Kape Technologies performs 'strongly' even as revenues decline
By Josh White
Date: Tuesday 15 Jan 2019
(Sharecast News) - Consumer security software business Kape Technologies updated the market on its trading for the year ended 31 December on Tuesday, reporting that it performed "strongly" in the year following initiatives both to grow its product offering and user base, and to generate higher-margin recurring revenues.
The AIM-traded firm said adjusted EBITDA for the year was expected to be slightly above market consensus at $10.4m, representing a year-on-year increase of 25%, with an anticipated increase in underlying adjusted EBITDA of 70%.
It said that was achieved on revenues of $56.4m, down from $66.4m year-on-year, with that change in revenues anticipated as a result of the divestment of the media business, which Kape said enabled it to "fully focus" on the delivery of cybersecurity solutions.
Revenues for the group's app distribution segment, which was now its sole focus, were anticipated to be $52.1m - an increase of 8% - with profitability and margins continuing to improve due to the switch to a recurring revenue-based model.
Significant progress was made in transitioning customers to subscriptions, with future revenue generated from existing users in 2018 anticipated to be $30m in future periods, up from $18m in June.
Customer retention was around 74% for the year, rising from 69% year-on-year, with the group's subscriber base rising 219% to around 830,000 users in December.
In July, Kape announced the acquisition of Intego - a Mac and iOS cybersecurity and malware protection software-as-a-service business - and in October, it acquired ZenMate, which it described as a multi-platform security software business with a focus on the provision of VPN solutions.
The integration of both businesses was said to be progressing ahead of management expectations, with the benefits of the implementation of Kape's user acquisition capabilities anticipated to be realised in 2019.
Kape's board said the firm's balance sheet remained "strong", with a closing cash position of $40.3m at year-end.
It said it was pleased with Kape's strong performance during the year, adding that it entered 2019 with "increasing demand" for its products, and expected to continue that growth trajectory in the medium term.
"2018 was an excellent year for Kape, during which we delivered both organic and acquisitive growth, resulting in a 70% increase in underlying adjusted EBITDA," said chief executive officer Ido Erlichman.
"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."
Kape Technologies said it would report its results for the year ended 31 December in March.
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