Kape has delivered on a very strong H1 period – revenues from core ongoing operations up 14%, with Adjusted EBITDA tracking well towards our full-year estimates. We make no changes to profit forecasts, but take comfort from the strength of the H1 delivery. More strategically, the recent Intego deal has added malware protection to the expanding technology suite, offering a steadily-more-holistic solution to users’ technology security needs.
H1 saw strong growth in core revenue (up 14%), adjusted EBITDA (up 178% on a like-for-like basis) and cash from operations (up 90%). The group ended the period with net cash of $62.7m, still very well funded for further acquisitions, and/or material investment in the product and strategic roadmap.
Performance in the long term will be driven by new customer subscriptions, client retention and strong margin generation. H1 saw impressive delivery on all three: customer subscriptions more than doubled, to 561,000; customer retention rose from 69% to 74%, and EBITDA margins rose from 10% to 15%.
Post the period end, Kape acquired a pure-SaaS malware protection business, Intego. The deal offers significant opportunities both in its own right, and through applying Kape’s customer acquisition skills…we comment further overleaf.
Given the strength in H1 delivery, the group appears to be well on track for our full-year 2018 estimates. We chart the EBITDA progression, in particular, overleaf. At this point we feel it prudent not to raise estimates – although the balance of risk has perhaps shifted to the upside. We have nudged down our net cash estimate to reflect the capitalised investment in subscription customers.
Overall, these results demonstrate a business that is delivering on its longheld and clearly-enunciated plan: focus on high quality consumer-facing products in the cyber security arena, and use excellence in customer acquisition to build a large body of loyal and profitable customers. The RNS shows all elements of this – product enhancements, M&A into new areas and ongoing rigour on customer marketing. We look forward to further developments, both organic and through acquisition…