Trading Update January 2019 Disclaimer The information contained - - PowerPoint PPT Presentation
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
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
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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
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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
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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
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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
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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
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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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Who weare Kape is a SaaS business focused on the provision
- f
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
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
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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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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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
8
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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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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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)
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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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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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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