2018 Final Results March 2019 Disclaimer The information contained - - PowerPoint PPT Presentation
2018 Final Results March 2019 Disclaimer The information contained - - PowerPoint PPT Presentation
2018 Final Results March 2019 Disclaimer The information contained in The Presentation is being supplied to you solely for your Services and Markets Act 2000 (Financial Promotion) The Company is under no obligation to update or keep
The information contained in these slides and communicated verbally to you, including the speech(es) of the presenter(s) and any materials distributed at or in connection therewith (together, the “Presentation”) is confidential. Reliance upon the Presentation for the purpose of engaging in any investment activity may expose an individual to a significant risk of losing all of the property or other assets
- invested. If any person is
in any doubt as to the contents of the Presentation, they should seek independent advice from a person who is authorized for the purposes of the Financial Services and Markets Act 2000 (“FSMA”) and who specializes in advising on investments of this kind.
The Presentation is being supplied to you solely for your
- information. The Presentation has been prepared by, and is
the sole responsibility of Kape Technologies plc. (the “Company”). The directors of the Company have taken all reasonable care to ensure that the facts stated herein are true to the best of their knowledge, information and belief. No undertaking, representation, warranty
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assurance, expressed or implied, is made or given by or on behalf of the Company or any of its respective directors,
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person as to the fairness, accuracy or the completeness of the information or opinions contained herein and to the extent permitted by law no responsibility or liability is accepted by any of them for any such information or
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paragraph shall limit
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exclude liability for any representation or warranty made fraudulently. The Presentation has not been approved by the Financial Conduct Authority and does not constitute, or form part of, an admission document, listing particulars, a prospectus or a circular relating to the Company, nor does it constitute, or form part of, any offer or invitation to sell or issue, or any solicitation of any offer to purchase or subscribe for any
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The Presentation may not be copied, reproduced or further distributed, in whole or in part, to any other person, or published, in whole or in part, for any purpose without the prior written consent of the Company. The Presentation is being distributed only to, and is directed at, authorized persons or exempt persons within the meaning of the FSMA or any order made thereunder or to those persons falling within the following articles of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (S.I. 2005 (No 1529)) (as amended) (the “Financial Promotion Order”) made pursuant to section 21(5) of the FSMA: Investment Professionals (as defined in Article 19(5) οf the Financial Promotion Order); and High Net Worth Companies (as defined in Article 49(2)). Persons who do not fall within either of these definitions should not rely on the Presentation nor take any action based upon it but should instead return it immediately to the
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restriction in section 21 of the FSMA relating to the communication of invitations or inducements to engage in investment activity on the grounds that it is made only to certain categories of persons. The distribution of this document in jurisdictions other than the United Kingdom may be restricted by law and persons into whose possession this document comes should inform themselves about and observe any such restrictions. In particular, neither the Presentation nor any copy of it should be distributed, directly or indirectly, by any means (including electronic transmission) to any persons with addresses in the United States of America (or any of its territories or possessions) (together, the “US”), Canada, Japan, Australia or the Republic of South Africa, or to any corporation, partnership
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entity created
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The Company’s ordinary shares have not been, and are not expected to be, registered under the United States Securities Act of 1933, as amended, (the “US Securities Act”) or under the securities laws of any other jurisdiction, and are not being offered or sold (i) directly or indirectly, within or into the US, Canada, Japan, Australia or the Republic of South Africa or (ii) to, or for the account or benefit of, any US persons or any national, citizen or resident of the US, Canada, Japan, Australia or the Republic of South Africa, unless such offer or sale would qualify for an exemption from registration under the US Securities Act and/or any other applicable securities laws. The Company is under no obligation to update or keep current the information contained in this Presentation or to correct any inaccuracies which may become apparent, and any opinions expressed in it are subject to change without notice. Neither the Company nor any of its respective directors, officers, partners, employees or advisers accept any liability whatsoever for any loss howsoever arising from any use of this Presentation or its contents or otherwise arising in connection therewith. The contents of the Presentation have not been verified by the Company or its advisers. No liability is accepted by the Company or its advisers for any information or
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The Presentation contains forward-looking statements. These statements relate to the future prospects, developments and business strategies of the Company. Forward-looking statements are identified by the use of such terms as “believe”, “could”, “envisage”, “estimate”, “potential”, “intend”, “may”, “plan”, “will” or variations or similar expressions, or the negative thereof. The forward looking statements contained in the Presentation are based on current expectations and are subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied by those
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materialize, or if underlying assumptions prove incorrect, the Company’s actual results may vary materially from those expected, estimated or projected. Given these risks and uncertainties, certain
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which are beyond the Company’s control, potential investors should not place any reliance
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forward-looking statements. These forward-looking statements speak only as at the date of the Presentation. Except as required by law, the Company undertakes no obligation to publicly release any update or revisions to the forward-looking statements contained in the Presentation to reflect any change in events, conditions
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circumstances
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which any such statements are based after the time they are made.
Disclaimer
2
Who we are A SaaS business focused on the provision of cybersecurity anddigitalprivacyproducts Our focus Kape
- wns,
develops and acquires software solutions for consumers and SMEs in the cybersecurity space, targeting users globally Digital marketing expertise Our proprietary technology enables Kape to leverage its digital distribution and online marketing expertise to maximise ‘own’ product sales
Our business
Our vision To provide online autonomy for a secure and accessible digital life
1.1 million 830K $ 52.1 million
Customers Subscribers Revenue
9
Global Hubs
3
Kape in numbers
* Adjusted EBITDA is a non-GAAP measure and a company specific measure which excludes other operating income and expenses which are considered to be one off and non-recurring in nature.
2,8 6,0 10,4
2016 2017 2018
Underlying Adjusted EBITDA* ($ million) 271% Growth
Highlights
* The Adjusted EBITDA attributable to the Web apps and licence division for 2018 is nil, (2017: $2.2 million); this division has been discontinued as of September 2017. Underlying Adjusted EBITDA from core activities for 2018 is $4.3 million (2017: $6.0 million) **Calculated as expected revenues from first renewal of the existing user base in addition to the deferred revenue balance
4
Financial highlights
- Revenue from continued operations increased to $52.1
million (2017: $50.6 million) increase of 8% in core app distribution segment
- Adjusted
EBITDA* from continued
- perations
slightly ahead of market expectations at $10.4 million (2017: $8.1 million), representing growth of 28.3%
- 73% increase in underlying Adjusted EBITDA continued
- perations excluding Web Apps and Licences segment
- Increase of 37% in adjusted EPS to 5.2 cents (2017:3.8
cents)
- Expect to deliver $30 million revenue from existing users
in future periods (Dec 2017: $8 million)**
Operational highlights
- Strong SaaS revenue progress:
- Subscription retention rate c. 74% (2017:69%)
- Premium Subscription users increased by 219%
- Launched CyberGhost 7.0 app and developed add-ons for
Chrome and Firefox browsers
- 830,000 subscribers in over 160 countries (Dec 2017:
260,000)
- Acquisition of Intego in July 2018, a leading Mac and iOS
cybersecurity and malware protection SaaS business, for $16.0 million
- Acquisition of ZenMate in October 2018, a digital privacy
company, for €4.8 million
Strong market fundamentals
- High internet penetration has increased the number of
cyber attacks, resulting in heightened concerns around data privacy
- VPN market is already worth $24 billion and is expected
to grow by 50% by 2022
- The Data Protection and Privacy subsector was the
fastest growing, in light of the General Data Protection Regulation (GDPR) and countless large data breaches that have occurred over the last few years
The cybersecurity market was worth $153 billion in 2018 and is expected to grow by 52% by 2022
Global VPN Market Global Cybersecurity Market
5
Source: Cybersecurity Market by Solution, Markets & Markets, September 2018, Start-Up Nation Central: Finder Insights Series The State of the Israeli Ecosystem in 2018, March 2019
Usage of VPN is growing
How Popular Are VPNs? 25% of internet users have used a VPN in the past month on computers, mobile phones and tablets Regional VPN Usage (Of All Internet Users)
6
Source: Global Web Index - VPN around the World 2018
- Frequency of usage of VPN growing in tier 1 markets.
- Value of personal data is underpinning the growing
trend of cyber crime targeting consumers’ data
- 75% of VPN users use VPN on a weekly basis.
- VPN use is moving from a niche tech product to a
widely used consumer application
Digital privacy awareness is growing supported by new regulations and a more educated market
Performance
- Consists of Restoro & Reimage, our PC and Mac
repair product, and Driverfix, our driver repair solution
- Restoro is a patented repair solution to fix PCs
and Macs remotely; removes malware and repairs computer software
- Proprietary Driverfix solution scans computers
for
- utdated
drivers across all Windows
- perating
systems
- n
desktop computers, tablets and mobile devices
- Developed subscription brands
- Consists
- f
- ur
two complementary digital privacy solutions: CyberGhost and recently acquired ZenMate
- Safeguards personal information when browsing
the internet through unsecured networks
- Blocks malicious content and provides a fully
encrypted internet
- CyberGhost is consistently rated a Top 3 VPN
SaaS provider in Europe and the USA
Core software products
Digital marketing platform: driving users to Kape’s products
- Consists of Intego, our leading Mac and iOS
cybersecurity and malware protection SaaS provider
- Focused on the provision of malware protection,
firewall, anti-spam, backup, data protection
- Provide parental controls software for Mac, a
tool for keeping children safe online
- NetBarrier provides a two-way firewall to protect
consumers from malicious apps
Privacy Malware Protection
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Users wishing to protect their digital privacy Mac and iOS users those with children Users aiming to maximise the performance of their Macs and PCs
Target customers
User acquisition expertise 01 Target market
User acquisition
- Advanced user acquisition technology and
leveraging of digital marketing platform
- Utilise extensive network to drive users to
- ur products
- Leverage wide user base for indirect user
acquisition
- Highly efficient method to drive traffic
Organic
- High brand awareness drives users to
products
- Referrals from existing customers
- Consumers go directly to product
websites or search for product as a result
- f growing media presence
02 Prospective customers
Funnel expertise
- Proprietary data driven automatic funnel
- Ongoing customisation of product
- Automatic personalisation of user journey
- Proprietary targeting of purchase process
03 Existing customers
Retention / up-sell
- Once acquired, provide a subscription model
to grow customer’s LTV
- Provide servicing such as remote technician
and 24/7 support to increase customer retention
- Convert users to additional Kape products by
channelling customers to further owned software solutions
- Increase the value of the user
- 200 support personnel in Manilla, supporting
main languages
01
TARGETMARKET
User acquisition
02
PROSPECTIVE CUSTOMERS
Funnel expertise
03
EXISTING CUSTOMERS
Rent on/Up-sell
Performance Privacy Malware Protection
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Financial highlights
¹ EBITDA, Adjusted EBITDA and Adjusted cash flow from operations are non GAAP measures. Adjusted EBITDA and adjusted cash flow from operations are company specific measures which exclude certain expenses which are considered to be one off and non-recurring in nature.
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Adjusted EBITDA* from continued operations up 28.3% to $10.4 million (2017: $8.1 million) Strong underlying growth in Adjusted EBITDA from core activities of 73% Revenue of $52.1 million (2017: $50.6 million) Revenue from App Distribution segment up by 8% Strong balance sheet with $40.4 million cash (2017: $69.5 million) and no debt after cash outflow of $32.0 million from investing and financing activities driven mainly from Intego and Zenmate acquisitions and distribution of special dividend Increase of 49.3% in app distribution segment results to $25.7 million (2017: $17.2 million) Significant Improvement in margins as segment results margin increased to 49.3% (2017: 38.7%) and EBITDA margin to 19.9% (2017: 16%) $M 2017 2018 Chg
App Distribution 48.2 52.1 8.0% Web Apps and Licence 2.4
- (100%)
Revenue 50.6 52.1 2.9% Direct costs (31.0) (26.5) (150%) Segment results 19.6 25.7 31.2% Segment margin % 38.7% 49.3% +10.6% Opex (11.5) (15.3) 32.2% Adjusted EBITDA 8.1 10.4 28.3% EBITDA % 16.0% 19.9% +3.9%
Revenue by geography
39% United States 14% Germany 8% United Kingdom 7% France 5% Australia 5% Japan 4% Canada 2% Italy 2% Switzerland 1% Netherlands 1% Spain 1% Austria 1% Sweden 11% Others
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Revenue analysis
Increase of recurring revenue as subscription sales reache 53% of revenues
Recurring revenue
53% Subscriptions (2017: 19%) 47% Software licences and Services (2017: 81%)
Creating a strong SaaS revenue base
High lifetime ROI on user acquisition
*Note: Numbers include Zenmate, Intego and CyberGhost. 100 200 300 400 500 600 700 800 900 2012 2013 2014 2015 2016 2017 2018
Units sold by initial purchase year (000’s)
2012 2013 2014 2015 2016 2017 2018
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122.3 170.0 275.4 491.3 611.7 745.4 832.3
- Increase in yearly new users
- Recurring revenue base accelerated through user acquisition
- Growth in retention rate as the cohorts mature
Cash flow analysis
$M 2017 2018 Chg Adjusted operating cash flow: Attributable to current year Cash conversion from EBITDA 9.5 117% 15.9 153% 6.4 +36% Movement in capitalised CAC (1.3) (10.2) (9.9) Total Adjusted operating cash flow Cash conversion from EBITDA 8.1 101% 5.7 55% (2.4)
- 56%
Cash flow from investing activities: CAPEX (2.1) (2.5) (0.4) Business combinations (5.3) (21.1) (15.8) Net cash used in Investing activities (7.4) (23.6) (16.2) Cash flow from financing activities: Net cash used in financing activities (1.4) (8.4) (7.3)
LTV CAC
CyberGhost Lifetime Value to Customer Acquisition Cost in 2018
Year 1 Year 2 Year 3 Year 4 Year 5
12 100% 50%
2.72 1.92 2.34 1.47 0.84 3.06
Year 6
75%
LTV/CAC
15 months break even point
Dec 2018
Key performance indicators
Growth of 219% in Premium subscription
Growth in subscription base
Deferred income Increase of x3.3 Adjusted operating cash flow* attributable to current year Retention rate** Up from 69% Paying users
Dec 2017 Dec 2018 Dec 2017 $2.2m 260K 830K $8.1m 734K $9.5m $15.9m 1.101K Dec 2017 Dec 2018
74%
Dec 2017 Dec 2018
Subscription base Churn Subscription base
219%
529K
* From continued activities excluding capitalised CAC ** Retention rates are calculated on a six monthly basis, June 18 to Dec 18
13
197K
Acquired through acquisitions New users
(156K)
Ongoing growth strategy
Broadening our product portfolio and accelerating our market penetration
Leverage existing expertise to accelerate growth
- Leverage
technology expertise to accelerate user acquisition across existing products
- Broaden
customer cross and up-sell
- pportunities to increase ARPU
- Enhance inter-company synergies
- Develop
a
- ne
platform dashboard allowing consumers to purchase Kape’s products from one place Accelerate SaaS adoption
- Continue to transition all products to
licence/subscription based models
- Execute
- n
SaaS-based acquisitions such as Intego
- Increase recurring revenues to achieve
heightened visibility over earnings Ongoing R&D supported by complementary acquisitions
- Expand and develop core products
- Add complementary products and user base
through acquisition
- Build
a complete suite
- f
cybersecurity products to provide consumers with all their digital protection needs
14
Kape’s M&A integration process and implementation
Business acquired Future growth with the Kape Group
Operational leverage Growth acceleration Cross promotion
- Integrate Kape’s in-house support
systems
- Align G&A to wider Kape group
- Provide support to existing
management
- Maximise operational leverage and
realisation of cost synergies
- Implement Kape’s marketing
platform and expertise for user acquisition, the benefits of which expect to see in 2019
- Integrate R&D teams and practices
to further develop products
- Implemented initial cross promotion
campaigns between Kape’s product suite, already experiencing traction
15 K 10K 20K 30K 40K 50K 60K 70K
Q3-17 Q4-17 Q1-18 Q2-18 Q3-18 Q4-18
Monthly new users through Kape's marketing platform
R&D is central to our progress
New products under development Proprietary cross product business intelligence and marketing tools Investment in next generation infrastructure
16
R&D capabilities :
- Added capabilities through acquisitions
- 77% increase in investment in R&D
R&D achievements 2018:
- Launched our most comprehensive update to-date for CyberGhost
- Added Google Chrome and Mozilla Firefox plug-in based on distributed
computing platform and operating system
- Developed fire stick app and android TV app
- Developed recurring revenue product Restoro and upgraded Driver fix
R&D plans for 2019:
- Release new products within malware protection space
- Release cross company dashboard
- Release new Linux app and smart DNS for CyberGhost
- Release Privacy Guard
Summary
ir@kape.com
17
Profit momentum
Growth of 73% in underlying Adjusted EBITDA from core activities
Quality of earnings
53% of revenues are recurring , giving greater earnings visibility SaaS. Model transition on track
M&A expertise
Proven M&A capabilities executed and integrated successfully, four acquisitions in the last couple of years. Acquired and integrated Intego and ZenMate second half of 2018
Proven execution
Focused strategy to grow both organically and by acquisition as demonstrated in 2018
Strong sector growth
Operating in the rapidly developing digital privacy market
Contact
For further information please contact ir@kape.com +44 (0) 203 355 7926 Kape Technologies plc LABS Atrium, Stables Market, Chalk Farm Rd, London NW1 8AH
www.kape.com
Awards
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Premium brand reputation and go to market capabilities
“I really admire CyberGhost…. not only has the technology and a robust network, it has several unique features …..” “Intego's Mac Internet Security X9 is one of our favourite security packages for Mac….” “CyberGhost VPN is a capable service with an exceptionally powerful Windows client, packed with features yet still easy to use.” Techradar - Mike Williams from January 2019 ”Tons of Features, Loads of Servers” “CyberGhost VPN is practically a one-click solution. It makes the privacy and security of VPNs available to a much wider audience.” “CyberGhost is offering an easy-to-use, fast, and reliable
- service. It has plenty of servers to provide you with
- ptions
such as anonymous surfing, unblocked streaming, and anonymous torrenting.” “It's rare that a piece of "miracle" software actually lives up to its developers' claims. Reimage--which claims to provide hassle-free relief for damaged Windows installs--delivers on its promise.” “After testing this interesting VPN in-depth, we highly recommend giving CyberGhost a try. This is an all-in-one tool that helps you wander the Web with a virtual identity - like a true ghost!” 19