Crossrider Plc (LON:CROS) is a B2C software business focussed on security/privacy and performance solutions. The company operates three core brands: Reimage. Patented software delivering repairs for PC and Mac. DriverAgent. Searches and updates for outdated drivers on computers, tablets and mobiles. CyberGhost. Leading cyber security provider with a focus on Virtual Private Networks. The acquisition of CyberGhost, announced March 2017, has extended Crossrider’s presence in high growth end markets, and reinforces the company’s strategy of moving towards a Software-as-a-Service (SaaS) business model. A core intellectual asset underpinning all of three is the company’s proprietary distribution platform, which maximizes market reach and drives strong returns on customer acquisition spend.
Crossrider Plc ( LON:CROS) will release FY 2017 results on March 13th . We expect these will confirm that Crossrider continues to deliver on its new business strategy. The strategy was announced in September 2016, and this was a big inflection point for the business and for the share price.
Some key details of 2017 performance were already announced in the trading update on January 16th: 1) Revenue growth of 16%, 2) EBITDA from core activities +154% (or +29% including legacy business), 3) net cash position of $69.4m. Looking forward, a key objective is to continue the transition to more SaaS revenues (details p2). We believe that 2018 will be another year of strong progress on this front, and for the business generally.
The shares have gained 112% since the start of 2017 as the new business model has begun to bring results, and the CyberGhost acquisition has been well received. However, the valuation is still not demanding at an EV/EBITDA multiple of 8.1x for 2018, with continuing strong revenue growth, further potential EBITDA margin upside, and potential to deploy the cash for further value-creating acquisitions.