TIDMCALL
RNS Number : 2989Q
Cloudcall Group PLC
11 September 2017
11 September 2017
CloudCall Group plc
("CloudCall" or the "Company")
Interim results announcement
Cloudcall announces its unaudited interim results for the
six-month period ended 30 June 2017 (the "Period").
Key financial highlights:
-- Revenue up 40% to GBP3.2m (H1 2016: GBP2.3m)
-- Monthly recurring revenues up 61% compared to H1 2016
-- Gross margin increased to 81% (H1 2016: 77%)
-- Operating losses continue to narrow to GBP(1.5)m (H1 2016: GBP(1.8)m)
-- Available cash of GBP3.0m with new facility on improved terms, supports pathway to break-even
-- Strong momentum experienced in H1 has continued into H2
giving the board confidence that revenue for the full year will be
at least in line with market expectations
-- Annualised revenue run rate surpassed GBP7.0m by June 2017
Key operational highlights:
-- Total users up 52% to 20,162 (H1 2016: 13,299)
-- Approximately 4,000 net new users added in the period (H1 2016: 1,450)
-- Continued progress with Bullhorn CRM partnership underpinning strong user growth
-- Ongoing shift to focus on larger customers is further
evidenced with signing of a master service agreement with Manpower
Group
-- Launch of dedicated Microsoft Dynamics solution due in October 2017
-- CloudCall's new 'unified' architecture currently being
trialled by a number of customers in anticipation of a full launch
later this year
Peter Simmonds, Non-executive Chairman, commented:
"I am pleased to report that the results for the half year ended
30 June 2017 reflect the clear progress towards the strategic
objectives set out by the board in 2016.
"This strategy continues to deliver tangible benefits to the
Group, most notably in our relationship with Bullhorn, a key
channel partner and a leading recruitment sector CRM provider. This
is clearly demonstrated in the growth across all of the Group's key
metrics for the period.
"Overall, we continue to see steady growth in the number of end
users adopting CloudCall's technology, further demonstrating the
quality of our product. In addition, we have seen a clear trend
that, once the CloudCall service is adopted within a customer, it
subsequently gains significant traction and uptake across further
users and departments.
"We have also seen a direct correlation between the development
of our relationship with Bullhorn as a key strategic partner and
lead flow, as their staff's understanding of the benefit that
CloudCall's service brings to their customers and their confidence
in the quality of our service grows.
"In early July, we also announced a new revolving credit
facility ("RCF") of GBP1.85m with our existing lender, Barclays.
This RCF replaces (on better terms) the original GBP0.9m loan,
which was due for repayment in March 2018. This, combined with cash
in the bank, the Group's growing monthly revenues and well-managed
operating costs, gives the board comfort that the monthly cash-burn
continues to reduce and that the business is well-placed to
continue to execute on its focused growth strategy.
"As we move forward, we continue to explore opportunities to
integrate the CloudCall platform with select additional CRM
platforms, increasing our potential addressable market and
facilitating further accelerated growth."
For further information, please contact:
CloudCall Group plc Tel: +44 (0)20
Simon Cleaver, Chief Executive 3587 7188
Officer
Paul Williams, Chief Financial
Officer
Vigo Communications Tel: +44 (0)20
Ben Simons / Jeremy Garcia / Fiona 7830 9701
Henson / Natalie Jones
www.vigocomms.com
Cenkos Securities (Nominated Adviser Tel: +44 (0)20
and Joint Broker) 7397 8900
Stephen Keys / Callum Davidson
/ Alex Aylen
Arden Partners (Joint Broker) Tel: +44 (0) 20
Steve Douglas / Ciaran Walsh 7614 5900
Operational Review
Strategic Update
We have made a strong start to 2017, with underlying recurring
revenues 61% higher and total revenue, at GBP3.2m, 40% higher than
the same period last year.
The Group has continued to see increased demand from both new
and existing customers in the period, and we are pleased to report
record levels of net new user growth in H1 2017, resulting in a 24%
increase in total users over the course of the period. This strong
net user growth has been delivered from both accelerating the
acquisition of new users and an improvement in client satisfaction
levels with a resultant decline in customer churn.
We are particularly pleased to report good progress in the rate
of new user growth half-on-half and quarter-on-quarter. Whilst net
new user additions averaged 658 per month throughout H1 2017,
quarterly analysis shows Q1 new user additions averaging 633 per
month, with Q2 increasing to 712 per month.
At 30 June 2017, the Group's user base was 20,162, moving
positively towards our estimated breakeven target of 28,500 users
(at projected "focused growth" OPEX levels).
Bullhorn partnership
Much of this user growth has been driven by our key partner,
Bullhorn, a leading CRM provider to the recruitment sector. Whilst
we continue to see user growth generated through Salesforce.com and
other CRM partners, the strategy to focus on Bullhorn is proving to
be successful.
CloudCall's relationship with Bullhorn is continuing to
strengthen. In the first half of this year Bullhorn implemented
CloudCall internally. This has enabled their own staff to
experience CloudCall first hand, to understand CloudCall's solution
and the benefits it can deliver, and to bring these benefits to the
attention of their own customers. The board believes this has
contributed directly to the strong pipeline of new customers we see
generated through this channel.
We have continued to see a strong pipeline of new customers
generated through this channel, along with increasing user numbers
from larger organisations following the installation of the
software with an initial group of users.
Uptake of the CloudCall service within Bullhorn's UK customer
base is now estimated to be around 19% of Bullhorn's users. In the
US, where Bullhorn has a much larger customer base, penetration of
CloudCall has grown, but is still below 5%, demonstrating well the
scale of the opportunity opening up.
As Bullhorn historically displays user growth rates of over 30%
per annum, the Board believes there is considerable further upside
potential in this relationship.
Increasing customer size
The Group is also pleased to report progress towards its' stated
objective to focus on larger customers. The average number of users
per customer continues to climb, and an increasing number of new
Bullhorn users are from their larger customers, many of whom have
additional capacity to expand their use of CloudCall across
additional departments, offices and, in some cases,
territories.
Furthermore, in June 2017, CloudCall signed a master services
agreement with Manpower Group ("Manpower"). At present, Manpower
has initially deployed CloudCall throughout the Solihull office of
Experis Ltd (a Manpower brand), and we are confident of expanding
the service to additional Manpower offices.
Platform Improvements
During the period, the Company continued to develop its' new
'unified' architecture. This new, scalable platform is the
foundation that will allows us to offer a full 'unified'
communications solution, including instant messaging and SMS, that
integrates as deeply and seamlessly with our partner CRM platforms
as does our existing telephony. When completed, our customers are
expected to benefit from this new functionality, as well as our
existing telecoms functionality, through a single 'CRM integrated'
user interface.
Learning lessons from the past, the new 'unified' platform is
architected so that all functionality and logic is maintained and
delivered centrally from a single software base within our
CloudCall platform. Historically, this logic and functionality had
to be built as separate bespoke software modules within each
partner CRM - leading to different levels of functionally and an
ongoing development overhead for maintenance.
Reducing this ongoing development overhead has the direct
benefit of releasing development time to work on adding the SMS and
messaging functionally to the platform, which is targeted for
launch early next year. Further new functionality will be added
throughout 2018.
The telecoms element of the new platform is already built and is
currently being trialled by a selected number of customers. We
expect to start upgrading our Bullhorn users in September so they
can benefit from the significantly improved user interface, further
enhancing their CloudCall experience.
An added benefit of this new 'unified' architecture, is that it
allows technical integration with additional CRM partners, in a
simple, uniform and consistent manner.
We expect to complete the launch our new Microsoft Dynamics
solution in October 2017. This has been built on the new platform
and has already been tested with a number of key customers. As the
second largest CRM in the world, with an estimated user base of
over 5 million and with limited direct competition for delivering
integrated voice communications solutions, we hope to see good
traction from Microsoft Dynamics in 2018.
Outlook
The Group's strategy to foster close relationships with a
limited number of key CRM providers is proving highly successful,
as demonstrated by the traction it has gained with Bullhorn. As
such, the board plans to continue with this focussed strategy to
drive the Company towards break-even. Partnership discussions
continue with a small number of CRMs that have a similar profile to
Bullhorn and we hope to update shareholders in 2018 on the status
of these discussions.
I am further pleased to report that the strong momentum
experienced in the first half of 2017 has continued into the second
half of the year. The board believes that this, combined with the
growing pipeline of near-term customer sales opportunities and
lower churn rates, underpins our view that revenue for the
financial year 2017 will be at least in line with market
expectations.
Simon Cleaver
Chief Executive Officer
Financial Overview
Revenues grew by 40% from GBP2.3m to GBP3.2m in H1 2017. The
Group maintains a high degree of revenue visibility with 85% of
revenues that are either recurring or repeating in nature.
Recurring revenue from software subscription services alone
continues to grow strongly, up 61% in H1 2017 compared to the same
period last year. This core recurring revenue growth is a direct
result of continued strong sales to both new and existing customers
which is adding an increasing number of new users who continue to
be on-boarded effectively. This, alongside improved customer
retention, is leading to strong growth in net user numbers which is
driving new billing and subsequent revenue growth.
Gross margin improved from 76.8% in H1 2016 to 80.7% in H1 2017.
Growth in recurring core Software-as-a-Service (SaaS) income,
together with continued focus on value-adding network discovery,
training and implementation services, improved hardware margins and
better procurement of upstream telecoms capacity has seen us
continue to improve overall gross margin to just under 81% in H1
2017.
Operating expenditure before share-based payments grew from
GBP3.6m to GBP4.0m in H1 2017. Growth in operating expenditure of
11% year-on-year alongside a 40% overall revenue growth for the
same period, continues to follow the expected trajectory of a SaaS
business moving towards scale and profitability. Operating losses
were GBP1.5m, down by 20% from GBP1.8m in H1 2016.
Development costs capitalised GBP0.33m (H1 2016: GBPnil).
Investment in the development of new and improved products and
applications and the protection of the intellectual property of
such development work is considered key to the further improvement
of CloudCall's competitive position. Since Q3 2016, the Group has
capitalised software development costs as an intangible asset in
accordance with the requirements of IAS 38, bringing the Group into
line with its peers.
The Company had outstanding debt of GBP0.9m at the end of the
period (H1 2016: GBP0.9m). Following the progress that the Company
has made, and reflecting the strengthening of the relationship with
Barclays, the Company announced on 12 July 2017 that it had reached
an agreement to replace (on better terms), the existing GBP900k
sterling term loan facility with a new revolving credit facility
(RCF) of up to GBP1.85 million.
This new Barclays facility provides borrowing of up to GBP1.85
million for a 3-year term. Interest is set at 7.45% above 3 month
LIBOR rate for funds drawn. Funds can be drawn as required by the
Company, typically for fixed periods of 3, 6 or 12 months. Interest
is payable upon settlement of each tranche drawn. The facility is
secured over the assets of the Group.
The Group had GBP1.5m cash at the end of the period (H1 2016:
GBP0.9m). Net cash was GBP0.6m after deducting the GBP0.9m debt
position with Barclays. The Group's balance sheet includes an
R&D tax credit receivable of GBP0.9m of which GBP0.6m was
received into cash on 3 July 2017. This, combined with cash at bank
and the increased headroom from the new Barclays RCF also announced
in early July, provides the Company with effective available cash
of GBP3.0 million. Net cash absorbed by operating activities was
GBP1.4m in H1 2017 (H1 2016: GBP1.5m). This figure, whilst
reflective of additional investments made from funds raised last
year, is expected to continue to fall as the Group's revenue growth
continues to outpace operating expenses growth as we advance along
the pathway to break-even.
Total issued share capital at the period-end was unchanged at
20,060,348 ordinary shares of 20 pence each.
Loss per share for the half year period was 6 pence (H1 2016: 11
pence).
The Directors confirm that, as disclosed in note 2, they have a
reasonable expectation that the Group has adequate resources to
continue in operational existence for the foreseeable future.
By order of the board
Simon Cleaver Paul Williams
Chief Executive Officer Chief Financial Officer
Consolidated Income Statement and Statement of Comprehensive
Income
Unaudited Unaudited Audited Year
Six months Six months ended 31
to June to June December
30 2017 30 2016 2016
GBP000 GBP000 GBP000
Revenue 3,184 2,269 4,855
Cost of sales (614) (527) (1.044)
------------------- ------------ -------------
Gross profit 2,570 1,742 3,811
Sales and marketing
expenses (871) (726) (1,564)
-------------------------- ------------------- ------------ -------------
Administrative
expenses (2,674) (2,093) (4,542)
Share based payments (54) (49) (116)
-------------------------- ------------------- ------------ -------------
Total administrative
expenses (2,728) (2,142) (4,658)
Research & development
expenses (429) (697) (1,283)
------------------- ------------ -------------
Operating loss (1,458) (1,823) (3,694)
Net financing
expense (41) 11 (71)
------------------- ------------ -------------
Loss before tax (1,499) (1,812) (3,765)
Taxation 299 332 754
------------------- ------------ -------------
Loss from the
period attributable
to owners of
the parent (1,200) (1,480) (3,011)
------------------- ------------ -------------
Foreign exchange
translation differences 76 12 (75)
------------------- ------------ -------------
Other comprehensive
income 76 12 (75)
------------------- ------------ -------------
Total comprehensive
loss for the
period (1,124) (1,468) (3,086)
------------------- ------------ -------------
Loss per share
(GBP)
Basic & diluted
loss per share (0.06) (0.11) (0.20)
Consolidated Statement of Financial Position
At 30 June 2017
Unaudited Unaudited Audited
Six months Six Month Year
to to Ended
30 June 30 June 31 December
2017 2016 2016
GBP000
GBP000
GBP000
Non-current assets
Property, plant and
equipment 257 439 343
Goodwill 339 339 339
Other intangible assets 549 366 365
-------------- ------------ -------------
1,145 1,144 1,047
Current assets
Inventories 24 27 28
Trade and other receivables 1,265 764 897
Research & development
tax credit receivable 889 700 589
Cash and cash equivalents 1,457 860 3,169
3,635 2,351 4,683
----------------------------- -------------- ------------ -------------
Total assets 4,780 3,495 5,730
-------------- ------------ -------------
Current Liabilities
Trade and other payables (1,105) (649) (973)
Bank loan < 12 months (900) - -
Deferred Income - - (12)
-------------- ------------ -------------
(2,005) (649) (985)
Non-current liabilities
Deferred tax liabilities - (80) -
Bank loan > 12 months - (900) (900)
Total liabilities (2,005) (1,629) (1,885)
-------------- ------------ -------------
Net assets 2,775 1,866 3,845
-------------- ------------ -------------
Equity attributable
to shareholders
Share capital 4,012 2,701 4,012
Share premium 61,788 59,604 61,788
Translation reserve 29 5 (47)
Warrant reserve 29 29 29
Retained loss (63,083) (60,473) (61,937)
Total equity 2,775 1,866 3,845
-------------- ------------ -------------
Consolidated Statement of Changes in Equity
Share Share Translation Warrant Retained Total
Capital Premium reserve reserve Earnings equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at 1 January
2016 2,701 59,607 (7) 29 (59,042) 3,288
Loss for the period
Other comprehensive
income - - - - (1,480) (1,480)
Foreign exchange
differences on
translation of
foreign operations - - 12 - - 12
--------- --------- ------------ ------------------------- ---------- ---------
Total comprehensive
income for the
period - - 12 - (1,480) (1,468)
Equity settled
share based payments
transactions - - - - 49 49
Costs of Issue
of equity shares - (3) - - - (3)
Balance at 30 June
2016 2,701 59,604 5 29 (60,473) 1,866
--------- --------- ------------ ------------------------- ---------- ---------
Balance at 1 July
2016 2,701 59,604 5 29 (60,473) 1,866
Loss for the period - - - - (1,531) (1,531)
Other comprehensive
income
Foreign exchange
differences on
translation of
foreign operations - - (52) - - (52)
--------- --------- ------------ ------------------------- ---------- ---------
Total comprehensive
income for the
period - - (52) - (1,531) (1,583)
Equity settled
share based payments
transactions - - - - 67 67
Issue of equity
shares 1,311 2,458 3,769
Costs of Issue
of equity shares - (274) - - (274)
--------- --------- ------------ ------------------------- ---------- ---------
Balance at 31 December
2016 4,012 61,788 (47) 29 (61,937) 3,845
--------- --------- ------------ ------------------------- ---------- ---------
Balance at 1 January
2017 4,012 61,788 (47) 29 (61,937) 3,845
Loss for the period - - - (1,200) (1,200)
Other comprehensive
Income
Foreign exchange
differences on
translation of
foreign operations - - 76 - - 76
--------- --------- ------------ ------------------------- ---------- ---------
Total comprehensive
income for the
period - - 76 - (1,200) (1,124)
Equity settled
share based payments
transactions - - - - 54 54
Balance at 30 June
2017 4,012 61,788 29 29 (63,083) 2,775
------------------------ --------- --------- ------------ ------------------------- ---------- ---------
Consolidated Cash-flow Statement
Unaudited Unaudited Audited
Six months Six month Year Ended
to 30 to 30 31 December
June June 2016 2016
2017
GBP000
GBP000 GBP000
Cash flows from operating
activities
Loss before for the
period (1,200) (1,480) (3,011)
Adjustments for:
Depreciation and amortisation 237 274 551
Foreign exchange losses/(gains) - (6) -
Financial income - (11) -
Financial expenses 41 - 71
Equity settled share-based
payment expenses 54 49 116
Taxation (299) (332) (754)
Operating cashflow before
changes in working capital
and provisions (1,167) (1,506) (3,027)
Increase in trade and
other receivables (314) (144) (277)
Decrease in inventory 3 17 16
Increase in trade and
other payables 122 110 441
------------ ----------- -------------
Cash absorbed by operations (1,356) (1,523) (2,847)
Tax received - - 480
------------ ----------- -------------
Net cash absorbed by
operating activities (1,356) (1,523) (2,367)
Cash flows from investing
activities
Interest received - 11 -
Acquisition of property,
plant and equipment (45) (55) (96)
Development expenditure
capitalised and other
intangible assets acquired (328) - (145)
------------ ----------- -------------
Net cash absorbed by
investing activities (373) (44) (241)
Cash flows from financing
activities
Interest paid (41) - (71)
Proceeds from the issue
of share capital - - 3,492
Proceeds from new loan - 900 900
------------ ----------- -------------
Net cash from financing
activities (41) 900 4,321
Net (decrease)/increase
in cash and cash equivalents (1,770) (667) 1,713
Cash and cash equivalents
at start of period 3,169 1,524 1,524
Effect of exchange rate
fluctuations in cash
held 58 3 (68)
------------ ----------- -------------
Cash and cash equivalents
at end of period 1,457 860 3,169
------------ ----------- -------------
This information is provided by RNS
The company news service from the London Stock Exchange
END
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