Kape Technologies Share Discussion Threads

[rimau1] 01/8/2018 16:13

Here you go Rivaldo, it makes for pleasant reading.
All of these activities are performing well, so much so that Kape’s cash profits increased by almost half to $4.3m (£3.3m) on revenues of $26.4m in the first half of this year, underpinning expectations of analysts at Edison Investment Research that the company can deliver cash profits of $10.2m for the full year to boost pre-tax profit from $7.5m to $8.7m. On this basis, expect adjusted EPS of 5.4¢, or 4.1p at current exchange rates.

A key take for me is Kape’s rising recurring income stream – 40 per cent of Reimage sales in the first half were sold on a subscription basis – which improves the quality of revenues as well as forward visibility, thus de-risking forecasts. The other point worth noting is that having seen last year’s €9.2m (£8.2m) earnings accretive acquisition of Cyberghost outperform internal budgets, the board are using $16m of the company’s $62.7m cash pile to acquire Seattle-based Intego, a leading Mac and iOS cybersecurity and malware protection software-as-a-service (SaaS) business.

The acquisition provides Kape with a foothold in the malware protection market and boosts its product portfolio with the addition of complementary malware protection and security solutions; offers scope to leverage Intego's technology and development skills to expand into other complementary software solutions – Kape’s management intends to develop and launch an anti-malware product for Windows users based on Intego’s technology; increases Kape’s user base by 150,000 paying users, with high renewal rates of above 75 per cent; and creates cross-selling opportunities for both Kape's and Intego's products across their respective customer bases.

I would also flag up that although Intego is already highly profitable – the business posted pre-tax profits of $1.4m on revenue of $6m in 2017 based on an average annual subscription of $40 per customer – there is potential to accelerate Intego's user acquisition strategy and boost its profit margin by leveraging off Kape's digital marketing expertise.

Moreover, after factoring in a full 12-month contribution from Intego next year, then analysts predict Kape can increase its revenues by a sixth to $69.7m in 2019 to deliver cash profits of $13.2m. On this basis, expect pre-tax profits of $11.8m and EPS of 7.2¢ (5.5p). Also, after factoring in retained profits earned in the second half of this year, and adjusting for the $7m special dividend of 3.55p a share paid out in May, Kape should have $52m (£37m) net funds on its balance sheet by the year-end, a sum equating to 21 per cent of its current market capitalisation.

This means that net of cash the shares are rated on 18 times 2019 earnings estimates, hardly a full valuation given the potential for Kape’s management team under the leadership of chief executive Ido Erlichman to maintain the strong growth they have delivered since I initiated coverage two and a half years ago. There is also scope for the directors to make further complementary acquisitions to augment Kape’s product portfolio, and boost earnings further.

[rivaldo] 01/8/2018 15:31

It's subscription-only though wynmck - and I don't subscribe :o))

[wynmck] 01/8/2018 12:29

?....your link above takes you to it

[rivaldo] 01/8/2018 10:17

If anyone can paste Simon Thompson's article here that would be appreciated - after a suitable interval if felt necessary.

[malcolmmm] 31/7/2018 14:27

From 128p to all fall to 122p this morning to 1.33p at present. With light trading you have to be careful of the whiplash effect.

[rivaldo] 31/7/2018 14:10

Ah - thanks wynmck...



"Profiting from cyber security

Simon Thompson

Aim-traded Kape Technologies (KAPE:125p), a provider of cyber security software formerly known as Crossrider when I included the shares, at 47.9p, in my 2017 Bargain Shares Portfolio, has reported a robust pre-close trading update ahead of half-year results on 24 September....."

[wynmck] 31/7/2018 12:29

ST ups tgt price to 180p in IC

[gswredland] 27/7/2018 17:24

Getting bought up on slight dips

[aishah] 27/7/2018 15:18

Edison note:

[aishah] 26/7/2018 13:59

Progressive Equity Research fcst Adj EPS growth of 37.4%(2018) followed by 42.3%.

[gswredland] 26/7/2018 11:06

I think SCSW mentioned it going vertical!

[longshanks] 26/7/2018 10:44

Could go vertical. This is still very cheap for this kind of business on this kind of growth trajectory.

[essential] 26/7/2018 08:13

New high breakout. SHope it holds on good volume

[rivaldo] 26/7/2018 08:12

Indeed! Nothing wrong with 172% underlying EBITDA growth. The $62.7m cash pile looks ahead of expectations too?

The Media division sale looks like a canny move given the de minimis historic profit and the potential for profit-share.

Looks like there's still some work to do in H2 to achieve revenue and EBITDA forecasts AFAICS, but that may just be seasonality or some other explanation - research from Edison and Progressive may explain further.

However, most importantly, the outlook statement is extremely confident:

"We have made a strong start to 2018, as demonstrated by growth in our underlying EBITDA. In the second half of the year, we expect to build upon this solid growth by integrating the recently acquired Intego and continuing to focus on developing our existing product stack to accelerate user acquisition and broaden our reach in order to become a leading SaaS-based consumer cybersecurity business."

[gswredland] 26/7/2018 08:07

Yes great statement

[longshanks] 26/7/2018 07:48

I love trading updates that use the word "strong"

[rivaldo] 25/7/2018 10:44

New Progressive Equity Research report out today:



Summary:

"Complementary products and synergy opportunities

Kape has announced the acquisition of Intego, a malware protection and cybersecurity SaaS solution, for U$16 million in cash.

Intego is focused on the provision of malware protection, firewall, anti-spam, backup, data protection and parental controls software for Mac. The deal fits directly into Kape’s acquisition strategy of accelerating its growth in the cybersecurity market. It provides the Group with the opportunity to realise synergy benefits through additional sales, a lower cost structure and the application of Kape’s skill in efficient online user acquisition to Intego’s products.

In paying 11.4x historical profit before tax, Kape gains ‘significant’ levels of recurring revenues from subscribers through Intego’s strong position in the malware protection market. Management expects the acquisition to be earnings enhancing in the current financial year. Our estimate changes also reflect that as we add U$0.3 million and U$1.1 million to EBITDA for FY 2018E and FY2019E respectively. We leave revenues unchanged ahead of the anticipated H1 trading update."

[rivaldo] 25/7/2018 08:45

Interesting to see from the Edison report that KAPE are now on an ex-cash P/E of only 14.5 for next year.

With another acquisition or two from the forecast $53m cash, the ex-cash P/E could fall substantially, perhaps even down to single figures.

[igoe104] 25/7/2018 08:28

Breaking out here, hopefully new highs incoming.

[aishah] 24/7/2018 10:18

TechMarketView:

London-headquarted security software business Kape Technologies plc has acquired Neutral Holdings Ltd, trading as Intego, from Bessemer Venture Partners for $16.0m.

Kape, known as Crossrider plc until March 2018, was founded in Israel in 2011 and listed on the London Stock Exchange in September 2014. The business originally focused on the adtech sector, but struggled against the big players in market. Soon after CEO Ido Erlichman joined the business in June 2016, Kape switched its attention to acquiring and developing cybersecurity software solutions.

The business achieved revenues of $66.4m in 2017, up c.17% on the previous year (2016: $56.5m). During the year it completed the acquisition and integration of the CyberGhost VPN business and launched Reimage, its online computer repair service, for MacOS.

Seattle-based Intego was founded in 1997, it provides antivirus, firewall, backup and data protection solutions for MacOS and iOS devices. The acquisition aligns with Kape's strategy of building growth through acquisition in the cybersecurity market and will help extend its product portfolio in the sector.

hxxp://www.techmarketview.com/ukhotviews/archive/2018/07/24/kape-technologies-acquires-intego

[aishah] 24/7/2018 09:40

Edison update:
Kape’s acquisition of Intego for $16m looks a good fit. It broadens Kape’s portfolio by adding anti-malware software and significantly strengthening its Mac offering. We see good scope for sales synergies through cross-selling and leveraging Kape’s customer acquisition platform. The deal boosts our FY18 and FY19 EPS by 2% and 9% respectively, while synergies should strengthen beyond our forecast period.

[gswredland] 24/7/2018 08:29

Just lucky really!
Saw a tick up after the low and went for it but thanks star

[starpukka] 24/7/2018 08:03

gswredland, looks like you have made a good trade.

[igoe104] 24/7/2018 07:52

The best Mac antivirus software 2018, (Number 2 in the list)

[rivaldo] 24/7/2018 07:44

This looks an incredibly good acquisition - a pre-tax P/E of just 11.4 for a cybersecurity and malware business making $1.4m historic PBT looks terrific value.

Plus high recurring income, cross-selling opportunities...