Fad final print

WEBSENSE FINANCIAL ANALYST DAY
February 26, 2013

©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

Jason Clark, CISO
10:45 The Customer Perspective
Lamont Orange, Sr. Director, Information Security

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.


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


11,000 TRITON Customers…

21% TRITON GROWTH

$233M TRITON BILLINGS

...AND GROWING

Executing the TRITON Strategy

Technology Leadership

TRITON Security Alliance

The Customer Perspective

Financial Strategy


The TRITON Company Profile
11,000 TRITON CUSTOMERS NEW CUSTOMER SUCCESS TRITON SECURITY ALLIANCE
• TRITON products represent • Double-digit billings growth • F5 Networks
60% of install base value each quarter of 2012 • VMware
• TRITON product retention • Over 1,700 new customers in • Citrix
15-20% higher than legacy 2012 • Microsoft
• IBM
• 50%+ growth in new logo deals • Facebook
over $100K in 2012 • And more…

RECOGNITION & ACHIEVEMENTS

7 Nominations: RSA 2013
2012 Secure Web Gateway MQ: 2012 Email Content Security:
Leaders’ Quadrant Leader, Forrester Wave 7 Nominations: Infosecurity Europe 2013
Vendor with most nominations
2013 Content-Aware Data Loss
Prevention MQ: Leaders’ 2013
Quadrant NOMINATIONS
Web Security:
2012 Secure Email Gateway MQ: 2012 Overall Market Share Leader
Visionaries Quadrant

Key Differentiators
ADVANCED
threat detection
mechanisms FLEXIBLE
EASE deployment
of integration with
existing network WHY options

customers
choose COMPREHENSIVE
TRACK & protection of network
communication channels
PROTECT & endpoints
data ON or OFF
network


2013 – The Year of the TRITON Platform

Industry’s First Industry’s First Industry’s First Most Scalable TRITON – The Best
Real-Time Hybrid Content Integrated & Extensible Content Content Security Platform
Web Security Security Content Security Security Solution

2009 2010 2011 2012 2013 and beyond


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



Initiatives for Sustained Growth

Sales investment Multi-year sustained
growth
Multiple insertion points
Aggressive marketing Extending the
TRITON platform
Customer success

EXECUTE 2013 PLAN 2014 & BEYOND

TALENT STRENGTHEN ECOSYSTEM

Enhancing our trusted Create pull to amplify
advisor skills our push
Strategic engagement
Advanced training of
in the next generation
partner community
IT environment Page 11

New Insertion Capability Expands Opportunity

6% 2013
22% ACE-IN-THE-CLOUD
32%
40%
SPEAR-PHISHING APT

WSG
Legacy On-Premise Cloud-Enabled TRITON THREAT*VISION
Filtering TRITON TRITON ENTERPRISE

V - SERIES APPLIANCES

*Represents percent of software install base on each product segment Page 12


Websense Addressable Market
Integrated Content Security Gateway
Data Loss Prevention
$7 Email Security On Premise
$6.4B
Cloud Security (Web and Email)
$6 $5.9B Web Security Appliance
Web Security Software
$5
$ Billions

$4 Incremental opportunity
with TRITON products
$3 ~10% CAGR

$2

$1

$0
2013 2014
(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

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.



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


Threat Assessment Scope






Financial Strategy


Transformation of IT Security
TODAY TOMORROW
Data
People

OUTSIDE
Internet Consumer
Applications Storage
Internet

Public Private
Cloud Cloud
NG
DMZ
DMZ

AV IDS FW PROXY URL FILTER NGFW WEB SECURITY
IPS DLP ANTI-MALWARE

Web Server
INSIDE

Applications Storage PCs People BYOD People

Verizon Breach Report - Compromised Assets Involving IP Theft

Page 20


Russ Dietz, CTO

TRITON STOPS MORE THREATS. WE CAN PROVE IT.

Page 21

Infiltration is an Architectural Problem

EMAIL PROXY ANTI ANTI DATA LOSS
GATEWAY MALWARE VIRUS PREVENTION



PERSISTENT - Threat Protection Architecture

Data

ADVANCED
Web
PERSISTENT Threats

THREATS

Message


Complete Threat Protection – TRITON Architecture

GLOBAL THREAT REAL-TIME PERSISTENT PROTECTION &
AWARENESS THREAT DETECTION VISIBILITY DEPLOYMENT



THREATSEEKER – Detection Evolution

GLOBAL THREAT REAL-TIME
AWARENESS THREAT DETECTION ACTIVE PROTECTION
APT MITIGATION

THREAT AWARENESS & EDUCATION


TRITON Architecture – Protection Evolution

PERSISTENT PROTECTION & OVERLAYS CURRENT
DEFENSES
ADVANCED THREAT DEFENSES
VISIBILITY DEPLOYMENT

MOBILE SECURITY ENDPOINT PROTECTION

• Any OS
• Any Browser
• Anywhere



Unique, Patented, TRITON Architecture…
ADVANCED PERSISTENT THREATS
BLOCKED

Full content analysis Encrypted visibility & Safe & Scalable
Recognize legitimate data
Web, Message & Data prevent criminal encryption content sandboxing

Validate Identities Evolve…
Block known compromised…
Double check TRUST beyond attacks
Page 27

Impact on Real Protection – Today & Going Forward…

INFORMATION
TECHNOLOGY & ATTACK
SURFACE LANDSCAPES
EVOLVING

THREATS & PREDATORS
ARE LONG-TERM &
BUSINESS DRIVEN

CYBER WARFARE
ADVANCING
TECHNOLOGY
Page 28


TRITON & THREATSEEKER MOMENTUM

INDUSTRY UNIQUE
THE FUTURE…
LEADING INTELLECTUAL
TODAY
PROGRESS PROPERTY






Financial Strategy


Websense – F5 Strategic Partnership
TODAY 2014

Web Application
Web Server Farm

People

2014

Web

People
People

COMMON SECURITY SERVICES & POLICY MANAGEMENT Page 31


• ARUBA
• HP ARCSIGHT • JUNIPER NETWORKS • FACEBOOK • F5 NETWORKS • IMPERVA
• IBM QRADAR • AEROHIVE • WORDPRESS • VMWARE • MICROSOFT Page 32






Financial Strategy

Needs Driving the Demand for the Best Security



Real World Phishing Test – Typical Results

29% 71% 15% 85% 35% 65%

Not Opened Email Didn’t Click Link Didn’t Give Credentials
Opened Email Clicked Link Gave Credentials

0% 25% 50% 75% 100%
Location
Outside Company
Inside Company

Real Example of Spear-Phishing in Action

• 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
URL SANDBOXED:
http://webdefence.global.blackspider.com/urlwrap/?q=AXicY • Most companies
3RmuMjNwHBHhYGhKKfS0CJJr7ioTC83MTMnOT-
do not have a
defense today
vpCg_Ry85P5ehyNDTLTArOMrA2NDSwoAhOTknMy_VZ

Page 36


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


Innovative Approach in Reaching Customers
Websense CISO Team Websense Global CISOs
Sales Force
100+ Years of Experience

Innovating how we reach / engage with CISOs Driving Results
• Building trusted advisor relationships • Growth of $100K+ deals
• Driving community best practices • Turning CISOs into evangelists



Ways We Prove It


Lamont Orange – CISO Charter Communications

• Uncovered compromised
network
• Significant operational
efficiencies realized
• Strong vision for current
and future security needs



Future Perspective

• A strategic tool for CISO
• Trusted advisor for security
intelligence and analysis
security
• Thought leader
(proven technology, process
and strategies)





The Customer Perspective …

Financial Strategy


Financial Strategy
Mike Newman, CFO

TRITON STOPS MORE THREATS. WE CAN PROVE IT.

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.



Transition from Websense Legacy to TRITON
In 2012, we sold $233 million of TRITON products, compared with $93 million in
2009, for a CAGR of 36%.
Legacy TRITON Products TRITON Suites

Upgrade cycle
began in 2013+
Upgrade cycle 2H 2011 ~ $40M
began in Software
2009
~ $335M Install Base ACE-in-the-Cloud
Software
~ $250M Spear-Phishing
Install Base
Software APT
Install Base
WSG
Web Threat*Vision
Security Suite On-Premise Cloud-Enabled TRITON Mobile Security
Web Filter TRITON TRITON Enterprise

~$80M Appliance Install Base

TRITON Cloud Opportunity
Addition of Cloud capabilities provides upgrade value within TRITON product set.

TRITON Products
~$335M Software Install Base

~ $135M

~ $200M

Cloud-Enabled TRITON
On-Premise TRITON Web Security Gateway Anywhere
Web Security Gateway Email Security Gateway Anywhere
Email Security Gateway Cloud Web Security
Data Security Cloud Email Security

~$70M Appliance Install Base


Increased Value of the Install Base
The quantity and quality of the install base continue to improve.

TRITON
Suites
7%
TRITON
Suites
3%

Legacy
40%
TRITON
Products
TRITON Legacy
53%
Products 50%
47%

2013
$625M Software Install Base
2012 $80M Hardware Install Base

$600M Software Install Base
$55M Hardware Install Base

Lifetime Value of a TRITON Customer
Each sales cycle generates incremental customer purchases and strengthens
commitment to the TRITON security platform.

Customer has Customer off-cycle
Customer signs
strengthened unlocks product
initial TRITON
transaction commitment to upgrades or
expands coverage
(Typically 3-year TRITON architecture
contract + appliance)

At renewal: TRITON customer
• Unlock product has higher renewal
upgrades rates of 85-90%
• Renew for 1-3 years
• Refresh appliance



Improved Quality of Up-for-Renewal in 2013
The improved quality of the 2013 up-for-renewal subscriptions supports more
consistent billings growth opportunity.

TRITON TRITON
Suites Suites
1% 2%

TRITON
Products TRITON
23% Products
34% TRITON
Products
46%
Legacy
52%
Legacy Legacy
77% 65%

2011 2012 2013

Buying Patterns Remain Stable
Customers consistently make long term commitment to TRITON products.

2010 Billings 2013 Billings
TRITON 39% / Legacy 61% TRITON ~70% / Legacy ~30%

Mix Shift Toward TRITON

Legacy
25-29 months 19-20 months

Legacy

Average Contract Duration Average Contract Duration


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 2012 2013
Focus on Drive Double-Digit Drive Consistent
Install Base Growth New Customer Growth Execution on Both
Fronts


Expense Growth Will Follow Seasonal Patterns
2013 sales expansion investment was front-loaded in Q4’12 and Q1’13.

2012 2013
$70 16%

$65
12%
Sequential Growth

Impact of decline
$60 in YoY billings
8%
Millions

$55
4%
$50

0%
$45

$40 -4%
Q1'12 Q2'12 Q3'12 Q4'12 Q1'13E Q2'13E Q3'13E Q4'13E
Non-GAAP Operating Expenses Sequential Growth

Based on guidance provided 01/29/13.



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.

Billings
Billings REVENUE

Billings

Fully Fully Fully
Loaded Loaded Loaded
Costs Costs Costs

YEAR 1 YEAR 2 YEAR 3

Consistent Growth Drives Subscription Model
Our investment in sales capacity will yield billings growth in 2013, with future ability to drive
billings growth through productivity improvements.

$400M+
$3 $384M*
$369M $0

New Logo Billings
$2
Install Base Billings

Productivity Per Rep
~200 Reps ~240 Reps 240+ Reps

$1

$0 $0
2012 2013 2014+
*Midpoint of guidance provided 01/29/13



Operating Model Trends
Billings operating margins will improve as the sales expansion generates
billings growth.

2012 2013 Target
Billings TRITON 63% TRITON ~70% TRITON >80%

Billings-based operating
21.8% 17-20% 24-26%
margins

Revenue-based operating
19.3% 11-13% >20%
margins (Non-GAAP)

Increasing with billings-based
Operating cash flow $48.9M $66-76M
EBITDA


Billing-Based Operating Model
Our long-term vision is to grow billings with margin improvement over time.

Guidance Long Term
2012A 2013 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%



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

Q&A

Page 58


Fad final print

Recommended

Recommended

More Related Content

What's hot

What's hot (17)

Similar to Fad final print

Similar to Fad final print (20)

Fad final print