Kape has enjoyed a good first half of 2020 both in terms of operational progress and financial performance. Revenues increased 97% to $59.0 million (H1 2019: $29.9 million), a 12% increase on a pro-forma basis. The interim results reflect the Group’s continuing success in integrating its Private Internet Access (PIA) acquisition while growing subscriber numbers – now just shy of 2.4m in total - across the businesses. The focus on customer lifetime value is evident in the marketing spend and investment in new product development. Kape remains on track to meet previous guidance for the full year and expects to deliver synergies from the PIA deal at the top end of the mooted range. We believe that the Group has good revenue visibility and it continues to maintain a high level of user retention at 80%. We make no changes to estimates other than to reflect a higher amortisation charge. In our view, the interim results show that Kape continues to display the drive and capacity to meet the growing needs of consumers for digital privacy and security products in a rapidly evolving marketplace.
In H1 2020, Kape produced double-digit growth in revenue and EBITDA – both reported and pro forma – while continuing to invest in product development and showing improved cash generation. The Group also saw strong growth in recurring revenues to $50.8 million, an increase of 140%. Revenue visibility (from existing users) increased to $106.6 million.
Kape continues to make progress in the high growth privacy-first digital security space and to report positively on the integration of PIA and new product development.
PIA is proving to be a successful merger between two teams sharing technical knowledge and the same development methodologies. The Group is delivering new products to market in a very short space of time and we expect it to leverage PIA’s brand and business pedigree to good advantage to bring significant upsell opportunities.
With a growing, maturing customer base to which Kape can apply its user acquisition strategy and new product development, we note the potential for continued strong organic growth.
Although Kape has made a transformational acquisition in the form of PIA, it retains the capacity to make more acquisitions through which it could further accelerate its strategic delivery.