REG - LoopUp Group PLC - Interim results for the period ended 30 June 2023
14/09/2023 07:15
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RNS Number : 3782M LoopUp Group PLC 14 September 2023
14 September 2023
LOOPUP GROUP PLC
("LoopUp" or the "Group")
Interim results for the period ended 30 June 2023
Continued strong traction in Cloud Telephony
LoopUp Group plc (AIM: LOOP), the cloud platform for premium hybrid
communications, is pleased to announce its unaudited interim results for the
six months ended 30 June 2023 ("H1-23").
Financial Highlights:
£ million H1-23 H1-22
(unaudited) (unaudited)
Revenue 12.2 6.6
Gross margin 76% 67%
Adjusted EBITDA(1) 2.5 (1.5)
Period end gross cash 0.9 0.7
Period end net debt 5.6 8.0
· Improved key financial metrics year-on-year
· Extension of senior debt facilities with Bank of Ireland by twelve
months to 30 September 2024
· Reduction of outstanding Bank of Ireland debt to £6.0 million (31 Dec
2022: £6.8m) following scheduled repayment of £0.85 million in June 2023
Operating Highlights:
· Cloud Telephony - Our primary focus - securing customers and strong
pipeline building:
- LoopUp was certified onto Microsoft's Operator Connect partner program, and
now has Cloud Telephony service availability in 54 countries, the broadest
geographic coverage amongst all c.70 partners in the Operator Connect program
globally
- 118% growth in customers from 50 at end H1-22 to 109 at end H1-23
- 176% growth in contracts from 102 contracts at end H1-22 to 282 at end H1-23
- 154% growth in Booked ARR(3) from £1.0 million at end H1-22 to £2.5
million at end H1-23
- Zero gross churn in FY-22 and Net Revenue Retention (NRR)(4) of 155%
· Meetings and Virtual Events ("Event"):
- Material increase in H1-23 Meetings and Event revenue to c.£9.4 million
(H1-22: c.£3.6 million), driven by the transition of PGi Connect customers in
October 2022
- However, as expected and previously guided, these lines of business are in
progressive structural decline, as shown in the following quarterly revenue
profile:
c.£ million Q1-22 Q2-22 Q3-22 Q4-22 Q1-23 Q2-23
Meetings & Event revenue 2.0 1.6 1.4 5.8 5.3 4.0
Post Period Highlights:
· Cloud Telephony Booked ARR currently at c.£2.7 million, an increase of
70% from £1.6 million at the end of FY22, and a year-on-year increase of 145%
from £1.1 million in August 2022
· Strong pipeline of future Cloud Telephony sales opportunities (c.£100
million ARR)
Number of customers Number of Individual Contracts Booked ARR
(£ million)
At end H1-22 50 102 0.98
Increase from base (12 month to end H1-23) 87 0.54
New customer wins (12 month to end H1-23) 59 93 0.96
At end H1-23 109 282 2.49
Increase from base (since end H1-23) 41 0.19
New customer wins (since end H1-23) 18 19 0.04
Current 127 342 2.72
Outlook:
· Based on current year-to-date trading, the positive trajectory in Cloud
Telephony and the as expected declining trajectory in Meetings and Event, the
Group is confident of broadly meeting current market expectations for FY-23.
Steve Flavell and Michael Hughes, co-CEOs of LoopUp Group, commented:
"Today we report results demonstrating improved financials year-on-year,
boosted by the cash generation associated with last year's PGi Connect
transaction. We are pleased with the continued strong commercial traction in
our primary Cloud Telephony business, executing on our strategy of enabling
multinational enterprises to consolidate their telephony procurement and
management globally.
Cloud Telephony has seen triple digit growth in both customers and booked ARR,
and we are proud to offer the broadest geographic licensed coverage on
Microsoft's Operator Connect program. Combined with our global technology
platform and team expertise across telecommunications, unified communications
and software development, we are well placed with a building pipeline to
become a future winner in the multinational segment of the $31 billion(5)
Cloud Telephony market opportunity."
(1) Earnings before interest, tax, depreciation, and amortisation, excluding
share-based payments charges
(2) Adjusted to exclude amortisation of acquired intangibles and share-based
payment charges
(3) Booked Annual Recurring Revenue: minimum contracted annual revenue during the
initial term of the customer contract
(4) NRR is calculated as the ratio of booked ARR at the end of H1-23 to booked ARR
at the end of H1-22, from the cohort of customers in place at the end of H1-22
(5) Source: Gartner 2023
Market abuse regulation:
This announcement contains inside information for the purposes of Article 7 of
Regulation (EU) No 596/2014 as it forms part of UK domestic law by virtue of
the European Union (Withdrawal) Act 2018.
LoopUp Group plc via FTI
Steve Flavell, co-CEO
Panmure Gordon (UK) Limited +44 (0) 20 7886 2500
Dominic Morley / Ivo Macdonald (Corporate Finance)
Cavendish Securities plc +44 (0) 20 7397 8900
Giles Balleny / Dan Hodkinson (Corporate Finance)
Dale Bellis (Sales)
FTI Consulting, LLP +44 (0) 20 3727 1000
Emma Hall / Jamille Smith / Tom Blundell
About LoopUp Group plc
LoopUp (LSE AIM: LOOP) is a cloud platform for premium hybrid communications.
The Group's flagship Cloud Telephony solution for Microsoft Teams enables
multinational enterprises to consolidate their global telephony provision into
a single, consistently managed cloud implementation rather than disparate
implementations from multiple carriers. The Group is listed on the AIM market
of the London Stock Exchange and is headquartered in London, with offices in
the US, Spain, Germany, Hong Kong, Barbados and Australia. For further
information, please visit: www.loopup.com (http://www.loopup.com) .
Chief Executive Officers' Business Review
Continued execution on our strategic transition
Boosted by the material additional cash generation in our Meetings and Event
businesses following the PGi Connect transaction, as announced in September
2022, the Group has continued to forge further strong commercial progress in
our primary Cloud Telephony growth business.
At a Group level, all key financials improved year-on-year, with H1-23 revenue
84% higher than the prior year, gross profit 109% higher, gross margin 9
percentage points better, profitable at an adjusted EBITDA level, and an 81%
reduction in operating loss.
Our primary Cloud Telephony growth business continued its strong growth
profile since launch in H2-20, with triple digit growth in customers,
contracts, Booked ARR and revenue, and very strong churn and retention
metrics. Our strategy of enabling multinational enterprises to consolidate
their telephony procurement and management globally has been strengthened by
the Group's leading global coverage on Microsoft's Operator Connect cloud
telephony partner program.
Revenue from our Meetings and Event business was 160% higher in the period
than prior year due to the PGi Connect transaction, but as expected, continues
to decline due to the global trend of these capabilities being fulfilled by
broader Unified Communications platforms, such as Microsoft Teams and Zoom.
Strong commercial momentum in Cloud Telephony
The Group's flagship Cloud Telephony solution is integrated into Microsoft
Teams and enables users to make phone calls to external phone numbers and
receive phone calls to their own work phone numbers, all seamlessly via their
Teams-enabled devices. Our platform targets multinational mid-market and
enterprise organisations with the value proposition of consolidating their
global telephony procurement with one vendor partner - LoopUp - rather than
from multiple geographic-specific carriers.
Cloud Telephony now sits squarely at the heart of the Group's forward-looking
growth strategy, and we achieved further strong operational progress and
commercial traction during H1-23.
LoopUp was certified onto Microsoft's Operator Connect partner program in
April 2023. Importantly for our multinational go-to-market strategy, our
service availability in 54 countries is the broadest geographic coverage
amongst all c.70 partners in the Operator Connect program globally.
Customer numbers grew by 118%, a growth of 59 customers from the 50 at the end
of H1-22 to 109 at the end of H1-23.
Given the geographic rollouts generally associated with multinational customer
deployments, customer wins often comprise multiple individual contracts over
time. Individual contract numbers grew from the 102 contracts with the Group's
50 customers at the end of H1-22 to 282 with the Group's 109 customers at the
end of H1-23, a growth of 180 contracts or 176%.
Booked ARR from these 180 customers stood at £2.5 million at the end of
H1-23, a 154% increase from £1.0 million at the end of H1-22. This represents
the minimum contractually guaranteed level of won ARR, and the Group
realistically expects the ARR from these 109 customers to progress to c.£3.9
million as rollouts progress, materially above the minimum contracted level.
Nearly all of the Group's Cloud Telephony customers are on 3-year initial term
licence contracts. To date, the Group is proud to have experienced zero gross
customer churn since entering the market and very strong Net Revenue Retention
(NRR). NRR was 155% in the twelve months to end H1-23, this being the ratio of
booked ARR at the end of H1-23 to booked ARR at the end of H1-22 from the
cohort of 50 customers in place at the end of H1-22.
The Group maintains a strong pipeline of future Cloud Telephony sales
opportunities (c.£100 million ARR). We are confident in our continued Cloud
Telephony growth prospects and are excited by the traction and potential of
our differentiated multinational solution in this large Cloud Telephony
market, which is forecast to grow from £21.2 billion in 2022 to £31.4
billion by 2027(6).
Meetings and Event
The Group's Meetings and Event businesses remain structurally in decline,
primarily due to customers switching to broader Unified Communications
platforms such as Microsoft Teams that include similar features and
capabilities.
However, our Meetings and Event businesses received a substantial boost in
September 2022, when the Group announced a 'Revenue Sharing and Customer
Transfer Agreement' with PGi Connect. The agreement gave LoopUp the rights to
onboard materially all of PGi Connect's conferencing services customers. While
no initial or fixed consideration was payable, the Group agreed to pay PGi
Connect a share of invoiced and received revenue(7) from successfully
transferred customers for a period of three years.
Meetings and Event revenue was c.£9.3 million in H1-23, an increase of 160%
over c.£3.6 million in H2-22. However, the underlying structural decline is
demonstrated in the quarterly revenue profile as below:
c.£ million Q1-22 Q2-22 Q3-22 Q4-22 Q1-23 Q2-23
Meetings & Event revenue 2.0 1.6 1.4 5.8 5.3 4.0
Recent churn was amplified by a major collections initiative beginning in Q2
across the thousands of new accounts transitioned from PGi Connect, and the
Group believes this churn rate will settle at a lesser but nevertheless still
material level in due course.
Notwithstanding the structural decline, Meetings and Event are highly cash
generative for the Group.
Hybridium
Following the acquisition of SyncRTC Inc. in October 2021, the Group's
Hybridium (www.hybridium.com (http://www.hybridium.com) ) solution is focused
on relatively large-scale corporate events that have a mix of in-room and
remote guests and/or a mix of in-room and remote hosts/presenters, such as
management onsites, departmental kick-offs, capital markets days and thought
leadership seminars.
Events with Hybridium's video wall technology benefit from ultra-low latency
at ultra-high resolution, with full video wall layout flexibility facilitating
any content on any section of the wall. The Group is currently reviewing its
go-to-market strategy for Hybridium and will make further market announcements
in due course.
Bank of Ireland debt arrangements
In June 2023, the Group successfully extended its debt facilities with Bank of
Ireland by twelve months, such that the facilities will now mature on 30
September 2024. The financial covenants to this facility were extended through
to the updated maturity date, on the same essential basis as prior to the
extension. There were no material changes to key commercial terms in
connection with the facility.
Outlook
While the Directors expect the Group's Meetings business to continue to
decline over time, this is now from a materially larger base following the
transition of former PGi Connect customers. Combined with the fast and
accelerating growth in its primary forward-looking Cloud Telephony business,
the Group is confident of broadly meeting current market expectations for
FY-23.
Steve Flavell Michael Hughes
co-CEO co-CEO
(6) Source: Gartner 2023
(7) Approximately 13% on a weighted average basis
Unaudited consolidated statement of comprehensive income for the six months to
30 June 2023
£'000 Six months to Six months to Year to
30 June 2023 30 June 2022 31 December 2022
Revenue 12,218 6,632 16,480
Cost of sales (2,975) (2,211) (5,060)
Gross profit 9,243 4,421 11,420
Adjusted operating expenses ((1)) (6,769) (5,967) (12,287)
Adjusted EBITDA ((2)) 2,474 (1,546) (867)
Depreciation (579) (806) (1,556)
Amortisation of development costs (2,880) (2,722) (5,495)
Adjusted operating profit / (loss)((3)) (985) (5,074) (7,918)
Exceptional reorganisation costs - (259) (633)
Exceptional impairment charge - - (13,560)
Amortisation of acquired intangibles - (925) (1,846)
Share-based payment charges (300) (602) (1,142)
Total administrative expenses (10,528) (11,281)
Operating profit / (loss) (1,285) (6,860) (25,102)
Finance costs (269) (212) (766)
Profit / (loss) before income tax (1,554) (7,072) (25,868)
Income tax (113) (121) 4,066
Profit / (loss) for the period (1,667) (7,193) (21,802)
Other comprehensive income and loss
Currency translation gain / (loss) (374) 27 209
Total comprehensive income / (loss) for the period attributable to the equity (2,041) (7,166) (21,593)
holders of the parent
Earnings / (loss) per share (pence) - Note 4
- Basic and diluted adjusted ((4)) (1.1) (5.4) (6.9)
- Basic and diluted (1.4) (7.1) (18.1)
(1. ) Total administrative expenses excluding depreciation, amortisation of
development costs and acquired intangibles, exceptional reorganisation costs,
exceptional impairment charge and share-based payment charges.
(2. ) Adjusted EBITDA is operating profit/(loss) stated before depreciation,
amortisation of development costs and acquired intangibles, exceptional
reorganisation costs, exceptional impairment charge and share-based payment
charges.
(3. ) Adjusted operating profit/(loss) is operating profit/(loss) stated before
amortisation of acquired intangibles, exceptional reorganisation costs,
exceptional impairment charge and share-based payment charges.
(4. ) Basic adjusted and diluted adjusted earnings per share are calculated using
profit/(loss) attributable to equity holders adjusted for exceptional
reorganisation costs, exceptional impairment charges, amortisation of acquired
intangibles and share based payment charges.
Unaudited consolidated statement of financial position at 30 June 2023
£'000 30 June 2023 30 June 2022 31 December 2022
Assets
Non-current assets
Property, plant and equipment 1,307 1,985 1,626
Right of use assets 532 1,717 780
Intangible assets:
- Development costs 12,779 12,384 13,126
- Other intangible assets - 5,397 -
- Goodwill 25,649 35,425 25,654
- Deferred tax 1,974 - 1,974
Total non-current assets 42,241 56,908 43,160
Current assets
Trade and other receivables 6,170 3,632 8,173
Cash and cash equivalents 885 662 1,661
Current tax 712 2,063 825
Total current assets 7,767 6,357 10,659
Total assets 50,008 63,265 53,819
Liabilities
Trade and other payables (5,715) (3,796) (6,313)
Accruals and deferred income (3,846) (1,659) (3,914)
Lease liabilities (835) (762) (819)
Borrowings (1,700) (1,700) (6,772)
Total current liabilities (12,096) (7,917) (17,818)
Net current assets/(liabilities) (4,329) (1,560) (7,159)
Non-current liabilities
Borrowings (4,742) (6,948) (686)
Lease liabilities (674) (1,468) (897)
Deferred tax liability - (1,721) -
Provisions - (172) (178)
Total non-current liabilities (5,416) (10,309) (1,761)
Total liabilities (17,512) (18,226) (19,579)
Net assets 32,496 45,039 34,240
Equity
Share capital 881 518 881
Share premium 74,055 71,129 74,055
Other reserve 12,691 12,691 12,691
Foreign currency translation reserve (2,914) (2,722) (2,540)
Share based payment reserve 4,325 3,689 4,028
Retained loss (56,542) (40,266) (54,875)
Shareholders' funds attributable to equity owners of parent 32,496 45,039 34,240
Unaudited consolidated statement of changes in equity at 30 June 2023
£'000 Share capital Share premium Other reserve Foreign currency translation reserve Share based payment reserve Retained loss Shareholders' funds / (deficit) attributable to equity owners of parent
Balance at 1 January 2022 485 70,860 12,691 (2,749) 3,395 (33,073) 51,609
Total comprehensive income / (loss) - - - 27 - (7,193) (7,166)
Equity share-based payment compensation
33 269 - - 294 - 596
Balance at 30 June 2022 518 71,129 12,691 (2,722) 3,689 (40,266) 45,039
Total comprehensive income / (loss) - - 182 - (14,609) (14,427)
Equity share-based payment compensation 13 191 - - - (517)
339
Proceeds from share issues 350 2,735 - - - - 3,085
Balance at 31 December 2022 881 74,055 12,691 (2,540) 4,028 (54,875) 34,240
Total comprehensive income / (loss) - - - (374) - (1,667) (2,041)
Equity share-based payment compensation - - - - - 297
297
Balance at 30 June 2023 881 74,055 12,691 (2,914) 4,325 (56,542) 32,496
Unaudited consolidated statement of cash flows for the six months to 30 June
2023
£'000 Six months to Six months to Year to
30 June 2023 30 June 2022 31 December 2022
Operating activities
(Loss) before tax (1,554) (7,072) (25,868)
Non-cash adjustments:
Depreciation and amortisation 3,465 4,413 8,900
Share based payment charge 300 602 1,145
Impairment charges - - 13,560
Interest payable 269 212 502
Working capital adjustments:
Decrease/(increase) in trade and other receivables 2,260 (24) (3,170)
(Decrease)/increase in trade and other payables (811) 34 4,214
Net income tax received / (paid) 113 (302) 1,280
Cash generated from/(used in) operations 4,042 (2,137) 563
Cash flows from investing activities
Purchase of property, plant and equipment (13) (38) (39)
Development expenditure (2,533) (3,000) (5,942)
Net cash used in investing activities (2,546) (3,038) (5,981)
Cash flows from financing activities
Proceeds from share issues - - 3,085
Repayment of loans (1,015) - (424)
Payments for leased assets (648) (379) (885)
Credit facility - 930 -
Interest and finance fees paid (235) (152) (400)
Net cash generated from/(used in) financing activities (1,898) 399 1,376
Net (decrease) in cash and cash equivalents (402) (4,776) (4,042)
Cash and cash equivalents brought forward 1,661 5,465 5,465
Effect of foreign exchange rate changes (374) (27) 238
Cash and cash equivalents carried forward 885 662 1,661
Notes to the financial information for the six months ended 30 June 2023
1. General information
LoopUp Group plc (AIM: "LOOP", "LoopUp Group", or the "Group") is a global
provider of hybrid communication software and services. It is a public limited
company incorporated and domiciled in England and Wales, with company number
09980752. Its registered office is 9 Appold Street, London EC2A 2AP.
2. Basis of preparation and significant accounting policies
These consolidated interim financial statements have been prepared in
accordance with UK adopted International Accounting Standards ("IFRS") and
IFRS Interpretations Committee (formerly IFRIC) interpretations in accordance
with international accounting standards in conformity with the requirements of
the Companies Act 2006. This results announcement does not constitute
statutory accounts of the Group within the meaning of sections 434(3) and
435(3) of the Companies Act 2006. The balance sheet at 31 December 2022 has
been derived from the full Group accounts published in the Annual Report and
Accounts 2022, which has been delivered to the Registrar of Companies and on
which the report of the independent auditors was unqualified and did not
contain a statement under either section 498(2) or section 498(3) of the
Companies Act 2006.
The results have been prepared in accordance with the accounting policies set
out in the Group's 31 December 2022 statutory accounts, which are based on the
recognition and measurement principles of IFRS.
These unaudited interim results have been prepared on the going concern basis.
At the balance sheet date, the Group had cash of £0.9m and net assets of
£32.5m. Based on detailed forecasts prepared by management, the Directors
have a reasonable expectation that the Group has adequate resources to
continue operations for the next twelve months, and as such these results have
been prepared on a going concern basis.
The results for the six months ended 30 June 2023 were approved by the Board
on 13 September 2023. A copy of these interim results will be available on the
Group's web site www.loopup.com from 14 September 2023.
The principal risks and uncertainties faced by the Group have not changed from
those set out in the Annual Report and Accounts 2022.
No impact is anticipated from new standards coming into effect from 1 January
2023.
3. Revenue and segmental reporting
IFRS 8 Operating Segments requires operating segments to be identified on the
same basis as is used internally for the review of performance and allocation
of resources by the CODM. The Directors have identified the segments by
reference to the principal groups of services offered and the geographical
organisation of the business as reported to the CODM.
The primary segment is that of LoopUp Platform Capabilities (LPC), and
includes global cloud voice services via Direct Routing and Operator Connect
integration with Microsoft Teams (known as Cloud Telephony), as well as the
Group's longstanding Remote Meetings and Managed Events capabilities. Revenue
from resale of Cisco WebEx services is categorised as 'third party resale
services'. A third segment exists as a result of the acquisition of SyncRTC in
October 2021, that of Hybridium.
Segmental revenues are external and there are no material transactions between
segments. The Group's largest customer represented less than 5% of total
revenue in both years.
No segmental balance sheet was presented to the CODM. It is not possible to
allocate overheads, and therefore profits, by segment due to the pooled
nature of the overhead base and the capital structure. Overheads are not
presented to the CODM on a segmental basis.
The Group's revenue disaggregated by primary geographical markets is as
follows:
£'000 6 months to 30 June 2023 6 months to 30 June 2022 12 months to 31 December 2022
UK 1,517 2,674 3,783
EU 1,049 1,058 2,781
North America 9,189 2,813 9,453
Rest of world 463 87 463
12,218 6,632 16,480
The Group's revenue disaggregated by pattern of revenue recognition is as
follows:
£'000 6 months to 30 June 2023 6 months to 30 June 2022 12 months to 31 December 2022
Services transferred at a point in time 9,666 4,237 10,995
Services transferred over time 2,552 2,395 5,485
12,218 6,632 16,480
The Group's revenue disaggregated by segment is as follows:
£'000 6 months to 30 June 2023 6 months to 30 June 2022 12 months to 31 December 2022
LoopUp Platform Capabilities 10,877 4,590 12,880
Third party resale services 1,127 1,642 2,971
Hybridium 214 400 629
12,218 6,632 16,480
The Group's non-current assets disaggregated by primary geographical markets
are as follows:
£'000 6 months to 30 June 2023 6 months to 30 June 2022 12 months to 31 December 2022
UK 39,090 55,222 40,055
EU 565 170 237
North America 2,585 1,513 1,866
Rest of world 1 3 2
43,241 56,908 43,160
4. Earnings per share
The basic earnings per share is calculated by dividing the net profit
attributable to equity holders of the Group by the weighted average number of
ordinary shares in issue during the year.
6 months to 30 June 2023 6 months to 30 June 2022 12 months to 31 December 2022
Profit / (loss) attributable to equity holders (£'000) (1,667) (7,193) (21,802)
Adjusted profit attributable to equity holders (£'000) ((1)) (1,367) (5,407) (9,090)
Weighted average number of ordinary shares in issue ('000) 120,522 100,783 120,522
Basic earnings per share (pence):
- Basic adjusted ((1)) (1.1) (5.4) (6.9)
- Basic (1.4) (7.1) (18.1)
(1.) Calculated using profit / (loss) for the period, adjusted for exceptional
reorganisation costs, exceptional impairment charges, amortisation of acquired
intangibles and share based payment charges.
Since the Group made a loss in each of the periods above, there were no
potentially dilutive shares that were not anti-dilutive, and the diluted
earnings per share is identical to the basic earnings per share.
5. Dividends
The directors did not recommend the payment of a dividend for the years ended
31 December 2022 or 2021, or the six month periods ended 30 June 2023 or 2022.
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