TIDMECK
RNS Number : 5316X
Eckoh PLC
05 May 2021
5 May 2021
Eckoh plc
("Eckoh", the "Group", or the "Company")
Full year trading update
- Trading in line with market expectations
- Strong revenue and order momentum in US Secure Payments;
resilient performance in the UK
- Expectation of material growth in FY23, after FY22 comparable
to current year due to the pandemic
Eckoh plc (AIM:ECK), the global provider of Secure Payment
products and customer contact solutions, announces a trading update
for the year ended 31 March 2021.
The Board confirms that trading for the year ended 31 March 2021
was in line with market expectations. A highlight was the robust
level of operating profit, which slightly exceeded last year's
total of GBP4.7m, despite the planned exit from US Support, a
significant negative currency movement, the material Coral contract
in the prior year and the challenges of the COVID-19 pandemic.
This outcome reflects particularly strong growth in our US
Secure Payments operation, which grew by more than 50% and now
accounts for nearly 80% of total US revenues, and a resilient UK
performance despite the trading conditions continuing to be
impacted by the ongoing lockdown.
Following record total order levels last year of GBP35.9m, we
secured total orders in FY21 of GBP30.7m, with GBP16.7m in the
second half. This is an excellent outcome given the continued
disruption and uncertainty in market conditions, which were
particularly acute in the first half of the financial year.
US Division
The strong performance in the US was driven by increasing demand
from large enterprises to secure customers' payment data in their
contact centre and IT operations, a technology solution for which
Eckoh is the market leader. As previously announced, Eckoh signed
new Secure Payments contracts worth $11.6m in the year (FY20:
$10.7m), of which $9.3m was won since September 2020, and the
highest number of contracts in a year since Eckoh entered the US
market. Furthermore, total US Secure Payments contract value was at
a record level, reflecting the new contracts won as well as the
first year of meaningful contract renewals, which will now continue
to grow in number and value.
Consistent with our longstanding goal to focus on Secure
Payments, we have continued our planned transition away from
third-party Support contracts. This approach, which will improve
revenue quality and visibility in the future, has seen Support
revenues decline from 27% of total US revenues in FY20 to less than
10% in this period. There were also a small number of Support
contracts in the UK, that were largely operated from the US, which
have also been discontinued in line with our strategy.
In the second half, we were pleased to win a $1m contract for
Coral licences, our agent desktop product that increases efficiency
by bringing all the contact centre agent's communication tools into
a single screen. It is worth noting that last year we had a large
one-off contract for Coral of $3.8m, making it a challenging
comparator, and the timing of these large orders remains hard to
forecast.
As highlighted previously, one positive consequence of the
pandemic has been the rapid increase in the number of Secure
Payments contracts won and delivered through Eckoh's Cloud
platforms, as larger enterprises have accelerated their move to the
Cloud. These accounted for more than half the contract value Eckoh
has won, and more than 80% of the number of contracts. We do not
anticipate this trend to reverse and whilst this reduces the
upfront payments (and cash received) for implementations, it
increases the proportion of recurring revenue and improves the
operational gearing, earnings quality and visibility in the
business. These Cloud contracts will support Eckoh's revenue
visibility in the longer-term and will enable us to grow faster.
Consequently, we will be investing significantly more in this area
in this financial year to drive greater growth in future years.
UK division
The UK delivered a resilient performance in the context of the
pandemic and we continued to see particularly high levels of demand
and new business wins coming from our existing clients. Total
business contracted of GBP18.9m (FY20: GBP20.1m) was an excellent
outcome given the abnormal trading conditions relating to the
pandemic and the record levels won last year. The UK operation
continued to operate in an uncertain business climate and the
ongoing lockdown inevitably resulted in further delays to projects
and purchasing decisions. Some of our largest clients in the
travel, retail and leisure sectors have had their transactional
activity severely reduced during the period, which continued to
impact our UK revenue (if not on a proportional basis). This will
continue into the current financial year until such time as
restrictions are lifted and volumes can return to pre-pandemic
levels.
As organisations adapt their customer engagement strategy to
reflect the increase in remote working that is now set to become a
permanent feature, we have seen improved interest in and sales for
our CallGuard Remote product, which facilitates the taking of
payments securely in remote working environments. Furthermore, we
expect an even faster adoption of emerging engagement technologies
such as conversational bots working in tandem with human agents,
and the number of companies who are accelerating their shift to
Cloud-based solutions. Eckoh will be able to assist new and
existing clients in responding to these changes.
Outlook and financial position
There was strong cash generation during the period and Eckoh's
balance sheet remains robust with net cash of GBP11.7m (FY20:
GBP11.6m), and total cash of GBP12.7m at the period end.
The Board expects revenue and profit for FY22 to be comparable
to FY21, and material year-on-year revenue and profit growth in
FY23. These expectations are subject to no further lockdowns in the
UK or US, and ongoing uncertainty in the macro-economic climate
because of the COVID-19 pandemic.
FY22 guidance reflects two fundamental dynamics. On one side,
Eckoh's market leadership in US Secure Payments, high levels of
recurring revenue and strong order book. On the other side, the
impact of the pandemic on new business activity, delayed
incremental recurring revenue, and transactional volumes in the UK,
allied to increasing investment in our Cloud-based Secure Payments
offering to capture the market opportunity and deliver sustained
high levels of future revenue growth.
FY23 guidance for material growth reflects an anticipated return
to normal UK trading activity, ongoing momentum in US Secure
Payments supported by long-term structural growth drivers, Cloud
adoption and Eckoh's strengthening partner offering, coupled with
the benefits of operational gearing.
This announcement contains inside information for the purposes
of Article 7 of Regulation 596/2014.
- Ends -
For more information, please contact:
Eckoh plc
Nik Philpot, Chief Executive Officer
Chrissie Herbert, Chief Financial Officer
Tel: 01442 458 300
www.eckoh.com
FTI Consulting LLP
Ed Bridges, Jamie Ricketts, Darius Alexander, Tel: +44 (0) 203
Tom Blundell 727 1000
eckoh@fticonsulting.com
N+1 Singer (Nomad & Joint Broker)
Shaun Dobson, Justin McKeegan Tel: +44(0) 20 7496
3000
www.n1singer.com
Canaccord Genuity Limited (Joint Broker)
Simon Bridges, Emma Gabriel Tel: +44(0) 20 7523
8000
www.canaccordgenuity.com
About Eckoh plc
Eckoh is a global provider of secure payment products and
customer contact solutions, supporting an international client base
from its offices in the UK and US.
Our secure payments products help our clients take payments
securely from their customers through multiple channels. The
products, which include the patented CallGuard, can be hosted in
the Cloud or deployed on the client's site and remove sensitive
personal and payment data from contact centres and IT environments.
They offer merchants a simple and effective way to reduce the risk
of fraud, secure sensitive data and become compliant with the
Payment Card Industry Data Security Standards ("PCI DSS") and wider
data security regulations. Eckoh has been a PCI DSS Level One
Accredited Service Provider since 2010, securing over GBP5bn in
payments annually.
Eckoh's customer contact solutions enable enquiries and
transactions to be performed on whatever device the customer
chooses, allowing organisations to increase efficiency, lower
operational costs and provide a true Omnichannel experience. We
also assist organisations in transforming the way that they engage
with their customers by providing support and transition services
as they implement our innovative customer contact solutions.
Our large portfolio of clients come from a broad range of
vertical markets and includes government departments, telecoms
providers, retailers, utility providers and financial services
organisations.
For more information go to www.eckoh.com
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END
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