TIDMECK
RNS Number : 9745Q
Eckoh PLC
02 November 2021
2 November, 2021
Eckoh plc
("Eckoh", or "the Company", or "the Group")
Half year trading update
- Outlook: full year performance expected to be in line with
market expectations
- Good visibility: growth in recurring revenues and recovery in
UK enhancing revenue visibility
- US Secure Payments: strong progress in ARR and momentum in
long-term structural growth market
Eckoh (AIM:ECK), the global provider of secure payment products
and customer contact solutions, announces a trading update for the
six months ended 30 September 2021. All commentary relates to this
period, unless otherwise stated.
Group
Eckoh performed in line with Board expectations, driven by
continued progress in our US Secure Payments business, recovering
activity in the UK division and the resilience of our business
model; supporting confidence in a positive outcome for the full
year, and in line with market expectations.
On an underlying basis (at constant currency, excluding
discontinued third-party Support activity), revenue was slightly
higher, recurring revenues increased by 7% (representing 73% of
total revenues) and operating profit grew by 18%.
Total revenue was slightly lower at constant currency, largely
driven by the planned exit from US and UK third-party Support that
is now almost complete, declining to only GBP0.3m from GBP1.8m in
the prior year, as resources continue to be focused on the
significant opportunity in Secure Payments. This also reflects the
ongoing revenue impact of the pandemic on the UK business, although
we are now seeing improved trends to a more normalised level of
activity.
US Division
Secure Payments now account for 89% of total US revenues, or 92%
excluding the Support business. We continue to see the biggest
opportunity for US Secure Payments contracts delivered in the
Cloud, underpinned by long-term structural drivers of tightening
regulation, the need to mitigate the risk of data breaches (and
fraud) within our clients' IT and Contact Centre operations and the
migration to a greater level of remote working.
With the significant shift to a largely SaaS Cloud delivery and
pricing model in the last 18 months, we have instigated a new KPI
of US Annualised Recurring Revenue (ARR)(1) . This increased by 29%
to $8.9m at the end of the period and nearly 40% of this revenue
now comes from Cloud services, more than doubling the level in
April 2020.
Our largest client to date, a $7.4m contract that went live in
2019, was successfully renewed in the period, and as more clients
go through their first contract renewal we will see the overall
percentage of recurring revenue increase, as the revenue from
initial set up fees and installed hardware is fully recognised.
1. Annualised Recurring Revenue of all signed US Secure Payments
contracts, whether live or still to be deployed
UK Division
The Company's business in the UK remains resilient, underpinned
by 80% recurring revenues and high gross margins, consistent with
the prior year. The recovery from the impact of the pandemic on
both transactional activity and new business has been gradual, but
momentum built in the second quarter, reflecting a return to more
normalised levels of activity from large clients such as Transport
for London and Premier Inn, and by September 2021, overall activity
was in line with pre-pandemic levels.
Revenue was marginally lower than the previous year, but
excluding the third-party Support business it increased by 6%,
reflecting the ongoing recovery from the pandemic. This progress is
expected to continue into the remainder of the year.
Business Development
The ongoing impact of the pandemic has created an environment
that continued to be challenging for new business, especially in
the first quarter and particularly for large enterprise sales.
However, as part of a long-term strategy to support new Secure
Payments business in the US, we have strengthened our sales team
and increased our focus on 'vertical selling' (targeting sectors
such as healthcare, which are well suited to our model).
We have also developed a new Cloud CallGuard offering in both
the US and UK that is specifically designed for reseller partners,
that will enable us to on board customers that were previously
considered too small to target, with almost no operational
overhead. This will expand our target market considerably
(including expansion into other territories) and the first clients
for this new product will be live this calendar year. We are also
seeing encouraging signs of sales momentum building again in the
third quarter, as it did last year, with some sizeable contracts -
that have been slower to move forward - now gaining traction.
Outlook
Eckoh's growing base of recurring revenues is improving the
Group's earnings visibility, which allied to a robust order book
for enterprise clients, increased transactional activity and
prudent cost control, supports our confidence that full year
performance will be in line with current market expectations.
Business performance and prudent balance sheet management has
ensured Eckoh remains in a strong financial position, with net cash
of GBP12.7m at 30 September 2021 (30 September 2020: GBP12.9m).
Interim Results
The Group expects to report its results for the six months ended
30 September 2021 in the week commencing Monday 29 November
2021.
Prior to publication the information communicated in this
announcement was deemed by the Company to constitute inside
information for the purposes of article 7 of the Market Abuse
Regulations (EU) No 596/2014 as amended by regulation 11 of the
Market Abuse (Amendment) (EU Exit) Regulations No 2019/310
('MAR').
For further information please contact:
Eckoh plc Tel: 01442 458
Nik Philpot, Chief Executive Officer 300
Chrissie Herbert, Chief Financial Officer
www.eckoh.com
FTI Consulting LLP Tel: 020 3727
Ed Bridges / Jamie Ricketts / Tom Blundell 1017
eckoh@fticonsulting.com
Singer Capital Markets (Nomad & Joint Broker) Tel: 020 7496
Shaun Dobson / Tom Salvesen / Alex Bond 3000
/ Kailey Aliyar
www.singercm.com
Canaccord Genuity Limited (Joint Broker) Tel: 020 7523
Simon Bridges / Andrew Potts 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 all engagement channels. The
products, which include the patented CallGuard and ChatGuard, 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 GBP5 billion 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 or email
MediaResponseUK@eckoh.com.
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END
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