Interim Results September 2019 Disclaimer The information - - PowerPoint PPT Presentation
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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Disclaimer
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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
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
H1 highlights
5
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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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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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
- 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
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
9
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
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
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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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
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
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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
$- $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
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%
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.
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
Summary
ir@kape.com
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- 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
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
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Thank you!
Appendix - competitive landscape in the US, by downloads (%)
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