15 Jan 2019 07:00
This announcement contains inside information for the purposes of Article 7 of Regulation (EU) No 596/2014
15 January 2019
Kape Technologies plc
("Kape" or the "Group")
Trading Update
Kape (AIM: KAPE), the consumer security software business, provides an update on trading for the year ended 31 December 2018.
The Group performed strongly in the year following initiatives both to grow Kape's product offering and user base, and to generate higher margin recurring revenues.
Adjusted EBITDA1 for the year is expected to be slightly above market consensus at $10.4 million (2017: $8.3 million), representing an increase of 25%, with an anticipated increase in underlying Adjusted EBITDA2 of 70% (2017: $6.1 million). This was achieved on revenues for the Group of $56.4 million (2017: $66.4 million), with the change in revenues anticipated, and as a result of the divestment of the Media business, enabling the Group to fully focus on delivery of cybersecurity solutions.
Revenues for the Group's App Distribution segment, which is now Kape's sole focus, are anticipated to be $52.1 million (2017: $48.2 million), representing growth of 8%, with profitability and margins continuing to improve due to the switch to a recurring revenue-based model.
Significant progress has been made in transitioning customers to subscriptions, with future revenue generated from existing users in 2018 anticipated to be $30 million3 in future periods (June 2018: $18 million). Customer retention is c.74% for the year (2017: 69%), with the Group's subscriber base increasing by 219% to c. 830,000 users in December 2018 (December 2017: c. 260,000).
In July 2018, Kape announced the acquisition of Intego, a leading Mac and iOS cybersecurity and malware protection SaaS business, and in October 2018, Kape acquired ZenMate, a multi-platform security software business with a focus on the provision of VPN solutions. The integration of both businesses is progressing ahead of management expectations and the benefits of the implementation of Kape's user acquisition capabilities are anticipated to be realised in 2019.
The Group's balance sheet remains strong with a closing cash position of $40.3 million at year-end.
The board is pleased with Kape's strong performance during the year. The Group has entered 2019 with increasing demand for its products and expects to continue this growth trajectory in the medium term.
The Group will report its results for the year ended 31 December 2018 in March 2019.
Ido Erlichman, Chief Executive Officer of Kape, commented:
"2018 was an excellent year for Kape, during which we delivered both organic and acquisitive growth, resulting in a 70% increase in underlying Adjusted EBITDA1,2. This success has been underpinned by ongoing progress in growing our customer base and recurring revenue streams, which is particularly pleasing as we transition to a SaaS-based model.
"Both Intego and Zenmate are being integrated at pace, further demonstrating Kape's ability to source and acquire businesses to successfully develop our broader offering, with our digital marketing expertise remaining central to Kape's success."
1 Adjusted EBITDA is a non-GAAP measure and a company specific measure which excludes other operating income and expenses which are considered to be one off and non-recurring in nature.
2 The Adjusted EBITDA attributable to the Web Apps and License division for 2017 was $2.2 million. This division was discontinued as of September 2017; as such no revenue was recorded in 2018.
3 Calculated as expected revenues from first renewal of the existing user base in addition to the deferred revenue balance
Enquiries:
Kape Technologies plc Ido Erlichman, Chief Executive Officer Moran Laufer, Chief Financial Officer
| via Vigo Communications |
Shore Capital (Nominated Adviser & Broker) Toby Gibbs / James Thomas
| +44 (0)20 7408 4090 |
Vigo Communications (Financial Public Relations) Jeremy Garcia / Antonia Pollock kape@vigocomms.com | +44 (0)20 7390 0237 |
About Kape
Kape is a cybersecurity company focused on helping consumers around the world to have better experience and protection in their digital life. Kape develops and distributes a variety of digital products in the online security space. The Group utilises its proprietary digital distribution technology to optimise its reach and create a superb user experience. Kape offers products which provide online security, privacy and an optimal online experience. Kape's vision is to provide online autonomy for a secure and accessible personal digital life, with team of over 350 people across seven locations worldwide.
www.kape.com