Event in Progress:
View the latest research on other companies in the sector.
LoopUp, the premium hybrid communications cloud platform provider has released unaudited preliminary results to December 2022. Revenues were £16.5m (FY21A:£19.5m), a YoY decline of 15.4% driven by the structural decline in the meetings business coupled with a decline in the third-party resale services channel. Adjusted EBITDA of £(0.9)m was behind the prior year (FY21A: £1.2m), but ahead of our £(1.1)m forecast. We update our FY23E forecasts to reflect an uplift in the Meetings business, and release FY24E forecasts. The Group trades on an attractive FY24E EV/Adj EBITDA of 3.4x, which we believe continues to offer attractive value for investors, especially when coupled with the continued acceleration in its Cloud Telephony business. We reaffirm our Buy recommendation.
LoopUp Group PLC
LoopUp has released an encouraging trading update, underpinned by the successful transfer of c7,000 former PGi Connect conferencing service customers to the Group's Meetings and Event platforms. The acceleration in new customer and contract wins for the Group's Cloud Telephony solution is positively contributing to the strong performance of the Group. To reflect the uplift in performance we marginally increase FY22E revenue from £15.4m to £15.5m whilst also increasing administrative expenses by £0.9m to £12.4m. The uplift in administrative expenses is driven by a rise in professional and execution fees (PGi Connect agreement). These adjustments result in a reduction in FY22E Adj EPS from -1.0p to -1.5p. Trading on a FY23E EV/Sales of just 0.7x, we believe LoopUp remains substantially undervalued and reaffirm our Buy rating.
The PGi book of business transfer goes live on 1 October 2022. This transaction will boost the Group's cash flow over the next two years, albeit on a slightly deferred basis in FY22E given monthly billing in arrears and normal collection cycles. LoopUp has raised £3.5m of new equity to help finance its working capital during the transition period and invest further in its growing Cloud Telephony division.
LoopUp has assumed a book of conference service contracts from a US competitor for no initial outlay. This book will yield operating cash flow of c£5m on an annual basis. Together with the renegotiated banking facilities secured earlier in the year, the Group's enhanced cash flow and headroom in its facilities will position the company well for FY23E and we upgrade the stock to Buy.
New Cloud Telephony customer numbers expanded significantly last year but a lag in implementation timing is impacting the ramp up of revenues in the new year. If all customer geographies are rolled out there is upside to our earnings and cash flow forecasts but we revise our recommendation to Hold until we have greater visibility over the outcome of FY22E.
LoopUp is trading broadly in line with market expectations and continues to make progress with the mission-critical transition towards the Cloud Telephony product for Microsoft Teams. Management remains optimistic about the long-term implications for growth from this changing revenue mix effect. However, the lag between bookings and recognising revenues is proving to be longer than anticipated, which underpins new guidance of a yoy revenue contraction of 18-23% in FY22E. We reinstate our estimates and HOLD recommendation.
LoopUp has signed a major reselling agreement with an international telco to distribute its Cloud Telephony platform into its business customer base. In our view, this validates both the commercial proposition and LoopUp's channel strategy. We have nothing in our forecasts for CT indirect sales meaning this agreement provides upside potential to forecasts once revenues flow.
LoopUp has raised £8.85m gross in a Placing and Primary Bid offer of new ordinary shares to support the expansion of its subscription cloud telephony platform, fund an acquisition and reduce gearing. While still materially cash generative, Remote Meetings is now a sunset business and the primary driver for earnings growth going forward is the platform-based Cloud Telephony division. LoopUp has a £117m pipeline to convert in this expanding marketplace and the share price is not discounting any recovery in the company's markets.
LoopUp is experiencing ‘intense competition’ in its Remote Meetings business, and now expects to report H1 revenues of c£11.5m – 13% below management expectations. Progress has accelerated in the critical Cloud Telephony segment, but the scale has not yet reached the critical mass required to offset the ongoing decline of the meetings business. However, management expect to return the business to growth during the second half. Given the lack of visibility, we downgrade our recommendation to HOLD.
LoopUp has managed its way through the challenges and opportunities brought about by COVID-19, and exits 2020 with a strong cash balance, a reinvigorated product line-up, and some promising pipeline opportunities. This year will be one of transition, as the group evolves and continues promoting its Cloud Telephony offering within Microsoft Teams, both selling directly to enterprise customers and indirectly via the large Microsoft partner ecosystem. The RNS strikes a cautious tone on near-term sales, so we take management’s cue and modestly reduce expectation for 2021.
LoopUp has published a trading update detailing a modest miss for FY20, but a materially lower-than-expected run rate as the business moves towards FY21. The shortfall is attributable almost entirely to a faster-thanexpected and more dramatic decline for the LoopUp meetings product in sectors outside the core focus Professional Services segment. We make reductions in estimates to reflect this revised outlook – clearly this is disappointing, but there are a number of positives within the parts of the business likely to drive long-term value.
LoopUp has announced a very strong H1 period, in line with the previous trading update and reflecting a number of months of exceptional performance. This is allowing the business to invest in the major identified new opportunity, to provide telephony within Microsoft Teams, where the early signs are extremely positive. We look forward to further detail on the Teams pipeline and sales levels over time.
LoopUp recently unveiled a major extension to its ambitions – the group is aiming to become a leading global provider of telephony “inside” Microsoft’s Teams product. The opportunity is clear and growing, as enterprise customers look to use Teams for “normal” external phone calls, and LoopUp seems well placed to deliver a differentiated offering using its existing infrastructure and knowhow. In this document we provide an overview of the new platform and explain its strategic significance.
LoopUp has delivered a trading update for H1, highlighting some exceptionally strong activity during the COVID-19 lockdown period, which appears to be at least partly translating into longer-term outperformance. We materially upgrade our forecasts for 2020 and 2021, and look forward to additional detail at the late-July Operational Update webinar.
LoopUp has provided an update on trading to coincide with today’s AGM…in essence, the group continues to see activity “materially” above pre-COVID levels, and is confident of exceeding expectations for 2020. We choose to leave our forecasts (that we believe to be roughly in line with consensus estimates) unchanged for now, in advance of further detail likely with a fuller H1 update in early July.
LoopUp recently updated on the first four months of 2020, which have seen an exceptional level of customer activity and new client wins. This is largely driven by the COVID-19 pandemic and the associated shift towards remote working with additional use of conference calls, but the group has also recently implemented an increased focus on Professional Services, which in our opinion could boost long-term potential. This note focuses on current activity levels within the business, the opportunity within Professional Services and the attitude of investors towards remote meetings companies.
LoopUp has announced a trading update for the period to April 2020. The group has seen very strong revenue performance for the first four months of the year, which we assume is driven by exceptional call volumes during March and April. We upgrade our 2020 and 2021 estimates to reflect this strong performance, although we have avoided assuming a long term continuation of these buoyant recent trends.
LoopUp has issued a trading update, highlighting two specific challenges which impact near-term revenues. Firstly, there has been an across-the-board reduction in activity levels among clients, driven (in the Board’s view) by depressed macro activity. Secondly, levels of new business have been impacted by the diversion of senior staff onto training roles and away from business development. Both issues are disappointing, and they combine to a material reduction in near-term EBITDA (c20%), but both should also be manageable and neither diminishes the attractiveness of the LoopUp product.
LoopUp has developed a software-as-a-service product for remote business meetings which combines advanced technology with extreme simplicity and ease of use. The group is seeing good traction with enterprise customers, and its process-centric and team-based sales approach lends itself to rapid scaling. The acquisition of MeetingZone in 2018 added very significant scale and brought synergy opportunities. With strong gross margins and powerful growth metrics, the group has material expansion plans for the short to medium term and should be able to deliver material dividends to investors in the long run.
We attended a Capital Markets Day last Thursday (6 June)…insights were given into group strategy, the addition of video, the MeetingZone acquisition, a new “events” product, as well as an update on Pods and marketing, with positive customer feedback from Clifford Chance.
LoopUp Flash : FY'17A trading ahead on accelerating revenue and margins
LoopUp : A closer look at unit economics
Accelerating organic growth (ex-currency) drives upgrades to forecasts and TP.
We raise our target price as LOOP’s record of dependable delivery grows.
EBITDA doubles on 39% organic growth. “Negative Net Churn” beats our expectations materially. Raise target price to 180p.
3% underlying* revenue and EBITDA beat, excess re-invested for growth.
LoopUp’s shares have risen by 23% since the Aug’16 IPO. Today, the company publishes a strong set of maiden interims that leave management confident of meeting FY expectations. LoopUp develops conference-calling SaaS products for remote meetings. Its patented software guarantees ease of use, and its scalable model addresses a £4.7bn market in which it has grown revenues by 36% CAGR since 2013. It has been EBITDA profitable since Q4’13 and serves 1,850+ customers. We initiate with a Buy recommendation and a 150p target price.
.png)
Share: