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Published on: March 19, 2020

Strong financial performance in FY 2019

Kape’s results for FY 2019 are in line with numbers given in January’s trading update. Importantly, a further strong period of SaaS KPIs underpins revenue and earnings visibility. Management has delivered a strong financial performance while executing a substantial, earnings enhancing acquisition towards the end of the period. The Group completed the transformational and significantly earnings enhancing acquisition of Private Internet Access (PIA) in December 2019 and integration is ‘well underway’, with management still expecting to realise $3.5-4.5 million annual savings in 2020. As well as expanding the Group’s user base, the deal brought additional product innovation and R&D capabilities. Previous acquisitions, ZenMate and Intego, benefited from further investment in customer acquisition. The Group has also announced the promised new bank facility which reduces its cost of debt and, in our view, represents a significant endorsement of Kape’s business model by leading banks. We make small adjustments to operating items noting that the group has reiterated its guidance for FY 2020E of $120-123m revenue and $35-38m Adjusted EBITDA, with our estimates sitting prudently within this range.

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