Israeli cybersecurity company Kape Technologies (LSE: KAPE), announced this morning the acquisition of Intego, which specializes in cybersecurity and SaaS-based software protection for iOS. Kape (formerly CrossRider), part of the Teddy Sagi Group, has acquired Intego from Bessemer Venture Partners for $16 million.
Based in Seattle, US, Intego focuses on providing protection against malicious software, firewalls, anti-spam, backup, data protection and parental control software for Mac. The acquisition is expected to contribute to group profitability in the current financial year. In 2017, Intego reported pre-tax profit of $1.4 million with a significant level of revenue generated by subscriptions.
Kape, operating from four main centers in Tel Aviv, London, Berlin and Bucharest, has a strategic plan based on three areas: internal R&D; additional acquisitions to expand the range of products and customer-base; and speeding up growth by maintaining a strong cash-flow. In the past, Kape CEO Ido Erlichman has declared that the company has about $70 million cash for carrying out deals and that the company is examining a number of acquisition options. Intego is the second significant company that Erlichman has chosen to invest in since becoming CEO in 2016. The integration of the CyberGhost, the previous acquisition, has succeeded beyond management's expectations with a major increase in revenue and the number of customers who have subscribed.
Kape CEO Ido Erlichman said, "As part of Kape's growth strategy we have set ourselves the aim of implementing quality acquisitions that will yield value for both the company's customers and investors. Intego is a good fit with substantial potential and I am delighted with this step, which will enhance our arsenal of products in cyber protection for iOS, and we will continue to look for other companies that will take part in our vision - to provide customers worldwide with a secure, private and protected digital experience."
He added, "The acquisition opens a window for growth by combining the experience of Kape in digital marketing, which is expected to speed up Intego's strategy of recruiting users and increasing profit margins after it is integrated. Through this deal, we will not only expand the volume of products and Kape's R&D capability but also we will add to our user base and expand it by 150,000 paying users, with a renewal rate above 75%, and consequently our potential number of opportunities to cross-sell will also grow. In addition, due to Intego's returning revenue model, we expect an improvement in the quality of future revenue and profit, representing a central target as part of completing the transition to a SaaS-based business."
2017 was the first full calendar year in which the new strategic plan was fully applied and positives results have not been slow in coming. Kape reported major growth of about 172% in operating profit (EBITDA) and accordingly this is also brought about confidence among investors with the share price soaring by about 138% during 2017. Kape has 300 employees, of whom 50 are based at the development center operated by the company in the Azrieli Sarona Tower in Tel Aviv.
In the deal, Kape was represented by Advs. Asaf Rimon and Galit Farkash of the ERM law firm.
Published by Globes [online], Israel business news - www.globes-online.com - on July 24, 2018
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