Eckoh — FY2019 Earnings Presentation
24 slides from Eckoh's earnings presentation, March 2019
Slide 1: Eckoh Results for the full year ended 31st March 2019
Eckoh Results for the full year ended 31st March 2019
Slide 2: Agenda
Agenda • Eckoh Overview • Financial Highlights • Operations Review – Strategic Goals – US Operations – UK Operations – Innovation • Summary and Investment Case 2 Full Year Results – Year ended 31st March 2019
Slide 3: Highlights - Strong Order Growth
Highlights - Strong Order Growth q Results in line with market expectations q Revenue growth in UK and US q Record levels of new business up 47% q Total business contracted up 62% q Strong year for the UK in new business and contract renewals q Excellent progress in US Secure Payments contracts, gro
Slide 4: Financial Highlights
Financial Highlights New Business 4 Deferred revenue Revenue £22.6m £14.6m £28.7m 2 47% 44% 5% 5% (FY18 : £15.3m) (FY181: £10.1m) (FY181: £27.2m) Recurring Revenue EBITDA 3 Net Cash 83% £4.3m £8.3m 1% 16% £4.7m (FY181: 82%) (FY181: £5.1m) (FY18 : £3.6m) 1. Restated for adoption of IFRS 15 – Revenue
Slide 5: Summary Financials
Summary Financials £’000 31 Mar-19 31 Mar-18 1 Variance New business contracted 2 22,568 15,310 +47% Total business contracted 32,723 20,205 +62% Revenue 28,719 27,237 +5.4% Gross profit 24,105 23,490 +2.6% Gross profit margin (%) 84% 86% -2pts Adjusted 3 EBITDA 4,322 5,149 -16.1% Profit after tax 9
Slide 6: Divisional Trading Analysis
Divisional Trading Analysis FY181 (Revenue £m) FY19 q 5% growth in UK and US US 8.8 US 9.3 UK 19.4 q US share of Group stable at 32% UK 18.4 32% 68% 32% 68% q UK has continued to strengthen with new business growth flowing through to revenue US (Sales Split £m) UK q In UK the Capita relationship is
Slide 7: UK Trading Analysis
UK Trading Analysis q Significantly improved new contracted business 2, Revenue Split by Product up 69% to £10.1m (FY181: £6.0m) FY18 q Revenue up 5% to £19.4m (FY181: £18.4m) 28% 45% q Gross profit up 4% to £16.5m (FY181: £15.8m) 26% q Gross profit margin 85% (FY181: 86%) FY19 q Recurring revenues
Slide 8: US Trading Analysis
US Trading Analysis q Strong new business contracted 2, up 32% to $16.3m (FY18: $12.3m) q Secure Payments revenue grew 35% to $5.0m Revenue by Activity Y-o-Y (FY181: $3.7m) $5.8 $5.0 $5.4 $6.00 q Overall revenue increased 5% to $12.2m (FY181: $5.00 $3.7 FY18 $11.7m) ($m) $4.00 $3.00 $1.7 $1.8 q Gros
Slide 9: Adjusted EBITDA bridge – ahead of consensus
Adjusted EBITDA bridge – ahead of consensus q UK business – planned investment in headcount, staff bonus, Sales & Marketing and IT (including expansion of Cloud platform), ahead of new business revenue Adjusted EBITDA 6.0 recognition due to IFRS 15 0.5 0.2 5.0 0.2 0.3 q US Secure Payments – year on
Slide 10: Contracted Business – UK and US
Contracted Business – UK and US q 47% year on year growth in new contracted Contracted New Business (£m) 1 22.5 business achieved £25 £20 15.3 q UK growth of 69% and US growth of 34% 12.4 UK £15 9.3 US q 62% year on year growth in total contracted £10 business achieved £5 6.0 10.1 £0 q Strong UK ren
Slide 11: Strategic Goals
Strategic Goals • Expanding our footprint in the US to capitalise on the fast-growing market for secure payment opportunities • Extend our market leader position into the Cloud • Further enhancing the Eckoh Experience Portal to enable faster and more flexible delivery of our solutions • R&D to devel
Slide 12: UK Overview
UK Overview q Strong return to growth after successful restructure of sales team and refocusing on large tenders, channel partners and strategic accounts q New sales orders exceeded £10m for the first time since FY14 q Cross selling - 24% of new business contracted was from existing customers q Rene
Slide 13: US Secure Payments
US Secure Payments q Continued strong momentum in Secure Payments q New Secure Payments contracted business grew 47% to $13.7m q Total unrecognised order book increased 64% to $22.8m (FY181: $13.9m) q Secure Payments revenue grew 35% to $5.0m (FY18: $3.7m) q Largest contract win of $7.4m won in Sept
Slide 14: US Overview
US Overview q Secure payments market trends and updates § Sales pipeline continues to grow § Our level 1 PCI DSS accreditation retained for the 9th successive year § Cloud platform is now fully operational and included in this accreditation § Cloud Contact Centre provider NICE inContact added as a p
Slide 15: Innovation Update
Innovation Update q Patent Updates § Patents secured protect our existing proposition and lay platform to extend our security proposition § Five new patent grants across the UK, the US, and for the first time the EU, and a further grant since period end § EU patent covers the ‘secure proxy’ process
Slide 16: Summary
Summary q Results in line with market expectations q Revenue growth in UK and US q Significant growth in contracted business q Excellent progress in US Secure Payments q Focus on large enterprise contracts q Strong cash generation and robust balance sheet q Improving quality of earnings q Current tr
Slide 17: 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 § External factors – Ongoing data breaches, increased regulation and cost of cyber insurance q Strong momentum building § Re
Slide 18: Thank you
Thank you Nik Philpot CEO DD: 01442 458358 nik.philpot@eckoh.com Chrissie Herbert CFO DD: 01442 458329 Chrissie.herbert@eckoh.com 18 Full Year Results – Year ended 31st March 2019
Slide 19: 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 20: 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 Corporation Capita, BT, NICE
Slide 21: Appendix - Growth drivers in a largely untapped target market
Appendix 3 - Growth drivers in a largely untapped target market Organisations with Contact Centre Operations of 50+ seats US Market Size UK Market Size 14,000 Contact Centres 2,500 Contact Centres 4bn payments annually1 572m payments annually1 Reducing Fraud Improving Engagement PCI DSS Compliance M
Slide 22: Appendix Financial Information
Appendix Financial Information 22 Full Year Results – Year ended March 31st 2019
Slide 23: Balance Sheet – March 2019
Balance Sheet – 31 March 2019 £’000 2019 20181 Intangible Fixed Assets 7,464 7,959 Amortisation of intangibles Mainly comprised of HQ building and hosted telephony Tangible Fixed Assets 4,118 4,703 platform Deferred Tax Asset 4,081 4,280 Adoption of IFRS 15 restated DTA Total Fixed Assets 15,663 16,
Slide 24: Cash Flow Statement
Cash Flow Statement 31 Mar 31 March £’000 2019 20181 Profit after tax 945 1,323 Depreciation / Amortisation 2,560 3,568 Share based payments 567 554 K2C Earn-out release - (975) Taxation 209 (269) Other 118 (167) Operating profit before changes in working capital 4,399 4,034 Movement in receivables,