growing and profitable Adjusted billings Adjusted revenue In this report: $911.0m $873.1m Strategic report Financial statements Introducing Avast 1 Independent Auditor’s report 108 + 10.2% organic growth +9.1% organic growth Chairman’s statement 8 Consolidated financial statements 116 +5.7% actual growth +5.6% actual growth Markets & threat landscape 10 Notes to the consolidated Business model 16 financial statements 123 Adjusted EBITDA Adjusted net income Investment case 20 Company financial statements 166 CEO’s strategic review 22 Notes to the Company financial statements 168 $483.0m $322.3m Our technology 28 Glossary 171 +7.9% +19% CFO's review 35 Risk management 48 Unlevered free cash flow Net debt/ People and corporate LTM adjusted EBITDA social responsibility 51 $424.6m Section 172(1) statement 60 +7.9% 1.8x Governance Board of Directors 66 Statutory revenue Statutory net income Corporate governance statement 68 Audit and Risk Committee report 74 Nomination Committee report 80 $871.1m $248.9m Directors’ remuneration report 84 +7.8% +3.2% Directors’ report 100 © 2019 Friend Studio Ltd File name: FC_Mission_AboutUs_OurImpact_v69 Modification Date: 25 February 2020 2:21 pm Strategic report Governance Financial statements Avast annual report 2019 01 Our purpose We make the world a safer place Truly innovative cybersecurity sets people free, keeping them safe and private online. It’s hard to imagine life without our in time, secure their private activities, favourite devices, apps and online and allow them to keep control of their experiences. Our devices don’t just help personal information. us communicate, work, bank, shop, and We are committed to providing our relax; they capture the special moments 435 million users across the world and memories we treasure forever. with next-generation security and Avast’s users rely on us to keep privacy tools – keeping their most safe that which is irreplaceable. precious online experiences private Across all their devices, in the home, and secure from ever-present, and on the go, our users expect us to ever-changing cyberthreats. protect their most valued moments The future of the online world depends on users being safe and free. Our mission is to build such a world. Our impact, page 04 Our purpose underlies our strategy, and is enabled by our values and culture. Read more on page 22 © 2019 Friend Studio Ltd File name: FC_Mission_AboutUs_OurImpact_v69 Modification Date: 25 February 2020 2:21 pm Strategic report Governance Financial statements Avast annual report 2019 02 About us We have the right approach, scale, and technology to create long-term value We protect millions of users from billions of attacks Our platform model underpins our business growth and success Smart Consumer home security 435musers worldwide1 + SMB security Protection Family safety 1.5bn 200m monthly attacks new files analysed prevented by Avast each month Data breaches Our brands: 50% Users of our employees Software are in research and Privacy Performance updates development roles ? Online anonymity 1 User is defined as a unique device that has one or more Avast free or paid products installed and has PC maintenance been in contact with our servers in the last 30 days. Identity protection © 2019 Friend Studio Ltd File name: FC_Mission_AboutUs_OurImpact_v69 Modification Date: 25 February 2020 2:21 pm Strategic report Governance Financial statements Avast annual report 2019 03 About us We deliver products which consistently win awards and industry recognition. Adjusted revenue Adjusted EBITDA This is one reason we $m % substantially outperformed 873.1 827.0 organic 9.1% 55.3 the FTSE 250 in 2019. 54.1 +119bps Industry-leading margins, 5.6% actual cash flow, and balance sheet We delivered on FY 2019 guidance 2018 2019 2018 2019 © 2019 Friend Studio Ltd File name: FC_Mission_AboutUs_OurImpact_v69 Modification Date: 25 February 2020 2:21 pm Strategic report Governance Financial statements Avast annual report 2019 04 Our impact PRIVACY Giving users control of their privacy Our products let users design their online privacy their way. Avast SecureLine VPN Avast AntiTrack What you do online is your business. Keep your digital footprint hidden. Our virtual private network makes Take back your privacy by disguising sure it stays that way. your online activity, and blocking attempts to track you. Avast Secure Browser Modern life moves fast. Our browser has been built to prioritise security and privacy without compromising on performance. © 2019 Friend Studio Ltd File name: FC_Mission_AboutUs_OurImpact_v69 Modification Date: 25 February 2020 2:21 pm Strategic report Governance Financial statements Avast annual report 2019 05 Our impact FAMILY SAFETY Putting families first Today’s children are true digital natives. Avast Family Space Parents naturally want to protect them Avast Family Space helps families live from the dark corners of the web, safely online. Parents can set filters while ensuring they are safe and free to to keep their children safe from harmful enjoy educational, fun, and interesting content online, and add safe physical content online. locations like home, school, and clubs Avast protects users’ digital lives, for added peace of mind. not just their devices. We give parents control, helping them to set healthy digital boundaries. © 2019 Friend Studio Ltd File name: FC_Mission_AboutUs_OurImpact_v69 Modification Date: 25 February 2020 2:21 pm Strategic report Governance Financial statements Avast annual report 2019 06 Our impact SMART HOME Smarter living for modern families Connecting home appliances and Avast Omni electronics to the internet can make Released in summer 2019 to Avast users modern life more convenient, but in the U.S., the new Avast Omni secures Internet of Things (IoT) devices the connected home. It sends alerts if often lack any security and unusual behaviour is detected on users’ privacy safeguards. IoT devices, blocks access to potential Our plug-and-play product, threats, and delivers robust parental Avast Omni, makes managing the controls to help families manage their smart home simple and gives digital habits. control back to consumers. Wind Family Protect In September 2019, Italian operator, Wind Tre, introduced router security to its offering for Wind brand subscribers. Based on Avast’s Smart Life platform, subscribers can protect their smart homes with features such as safe browsing, anomaly detection, and user alerts when unusual device behaviour is detected. © 2019 Friend Studio Ltd File name: FC_Mission_AboutUs_OurImpact_v69 Modification Date: 25 February 2020 2:21 pm Strategic report Governance Financial statements Avast annual report 2019 07 Our impact SMALL TO MID-SIZED BUSINESSES Safer solutions for business Digital transformation helps small Our new Avast Business Patch to mid-sized businesses (SMBs) Management service helps SMBs differentiate themselves and reach manage required security updates new markets. SMBs using new digital more efficiently. With 55% of installed technologies must ensure they retain software on PCs worldwide out customers’ trust, but often do not have of date, our new service enables the extensive internal and external SMBs to effectively prioritise, manage, technical resources larger companies and deploy critical security updates. can draw on. In 2019, we launched a new portfolio of enterprise-class layered security solutions designed for the needs of growing businesses including its new Avast Business Secure Web Gateway and Avast Business Secure Internet Gateway. © 2019 Friend Studio Ltd File name: FC_Mission_AboutUs_OurImpact_v69 Modification Date: 25 February 2020 2:21 pm Strategic report Governance Financial statements Avast annual report 2019 08 Chairman’s statement Another strong year Overview 2019 was another strong year for Avast as we continued to create value by delivering consistent and sustainable financial results. Our technology leadership enabled Avast to take advantage of market opportunities to execute on our strategy of driving growth while also maintaining high levels of profitability. Revenues in our core Consumer Desktop business once again grew strongly, performance in the Indirect business accelerated, and the restructuring in the Small to Mid-size business advanced well. Our performance is testimony to our employees’ passion and commitment to Avast and I would like to once again thank them for their contribution during the year. Our success is of course also tied to the loyalty of our customers. We greatly value the feedback from our more than 435 million users and draw on this data to continually improve our service to them. We believe this user base represents a massive future business opportunity. “ As an industry leader in consumer cybersecurity, Avast is in a great position to serve its customers.” John Schwarz Chairman of the Board © 2019 Friend Studio Ltd File name: ChairmansXStatement_v41 Modification Date: 25 February 2020 1:59 pm Strategic report Governance Financial statements Avast annual report 2019 09 Chairman’s statement the spectrum of protection, performance, and privacy. well supported by the members of the Board. The work of Total FY 2019 dividend We are building the future of Avast on unique competencies our Board and its Committees