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.
Current levels of activity The group is clearly seeing significant levels of activity, both in terms of client usage of the LoopUp platform, and in terms of new business wins. We believe that, while part of this activity will subside as lockdowns end across the world and business returns to some element of “normal”, there will also be a degree of permanent behavioral change, from which LoopUp should benefit into the long term
Increased focus on Professional Services sectors Just prior to the COVID19 lockdown, LoopUp had announced its 2019 results and described an increased degree of focus within the business on Professional Services sectors. There are a number of good reasons why these sectors should be interested in the LoopUp platform, mainly to do with security and reliability - both of which have been arguably absent from many of the platforms currently experiencing widespread consumer utilization.
Investor attitudes We believe that investors are beginning to appreciate the inherent value provided by remote meetings companies. The combination of high margins, recurring revenue and a good degree of scalability should provide the basis for software-style valuations. We believe that some valuations have been held back by investor perceptions around “conference call” businesses, but that this “drag” on sentiment is gradually becoming less of a factor.
Overall, we believe that LoopUp is entering an exciting new phase. The business is clearly benefiting from some spikes in activity, but although these spikes may be at least partially transient, we suggest that the product and the management team are well placed to ensure that this translates into long-term upside. Clearly the remainder of the year is at this stage uncertain, both in terms of lockdown relaxation and in terms of changes in behaviour. For now, we look forward to seeing additional news flow from LoopUp in the weeks and months ahead.