REG - PCI-PAL PLC - Trading Update

PCI- PALAnnouncement

26/04/2022 07:00

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RNS Number : 2696J  PCI-PAL PLC  26 April 2022

 
PCI-PAL PLC
("PCI Pal", "the Company" or "the Group")
Trading Update
 
Continued successful execution against strategy leads to further earnings upgrade.
Strong early progress on expanded product roadmap.

 

PCI-PAL PLC (AIM: PCIP), the global cloud provider of secure payment solutions
for business communications, is pleased to announce that following continued
strong performance since the half year, the Group anticipates that results for
the full year to June 2022 will be better than current market expectations.

 

Trading Update

The first half of the financial year was another period of significant
progress for the Group, and this momentum has continued into the third
quarter. At the end of the quarter, all key metrics for the Group were again
performing ahead of management's expectations. The Group's key indicator of
future recurring revenues of TACV(2) increased to £12.5 million as at 31
March 2022, following a further £1.1 million ACV(1) added in Q3. ARR(3) has
now reached a key milestone of £10 million. As at 31 March 2022, cash had
increased to £6.4 million (31 December 2021: £5.5 million).

 

The Group continues to cement its position as the leader in true-cloud
solutions through strong channel relationships in its space. During the
quarter, the Company signed a number of additional new strategic target
partnerships, including:

 

·      a marketplace partnership with the global CCaaS(4) provider
Five9, which is using a repeatable integration created with a newly signed and
deployed enterprise sized customer in the U.S.

·      a reseller agreement with a European Gartner magic quadrant
CCaaS(4) vendor that specialises in enterprise size contact centres, and

·      a global reseller partnership with another one of the largest
call centre Business Process Outsourcers(6) in the world.

 

In the quarter, the Group has also renewed its existing long standing
relationships with two of the largest government contact centres in the U.K.,
adding a further minimum two year term to each relationship.

 

With this strong expansion of existing customer accounts, combined with Churn
rates of less than 3%, the Group has continued to deliver excellent Net
Revenue Retention(5) performance which now stands at 118% at the end of the
quarter.

 

As a result of continued strong financial performance across the business, the
Directors now anticipate that the results for the year to June 2022 will
exceed their previous expectations.

 

Expansion Plans & Product Development

Following the launch of the Canadian business in H1, in Q3 PCI Pal
successfully launched its Australian business. With a newly appointed ANZ
sales head hired from a principal competitor, together with the Group's
existing partner and customer presence in the region, the Directors are
encouraged by the start made by the business in this new territory.

 

Following the global industry hiring headwinds experienced in H1, recruitment
for the Company was slower than anticipated. In Q3, the market for talent
improved and the expansion-led hiring strategy is on track. This key planned
investment in talent has included new expertise in the Product team, with the
first step of a broadened product strategy being the recently announced
partnership with the international open banking payment provider, TrueLayer.

 

As the current financial year progresses, further updates will be made on PCI
Pal's new product development roadmap. The Group is not only strengthening its
existing leading compliance and security solutions, but also working towards
introducing further payments-focused services to customers and partners for
utilisation across all business communications environments. Light-touch,
cloud-based payment services are particularly relevant within contact centres
and this broadening of the product set is expected to further deepen channel
partner relationships and add value to PCI Pal's end-customers, thereby
further expanding the Group's addressable market.

 

Update on Unfounded Patent Infringement Claims

In September 2021, the Group announced that Semafone, one of its main
competitors, had filed lawsuits in both the U.K. and the U.S. relating to
alleged patent infringement by PCI Pal. The Directors strongly refute the
claims being made.

 

During Q3, the following procedural progress was made: In the U.K., the Court
process continued and cost budgets of approximately £1.3 million were agreed
for both parties with the Court. This agreed budget puts a ceiling on the
maximum amount of costs that could be awarded against the losing side, subject
to the judge's discretion, should the case go to Court. The next step is for
Semafone to provide to the Court by the end of April 2022 detailed disclosures
as to their reasons why they believe PCI Pal infringes their patent. PCI Pal
has to provide to the Court detailed reasons as to why Semafone's patent is
invalid by the same date.

 

In the U.S., PCI Pal filed a motion to dismiss the case based on the argument
that Semafone's U.S. patents are invalid because they are too abstract to be
patentable (an "Alice" motion).  The court conducted a hearing on the Alice
motion on 18 April 2022, and PCI Pal awaits the judge's decision within the
coming months.  In parallel, planning continues for the potential next stages
of the U.S. court process should PCI Pal's Alice motion be denied.  In that
instance, PCI Pal will seek a court ruling that PCI Pal does not infringe
Semafone's patents and that Semafone's patents are invalid in view of the
prior art.

 

The Board continues to be very confident in the Company's position on both the
defence of the claims made and on the counterclaims made against Semafone.

 

U.S. Patent Covering Cloud IP

In March 2022, the Group announced the approval for grant of one of its patent
applications in the U.S. This followed the U.S. Patent Office's reviews of
prior art and competitor patents, including those of Semafone Limited. This
new U.S. patent grant reflects the Company's position as the first in its
market to launch globally available, true-cloud services, incorporating
light-touch, cloud-to-cloud integration methodology. The patent protects PCI
Pal's core cloud innovation as to how it interacts with phone calls to secure
data and is relevant to the majority of PCI Pal's AWS platform deployments
across partners and direct customers. PCI Pal intends to protect its IP and
use this innovation as a method to further commercialise the Company's planned
product expansion.

 

Commenting on the update, James Barham, Chief Executive Officer, said:

"Since launching our cloud services five years ago, we have delivered on our
core objectives of: establishing the first globally available, true-cloud
secure payment platform for business communications; building a market-leading
partner eco-system; and making our services available globally to partners and
customers alike. We are now reaping the returns on this investment through a
valuable recurring SaaS business model. With another strong quarter delivered,
that model has enabled the Group to further increase its market expectations
for the current financial year.

 

"Last year we took the decision to invest further in international expansion,
as well as in product development, in order to create complementary solutions
and services that are relevant to our market-leading partner eco-system and
end-customers. The international expansion is on track as planned and we are
very excited with the initial momentum in our product development activities.
As well as strengthening our core compliance and security-centric products
today, we will begin to layer in additional payment-centric services
specifically designed for the business communications market. We expect this
in turn to further grow our addressable market as these new products are
released."

 

(1) ACV is the contracted annual recurring licence revenue component of the
contract.

( )

(2) TACV is the total expected annual recurring revenue from all contracted
customers, whether invoiced and included in deferred revenue or still to be
deployed and/or invoiced.

 

(3) ARR is the annual recurring revenue generated from deployed contracts

( )

(4) CCaaS - Contact Centre as a Service providers such as Genesys, Vonage,
Talkdesk, 8x8.

( )

(5) AWS platform net retention rate "NRR" is calculated using the opening
total value of deployed contracts at the start of the period less the ACV of
lost deployed contracts in the period plus the ACV of upsold contracts signed
in the period all divided by the opening total value of deployed contracts at
the start of the period

 

(6) Business Process Outsourcers are organisations with large contact centre
operations handling calls for third party businesses. These companies
typically have tens or hundreds of thousands of contact centre agents
globally.

 

For further information, please contact:

 

 PCI-PAL PLC                                 Via Walbrook PR
 James Barham - Chief Executive Officer

 William Good - Chief Financial Officer
 finnCap (Nominated Adviser and Broker)      +44 (0) 20 7227 0500
 Marc Milmo/Simon Hicks (Corporate Finance)

 Richard Chambers (Corporate Broking)
 Walbrook PR                                 +44 (0) 20 7933 8780
 Tom Cooper/Nick Rome                        +44 (0) 797 122 1972
                                             PCIPAL@walbrookpr.com

 

About PCI Pal:

 

PCI Pal is a leading provider of Software-as-a-Service ("SaaS") solutions that
empower companies to take payments from their customers securely, adhere to
strict industry governance, and remove their business from the significant
risks posed by non-compliance and data loss. Our products secure payments and
data in any business communications environment including voice, chat, social,
email, and contact centre. We are integrated to, and resold by, some of the
worlds' leading business communications vendors, as well as major payment
service providers.

 

The entirety of our product-base is available from our global cloud platform
hosted in Amazon Web Services ("AWS"), with regional instances across EMEA,
North America, and ANZ.

 

For more information visit www.pcipal.com (http://www.pcipal.com) or follow
the team on Linkedin: https://www.linkedin.com/company/pci-pal/
(https://www.linkedin.com/company/pci-pal/)

 

 

This announcement contains inside information for the purposes of Article 7 of
the Market Abuse Regulation (EU) 596/2014 as it forms part of UK domestic law
by virtue of the European Union (Withdrawal) Act 2018 ("MAR"), and is
disclosed in accordance with the company's obligations under Article 17 of
MAR.

 

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