Kape’s recent Capital Markets Day (CMD) was an extremely useful update on the many benefits of integrating complementary acquired businesses (including the collaboration between engineering teams) and the opportunities for upselling that new product development brings. Over the last six months, Kape has proceeded with the integration of PIA, expanding the growth of new users through the application of the Group’s user acquisition knowhow and technology. It has also made further enhancements to its product offering which, inter alia, will improve user engagement and retention. This note looks to bring out the main points from the CMD and highlights the significant progress that has been made this year.
The CMD highlighted the significant benefits that the Group is reaping from the collaboration between its businesses to combine expertise and R&D investment. In particular, it emphasised the success which management has had in integrating PIA into the Group, while developing and growing the CyberGhost Privacy Suite in a market which has expanded during the COVID-19 pandemic.
Kape has market leading privacy and software products which provide a strong offering to consumers on a global basis. Crucially, the Group has continued to trade strongly in 2020 with increased demand for its products as remote working has become the norm.
This customer proposition and the Group’s proven user acquisition model combine to produce significant growth in customer numbers, revenue and EBITDA. The growing proportion of Software as a Service (SaaS) agreements adds to the excellent revenue visibility of the Group.
The impact of the earnings enhancing acquisition of PIA can be seen in the levels of revenue and EBITDA growth, 83% and 148% respectively, in our estimates for FY20, its first full year of ownership.
In all, we believe that Kape is in a position to grow strongly organically from the base which the management team has established following a series of complementary acquisitions. It also retains the ability to make more acquisitions through which it can further accelerate its strategic delivery.