Trading Update January 2019 Disclaimer The information contained - - PowerPoint PPT Presentation

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Trading Update January 2019 Disclaimer The information contained - - PowerPoint PPT Presentation

Trading Update January 2019 Disclaimer The information contained in these The Presentation is being supplied to you solely for your the Financial Services and Markets Act 2000 (Financial Promotion) The Company is under no obligation to update


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SLIDE 1

Trading Update January 2019

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The information contained in these slides and communicated verbally to you, including the speech(es) of the presenter(s) and any materials distributed at

  • r 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

  • 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 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

  • f their knowledge,

information and belief. No undertaking, representation, warranty

  • r other assurance, expressed or implied, is made or given by or on

behalf of the Company or any of its respective directors, officers, partners, employees or advisers or any other person as to the fairness, accuracy or the completeness of the information

  • r
  • pinions contained herein and to the extent permitted by law no

responsibility or liability is acceptedby any of them for any such information or opinions. Notwithstanding the aforesaid, nothing in this paragraph shall limit or 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

  • r subscribe for

any ordinary 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, or act as any inducement to enter into any contract for the

  • rdinary shares in the Company.

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

  • f 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)); 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

  • r 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

  • bserve

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 or

  • ther entity created or organizedunder the laws thereof.

The Company’s ordinary shares have not been, and are not expected to be, registered under the United States Securities Act

  • f 1933, as amended, (the “US Securities

Act”) or under the securities laws of any other jurisdiction, and are not being offered

  • r 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

  • r 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

  • r its advisers for any information or opinions contained in the

Presentation. 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 statements. If one or more of these risks or uncertainties 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 of which are beyond the Company’s control, potential investors should not place any reliance on 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 or circumstances on which any such statements are based after the time they are made.

Disclaimer

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SLIDE 3

Who weare Kape is a SaaS business focused on the provision

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cybersecurity products Our focus Kape owns, develops and acquires software solutions for consumers and SMEs 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

Ourbusiness

Our vision To provide online autonomy for a secure and accessible personal digital life

  • c. 160
  • c. 400

$40.3 million* 830k

Countries Employees Cash position at year end Premium Subscribers¹

9 $ 56.4 million*

Global Hubs Revenues 2018

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Kape in numbers

*unaudited as per trading update 15/01/2019

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SLIDE 4

Financial highlights

  • Adjusted EBITDA* of $10.4 million (2017: $8.3 million),

representing growth of 25%

  • Revenue of $56.4 million (2017: $66.4 million) reduced as a result
  • f the divestment of the Media business
  • Revenues from the App Distribution segment $52.1 million

increasing by 8% (2017: $48.2 million)

  • Expect to deliver $30 million revenue from existing users in future

periods (June 2018: $18 million)**

Operational highlights

  • Growing our SaaS revenue base:
  • 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 paying subscribersglobally 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

Highlights

*The Adjusted EBITDA attributable to the Web apps and license division for 2018 is nil, (2017: $2.2 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 2018 is $4.3 million (H1 2017: $1.5 million) **Calculated as expected revenues from first renewal of the existing user base in addition to the deferred revenue balance 4

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Strategic Goals

Grow

Kape’s user base across existing products by leveraging proprietary technology and expertise

Score card

Progress Achieved

Acquire

businesses that broaden product offering and potentially enter additional complementary sector verticals

Build-up

a fully SaaS-based business model, improving both visibility and quality of earnings, as well as increasing life time ARPU

✓ ✓ ✓

  • 219% growth to 830,000 premium subscriptions
  • CyberGhost continues to outperform due to Kape’s marketing

capabilities

  • Introduced cross promotion across our product portfolio
  • Acquisition of Intego provides Kape with a strong foothold in the

malware protection market

  • Intego grows the Company's user base by c.150,000 paying users, with

high renewal rates of above 75%. Acquisition of ZenMate, growing SaaS user base by c.50,000 paying users

  • Increased SaaS-based revenues through our VPN and PC & Mac repair

products.

  • Overall increased visibility over revenues, with over $30

million expected to be delivered from existing user in future periods

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B2C cybersecurity - a significant opportunity

*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

B2C market replicating B2B trends Individuals increasingly becoming targets of cybercrime IoTincreasing levels of data and connected devices Rise in personal data stored in the cloud Increasing awareness of need to protect digital presence

  • The B2C cybersecurity market is growing exponentially
  • A rise in connectivity and devices is driving an increase in data that needs

protecting

  • This is leading to an increase in the number of attacks on the consumer,

not just enterprises

  • Kape is building a product portfolio to protect and secure all aspects of an

individual’s digital life to capitalise on this shift

The addressable personal digital safety market is worth $10 billion globally*

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SLIDE 7

Performance

  • Our Reimage PC repair product is a patented solution

to fix PCs and Macs remotely; removes malware and repairs a computer’s software

  • Proprietary DriverAgent solution scans computers for
  • utdated drivers across all Windows operating

systems ondesktop computers, tablets and mobile devices

  • Our CyberGhost product is consistently rated a

Top 3 VPN SaaS provider in Europe and the USA

  • ZenMate a strong European multi platform VPN

brand

  • Safeguards personal information when browsing

the Internet through unsecured networks

  • Blocks malicious content and provides a fully

encrypted internet

Core software products

Digital marketing platform: driving users to Kape’sproducts

  • Recently acquired Intego is a 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 kids safe online

Privacy

  • An extensive product portfolio built through acquisition and in-house development
  • Significant opportunity to cross/up-sell across products

Malware Protection

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SLIDE 8

CyberGhost continues to perform ahead of expectations

Kape’s digital marketing expertise is accelerating CyberGhost’s customer acquisition 116% increase in sales of premium subscriptions (H1:2018) Growing our strategic partnership with major content players

Cost efficiencies

Introduced automatic renewals across the product suite CyberGhost is 100% SaaS-based

Cross promotion & product development

Growing traction from product cross- selling initiatives Launched CyberGhost 7.0 across Apple and Android Addition of Firefox and Chrome plug-ins

Recurring revenues User acquisition

Increasing efficiency of user acquisition Reaching economies of scale with suppliers Consolidation of Bucharest and Manilla Hubs resulting in central cost savings

$4m $5m $6m $7m $8m $9m $10m $11m $12m Jun 2016 Jun 2017 Jun 2018 Year on year growth App Distribution Segment results

2,000 4,000 6,000 8,000 10,000 12,000 14,000

Monthly new users through Kape's marketing platform

Jul-17 Dec-17 Jun-18

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SLIDE 9

c.50,000

Paying users

100%

SaaS

Acquisition of ZenMate

Summary

  • Announced on 16 October 2018
  • ZenMate a multi-platform security software business with a focus on the provision of VPN
  • Acquisition is highly complementary to CyberGhost, ZenMate has c.50,000 SaaS based customers
  • On track to deliver a profitable performance in 2019
  • Offices in Berlin

Acquired ZenMate for total cash consideration of €4.8 million

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c.150,000

Paying users

75%

Renewal rate

$1.4m

PBT

100%

SaaS

30

Employees

Acquisition of Intego

Summary

  • Announced on 24 July 2018
  • Intego is a leading Mac and iOS cybersecurity and malware protection SaaS business
  • Intego is focused on the provision of malware protection, firewall, anti-spam, backup, data

protection and parental controls software for Mac

  • Headquartered in Seattle, USA, with a European office in Paris
  • Currently all of Intego’s user acquisition is done organically, with no digital marketing exposure

Acquired Intego for total cash consideration of $16.0 million

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SLIDE 11

Expanding product portfolio

  • Adds complementary malware protection and

security solutions

  • Optimises cross-selling and up-selling
  • pportunities

Addition of expertise

  • Scope to leverage Intego’s technology to

develop additional solutions

  • Addition of R&D expertise provides
  • pportunity to accelerate product

development

  • $1.4 million generated in profit before tax in

year to 31 December 2018

  • All revenues generated are SaaS-based

Earnings enhancing

✓ ✓ ✓

Significant opportunity to accelerate Intego’s growth through implementation

  • f Kape’s digital marketing expertise

Acquisition of Intego

Deal rationale and synergies

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User acquisition 01Target 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 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 of growing media presence

02Prospective customers

Funnel expertise

– Proprietary data driven automatic funnel – Ongoing customisation of product – Automatic personalisation of user journey – Proprietary targeting of purchase process

03Existing 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

01

TARGETMARKET

User acquisition

02

PROSPECTIVE CUSTOMERS

Funnel expertise

03

EXISTING CUSTOMERS

Rent on/Up-sell

Performance Privacy Malware Protection

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SLIDE 13

Expanding R&D

Investment in next generation infrastructure New products under development Proprietary cross product business intelligence and marketing tools

Top tier global R&D teams; over 65 employees globally

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December 2018

Key performanceindicators – unaudited numbers for Dec 2018

Premium subscriptions

Revenue expected from existing users in future periods Increase of 66% Retentionrate Up from 69%

June 2017 December 2018 December 2017 $18m 260K 830K $30m

74%

Premium subscription Premium subscription** 74% retention

219%

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Performance of core activities

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Revenue by geography – June 2018

33% United States 18% Germany 9% United Kingdom 7% France 4% Australia 4% Canada 2% Italy 2% Japan 2% Switzerland 2% Netherlands 2% Spain 15% Other

$m Dec 2017 (Audited) Dec 2018 (Unaudited) Chg

App Distribution 48.2 52.1 8.1% Media 15.7 4.3 (72.6%) Web Apps and License 2.3 0.0 (100%) Revenue 66.2 56.4 (17.7%) Adjusted EBITDA 8.3 10.4 25.3% EBITDA % 12.5% 18.4% +5.9%

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.

($m)

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SLIDE 16

Growth strategy

Broadening our product portfolio and accelerating our market penetration

Ongoing R&D supported by complementary acquisitions

  • Expand and develop core products
  • Add complementary products and user base through

acquisition

  • Build a complete suite of cybersecurity products to

provide consumers with all their digital protection needs

Leverage existing expertise to accelerate growth

  • Leverage technology knowhow and expertise to

accelerate user acquisition across existing products

  • Broaden customer cross and up-sell opportunities to

increase ARPU

  • Enhanceinter-company synergies

Accelerate SaaS adoption

  • Continue to transition all products to

licence/subscription based models

  • Execute on acquisitions such as Intego which are

SaaS-based

  • Increase recurring revenues to achieve heightened

visibility over earnings

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SLIDE 17

Summary

ir@kape.com Growth of 70% in underlying Adjusted EBITDA from core activities 25% growth in unaudited Adjusted EBITDA to $10.4 million (2017: $8.3 million) Increased levels of recurring revenues giving greater earnings visibility Strong second half of 2018 with acquisition of Intego and ZenMate, and divestment of Media division Focused strategy to grow both organically and by acquisition Strong financial performance in 2018, alongside significant strategic progress

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SLIDE 18

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 NW18AH

www.kape.com

Awards

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SLIDE 19

Thank You!