Interim Results September 2019 Disclaimer The information - - PowerPoint PPT Presentation

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Interim Results September 2019 Disclaimer The information - - PowerPoint PPT Presentation

Interim Results September 2019 Disclaimer The information contained in these slides 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


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SLIDE 1

Interim Results

September 2019

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SLIDE 2

The information contained in these slides and communicated verbally to you, including the speech(es)

  • f

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

  • r 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

  • n 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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  • ther

assurance, expressed or implied, is made or given by or on behalf of the Company or any of its respective directors,

  • fficers, partners, employees or advisers or any other

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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shares in the Company. Further, neither the Presentation nor any part of it, or the fact of its distribution, shall form the basis of, or be relied upon in connection with,

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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

  • Company. The Presentation is exempt from the general

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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  • rganized under the laws thereof.

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

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SLIDE 3

Investment highlights

3

01 01

Fully focused on the high growth privacy-first digital security space

02 02

Strong customer proposition underpinned by proven user acquisition model

04 04

Proven track record of revenue and EBITDA growth

05 05

Strong revenue visibility underpinned by a SaaS-based financial model

03 03

Market leading privacy and software security products designed for global consumer markets

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SLIDE 4

1.2 MILLION

Paying Customers

4

Kape in numbers

1 Ad Adjusted EB EBITDA is is a non non-GA GAAP me measure an and a co company sp specific me measure wh which ex excludes es ot

  • the

her op

  • perating

ng in income an and ex expen enses es wh which ar are co considered to to be be one

  • ne of
  • ff an

and non non-rec recurri rring in in na nature. 2 Un Underlying ad adjusted EB EBITDA ex excludes es rev reven enue fr from di discontinue ued ac activities 3 Th This is is ba based on

  • n th

the av averag age ren renew ewal ra rate an and onl

  • nly ca

calcu culates th the fir first ren renew ewal pe period 4 Ex Excluding st staff in in ou

  • ur cu

customer su suppor

  • rt ce

centre in in th the Ph Philiphenes

$29.9 MILLION

H1 2019 Revenues

82%

Subscription retention rate

$38 MILLION

Revenues to be recognised future periods3

44% R&D

Out of our workforce4

9.7X

Growth in underlying adjusted EBITDA2 up from $0.6m H1 2016

$5.8 MILLION

H1 2019 Adjusted EBITDA1

8

Offices worldwide

  • c. 300

employees

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SLIDE 5

H1 highlights

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Financial highlights

  • Revenue increased by 24.2% to $29.9 million

(H1 2018: $24.1 million from continued operations)

  • Increase of 28.2% in segment results to $14.7 million

(H1 2018: $11.5 million)

  • Adjusted EBITDA increased by 21.3% to $5.8 million

(H1 2018: $4.7 million)

  • Increase of 14.9% in Adjusted Earnings Per Share to

2.5 cents (H1 2018: 2.2 cents)

  • Expect to deliver $38 million in future revenue from

existing users conservatively taking into account first renewal only (H1 2018: $30 million)

  • Net cash at period end of $36.4 million and no debt

Operational highlights

  • Strong SaaS metrics:
  • Subscription retention rate 82% (H1 2018:74%)
  • Increase in subscription users to over 1 million:

c.24%

  • Strong growth in our mobile user-base, doubling
  • ur overall mobile users
  • Post-integration,

both ZenMate and Intego benefitting from Kape’s digital marketing expertise

  • Launched both ZenMate Ultimate app and ZenMate

Pulse, the web firewall extension

  • Exposing a number of high-profile macOS malware

security threats, against which Kape users are fully protected; strengthening our prominent position in the end point security market

* * Based on average historical renewal rates *

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SLIDE 6

6

Consumer digital privacy market drivers

  • Individuals

are using an increasing number

  • f

connected devices for myriad of purposes, enabling us to access data whilst traveling, creating a real need for them to protect their online data

  • Coupled

with heightened awareness

  • f

the threat

  • f

digital hacks and personal data harvesting, supported by new regulations and a more educated market

“I don’t want my children to be followed and targeted.” “What happens if my internet banking details are stolen because my connection isn’t secure?” “I don’t want my data harvested.” “It concerns me that things like my electric toothbrush are collecting my data in their apps.” “I want my personal search history to remain private.”

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SLIDE 7

7

Significant growth opportunity

Just like the anti-virus industry in the nineties, consumers are realising online privacy is crucial as more and more of our life exists in our browser, cloud and connected devices. Privacy as a service is a market at the base

  • f its growth curve

Regular use of a VPN is growing 25% of internet users have used a VPN in the past month

  • n

computers, mobile phones and tablets

Co Consumer data breaches on the rise creating growing awareness for our products

Hundreds of millions of accounts compromised:

500,000 500 million 500 million 148 million 92 million records exposed 150 million records leaked

Source: Global Web Index - VPN around the World 2018

VP VPN market et continues es to grow in 2019, with +18% sea earch inter eres est q1 YoY

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SLIDE 8
  • Restoro is a patented repair solution to fix

PCs and Macs remotely; removes malware and repairs computer software

  • Proprietary

Driverfix solution scans computers for outdated drivers across all Windows operating systems and devices

  • Segment results margin 36%
  • CyberGhost and ZenMate VPNs are highly

complementary

  • Safeguard

personal information when browsing the internet through unsecured networks

  • Blocks malicious content and provides a

fully encrypted internet

  • Segment results margin 53%

Core software products

  • Intego

is a leading Mac and iOS cybersecurity SaaS provider, with solutions including:

  • malware protection
  • firewall
  • anti-spam
  • back-up
  • data protection
  • parental controls
  • NetBarrier – two-way firewall
  • Segment results margin 91%

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Malware Protection OS performance Digital Privacy

Proactive Preventative Optimisation

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SLIDE 9

Consumer focused interface - truly cross-device approach

  • Our teams specialise in constantly evolving and tailoring our products to provide a superior customer experience
  • Strong growth in our mobile user-base, doubling our overall mobile users in H1 2019
  • In H1 2019 Cyberghost was consistently positioned in the TOP10 Apple ios productivity apps globally

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Intego CyberGhost ZenMate DriverFix Restoro

In In H1 2019 2019, Cy Cyber berghost st wa was th the 2nd nd fa fastest gr growing io ios ap app in in th the pr productivity ca category in in th the US US

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SLIDE 10

Growing subscription base

200 400 600 800 1.000 1.200

Subscriber base ('000) Healthy subscription mix

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Dec-15 Jun-16 Dec-16 Jun-17 Dec-17 Jun-18 Dec-18 Jun-19

Yearly subscriptions Monthly subscriptions 9% 91% <1 year subscriptions >1 year subscriptions

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SLIDE 11

Financial performance

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. 11

$M June 2018 June 2019 Chg Revenue 24.1 29.9 24.2% Cost of Sales (2.8) (4.2) 48.0% Direct sales and marketing (9.8) (11.1) 12.6% Segment results 11.5 14.7 28.2% Segment margin % 47.6% 49.1% +1.5% Opex (6.8) (8.9) 33.0% Adjusted EBITDA 4.7 5.8 21.3% EBITDA % 19.7% 19.2%

  • 0.5%

34% United States 16% Germany 9% United Kingdom 8% France 4% Japan 4% Canada 3% Australia 2% Switzerland 2% Netherlands 1% Italy 1% Spain 1% Austria 1% Sweden 13% Others

Revenue by geography

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SLIDE 12

Cash flow analysis

$M June 2018 June 2019 Chg Adjusted operating cash flow: Attributable to current period Cash conversion from EBITDA 6.4 134% 7.3 127% 0.9

  • 7%

Movement in capitalised CAC (3.4) (7.1) (3.7) Total Adjusted operating cash flow Cash conversion from EBITDA 3.0 62% 0.2 4% (2.8)

  • 58%

Cash flow from investing activities: CAPEX (0.9) (1.4) (0.4) Cash flow from financing activities: Net cash used in financing activities (7.7) (1.4) 6.3

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72% 28%

72% Subscriptions (H1 2018: 22%) 28% Software licences and Services (H1 2018: 78%)

Recurring revenue

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SLIDE 13

ROI growth driven by our market leading customer acquisition model

Year 1 Year 2 Year 3 Year 4 Year 5 Year 6

Short payback period Recurring revenue Strong unit economics on performance marketing 0.84x 1.5x 1.9x 2.3x 2.7x 3.1x After 1y After 2y After 3y After 4y After 5y After 6y

  • Represents multiple of revenue generated relative

to original marketing investment by cohort

  • On average our payback period is 15 months
  • We continue to generate revenue from the initial

marketing investment for years to come Cumulative revenue to performance marketing investment

13

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SLIDE 14

A de-risked revenue model with strong visibility

Note: Numbers include Zenmate, Intego and CyberGhost.

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122.3 170.0 275.4 491.3 611.7 745.4 832.3

  • Strong increase in new subscribers
  • Subscriber renewals increasing year on year
  • Growth in retention rate as the cohorts mature

832.3

100 200 300 400 500 600 700 2014 2015 2016 2017 2018 2019

Su Subscribers by initial purchase year (‘000)

39% of new users 61% of existing users 2015 2016 2017 2018 2019

Creating a recurring revenue stream from existing cohorts

Launch of user acquisition activity

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SLIDE 15

$- $5.000.000 $10.000.000 $15.000.000 $20.000.000 2020 2021 2022 2019 2018 2017 2016 2015 2014 2013 2012

Existing cohorts are a growing source of future collections

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$45 million expected cash flow in the next three years solely from existing cohorts, excluding any new users

2023

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SLIDE 16

Key performance indicators

Deferred income Adjusted operating cash flow * attributable to current year Retention rate* Up from 74% Paying users

Dec 2018 Jun 2019 $9.5m $6.4m 1.101K $10.9m $7.3m 1.215K Dec 2018 Jun 2019

82%

Dec 2018 Jun 2019

* * Retention rates are calculated on a six monthly basis, June 19 to Dec 19

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Jun 2019

Subscriptions

Dec 2018 830K 1.027K

Subscriptions Churn Subscriptions 82% retention

24%

347 347K

New users

(1 (150K) K)

Malware protection + Performance 49.2% Digital privacy 50.8% Digital privacy 45.2% Malware protection + Performance 54.8%

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SLIDE 17

ZenMate & Intego integration

Identified $1.7 million in annualised savings. Product development ü Kape launched the ZenMate Ultimate app, the most comprehensive update of ZenMate’s VPN platform to-date. ü New infrastructure with central developments including augmented location features, server security improvements, a mobile connection checker and faster speeds. ü The app is available across multiple platforms including Chrome, Firefox, Opera, Android, iOS, Windows OS, XOpen and Xbox and can be used on up to five devices at a time.

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Summary User acquisition: ü Following its integration into Kape’s user acquisition operation, there is significant growth in new users’ malware protection. ü Following expansion of the security analyst team, Intego was the first to expose a number

  • f

high-profile MacOS malware security threats, both of which Kape users are now fully protected against. This reinforces Intego’s position at the forefront

  • f Mac security.
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SLIDE 18

Ongoing growth strategy

Leverage existing expertise to accelerate growth

  • Continue to utilise technological expertise

to accelerate user acquisition

  • Broaden

customer cross and up-sell

  • pportunities to increase ARPU
  • Enhance inter-company synergies

Accelerate SaaS adoption

  • Continue

to transition all products to licence/subscription based models

  • Execute on SaaS-based acquisitions
  • 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 bases

  • Build a complete suite of cybersecurity

products

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Optimising Kape’s positioning to capitalise on the significant digital privacy opportunity

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SLIDE 19

Summary

ir@kape.com

19

  • 3. Consumer-centric market leading privacy and security products
  • 2. Strong business model underpinned by digital marketing expertise
  • 4. Proven track record of revenue and EBITDA growth
  • 5. Strong revenue visibility underpinned by a SaaS-based model
  • 1. Fast growing privacy-first digital space is our focus
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SLIDE 20

Contact

For further information please contact ir@kape.com +44 (0) 203 983 9655 Kape Technologies plc 37-41 Mortimer Street London W1T 3JH

www.kape.com

Awards

20

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SLIDE 21

Thank you!

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SLIDE 22

Appendix - competitive landscape in the US, by downloads (%)

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Cyberghost in short time-frame won 30% market share from key competitors