Published on: January 16, 2019

Positive trading update for FY 2018E

Kape has issued a trading update which confirms a strong finish to 2018, with Adjusted EBITDA likely to be slightly above consensus at U$10.4 million – up around 25% on the prior year. Revenues were U$56.4 million, down as expected on the prior year after the sale of the Media business.  The Group ended the year with cash of U$40.3 million. We adjust our FY 2018E estimates to reflect these numbers which means that our revenue estimate reduces by 8% while Adjusted EBITDA increases by 2%. For FY 2019E, we leave estimates unchanged given the momentum in the business and await further detail in the March final results announcement. The proportion of subscription revenue has increased again, as the Group continues to transition customers while customer retention has improved further. Over the year, the Group’s subscriber base increased by 219% to c. 830,000 users. In line with November’s update on Intego and ZenMate, the integration of both acquired businesses is progressing ahead of management expectations and management continues to expect the benefits of the implementation of Kape’s user acquisition capabilities to be realised in 2019. In all, this is a very encouraging update with progress on user acquisition particularly of note.