Eckoh — H1 FY2021 Earnings Presentation
25 slides from Eckoh's earnings presentation, November 2020
Slide 1: Eckoh Results for the half year ended 30th September 2020
Eckoh Results for the half year ended 30th September 2020
Slide 2: Agenda
1 Results Overview 2 Financial Highlights Agenda 3 Operations Review 1. 2. Strategic Goals UK operation 3. US operation 4 Technology and Innovation 5 Summary 2 Interim Results – Year ending 31st March 2021
Slide 3: Highlights – Resilient performance
Highlights – Resilient performance q Results in line with Board expectations despite difficult conditions q Continued strong progress and growth in US Secure Payments q Underlying Group revenue slightly lower, excluding the Coral contract from last year, driven by the planned decline in US Support a
Slide 4: COVID – Update
COVID – Update q Well placed to continue to manage the impact of COVID due to high levels of recurring revenue, a record order book, blue chip enterprise clients and a strong balance sheet q Trading § UK - although client volumes were highly impacted from March, because of the various commercial mod
Slide 5: Financial highlights
Financial highlights Revenue Operating profit2 Total business3 £15.7m £3.4m £14.0m 13% 12% 1 0% 28% (H1 20: £18.0m) (H1 20: £3.4m) (H1 20: £19.4m) Revenue Operating profit2 Total business3 Excluding Coral Contract £15.7m £3.4m £14.0m 1 4% 3% 34% 15% (H1 20: £16.3m4) (H1 20: £2.5m4) (H1 20: £16.4m4)
Slide 6: Summary financials
Summary financials Excluding Coral Contract HY Sept HY Sept HY Sept Variance £M Variance 20 19 19 1 Revenue 15.7 18.0 (13%) 16.4 (4%) Gross profit 12.8 14.2 (10%) 13.3 (3%) Gross profit margin (%) 81% 79% +2pts 83% -2pts Adjusted2 EBITDA 4.2 4.2 n.m. 3.3 +25% Adjusted3 operating profit 3.4 3.4 n.m.
Slide 7: Adjusted Operating Profit and Revenue bridge
Adjusted Operating Profit and Revenue bridge Revenue Revenue 20.0 20.0 q Operating profit in line with H1 FY20 1.7 1.7 1.4 2.2 2.2 1.1 1.1 1.4 0.3 0.3 15.0 15.0 q Coral licenses – $2.1m non-repeatable Coral licences in prior year 10.0 10.0 18.0 18.0 16.3 16.3 15.7 15.7 q US Support – planned transit
Slide 8: Divisional trading analysis
Divisional trading analysis H1 FY20 (Revenue £m) H1 FY21 q US now accounts for 40% of Group revenue (H1 FY20: 36% excluding $2.1m US 7.5 UK 10.5 US 6.3 UK 9.4 Coral licences) 58% 40% 60% 42% q UK declined largely due to the transactional impact of COVID US (Sales split £m) UK q In the UK the partner
Slide 9: UK trading analysis
UK trading analysis q Total contracted business1 £8.6m, up 8% (H1 Revenue Split by Product FY20: £7.9m) H1 FY20 q New contracted business2 £3.2m (H1 FY20: 21% £2.7m) up 17% 43% q Revenue down 11% to £9.4m (H1 FY20: £10.5m) 36% q Gross profit down 9% to £8.0m (H1 FY20: £8.8m) H1 FY21 q Gross profit m
Slide 10: US trading analysis
US trading analysis q Total revenue decreased 15% to $8.0m (H1 FY20: $9.4m), but increased by 18% excluding the $2.1m from the one-off Coral contract q Secure Payments revenue increased significantly by 80% to $6.5m (H1 FY20: $3.6m) q Support revenue declined as planned to $1.1m and we expect FY21 t
Slide 11: Contracted business – UK and US
Contracted business – UK and US Contracted total business (£m) £3m Coral contract q £14m total business contracted1 in a £20 challenging period, against record £15 comparators £10 16.4 14.0 q UK total business grew 8% and new £5 business 17% £0 H1 FY20 H1 FY21 q US Secure Payments new business2 was
Slide 12: Strategic Goals
Strategic Goals • Be the market leader for Contact Centre payment security in premised, hosted and Cloud delivery • Capitalise on the fast-growing US market for Secure Payments • Maximise client value through cross-selling to generate higher levels of recurring income • Continue to enhance the Eckoh
Slide 13: UK Overview – Strong order levels despite backdrop
UK Overview – Strong order levels despite backdrop q UK has a combination of fixed fees and transactional charges with a few longstanding clients having lower committed volumes q Revenue impacted by COVID and declined 11% but saw a strong recovery in Q2, although the situation remains uncertain q To
Slide 14: US Secure Payments – Continued momentum
US Secure Payments – Continued momentum q Strong momentum in Secure Payments, revenue grew 80% to $6.5m (H1 FY20: $3.6m) q New Secure Payments contracted business $5.9m (H1 FY20: $7.3m); broader base than prior year US – Secure Payment New Business ($m) q Following disruption to Q4 in FY20 and Q1 th
Slide 15: US Overview – Benefiting from macro factors
US Overview – Benefiting from macro factors q Secure payments market trends and updates § Our level 1 PCI DSS accreditation retained for the 11th successive year § Version 4 of the PCI code will tighten compliance further, making it harder and more expensive to comply § Tougher data privacy regulati
Slide 16: Technology and Innovation Update
Technology and Innovation Update q CallGuard release Jan 2021 - There is a significant product update to CallGuard planned for early 2021 incorporating updated analytics, improved usability and additional payment methods q Further patent grants – Since April we have had a further two patents granted
Slide 17: Summary
Summary q Robust performance given impact of COVID q US Secure Payments growth offset by impacted UK volumes q Strong total order levels underpinning future trading q Continued excellent progress and growth in US Secure Payments and despite the underlying climate it remains a huge opportunity q Stro
Slide 18: Investment Case
Investment Case q Long term growth drivers § Significant market opportunity - largely untapped market § Patented IP and limited competitive threat - no homegrown US competitor § Macro factors - ongoing data breaches, increased regulation and cost of cyber insurance q Strong momentum building § Stron
Slide 19: Thank you
Thank you Nik Philpot CEO DD: +44 1442 458358 nik.philpot@eckoh.com Chrissie Herbert CFO DD: +44 1442 458329 chrissie.herbert@eckoh.com 19 Interim Results – Year ending 31st March 2021
Slide 20: Appendix - Eckoh history
Appendix 1 - Eckoh history § Dec 1999 Float on FTSE as 365 Corporation § Jan 2002 Sale of internet business § May 2002 Change of name to Eckoh, new customer engagement strategy § Jun 2003 Eckoh moves to AIM § Jul 2006 Symphony share sold to Redstone for £11m § Oct 2010 Level 1 PCI DSS Accreditation
Slide 21: Appendix - Significant market opportunity largely untapped
Appendix 2 - Significant market opportunity largely untapped Product Set Product Set Secure Payments, All Products Support and Coral Product Delivery Product Delivery Primarily hosted Primarily on site managed service (80%+) (90%+) Partner channels Partner channels West, Ribbon Capita, BT, NICE InCo
Slide 22: Appendix - Growth drivers in a largely untapped target market
Appendix 3 - Growth drivers in a largely untapped target market Contact Centre Industry employs 4% of total UK and US workforce US Target Market Size UK Target Market Size 14,000 Contact Centers 2,500 Contact Centres with 50+ agent seats with 50+ agent seats Reducing Fraud Improving Engagement PCI D
Slide 23: Appendix Financial Information
Appendix Financial Information 23 Interim Results – Year ending 31st March 2021
Slide 24: Balance Sheet – 30 September 2020
Balance Sheet – 30 September 2020 30 Sept 30 Sept 31 Mar £’000 2020 2019 2020 Intangible Fixed Assets 6,709 7,200 7,313 Amortisation of intangibles Tangible Fixed Assets 3,774 3,959 3,851 Mainly HQ building and hosted telephony platform Leased Assets 404 523 277 Deferred Tax Asset 3,786 4,116 3,805
Slide 25: Cash Flow Statement
Cash Flow Statement 31 Sept 31 Sept 31 March £’000 2020 2019 2020 Profit after tax 2,044 2,041 3,136 Depreciation / Amortisation 1,266 1,306 2,632 Share based payments 176 359 468 Taxation 484 551 166 Other 63 (287) (280) Operating profit before changes in working capital 4,033 3,898 6,122 Movement