Crossrider earnings down as it buys CyberGhost

Online distribution and digital product company Crossrider announced its final results for the year ended 31 December on Tuesday, with revenue of $56.5m, down from $84.6m in 2015.

The AIM-traded firm said the decrease was primarily due to the expected decline and decision to cease investment in the web apps platform.

Adjusted EBITDA was $6.4m, down from $10.1m, and the board reported an increase in adjusted cash from operations to $7.9m from $6.9m.

Cash conversion from Adjusted EBITDA was 123%, improving from 69%.

The board said there was an increase in media and app distribution combined segment results to $14.7m from $12.9m.

It also posted an increase in media and app distribution combined segment margins to 28.3% from 22.4%.

Crossrider’s balance sheet remained strong with $72.1m cash at year-end from $71.3m, and no debt.

“Having joined Crossrider in May, I'm delighted to report significant progress across our business and that we are on track in the execution of our strategic plan,” said chief executive Ido Erlichman.

“We have refocused Crossrider's core operating activities and are now well positioned to grow a world-class digital distribution platform both organically and through our stated acquisition ambitions.”

In a separate announcement, Crossrider also announced on Tuesday the acquisition of the entire issued share capital of CyberGhost for an initial consideration of €3.2m in cash, €3.0m through the issue of 4,057,813 options over ordinary shares exercisable at nominal value and an EBITDA based earn-out payment capped at €3.0m.

The board described CyberGhost as a “leading cyber security SaaS provider”, with a focus on the provision of virtual private network solutions.

The acquisition was expected to be earnings-enhancing in the current financial year.

In the year to 31 December, CyberGhost generated EBITDA of $1m and significant levels of recurring revenues from subscribers.

"Crossrider's expansion in the cyber security arena is strategically very significant given its scale and the growth opportunity it presents,” commented Ido Erlichman.

“We are thrilled to join forces with CyberGhost's highly experienced team and look forward to growing our reach together.

“This is an exciting step in the development of our business and marks another important milestone in our transformation into a highly scalable, online distribution platform.”