Capital Markets Day 25 June 2020 Disclaimer
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2 Introduction Ido Erlichman - Chief Executive Officer
Digital privacy markets in light of the recent Covid-19 impact Ted Kim - Head of North America and Board Member
Integration of Private Internet Access into the Kape group Richard Lee - Operations & Integration Director
CyberGhost Privacy Suite Timo Beyel - CTO Digital Privacy Tommie Podzemski – VP R&D Digital Privacy
Strategic objectives Ido Erlichman - Chief Executive Officer
3 Investment highlights
Substantial global revenue growth 1. Fully focused on high growth privacy-first digital security space $m Revenues 80
2. Strong customer proposition underpinned by CAGR 12% 66.060 60 proven user acquisition model 52.060 48.226 38.241 40 37.229 3. Market leading privacy and software security
products designed for global consumer markets 20 2015 2016 2017 2018 2019 4. Strong revenue visibility driven by a growing Strong EBITDA growth SaaS-based financial model $m Adjusted EBITDA 5. Proven track record of revenue and EBITDA growth 18 14.559 14 CAGR 23%
10.374 9 For the year ending 31 December 2020, we expect 8.085
revenues of above $120 million, and Adjusted 5.246 5.723 5 EBITDA of over $35 million 2015 2016 2017 2018 2019
*Excluding Kape’s discontinued operations
4 Kape’s journey to becoming a leader in the digital privacy space
• Completed 5 acquisitions over 3.5 years; deployed over $159 million of capital on M&A • Proven track record of acquiring and successfully integrating businesses
growth in paying subscribers, revenue and EBITDA Consistent H1 2018 500k H1 2019 1 million paying subscribers paying subscribers
May March July December New management Acquisition Acquisition Acquisition team appointed of CyberGhost of Intego of PIA
2011-15 2016 2017 2018 2019
September 2014 October March October IPO on AIM Acquisition of DriverAgent Name change to Acquisition of Kape Technologies ZenMate H2 2016 - Launch of H2 2019 > 2 million a new strategic roadmap paying subscribers
5 Our aim is to make the internet a safe and accessible place for everyone
Strong SaaS product suite, with a focus on digital privacy and digital security
Digital Privacy Digital Security
• CyberGhost, ZenMate and PIA applications are highly complementary • Restoro is a patented repair solution to fix PCs and Macs remotely; in their geographic focus removes malware and repairs computer software • Our products safeguard personal information when browsing the internet through unsecured networks and block malicious content • Proprietary Driverfix solution scans computers for outdated drivers across all Windows operating systems and devices • Additional privacy products Kape has an interest in: • Intego is a leading Mac OS cybersecurity SaaS provider, with solutions • Completely private browser including: • Encrypted search engine based on proprietary cryptography technology • Endpoint-Security Engine • Cloud based secured private storage solution • anti-spam • PhotoVault – a secured way to protect digital images • back-up • data protection • parental controls • NetBarrier – two-way firewall
6 Digital privacy markets in light of the recent Covid-19 impact
Ted Kim - Head of North America and Board Member
7 7
7 Market
The global privacy market is a fast growing billion-dollarmarket
59% 81% 79%
of consumers lack of Americans say they have of consumers are understanding about what is little/no control over the concerned over data use done with the data collected data collected about them from them
People want peace of mind for a better online experience and want to secure their digital lives
*Source: Pew Research
8 Market
VPN market exceeded $25bn in 2019 and is expected to reach $70bn in 2026
CAGR (2020-26): >12% >$25bn >$70bn
2019 2020 2021 2022 2023 2024 2025 2026
CAGR (2020-26)
Europe market CAGR (2020-26): 10% 16% 20% 18% LATAM market CAGR (2020-26): >15%
Software segment Cloud VPN Consumer segment
*Source: Global Market Insight
9 Data privacy
Ever expanding market
• Continued data breaches drive customer awareness and demand • Average Internet user's information will be shared with 800 different websites daily • Exposure of personal information including names, e-mail addresses, credit card numbers, and IP addresses
Global privacy is front and center
10M 900K 500K Global legislation addressing privacy • EU: GDPR in response to pressure from constituents • US: passed legislation permitting ISPs to capture and sellconsumer data to third parties * Sources: Wired, Bloomberg, Krebs on Security, Washington Post, ZD Net, Fortune
10 Data security
The security market's projected revenue is $170.4bn in 2022 with 8.5% CAGR expected growth rate through 2022
Every device is a potential entry point Number of connected devices are expected for hackers: to exceed 20bn this year:
Number of connected devices are expected to exceed 20bn this year: (m) 30.000 8.5% CAGR • Malware • Spyware • Ransomeware • Data Loss 20.000 • Spam • Phishing 10.000
0 2020 2021
Research indicates that 48% of phishing attacks occur on mobile devices
*Sources: Gartner, Wandera
11 COVID-19: Work From Home (WFH)
Increased number of personal devices used = increased risk for individuals & companies
Global downloads of video chat apps for Android and iOS (m) 30 Internal Network 26.9m Daily active users in March 2020 25
20 59.1m 4.3m 0.1m Employee 15 Skype* Zoom Houseparty Servers 10 6.2m 5.1m 5 Unmanaged Devices 0 January Febru ary March**
Zoom Skype* Houseparty
*Excluding Skype for Business | **March data as of March 26 | Source: Priori Data
12 COVID-19: Work From Home (WFH)
• Corporate exposure increased due to personal device usage by employees • Increased need for private WFH connections for corporate employees • There is an increased risk due to WFH connections being less secure than corporate/enterprise grade servers
13 COVID-19: Work From Home (WFH)
30,000% 33% Increase in phishing. Increase in remote access technologies and VPN where 48% of phishing attacks are on mobile devices usage since the beginning of the pandemic
* Source: Infosecurity Group, Wandera * Source: ZD Net
Individuals increasingly B2C market Rise in personal data Increasing awareness Internet Of Things COVID-19 is becoming targets of replicating B2B trends stored in the cloud of need to protect (IoT) increasing increasing the need for cybercrime digital presence levels of data and security connected devices
14 Kape & PIA
Make the internet private and safe for all by helping customers navigate their digital lives
User-oriented Adaptable and accessible for beginners and experts
PIA broadened Kape's customer reach to over 2.35 million paying customers globally
15 Integration of Private Internet Access into the Kape group
Richard Lee - Operations & Integration Director
16
16 Integration - overview
Kape's approach to the market PIA + KAPE = The “new” PIA
(‘000) 20 11 20 12 20 13 20 14 20 15 20 16 20 17 20 18 20 19 800 Cohorts analysis excluding PIA 700
600 Launch of user acquisition activity 500
400 275.4 300 170.0 122.3 200
100
0 2013 2014 2015 2016 2017 2018 2019
Bringing together two sets of complementary competencies
Marketing Customer Service Infrastructure Culture
17 Integration - cohorts
Merger has resulted in improved subscriber portfolio
20 11 20 12 20 13 20 14 20 15 20 16 20 17 20 18 20 19 “Classic” PIA Kape 2.000 Cohorts analysis including PIA 1.800
1.600 + = 1.400 1.200
1.000
800 • Strong brand • Higher growth 600 • High retention rate • Younger cohorts • Low user acquisition cost • Advanced user 400 • Cash flow acquisition platform 200
0 2011 2012 2013 2014 2015 2016 2017 2018 2019
• Consistently strong growth • Balanced cohort profile
18 Integration – user acquisition
Ready for high growth user acquisition program
Private Internet Access new sign-ups from Kape’s user acquisition platform 6,000 5,000 User acquisition platform 4,000 1. Advanced BI enabling new approaches 3,000 2. In-house Program 3. New channels – influencers, podcasts 2,000 1,000 ,000 Jan-20 Feb-20 Mar-20 Apr-20 May-20
19 Integration - marketing
Refreshed user journey
20 Integration - marketing
Customized, co-branded landing pages for new affiliate channels
21 Integration – customer service
Improving customer service leading to higher retention and customer satisfaction
+ =
Denver, CO Manila, Philippines Synergies
PIA U.S. Headquarters Kape Group Customer Service 24/7 coverage 6 PIA CS Agents 27 PIA CS Agents 800% increase in chat support 45% more cost effective
22 Integration – customer service
Customer service improving across all metrics
Ticket resolution time (h) First response time (h)
120 25 22,3 97,6 19,8 86,5 78,8 20 16,9 66,7 80 61,7 60,3 57,2 15 11,9 46,5 8,8 9,6 10 6,6 40 3,4 5
0 0 Nov Dec Jan Feb Mar Apr May Jun Nov Dec Jan Feb Mar Apr May Jun
Customer satisfaction
100%
90% 91,0% 80% 89,0% 90,0% 90,0% 90,0%
70% 80,4% 80,0% 75,3% 60%
50% Nov Dec Jan Feb Mar Apr May Jun
23 Integration - infrastructure
Realizing economies of scale and improving infrastructure
Synergies on Track • Economies of scale with vendors • Merging into next generation infrastructure roadmap • Wider geographic server coverage • New technology protocols • On track to achieve guidance of at least US$3.5-4.5 million cost synergies for 2020
24 Integration - infrastructure
On track to deliver significant synergies
Infrastructure costs per subscriber
$0,80
$0,70
$0,60
$0,50
$0,40 40% decrease in monthly operating expenses* $0,30
$0,20
$0,10
$0,00 Jul-19 Jul-20 Jan-19 Oc t-1 9 Jan-20 Oc t-2 0 Apr-19 Jun-19 Apr-20 Jun-20 Feb-19 Ma r-1 9 Sep-19 De c-1 9 Feb-20 Ma r-2 0 Sep-20 De c-2 0 Nov- 19 Nov- 20 Aug-19 Aug-20 Ma y-1 9 Ma y-2 0
*Expected Q3 2020 compared to Q3 2019
25 Integration - culture
Seamless integration and retention of Private Internet Access technology and development teams
Bringing together two companies with shared mutual objectives 1. Investing and growing Private Internet Access brand 2. +2 FTEs YTD at Private Internet Access 97% retention rate (minus pre-planned departures) 3. Remote working culture of Private Internet Access integrating well into Kape
26 Integration - foundation and new products
Foundation is set for future opportunities
Digital identity And more to Data encryption End-point security Private browser Password Manager protection come…
Unified customer service, management, marketing and technology
27 Product roadmap
Tommie Podzemski – VP R&D Digital Privacy
28
28 Infrastructure Consolidation Project “GEN4”
29 PIA currently
State of the art system, but was in need of some expansion and development
• No proactive management • Expensive and under-utilized hardware • No autohealing, a lot of manual intervention by OPS team • No IPV6 support • Time consuming to add new regions and protocols • Not prepared for zero access
30 GEN4
Advanced High performance Multi-region Security Modularity monitoring and self healing
31 Joint venture project
+ Research Integration into client (apps) Infrastructure development =
• One GEN4 server is equivalent to ten old PIA servers • Rapid deployments and upgrades • Deployed to bare-metal PIA owned hardware • First step towards zero access • Prepares for cross-fleet IPV6 support
32 WireGuard The next generation VPN protocol
33 Joint venture project
+ Infrastructure architecture Client (apps) part and research (Privacy Enhancements) =
• 6 weeks until Go-To-Market, 3x faster than expected • PIA was the first major VPN to support WG across all client platforms • CyberGhost shortly followed suit
Conclusion: Win-Win situation. Together with GEN4, this gives better speed for users, and lower costs for us
34 Stronger together
35 CyberGhost Privacy Suite
Timo Beyel - CTO Digital Privacy Tommie Podzemski – VP R&D Digital Privacy
36
36 Community platform
Establish an early adopter FINANCIAL HIGHLIGHTS community
Lean startup principle: build, measure, learn, improve
Build
Improve Measure
Learn
37 Community platform
Collect user feedback
Starting point for new product ideas
38 Privacy : what do we need?
39 Blinds : against eavesdroppers
40 Keep your doors locked
41 Alarm system
42 Tape your camera
43 Privacy dashboard
44 Demo
For a better view of the demo, please select full-screen on the video, and then revert to the standard view once the demonstration has concluded
45 Endpoint-security engine
Passed VB100 certification Member of Microsoft virus initiative program
46 CyberGhost Privacy Suite - endpoint-security integration
47 CyberGhost Privacy Suite - endpoint-security integration
48 CyberGhost Privacy Suite - endpoint-security integration
49 Up-selling
50 Up-selling
51 CyberGhost plug-in framework
Reusable components Unified layout and user experience Theming and white labeling
Custom controls
52 Plug-in menu
53 Main navigation area
54 Content area
55 Action area
56 Mobile strategy
• Provide a unique experience across all platforms • Offer additional, complementary privacy features
Photo Vault Privacy Browser
57 Protecting digital images
• Stores sensitive photos in a dedicated library • FaceID/TouchID/PIN protected • Automatic import with Machine Learning Technology
58 New Products
59 Identity protection product
• Global Identity Theft Protection Services Market is expected to reach USD 18.70 billion by 2025(1)
• We protect your devices, we protect your network. But we don’t protect your identity
• Internet and Dark Web Monitoring … and more!
(1) https://www.adroitmarketresearch.com/press-release/identity-theft-protection-services-market
60 61 Private browser
• Privacy focused and ephemeral desktop and mobile browser free of any tracking and Google Services dependencies
• Your data is your property, no more data spillage and harvesting in the background while browsing
• Coming to Desktop (Windows, Linux and Mac), iOS and Android
62 63 Password manager
• Password Management market size worth $2.05 Billion by 2025*
• High user retention on our platform and improves overall Life Time Value (LTV)
• Coming to the web, extensions, iOS and Android
*https://www.grandviewresearch.com/press-release/global-password-management-market
64 Takeoff
65 Strategic objectives
Ido Erlichman - Chief Executive Officer
66
66 Kape’s ongoing strategic priorities
1. Expand global customer base The group services 2.35 million paying subscribers, providing a significant global platform for continued growth 2. Product innovation and R&D to further competitive advantage and user satisfaction Kape’s enhanced product stack includes a suite of privacy-based software solutions focused on browsing, encryption and connectivity 3. Leverage customer acquisition platform Significant opportunity to leverage Kape’s proprietary technology platform to deliver continued strong organic growth
4. Continue acquisitive expansion Leverage Kape’s success in integrating and growing SaaS products in the consumer privacy space to create a truly dominant brand
67 Summary and outlook
1. We delivered on all strategic milestones
2. A leading brand in the growing digital privacy and security space servicing over two million users globally
3. Kape has delivered growth across the board with strong growth in revenues, profitability and improved margins
4. Highly cash generative and built on a robust SaaS model
[email protected] 5. Significant opportunity to drive future growth
68 Contact
Awards For further information please contact: [email protected] +44 (0) 203 983 9655
1 Water Lane London NW1 8NZ www.kape.com
69