First-half results from Crossrider (CROS:70p), a provider of security software and an online distribution platform, highlighted the dramatic change in the business in the past year, and are highly supportive of my view that fair value for the equity is at least 100p, or double the level when I included them in my 2017 Bargain Shares Portfolio ('Bargain Shares: second chance', 17 Aug 2017).
The company now sells four products to over 800,000 consumers including Reimage, a patented Microsoft-based product tool that enables users to clean up their computers; DriverAgent, a PC maintenance software products company offering a leading device driver search and update service, which scans computers for outdated drivers; and Cyberghost, a leading cyber security SaaS (software as a service) provider of secure virtual private networks (VPNs) which enables users, who pay an annual subscription of about $30, to connect through a secure tunnel to pass data traffic over public networks, an area of the market predicted to grow at a compound annual growth rate of 20 per cent over the next five years, according to experts.
Crossrider acquired Cyberghost six months ago for $9.8m (£7.4m) including an earn-out of $3.2m, and it already looks a shrewd purchase after the business increased paying subscribers by 17 per cent to 167,000 in the first half. It’s easy to see why given the threat posed by cybercrime to the security of personal data. For example, around 689m people were victims of cybercrime last year, and $16bn was lost to identity fraud. Not surprisingly, computer users are taking this threat seriously; in the US, a region accounting for a third of Crossrider’s overall revenue, over 40 per cent of working Americans have installed a virtual private network (VPN) on their laptop.