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Very reassuring numbers here today with organic growth of 74% ( excluding PIA) in the privacy vertical .
Key metrics on customer retention and total subscribers up from 1 million at half year
to 2.35 million ( including PIA) at year-end are very good indeed .
Kape do not upfront revenues but spread over the life of the contract - any investor who
knows the software / IT industry will be very wary of companies that upload revenues on medium/ longterm
contracts .
The subscriber numbers going forward will be the key influencer in the share price performance.
If Kape can move the dial on numbers to say 3 million this year then we may see a share price close
to £2.50 or better imho.
Progressive Equity Research also have a new note out today - their forecasts are higher and are as follows:
this year : 19.6c EPS
next year : 21.1c EPS
N+1 Singer are joint brokers so have updated this morning but as policy don't have target prices etc.
Here's a couple of extracts - they forecast 16.2c EPS tfor this year (2020):
"Rapid growth confirmed
Kape have announced a full year trading update confirming the expected strong growth in top-line and adjusted EBITDA. Kape’s sales growth accelerated sequentially to 19% h/h in H2 (H1: 7%), supported by continued growth in the Group’s core Digital Privacy segment. Full year revenues of c.$66m (N1S: $68.9m) were achieved after some reallocation of marketing investment towards Digital Privacy (sales recognised over time), which has in turn led to an improvement in revenue visibility for future periods.
Adjusted EBITDA is now expected to be ahead of expectations: ($14.5m; N1S: $13.9m) as a result of a higher than expected proportion of Digital Privacy sales.
Management guidance targets revenue growth of 85% and adjusted EBITDA growth of >150% in FY’20E (inc acquisition of PIA), in-line with expectations, and we make no changes to forecasts at this time. FY’20E OpFCF yield is forecast at 5%, ahead of comparative high-growth peers."
"Impact on earnings & valuation
Management guidance for revenues of $120m - $123m and adjusted EBITDA of $35m - $38m (inc acquisition of PIA) is in line with previous forecasts, and we make no changes at this time. Unit economics in Kape’s core market are attractive, and we see a number of supportive trends which have the potential to push positive returns higher still: 1) Market consolidation and rising barriers to entry; 2) Price increases over time (Nord VPN and HideMyAss recently reduced discounts); and 3) Further improvement in retention rates. We see a blue-sky LTV:CAC of 4.0x as achievable (Current: 2.7x). The OpFCF story is building, with OpFCF yield for FY’20E of 5%, rising to 7% in FY’21E."
Terrific stuff. EBITDA slightly above expectations too. And a very confident outlook:
"We have entered 2020 in a very strong position, focused on driving earnings growth and maintaining our historic levels of strong cash generation, alongside maximising the positive impact of our acquisitions."