Crossrider’s interim results contain revenue and Adjusted EBITDA in line with guidance given in July’s trading update. They also reflect Crossrider’s ongoing transition towards a SaaS model and its repositioning as a B2C security software and online distribution platform. The results include three months’ contribution from CyberGhost and build on the performance in the last financial year with the App Distribution business performing strongly and the group as a whole demonstrating good underlying cash conversion again. We note the revenue and margin metrics of the Company and make small reductions in our revenue and cost estimates while leaving Adjusted EBITDA unchanged, noting that there will be a full six months’ contribution from CyberGhost in H2. The outlook remains positive as the Company continues to focus on its growth strategy, and CyberGhost’s user acquisition gains momentum.
The core App Distribution division reported revenues of U$21.1 million for the first half of Crossrider’s current financial year (H1 2016: $18.2 million). This reflects the expansion of Crossrider’s B2C cyber security software business – including the March 2017 acquisition of CyberGhost, a Cyber Security SaaS solution business.
The Media division’s half year revenues were U$7.3 million versus U$7.5 million reported in H1 2016. The performance of the Web Apps and License business reflected the decision to cease investment in the division with revenues of U$1.6 million (H1 2016: U$3.0 million.
The acquisition of CyberGhost expanded Crossrider’s position in the growing personal privacy and security market. The solution is becoming a key component of personal online security, protecting users' personal information when browsing the internet. We look in more detail at cybersecurity and virtual private networks (VPNs) in more detail in this publication.
After adjusting for one-off items, cash conversion for the first six months remained good at around 90% of Adjusted EBITDA. Cash of U$68.7 million as at 30 June 2017 compared to U$72.1 million six months earlier following U$5.6 million of investment expenditure during H1 2017. Crossrider has no debt.
Following the first half results, we reduce revenue estimates for FY 2017E and FY 2018E by 5% and 2% respectively. Offsetting cost reductions mean no change to Adjusted EBITDA or earnings estimates leaving the company trading on an FY 2018E EV/EBITDA multiple of 3.8x on our estimates.