Hi, it's Paul here.

Sorry this is rather late again.

Cloudcall (LON:CALL)

Share price: 165p (down 6.5% today)
No. shares: 24.08m
Market cap: £39.7m

(at the time of writing, I hold a long position in this share)

Final results

CloudCall (AIM: CALL), a leading cloud-based software business that integrates communications functionality into Customer Relationship Management (CRM) platforms, is pleased to announce its audited full year results for the year ended 31 December 2017.

This company has been a long-standing favourite of mine, and I'm firmly of the view that it is (at long last) gestating into a decent company. The problems before were that it kept running out of cash. As is nearly always the case with blue sky shares, it failed to meet the original targets. Also, it has taken much longer, and burned a lot more cash, than originally planned.

However, to my mind this company is now very clearly on it way to becoming a decent SaaS business - so think in terms of an earlier stage dotDigital (LON:DOTD) , or LoopUp (LON:LOOP) - both of which soared in value when they reached a tipping point where profitability became assured. The key features for a SaaS business to soar in value are;

  • Strong organic growth
  • High gross margin (hence lots of operational gearing as revenues rise)
  • Mainly recurring revenues
  • Low customer churn rate

Those elements are clearly in place with CloudCall, hence why I think it's now looking very interesting.

Here are my notes from skimming over the 2017 results;

  • Revenues up 42% to £6.9m - organic growth of 40% or more very much interests me.
  • Gross margin up 150bps to 80.0% - very impressive.
  • Net cash of £4.9m should be fine for now (but how many times have we thought that before, only to find another placing is done?!)
  • Bullhorn relationship is key - maybe it might acquire CloudCall in future?
  • Overheads increased again, and set to rise further in 2018, due to beefing up of sales & development teams - this pushes breakeven out further, again.
  • Strong growth in 2017, despite cash constraints, before the last placing.
  • 2018 outlook - fast growth from Q2 suggested, as new sales team exit training & begin selling.
  • New product launches imminent, which should drive incremental sales from existing customers.
  • Outlook - strong start…

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