REG - Eckoh PLC - Half Year Trading Update

EckohAnnouncement

01/11/2023 07:00

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RNS Number : 9332R  Eckoh PLC  01 November 2023

1 November 2023

 

Eckoh plc

("Eckoh", the "Group", or the "Company")

Half Year Trading Update

 

-       Trading for the half in line with Board expectations

-       Record level of contracted business and record North American
pipeline

-       Positive traction in cross-selling & upselling across our
new solution set

 

Eckoh plc (AIM: ECK), the global provider of Customer Engagement Data Security
Solutions, today announces an update on trading for the six months ended 30
September 2023 (the "Period").

 

Trading update

 

Trading was in line with the Board's expectations for the Period. Newly
contracted business and renewals ('Total Contract Value') was at a record
level of £24.6m, up 40% on the prior year (£17.6m H1 2023), driven by strong
multi-year renewals and successful cross-selling and up-selling of our new
products.

 

The strong level of both cross-sell and up-sell initiatives to existing
clients has been achieved through our enhanced Secure Engagement Suite, the
ongoing shift to cloud and our new commercial strategy. Recent new product
additions such as Secure Call Recording and our updated Secure Digital
Payments platform have been extremely well received and we expect several
clients to be live with these and other additional products from our Suite in
the second half.

 

Overall, the Group is expecting to report revenues of c.£18.8m (H1 2023:
£19.6m), reflecting the loss of a large (non-security) UK client, disclosed
in our FY23 final results, and the ongoing transition to cloud-based delivery
of our solutions. This transition increases the visibility and quality of our
earnings as the proportion of one-off revenues in any period (from hardware
and implementation) decrease.

 

Whilst this shift to cloud is tempering revenue growth in the short term, it
has a positive impact on our recurring revenue, which has increased to 83% (H1
2023: 79%) and operating margins, which were strong at 21%. Adjusted operating
profit (ex-forex) is expected to be c.£4.1m*, compared to £3.5m in H1 2023.

 

Eckoh has a record pipeline of new business opportunities in the North
American market, validating the strategic decision at the beginning of the
year to move to a single global commercial team and focus them on this market,
where the scale of opportunity for Eckoh's solutions is most compelling. The
Company is, like others, experiencing a lengthening of sales cycles with new
clients, especially in the contracting phase. Consequently, the completion of
contracts is taking longer, and several sizeable enterprise deals where Eckoh
is the chosen supplier, which were expected to close in the Period, will now
shift to the second half. Despite this, Data Security Solutions annual
recurring revenue ('ARR') for the key North American market still strongly
increased year-on-year by 22% to $16.8m.

 

Outlook and financial position

 

Eckoh's balance sheet remains robust. Strong cash generation continued during
the Period with net cash of £7.3m at the end of the half year, up by £1.6m
from £5.7m at year end (H1 2023: £4.4m) and no debt.

 

The Board is very encouraged by the record level of business contracted in the
Period, the successful implementation of the new commercial strategy and the
sales pipeline; most notably the large deals which are in a progressed
position. The sales pipeline gives us confidence that the strong positive
trend of growth in Total Contract Value will continue in the second half.
Whilst the longer than expected sales cycles will marginally impact revenue,
the Board is confident that the Company is on track to meet profit
expectations for the full year.

 

Notification of Interim Results

 

Eckoh will provide further detail at the time of its results for the six
months ended 30 September 2023 on Tuesday 21 November 2023.

 

*In H123, the Company's operating performance benefitted from a £0.7m
currency tailwind versus an £0.1m headwind in H1 2024.

 

 

For more information, please contact:

 

 Eckoh plc                                                 Tel: 01442 458 300
 Nik Philpot, Chief Executive Officer
 Chrissie Herbert, Chief Financial Officer
 www.eckoh.com (http://www.eckoh.com)

 FTI Consulting LLP                                        Tel: 020 3727 1017
 Ed Bridges / Emma Hall / Valerija Cymbal / Emily Bowen
 eckoh@fticonsulting.com (mailto:eckoh@fticonsulting.com)

 Singer Capital Markets (Nomad & Joint Broker)             Tel: 020 7496 3000
 Shaun Dobson / Tom Salvesen / Alex Bond
 www.singercm.com (http://www.singercm.com)

 Investec Bank plc (Joint Broker)                          Tel: 020 7597 5970
 Patrick Robb / Nick Prowting / Shalin Bhamra
 www.investec.com (http://www.investec.com)

 

 

About Eckoh plc

As a global provider of Customer Engagement Data Security Solutions, Eckoh is
all about making the world of data more secure.

 

Our vision is that everyone should be able to trust every brand and engage
without risk to their personal information. We're on a mission to set the
standard for secure interactions between consumers and the world's leading
brands, and our innovative products build trust and deliver value though
exceptional experiences.

 

We're trusted by many of the world's leading brands to help them manage the
personal data from customer enquiries and transactions safely. Our solutions
enable payment transactions to be performed securely and help protect
sensitive personal data across any customer engagement channel and device the
customer chooses.

 

Protected by multiple patents, our solutions remove sensitive personal and
payment data from contact centres and IT environments, as the best way to
secure data is not to collect it. This allows organisations to be not just
compliant but secure, increase efficiency, lower operational costs, and
provide an excellent customer experience.  This is our specialism.

 

Our solutions are delivered globally through multiple cloud platforms or can
be deployed on the client's site. 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, and our extensive portfolio of typically large
enterprise clients spans a broad range of vertical markets including
government departments, telecoms providers, retailers, utility providers and
financial services organisations.

 

For more information go to www.eckoh.com (http://www.eckoh.com/)  or
email MediaResponseUK@eckoh.com (mailto:MediaResponseUK@eckoh.com) .

 

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