REG - LoopUp Group PLC - Trading update

LoopupAnnouncement

29/03/2023 07:00

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RNS Number : 5991U  LoopUp Group PLC  29 March 2023

29 March 2023

LOOPUP GROUP PLC

("LoopUp" or the "Group")

Trading update

 

Material uplift in Q4 revenue run-rate

 

LoopUp Group plc (AIM: LOOP), the cloud platform for premium external
communications, is pleased to announce a trading update for its financial year
ended 31 December 2022.

 

Material jump in revenue

 

The Group now expects a material jump in Q422 revenue to approximately £7.2
million following the PGi Connect transaction announced in September 2022, and
so a strong run-rate heading into FY23. However, the Directors note that they
continue to expect attrition over time to revenue from the Group's Meetings
business, including that from the PGi Connect transaction.

 

For the full financial year ended 31 December 2022, the Group expects:

 ·       FY22 revenue above market expectations at approximately £16.5 million (H122:
         £6.6 million; FY21: £19.5 million);
 ·       FY22 Adjusted EBITDA(1) loss in line with market expectations at approximately
         £1.0 million (H122: £1.5 million loss; FY21: £1.2 million profit); and
 ·       FY22 year-end gross cash of £1.7 million (FY21: £5.5 million) and net debt
         of £5.8 million (FY21: £2.5 million), following the successful subscription
         and placing for approximately £3.5 million in September 2022.

 

Commercial traction in Cloud Telephony

 

Cloud Telephony now sits squarely at the heart of the Group's forward-looking
growth strategy, and the Group achieved strong operational progress and
commercial traction during FY22:

 ·       Customer numbers grew by 172%, a growth of 50 customers from the 29 at the end
         of FY21 to 79 at the end of FY22.
 ·       Individual contract numbers with the Group's customers grew 229%, a growth of
         117 contracts from the 51 contracts at the end of FY21 to 168 at the end of
         FY22. This reflects the fact that the Group is targeting the multinational
         mid-market and enterprise segments, where customer wins generally involve
         geographic rollouts. As such, the ratio of contracts per customer grew from
         1.76 at the end of FY21 to 2.13 at the end of FY22.
 ·       Booked Annual Recurring Revenue (ARR) from these 79 customers at the end of
         FY22 stood at £1.8 million minimum contractually guaranteed and c.£3.1
         million expected. Nearly all customers are on 3-year initial term licence
         contracts.
 ·       Net Revenue Retention (NRR) was 159% in FY22, being the ratio of booked ARR at
         the end of FY22 to booked ARR at the end of FY21 from the cohort of 29
         customers in place at the end of FY21.
 ·       The Group has experienced zero gross customer churn in Cloud Telephony since
         entering the market.
 ·       Sales cycles can involve a Proof of Concept (POC), enabling prospective
         customers to test our technology in their own IT environment. The Group has
         achieved a 95 percent POC conversion rate, with 19 out of 20 POC projects
         completed by the Group having successfully converted into customer wins.

 

The Group maintains a strong pipeline of future Cloud Telephony sales
opportunities (c.£100 million ARR) and is confident in the growth prospects
of this primary forward-looking line of business.

 

 

 

 

Meetings

 

In September 2022, the Group announced a revenue sharing and customer transfer
agreement with PGi Connect, giving 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(2) from successfully transferred customers for a
period of three years.

 

Since October 2021, approximately 7,000 customers have transitioned from PGi
Connect to LoopUp, leading to an increase in the Group's revenue run rate of
c.167% (c.£2.7 million in Q322 to c.£7.2 million in Q422).

 

While this transitioned Meetings business is expected to decline over time, it
is nevertheless highly cash generative, with a gross margin of 65-70 percent
(after LoopUp COGS and PGi Connect revenue share) and just c.£0.3 million in
incremental quarterly staff and overheads costs.

 

Outlook

 

Looking ahead, there are three primary factors influencing the development of
the Group's revenue progression, namely:

 ·       continued strong new business growth in the Group's primary Cloud Telephony
         business;
 ·       a full year (rather than single quarter) of revenue from the PGi Connect
         transaction; and
 ·       the continued projected decline in the Group's legacy Meetings business
         (including PGi Connect).

 

Combining these factors, the Group expects:

 ·       approximately 25% revenue growth in FY23, driven primarily by the full year
         impact of the PGi Connect transaction, alongside a return to Adjusted EBITDA
         profitability;
 ·       marginal revenue growth in FY24 as Cloud Telephony growth overtakes the
         decline in Meetings; and
 ·       strong double-digit revenue growth from FY25 onwards.

 

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.

 

 (1)  Earnings before interest, tax, depreciation and amortisation, excluding
      share-based payments charges
 (2)  Approximately 13% on a weighted average basis

 

 LoopUp Group plc                                    via FTI
 Steve Flavell, co-CEO

 Panmure Gordon (UK) Limited                         +44 (0) 20 7886 2500
 Dominic Morley / Ivo Macdonald (Corporate Finance)

 Cenkos Securities Limited                           +44 (0) 20 7397 8900
 Giles Balleny / Dan Hodkinson (Corporate Finance)
 Alex Pollen (Sales)

 FTI Consulting, LLP                                 +44 (0) 20 3727 1000
 Matt Dixon / 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) .

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