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Final Results March 2018 Contents About Kape Financial results - - PowerPoint PPT Presentation
Final Results March 2018 Contents About Kape Financial results - - PowerPoint PPT Presentation
Final Results March 2018 Contents About Kape Financial results Results highlights 4 Key performance indicators 15 Our business 6 Strategy and outlook 16 Products and expertise Appendix Market opportunity 7 Growing customer base 20
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Disclaimer
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Financial highlights
- Revenue increased to c.$66.4
million (2016: $56.5 million) representing growth of c.17.4%
- Adjusted EBITDA** of $8.3m
(2016 $6.4m) Representing 29% growth
- Underlying Adjusted EBITDA*
growth of 172% from core activities, excluding the Web Apps and License division*
- Strong balance sheet with
a cash balance at year-end
- f $69.5 million after $7.4
million of acquisition related payments (31 December 2016: $72.1 million)
- Due to solid cash generation the
board has declared a special cash dividend of $4.93 cents per share amounting to $7.0 million in total
Operational highlights
- Acquisition and integration of
CyberGhost, performing ahead of expectations
- Subscription retention rate
at 69%, providing visibility in revenues going forward
- 887,000 paying users globally;
5 million Active users
- Launched subscription model
for ReImage product, providing increased earnings visibility
- Launched ReImage for Mac
- Post period end: rebranded
to Kape Technologies plc
Highlights
*The Adjusted EBITDA attributable to the Web apps and license division for 2017 is $2.1 million, (2016: $4.0 million); this division has been discontinued as of September 2017. Underlying Adjusted EBITDA from core activities, excluding the discontinued Web Apps and License division for 2017 is $6.1 million (2016: $2.4 million) **Adjusted EBITDA is a non GAAP measure and a company specifjc measure which excludes other operating income and expenses which are considered to be one ofg and non-recurring in nature
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The Kape brand – supporting our growth
Brand story The online world has lost its autonomy. Corporations mine and sell our data, institutions dictate the content we consume, credit card and identity fraud is on the rise and online viruses are endemic. We are here to make the internet a safe and accessible place for everyone. With expert teams stationed in some of the world’s leading tech hubs (Bucharest, London, Tel Aviv), we spend our time and resources making sure your personal online experience is as secure and accessible as possible, because we believe in your online autonomy.
Online Autonomy
Proactive
Since our inception as a technology company we have always remained ahead
- f the curve.
We’re fast learners too, and believe that a proactive and problem-solving approach is the foundation
- f every innovation.
Accessible
We simplify the complex. With accessibility and ease of use always centre of mind, we create tech products and services with universal appeal.
Bold
We face every decision and every challenge boldly and fearlessly. We believe a secure and accessible online experience is a right, and we’re determined to fjx the internet, so that right remains so.
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Who we are Kape is a SaaS business focused on the provision of B2C cybersecurity products Our focus Kape owns, develops and acquires software products solutions for consumers in the cybersecurity space targeting users globally Digital marketing expertise Kape’s proprietary technology enables it 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 personal digital life
SE URITY PROTE TION UNRESTRI TED
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41%
Of working Americans have installed a VPN on their laptop
$10 billion
Personal digital safety addressable market in 2018
689 million
People were victims
- f cybercrime in 2016
$16 billion
Lost to identity fraud in 2016
Signifjcant B2C cybersecurity market opportunity
Key market drivers
Market stats
Source: Company estimate, McKinsey, Gartner, Javelin identity Fraud study, Javelin strategy and research 2017; 2017 User Risk Report, Wombat Security technologies, GP Bullhound Technology predictions 2018
Growing collections
- f personal data by
commercial entities Increasing network and WiFi connectivity Growing cyber crime targeting consumer data 50% of Americans worry about data breaches 75% of Americans want tighter control over personal information Emergence of IoT
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ReImage PC
- Patented solution to fjx PCs
remotely; removes malware and repairs computer’s software
- Ability to fjx computer problems
related to blue screens, crashes and freezes, DLL fjles, removing virus damage and more by replacing missing and damaged fjles
ReImage Mac
- Solution to fjx Macs remotely;
removes malware and repairs computer’s software
- With an addressable market of
100 million users
CyberGhost
- A leading cybersecurity SaaS
provider with a focus on the provision of VPN solutions
- Safeguards personal information
when browsing the Internet through unsecured networks, mobile hotspots etc
- Safe online transactions
even when on WiFi
- Blocks malicious content and
provides a fully encrypted internet
DriverAgent
- Leading device driver search
and update service
- Scans computers for outdated
drivers across all Windows
- perating systems on desktop
computers, tablets and mobile devices
Core software products
Over 3.2 million active users Millions of PCs repaired Product developed in-house Launched in October 2017 187,000 premium subscriptions Over 17 million drivers available on database
Digital marketing platform: driving users to Kape’s products
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Leveraging Kape’s digital marketing platform expertise
Optimised customer cycle provides increased ROI
01 Target market
User acquisition
– Advanced user acquisition technology and leveraging of digital marketing platform – Utilise extensive network to drive users to our products – Leverage wide user base for indirect user acquisition – Highly effjcient method to drive traffjc
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 of 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
TARGET MARKET
User acquisition
01
Funnel expertise
PROSPECTIVE CUSTOMERS
02
Rent on/ Up-sell
EXISTING CUSTOMERS
03
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10 *Integration complete in June 2017, increase seen in the following months
User acquisition Digital marketing expertise accelerating CyberGhost’s customer acquisition, avg. increase of 30% in sales of premium subscriptions.* Growing our strategic partnership with major content players 187,000 Premium subscriptions Cost synergies Reducing cost of sales by 30% due to cross-company
- synergies. Provide 24/7
support across our products. Consolidate our hub in Bucharest Cross promotion & product development Growing traction with product cross-selling initiatives Blockchain based browser add on launched New Mac product under development Recurring revenues Introduced automatic renewals across our product suite
CyberGhost performing ahead of initial expectations
Budgeted net profjt on acquisition was $1.0 million, actual $1.5 million
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M&A activity
Enhancing our distribution funnel
- Optimisation of retention
- Increase conversion rates
- Growing ownership of the funnel
Growing our product portfolio
- Additional products in the space
- Acquire large and diverse user base
Cyberghost segment results ($’000) H1 2016 H2 2016 H1 2017 H2 2017 4000 3000 2000 1000 Moving forward, our acquisition targets include: CyberGhost acquisition execution delivered above expectations
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Key performance indicators
Premium subscriptions
*December 2016 KPIs are pro-forma basis including CyberGhost
Deferred income Increase of 84% Adjusted operating cash fmow Retention rate* December 2017 Paying users Increase of 21% Dec 2016 Dec 2017 Jun 2017 Dec 2017 $2.2m 167.5K 145.1K (52.3K) 260.3K $7.9m 734K $4.0m $7.5m 887K Dec 2016 Dec 2017
69% 55.4%
Dec 2016 Dec 2017 Premium subscription New users Churn Premium subscription 69% retention
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Financial highlights
$M App Distribution Media Web Apps and License Revenue Direct costs Segment margin Segment margin % Opex Adjusted EBITDA EBITDA % 2016 38.2 13.8 4.5 56.5 (37.3) 19.2 34.1% (12.8) 6.4 11.3% 2017 48.2 15.8 2.4 66.4 (42.4) 24.0 36.2% (15.7) 8.3 12.5% Chg 26.1% 14.5% (47.3%) 17.4% 13.6% 24.9% +2.1% 22.9% 28.9% +1.1%
Revenue increased by 17.4% to $66.4 million (2016: $56.5 million) Adjusted EBITDA increased by 28.9% to $8.3 million (2016: $6.4 million) representing an improved EBITDA margin of 12.5% (2016: 11.3%) Strong growth in Adjusted EBITDA from core activities of 172% from $2.5 million in 2016 to $6.3 million in 2017 Adjusted cash generated from
- perations¹ of $7.6 million
(2016: $7.9 million) representing a strong cash conversion of 92% Increase in Media and App Distribution combined segment results of 46.9% to $21.7 million (2016: $14.7 million) and combined segment margins to 32.0% (2016: 28.3%) Strong balance sheet with $69.5 million cash (Dec 2016: $72.1 million) and no debt Distribution of special dividend per share of $4.9 cents amounting to a total of $7 million
¹ EBITDA, Adjusted EBITDA and Adjusted cash fmow from operations are non GAAP measures. Adjusted EBITDA and adjusted cash fmow from operations are company specifjc measures which exclude certain expenses which are considered to be one ofg and non-recurring in nature.
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Revenue 17.4% Consolidated segment results 24.9% Revenue 23.0% Segment results 46.9% 2016 2017 2016 2017 2016 2017 2016 2017 56.5 52.0 19.2 7.6 66.4 64.0 24.0 21.7
Segment results
Total segment results $M Media and app distribution segment results $M
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Revenue analysis
70% of revenue in the period was generated from sales to end consumers
Revenue by geography
¹ Direct costs comprise of cost of sales and traffjc acquisition costs included within sales and marketing
Margin analysis
United States Germany France United Kingdom Italy Spain Australia Russian Federation Japan Canada Argentina South Africa Netherlands Switzerland Others 35% 13% 6% 6% 4% 3% 3% 3% 3% 2% 2% 2% 2% 1% 15% App Distribution $M Revenue Direct costs¹ Segment results Margin % 2016 38.2 (26.9) 11.3 29.5% 2017 48.2 (31.0) 17.2 35.7% Chg 26.1% 15.0% 52.7% +6.2% Media $M Revenue Direct costs¹ Segment results Margin % 2016 13.8 (10.3) 3.5 25.3% 2017 15.8 (11.3) 4.5 28.3% Chg 14.5% 9.8% 28.3% +3.0%
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Strategic priorities
Broadening our product portfolio and accelerating our market penetration
Ongoing R&D investment supported by complementary acquisitions
- Expansion and development
- f core software products
in key growth markets e.g. cybersecurity
- Add complementary solutions to
- ptimise cross-selling and
up-selling opportunities
Development of holistic consumer cybersecurity solution
- Provide a holistic cybersecurity
solution to our customers globally
- Accelerate customer cross and
up-sell opportunities to increase average revenue per user
- Enhance inter-company
synergies
Accelerate SaaS adoption
- All revenues generated through
CyberGhost are SaaS based
- Transitioning other products
to license/subscription-based model
- Increase recurring revenues to
enhance earnings visibility
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Summary
We delivered on all strategic fronts in 2017 Increased visibility on future revenues and growing quality of earnings 29% growth in EBITDA to $8.3 million ($6.4 million in 2016) Growth of 172% in underlying adjusted EBITDA from core activities* Ongoing focus on organic growth and executing larger acquisitions across the cybersecurity sector Strong start to 2018, in-line with market expectations ir@kape.com
*Excluding the Web Apps and License segment
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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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Appendices
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Growing customer base
Providing online security globally
IF 2017 WAS THE YEAR CYBERSECURITY ENTERED THE PUBLIC CONSCIOUSNESS... 2018 WILL BE THE YEAR WHEN CONSUMERS START DEMANDING PROTECTION GP BULLHOUND TECHNOLOGY PREDICTIONS 2018 Millions of customers across 160 countries 300 employees across 5 hubs
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Expansion into the market
- CyberGhost provided expansion into
the personal digital security market
- In-house product development
grows our footprint
- Acquisition of relevant target
companies will grow our presence
Growth potential
- Technology knowhow and expertise
allows us to accelerate user acquisition
- Kape’s unique marketing platform
provides ability to scale up users
Cross promotion
- Expand our product ofgering across our
existing users
- Kape is on track to provide users with
a full suite of products to address their digital security needs
Kape’s positioning in the personal security market
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Adoption of IFRS 15
2017 as reported under IFRS 15 44.1 8.3 (2.4) 3.8 0.3 1.1 2017 according to previous policy under IAS 18 45.5 6.9 (3.4) 2.8 – – Efgect of the application of IFRS 15 (1.4) 1.4 1 1 0.3 1.1
- The Company has adopted IFRS 15 using the
cumulative efgect method applied to those contracts which were not completed as of 1 January 2017
- Revenue recognition relating to most of our
products and services remains substantially unchanged and, in consequence, the impact of the new standard on our opening balances (as at 1 January 2017) was immaterial
- The most signifjcant impact of the standard
relates to our accounting for user acquisition costs associated with subscription sales which, are considered incremental in obtaining the contract, and therefore capitalised and amortised over the expected customer relationship period under the new standard
- The adoption of the new standard had no impact
to Revenues, Cash from or used in Operating, Financing or Investing on our consolidated cash fmow statements $M
Profjt and Loss Selling and Marketing expenses Adjusted EBITDA Basic EPS (cents) Adjusted Basic EPS (cents) Balance sheet Non-current Contract assets Current assets – Contract assets
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ReImage PC ReImage Mac DriverAgent CyberGhost VPN
Our product portfolio is evolving
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